Governance, organizational capabilities, and restructuring in transition economies

This paper focuses on the links between governance, firm capabilities and restructuring following the large-scale privatization process in Central and Eastern European transition economies using an integrative approach. Restructuring in these countries has been motivated by political and institutional changes and less so by market forces. Accordingly, political processes have produced political solutions such as “give-away” privatizations to insiders. These privatizations, in contrast to divestitures to outside owners, have realized less substantive restructuring because non-market incentives, such as too much managerial equity ownership, have created managerial entrenchment. In addition, we propose a connection between governance and organizational learning suggesting that learning is inhibited by excessive managerial ownership and lack of board knowledge regarding its oversight function. Furthermore, this entrenchment and poor board functioning may be perpetuated in financial-industrial groups, which have emerged as substitutes for market intermediaries in emerging economies. Thus, we propose that outside ownership involvement and the development of organizational capabilities may facilitate restructuring in the Central and Eastern European context. Our theoretical arguments are supported by case study evidence from transition economies.     

Corporate Governance and Corporate Social Responsibility Disclosures: Evidence from an Emerging Economy

We examine the relationship between corporate governance and the extent of corporate social responsibility (CSR) disclosures in the annual reports of Bangladeshi companies. A legitimacy theory framework is adopted to understand the extent to which corporate governance characteristics, such as managerial ownership, public ownership, foreign ownership, board independence, CEO duality and presence of audit committee influence organisational response to various stakeholder groups. Our results suggest that although CSR disclosures generally have a negative association with managerial ownership, such relationship becomes significant and positive for export-oriented industries. We also find public ownership, foreign ownership, board independence and presence of audit committee to have positive significant impacts on CSR disclosures. However, we fail to find any significant impact of CEO duality. Thus, our results suggest that pressures exerted by external stakeholder groups and corporate governance mechanisms involving independent outsiders may allay some concerns relating to family influence on CSR disclosure practices. Overall, our study implies that corporate governance attributes play a vital role in ensuring organisational legitimacy through CSR disclosures. The findings of our study should be of interest to regulators and policy makers in countries which share similar corporate ownership and regulatory structures.     

现金股利、股权结构和组织特征:一个Logistic分析

本文以763家上海证券交易所A股上市公司2003年的横截面数据为观察值,运用logistic回归分析分别考察了股权结构和组织特征对现金股利发放概率的实证影响。本文发现,股权结构(第一大股东持股、前二大股东持股和前三大股东持股)对现金股利发放概率具有显著的正向影响。公司各项组织特征(成长性机会、每股收益、每股留存盈余、资产规模和财务杠杆)也对现金股利发放概率具有显著的影响。本文的结论支持自由现金流假说。     

The Limits of Corporate Social Responsibility: Techniques of Neutralization, Stakeholder Management and Political CSR

Since scholarly interest in corporate social responsibility (CSR) has primarily focused on the synergies between social and economic performance, our understanding of how (and the conditions under which) companies use CSR to produce policy outcomes that work against public welfare has remained comparatively underdeveloped. In particular, little is known about how corporate decision-makers privately reconcile the conflicts between public and private interests, even though this is likely to be relevant to understanding the limitations of CSR as a means of aligning business activity with the broader public interest. This study addresses this issue using internal tobacco industry documents to explore British-American Tobacco’s (BAT) thinking on CSR and its effects on the company’s CSR Programme. The article presents a three-stage model of CSR development, based on Sykes and Matza’s theory of techniques of neutralization, which links together: how BAT managers made sense of the company’s declining political authority in the mid-1990s; how they subsequently justified the use of CSR as a tool of stakeholder management aimed at diffusing the political impact of public health advocates by breaking up political constituencies working towards evidence-based tobacco regulation; and how CSR works ideologically to shape stakeholders’ perceptions of the relative merits of competing approaches to tobacco control. Our analysis has three implications for research and practice. First, it underlines the importance of approaching corporate managers’ public comments on CSR critically and situating them in their economic, political and historical contexts. Second, it illustrates the importance of focusing on the political aims and effects of CSR. Third, by showing how CSR practices are used to stymie evidence-based government regulation, the article underlines the importance of highlighting and developing matrices to assess the negative social impacts of CSR.     

Corporate Social Responsibility,Ownership Structure,and Political Interference: Evidence from China

Prior research suggests that ownership structure is associated to corporate social responsibility (CSR) in developed countries. This article examines whether and how ownership structure affects CSR in emerging markets using Chinese firms’ social responsibility ranking. Our empirical evidences show that for non-state-owned firms, corporate ownership dispersion is positively associated to CSR. However, for state-owned firms, whose controlling shareholder is the state, this relation is reversed. We attribute the reversed relationship to political interferences and further test this hypothesis by demonstrating that regional economic development is negatively related to CSR for state-owned firms due to decreased political interference in more developed areas. This study is the first to directly examine the relationship between the dispersion of corporate ownership and CSR in emerging markets, and our results depict that it is important to consider ownership type in assessing CSR in emerging market where state ownership is still prevalent such as China. The results also reveal that firm size, profitability, employee power, leverage, and growth opportunity affect CSR in China.     

Graft and business in emerging economies: An ecological perspective

In this study we examine how a firm's engagement in graft in emerging economies is shaped by its organizational attributes. Building on the logic of organizational ecology, we envisage that a firm's engagement in graft is influenced by its (1) institutional structure (e.g., public ownership, foreign ownership, and government ownership), (2) market orientation (foreign vs. local market), and (3) firm capabilities (e.g., capacity utilization, product quality, and leadership quality). Using the World Bank's data, we analyzed 1782 firms in China, Brazil, Russia, Poland and South Africa, and found general support for our argument. The results suggest that a firm's engagement in graft is, at least in part, an organizational phenomenon influenced by the firm's founding conditions, required legitimization in the market, and capability conditions.     

Engaging informal institutions through corporate political activity: Capabilities for subnational embeddedness in emerging economies

This study examines how multinational enterprises (MNEs) organize internally to enhance subnational institutional fit in new frontier developing economies. We consider how corporate political activity (CPA) can facilitate local embeddedness by engaging informal institutions and nonmarket stakeholders at local community level. We apply an exploratory, qualitative, multi-case study approach to six MNEs in Uganda’s electricity generation sector. The findings suggest that in markets like Uganda, MNEs depend on being bridged with subnational informal institutions such as tribal, social, and religious norms and grassroots political networks. Such bridging in turn positions these MNEs to contribute to developmental processes by integrating recognizable informal institutions into grassroots projects.Drawing on institutional theory and an organizational capabilities perspective, we identify the diverse bridging capabilities that enable MNEs to successfully embed locally, thereby simultaneously pursuing business objectives and achieving societal relevance.     

The Micro-level Foundations and Dynamics of Political Corporate Social Responsibility: Hegemony and Passive Revolution through Civil Society

Exploration of the political roles firms play in society is a flourishing stream within corporate social responsibility (CSR) research. However, few empirical studies have examined multiple levels of political CSR at the same time from a critical perspective. We explore both how the motivations of managers and internal organizational practices affect a company’s choice between competing CSR approaches, and how the different CSR programs of corporate and civil society actors compete with each other. We present a qualitative interpretative case study of how a French children’s clothing retailer develops CSR practices in response to accusations of poor working conditions and child labor in its supply chain. The company’s CSR approach consists of superficial practices, such as supplier audits by a cooperative business-organized nongovernmental organization (NGO) and philanthropic activities, which enable managers to silence more radical alternative models defended by other NGOs, activists, and trade unions. By this approach, the core business model based on exploitative low-cost country sourcing remains intact through self-regulated CSR. Through the case study, we develop a framework of dynamism in competing CSR programs. We discuss the implications of our study for CSR researchers, company managers, and policy makers.     

Political Connection,Ownership Structure,and Corporate Philanthropy in China: A Strategic-Political Perspective

This paper investigates whether philanthropic giving decisions and amount of charitable giving are related to firms’ political connections and ownership type. To this end, Chinese firms listed on either the Shenzhen or Shanghai stock exchange between 2004 and 2011 are examined, where government interference in the business sector is prevalent, state ownership structure is dominant, and corporate political connections prevail. Our analyses show (1) a significant and positive relationship between political connections and the likelihood and extent of firm contributions; (2) a significant and negative relationship between state ownership and extent of firm contributions; and (3) a stronger relationship between political connections and corporate philanthropy in non-state-owned firms. These findings with regard to the relationship between corporate giving, political connections, and ownership type have important implications for understanding corporate giving behavior in China and in emerging markets in general.     

What happens to international new ventures beyond start-up: An exploratory study

Since its inception, research in international entrepreneurship has focused mainly on how and why international new ventures internationalize early on. To date, there has been hardly any research regarding the issue of continuing corporate growth in such ventures beyond their start-up phase or initial internationalization. Theoretically, we ground our study within the dynamic capabilities view of the firm and through an inductive theory building research explore how and whether international new ventures made-it beyond the start-up phase, aiming to generate early theoretical constructs to guide international entrepreneurship research in this substantive area. Grounded in data, we develop the following constructs related to made-it points: strategic experimentation, tensions in organizational gestalt, and legitimacy lies. To get to a made-it point, entrepreneurs experiment with their venture at several levels: organizational, business model, and operational. These experimentation efforts are fueled by tensions that exist in the organizational gestalt, such as ownership structure, business proposition to the market, and product development process. To legitimate themselves and their venture in the stakeholders’ eyes, entrepreneurs may tell legitimacy lies. We maintain that international new ventures do not reach a made-it point if they only manage to develop substantive capabilities to produce desired outputs at various levels within the venture but fail to create dynamic capabilities to change and reconfigure existing substantive capabilities.     

Institutional ownership of stock and dimensions of corporate social performance: An empirical examination

Collectively, institutions own an increasing proportion of outstanding corporate equities. As an emergent force in shaping corporate America, the linkages between institutional ownership and corporate social performance (CSP) require empirical examination. Not only do corporate policy makers need to know those areas where social performance may lure or inhibit capital infusions, lawmakers also need a better understanding of the social forces guiding corporate policy. As anticipated, this study found a positive relationship between the amount of institutional ownership of corporate stock and a company's social responsiveness as measured by the representation of women on its board of directors; however, no statistically significant relationship with social responsibility as measured by charitable giving was found. The exemplar of social issues management — compliance with the Sullivan principles — showed an unexpected, negative relationship with the level of institutional ownership.Betty S. Coffey's research interests are in the area of strategic management, organizational change, and social issues.Gerald E. Fryxell is Assistant Professor of Management at the University of Tennessee, Knoxville. His current research interests are in the area of corporate culture, innovation, and strategic management.     

Political dependence,social scrutiny,and corporate philanthropy: Evidence from disaster relief

This study explores why and how firms respond to social demands through philanthropic giving in the context of a severe natural disaster. Drawing on Marquis and Qian's organizational response model to government signals, we integrate resource dependence theory and institutional theory to build a two‐step model of organizational response to social needs, in situations of disaster relief. We argue that firms depending more on the government for support are more likely to donate in disaster relief, while firms who receive more scrutiny from the government and the general public and firms having more slack resources are likely to donate more. Evidence from Chinese listed companies' donations to the 2008 Sichuan earthquake largely supports our predictions. This study provides a more precise understanding of the corporate philanthropic decision process, decoupling the drivers of philanthropic giving, and those determining the amount given. Theoretical and practical implications are suggested.     

Structural differentiation and corporate venturing: The moderating role of formal and informal integration mechanisms

Research has suggested that corporate venturing is crucial to strategic renewal and firm performance, yet scholars still debate the appropriate organizational configurations to facilitate the creation of new businesses in existing organizations. Our study investigates the effectiveness of combining structural differentiation with formal and informal organizational as well as top management team integration mechanisms in establishing an appropriate context for venturing activities. Our findings suggest that structural differentiation has a positive effect on corporate venturing. In addition, our study indicates that a shared vision has a positive effect on venturing in a structurally differentiated context. Socially integrated senior teams and cross-functional interfaces, however, are ineffective integration mechanisms for establishing linkages across differentiated units and for successfully pursuing corporate venturing.     

Ebola and Global Airline Business: An Integrated Framework of Companies’ Responses to Adverse Environmental Shock

In spite of a growing body of literature on risk management, our understanding of how companies respond to unforeseen disruptions such as pandemics or outbreaks remains limited. This study advances tourism management, operations strategy, and risk management research by examining how airlines have responded to the Ebola outbreak in West Africa. Using archival records, the study uncovered three unique stages in airlines’ responses to the outbreak. The study provides insights and rationale behind strategic persistence and downscaling approaches adopted by different airlines. The implications for risk management and public policy are examined. © 2016 Wiley Periodicals, Inc.     

Not all family firms are equal: The moderating effect of family involvement on the political risk exposure of the foreign direct investment portfolio. Preliminary evidence from Spanish multinational enterprises

We investigate the effect of political risk (PR) exposure and family control on the internationalization strategy of multinational enterprises (MNEs) using social capital theory. Our results from a negative binomial cross‐sectional analysis in 2007 of Spanish MNEs show family ownership or the limited presence of family members on the board has no effect on internationalization. However, when the conceptualization of family firms (FFs) includes majority ownership and board presence, we find a direct negative effect on their internationalization scope but a positive moderating effect on the relationship between the exposure to PR and internationalization scope. FFs have some specific advantages suitable to be employed in their corporate political activity allowing them to develop long‐lasting relationships with relevant political actors. By disentangling the effects of family control on internationalization and PR, this article explains how FFs can be simultaneously risk‐willing and risk‐averse.     

环境信息披露对上市公司企业价值的影响——“组织可见度”是否起到中介作用

我国现行企业环境信息披露政策下,企业对于信息披露的方式、时间等有很大的自由裁量权力。因此,企业这一社会责任的自觉履行需要企业价值最大化等动机支撑,但其作用机理是否有效,投资者的关注度及解读尤为重要,亦即“组织可见度”在环境信息披露对企业价值的影响中扮演重要角色。本文以我国化工行业上市公司2013-2017年样本,实证检验环境信息披露对企业价值的影响,并依次从分析师关注水平和媒体关注水平两个角度衡量组织可见度,检验其是否具有中介效应,并分析所有权性质差异下的不同结果。结果表明:环境信息披露能提升企业价值,组织可见度在环境信息披露对企业价值的影响过程中发挥了部分中介效应。进一步研究发现,当使用分析师关注水平衡量组织可见度时,该中介作用只体现在国有企业中;当使用媒体关注度衡量组织可见度时候,该中介作用在两种类型的企业中均只得到了部分体现。企业环境信息披露政策本意是通过其影响企业的市值表现促进企业更好地履行其环境社会责任,本文通过揭示其中组织可见度的中介作用,有助于启示企业对其市值管理、有关管理部门对企业履行环境社会责任引导时的操作思路。     

Organizational creativity as a crucial resource for building international business competence

We aim to elucidate the roles that organizational creativity plays in the development of firms’ international business competence (IBC). We conducted an investigation grounded in the resource-based view of how this intangible resource supports the development of capabilities and competences. We surveyed 77 Brazilian audiovisual SMEs and analyzed our data using OLS regression analysis. The results partially support the hypothesis that organizational creativity is a building block for IBC but show that its effect is mostly exerted through the mediation of some of the dimensions of innovative and entrepreneurial capabilities. This study has implications both for organizations and public policies, contributing to the debate on how firms stimulate innovation and entrepreneurship and how public agents can leverage SMEs’ internationalization process.     

From Voluntarism to Regulation: A Study on Ownership, Economic Performance and Corporate Environmental Information Disclosure in China

This article examines whether economic performance could affect EID and how the relationship is determined by the form of ownership from voluntarism to regulation under the current Chinese context. In this study, our empirical results show that the relationship between firms’ performance and EID is complex and the interactive impact of ownership and economic performance on EID significantly varies from voluntary disclosure to mandatory disclosure. This study provides a more comprehensive understanding of the motivations in corporate EID. The performance–impression theory can be used to explain the disclosure behaviors during the period of voluntary disclosure, while the pressure–legitimacy theory can be used during the period of mandatory disclosure. The finding suggests that when evaluating corporate EID associated with economic performance in emerging economies such as China, it needs to be cautious, as which tends to vary with the form of ownership and whether there is any mandatory regulation in place.     

What if your owners also own other firms in your industry? The relationship between institutional common ownership,marketing, and firm performance

The growth in institutional holdings of public firms has led to increased interest in the concept of common ownership, in which the same investor owns stakes in multiple firms within the same industry. Economic theory suggests that common ownership could affect firm performance, but little empirical research has examined the nature of this effect or how a firm’s extant marketing potentially relates to this effect. This paper addresses this gap by proposing a relationship between common ownership and firm performance that is moderated by the firm’s extant marketing capabilities and its relative marketing strategic emphasis. Our empirical approach employs data from over 43 million institutional holdings to develop a measure of common ownership and accounts for empirical issues like endogeneity and unobserved heterogeneity. The results document a positive relationship between common ownership and firm performance and provide some evidence that this effect is stronger for firms with lower marketing capabilities and a relative strategic emphasis towards R&D spending. These results suggest that public policymakers should consider the firms’ extant strategic marketing when assessing regulations on common ownership.     

Do you punish or forgive socially responsible companies? A cross-country analysis of boycott campaigns

This study empirically investigates how companies' social contribution affects boycott intention by considering the role of brand strength. We use a dataset from two politically and historically conflicting countries, South Korea and Japan, at two points in time. A structural equation model is employed to test the hypotheses. Our findings reveal the pivotal role of companies’ social contribution in mitigating boycott intention through enhanced brand strength. The results, which are unexpected, show that the direct and negative link of social contribution to boycott intention is stronger for South Korea than for Japan. By elaborating the mediating role of brand strength, this study contributes to the literature by examining the differential impacts of corporate social responsibility (CSR) practices on consumer boycotts in the context of a cross-country difference. Additionally, one managerial implication of this study is that global companies should appropriately respond to public expectations of being socially responsible actors while associating CSR practices with brand strength through creative communications.