Corporate sustainability strategies in institutional adversity: Antecedent,outcome, and contingency effects

This study examines (i) how top-level managerial institutional ties drive corporate sustainability strategies of emerging market firms operating under conditions of institutional adversity; (ii) the impact of corporate sustainability strategies on market performance; and (iii) the moderating role of financial resource slack on the relationships between corporate sustainability strategies and market performance. The study builds from institutional development logic and the structure–conduct–performance paradigm. Primary data are collected from 300 firms operating in a major sub-Saharan African market. Findings show that top-level managerial institutional linkages with regulatory national governmental officials, local community leaders, and top managers at other firms drive corporate proactive and responsive sustainability strategies, which in turn influence market performance. In addition, the findings reveal that financial resource slack strengthens the path between corporate proactive sustainability strategies and market performance, but not the path between corporate responsive sustainability strategies and market performance. Theoretical and practical implications are discussed.     

Corporate Reputation and Social Performance: The Importance of Fit

abstract    Utilizing data on a sample of large firms, we estimate a model of corporate reputation. We find reputation, derived from the assessments of managers and market analysts, to be determined by a firm's social performance, financial performance, market risk, the extent of long-term institutional ownership, and the nature of its business activities. Furthermore, the reputational effect of social performance is found to vary both across sectors, and within sectors across the various types of social performance. Specifically, our results demonstrate the need to achieve a 'fit' among the types of corporate social performance undertaken and the firm's stakeholder environment. For example, a strong record of environmental performance may enhance or damage reputation depending on whether the firm's activities 'fit' with environmental concerns in the eyes of stakeholders.     

Corporate Governance and the Environment: What Type of Governance Creates Greener Companies?

We build on a stakeholder–agency theoretical perspective to explore the impact of particular corporate governance mechanisms on firm environmental performance. Our empirical evidence shows that several important corporate governance mechanisms such as the board of directors, managerial incentives, the market for corporate control, and the legal and regulatory system determine firms' environmental performance levels. These results suggest that these different governance mechanisms resolve, to some extent, the existing divergence of interests between stakeholders and managers with respect to environmental activities.     

Managerial Ownership and Earnings Management: Theory and Empirical Evidence from Japan

This paper examines the relationship between managerial ownership and opportunistic managerial behavior relating to earnings management. Economics theory identifies two apparently conflicting effects of managerial ownership on managers' incentives: the incentive alignment effect and the management entrenchment effect. We construct a theoretical model demonstrating the two effects. This model suggests that as managerial ownership increases, earnings management decreases for both high and low levels of managerial ownership, while it increases for intermediate levels of managerial ownership if the sensitivity of the probability of managerial dismissal to the corporate performance is high enough and/or the manager's private benefit derived from managerial position is high enough. In a sample of Japanese firms, we find a significant nonmonotonic relationship between managerial ownership and discretionary accruals, consistent with our model.     

Corporate entrepreneurship: a test of external and internal influences on managers’ idea generation,risk taking,and proactiveness

Because upper managers have the responsibility to set the corporate entrepreneurship agenda, their entrepreneurial characteristics matter to a firm's successful implementation of corporate entrepreneurship. This study investigated influences on the idea creation, risk taking, and proactiveness perceptions of upper managers in a random sample of 105 Thai manufacturing firms. Results indicate that these managers' idea generation was influenced by the type of product produced, the size of the company, and the extent of firm support for individual entrepreneurship. Managerial risk taking was associated with firm size and extent of support for personal entrepreneurship. Managerial proactiveness as associated only with the scope of firms' competition, firm size, organizational entrepreneurial climate and support for personal entrepreneurship. Results suggest that firm context can influence the basis for corporate entrepreneurship.     

Corporate Governance in China: A Meta‐Analysis

How has the impact of ‘good corporate governance’ principles on firm performance changed over time in China? Amassing a database of 84 studies, 684 effect sizes, and 547,622 firm observations, we explore this important question by conducting a meta‐analysis on the corporate governance literature on China. The weight of evidence demonstrates that two major ‘good corporate governance’ principles advocating board independence and managerial incentives are indeed associated with better firm performance. However, we cannot find strong support for the criticisms against CEO duality. In addition, we go beyond a static perspective (such as certain governance mechanisms are effective or ineffective) by investigating the temporal hypotheses. We reveal that over time, with the improvement in the quality of market institutions and development of financial markets, the monitoring mechanisms of the board and state ownership become more strongly related to firm performance, whereas the incentive mechanisms lose their significance. Overall, our findings advance a dynamic institution‐based view by substantiating the case that institutional transitions matter for the relationship between governance mechanisms and firm performance in the second largest economy in the world.     

中国民营上市企业的组织韧性驱动机制——基于“资源-能力-关系”框架的组态分析

以全球新冠肺炎疫情事件的冲击为观察窗口,本文基于“资源-能力-关系”的理论视角,采用模糊集定性比较分析(fsQCA)方法分析中国民营上市企业的组织韧性驱动机制,检验非沉淀性冗余资源、沉淀性冗余资源、管理者能力、创新能力、员工薪酬激励和企业社会责任六个条件对组织韧性的组态效应。研究结果表明：(1)中国民营上市企业的组织韧性驱动机制可以划分为三种类型：资源-能力-关系驱动型;资源-能力驱动型;资源-关系驱动型。(2)无论民营企业通过哪条路径构建组织韧性,资源(非沉淀性冗余资源或沉淀性冗余资源)是不可或缺的驱动条件。(3)相较其他条件而言,非沉淀性冗余资源、管理者能力与创新能力对民营企业组织韧性的形成起到更为重要的作用。(4)在一定情形下,资源、能力与关系之间具有替代关系。研究结论为揭示中国民营上市企业的组织韧性实现路径具有重要的理论与实践意义。     

MANAGERIAL AND OWNERSHIP SUCCESSION AND CORPORATE RESTRUCTURING: THE CASE OF MANAGEMENT BUY-INS*

This paper addresses the effects on corporate restructuring of changing management and ownership. First, it synthesises a number of perspectives on corporate restructuring which involve managerial succession, voluntary restructuring, agency theory, incentives and entrepreneurship, to obtain insights into the relative impact of simultaneously changing either, neither or both management and ownership. Second, it uses case study evidence from management buy-ins to examine the effects of changing both management and ownership. the evidence suggests that whilst management may be adequately incentivized, problems may arise in respect of information asymmetries, difficulties in matching entrepreneurs to the context and monitoring by venture capitalists, and implementation of strategies.     

Navigating through firm–environmental groups' relationships: The impact of societal trust on corporate environmental strategy

This study examines the impact of societal trust on corporate environmental strategy with particular reference to the firm–environmental groups' relationship, which has received very little attention in trust literature. Using data on 2332 firms from 16 countries, we find that societal trust exerts a negative effect on the likelihood of ISO 14001 certification. The negative relationship between societal trust and the likelihood of ISO 14001 is more pronounced for firms having intense collaboration with environmental groups. However, this effect appears to be weak in higher market uncertainty. These findings, besides significantly adding to the literature, have practical and managerial implications.     

Managerial perceptions of corporate environmentalism: interpretations from industry and strategic implications for organizations

Environmental issues are becoming increasingly important in organization theory and practice. Corporate environmentalism is emerging as a process of addressing environmental issues facing business firms. In this paper I examine managerial perceptions of corporate environmentalism and describes how key organizational members interpret the relationship between their firm and the biophysical environment. Corporate environmental orientation and environmental strategy focus are two themes of corporate environmentalism that emerge from the study. I discuss managerial perceptions of regulatory forces, public environmental concern, top management commitment and need for competitive advantage, and how perceptions of these factors might translate into environmental strategies. I conclude by discussing implications of corporate environmentalism for organizational theory and practice.     

Managerial incentives and R&D investments: The moderating effect of the directors’ and officers’ liability insurance

Literature regarding the impact of managerial incentives on firm’s research and development (R&D) investments suggests that due to the riskiness of R&D activities, firms need to provide managerial incentives to encourage managerial discretion on corporate long-term investments of R&D. In spite that managerial incentives influence corporate R&D spending, some also argue corporate R&D spending a function of managerial incentive schemes. This paper applies the simultaneous equation to investigate the association between managerial discretion on R&D investments and the incentive scheme of CEO compensations by using the sample firms listed in Taiwan Security Exchange and Taipei Exchange. The results indicate that the listed firms in Taiwan simultaneously determine corporate R&D investments and CEO compensations. They reward their CEOs in compliance with their efforts on R&D investments and CEO compensation motivates CEOs to align their interests with firms’ long-term investments on R&D. A further analysis of the protection effect from the directors’ and officers’ (D&O) liability insurance suggests that D&O protection intensifies the relationship between R&D investments and CEO compensation. It encourages CEOs to allocate resources on R&D activities and make CEO incentive contracts efficacious on corporate long-term investments. The result is robust in the electronic industry of Taiwan.     

Overinvestment,inflation uncertainty,and managerial overconfidence: Firm level analysis of Chinese corporations

We study corporate investment by considering both external economic factor and managerial behavior, in particular the dynamic interaction between inflation uncertainty and managerial overconfidence by employing a sample of Chinese companies. The empirical findings demonstrate that lower inflation uncertainty increases over-investment, and managerial overconfidence exacerbates such effect. Further analysis shows that over-investment in state-owned enterprises (SOEs) is mainly driven by managerial overconfidence, and the negative association between inflation uncertainty and overinvestment is due to managerial overconfidence. The effect of managerial overconfidence is mute in non-state-owned enterprises (non-SOEs). In addition, we find asymmetric impact of inflation uncertainty on corporate over-investment during different economic cycles.     

可操纵应计的市场反应——来自中国证券市场的实证证据

基于应计制核算的净利润和经营活动现金流量之间的差异,可以分为不可操纵应计和可操纵应计,后者为企业管理层提供了一种重要的盈余管理手段。本文利用中国证券市场的数据,证明中国上市公司平均而言通过操纵应计项目进行了正的盈余管理,而且证券市场对可操纵应计作出了价格反应。     

The Drivers of Multinational Enterprise Subsidiary Entrepreneurship in China: A New Resource‐Based View Perspective

This paper extends the resource‐based view (RBV) of the firm, as applied to multinational enterprises (MNEs), by distinguishing between two critical resource dimensions, namely relative resource superiority (capabilities) and slack. Both dimensions, in concert with specific environmental conditions, are required to increase entrepreneurial activities. We propose distinct configurations (three‐way moderation effects) of capabilities, slack, and environmental factors (i.e. dynamism and hostility) to explain entrepreneurship. Using survey data from 66 Canadian subsidiaries operating in China, we find that higher subsidiary entrepreneurship requires both HR slack and strong downstream capabilities in subsidiaries, subject to the industry environment being dynamic and benign. However, high HR slack alone, in a dynamic and benign environment, but without the presence of strong capabilities, actually triggers the fewest initiatives, with HR slack redirected from entrepreneurial experimentation towards complacency and inefficiency. This paper has major implications for MNEs seeking to increase subsidiary entrepreneurship in fast growing emerging markets.     

Strategic entrepreneurship and competitive advantage of established firms: evidence from the digital TV industry

Although strategic entrepreneurship in established firms is recognized as a vital source of sustainable competitive advantage, this field has no clearly developed research paradigm. This study proposes a conceptual framework to investigate dimensions of strategic entrepreneurship and its function in sustainable competitive advantage of established firms in a modern volatile environment, through the lens of the dynamic capability view. By conducting a systematic literature review of previous research documents and considering conceptual interrelationships between strategic entrepreneurship and dynamic capabilities, we propose categories that comprise dimensions of a firm’s strategic entrepreneurship: environmental sensing, opportunity seizing, strategic flexibility, entrepreneurial orientation and organizational learning. We establish a conceptual framework of strategic entrepreneurship in which entrepreneurs’ managerial capabilities of environmental sensing, opportunity seizing, strategic flexibility and entrepreneurial orientation closely interact with organizational learning, thereby facilitating sustainable performance of established firms. Following empirical studies of established firms in the digital TV manufacturing industry, the proposed conceptual framework suggests that each dimension of strategic entrepreneurship plays a critical role in competitive advantage of firms. In addition, case study results indicate that a firm’s position and evolutionary path form antecedent factors influencing entrepreneurs’ managerial capabilities and organizational learning of established firms.     

The interplay of corporate entrepreneurship,environmental orientation,and performance in clean‐tech firms—A double‐edged sword

Clean‐tech innovations are an important driver in solving global issues such as climate change and for the sustainable development of economies around the world. Whereas a large part of the literature focuses on clean‐tech ventures, less is known on corporate entrepreneurship, that is, entrepreneurial behavior in established firms and its relation to sustainability. This paper extends the sustainable entrepreneurship debate to corporate entrepreneurship, which represents a fruitful avenue to further developing clean technologies. We focus particularly on clean‐tech firms' organizational preparedness for corporate entrepreneurship (OPCE), that is, how well a firm's structures and processes are set for entrepreneurial activities. On the basis of contingency theory, this study investigates how the level of OPCE influences the environmental and financial performance of clean‐tech firms and whether their environmental orientation affects these relationships. Building on data from 103 firms, we find support for a positive effect of OPCE on both environmental and financial performance. Both effects are stronger the higher the external environmental orientation. In contrast, the leverage of internal environmental orientation is not equally positive. Our study reveals that the effect of OPCE on financial performance diminishes for firms that are more strongly driven by an internal than an external environmental orientation.     

The moderating role of entrepreneurial management in the relationship between absorptive capacity and corporate entrepreneurship: an attention-based view

Despite a growing interest in corporate entrepreneurship, we know little of how managers can better utilise their firm’s absorptive capacity to increase levels of corporate entrepreneurship. Building on the attention-based view, we investigate entrepreneurial management as an attentional driver to channel absorptive capacity towards corporate entrepreneurship. From the analysis of a sample of 298 supplier companies providing products and services to the mining industries in Australia and Iran, we observed that absorptive capacity fosters corporate entrepreneurship. Our findings also demonstrate that the dimensions of entrepreneurial management differentially affect the relationship between absorptive capacity and corporate entrepreneurship. The results show that a firm’s absorptive capacity in tandem with other organisational factors may generate higher levels of corporate entrepreneurship.     

Decision Comprehensiveness and Corporate Entrepreneurship: The Moderating Role of Managerial Uncertainty Preferences and Environmental Dynamism

Although comprehensiveness is considered among the most salient and enduring strategic decision-making characteristics in organizations, its influence on firm behaviour has remained elusive. As a first step, our study builds and tests a model that specifies the influence of comprehensiveness on the firm's pursuit of corporate entrepreneurship. Our core argument is that while comprehensiveness helps decision-makers gain the knowledge needed to escape the ignorance and overcome doubt associated with this pursuit, this beneficial influence is conditional upon managerial uncertainty preferences, together with the level of dynamism in the external environment. Findings from a large sample study of CEOs from 349 SMEs provide general support for this argument and associated hypotheses.     

Banks' business strategy and environmental effectiveness: The monitoring role of the board of directors and the managerial incentives

The purpose of this paper is to investigate how banks' climate strategies affect environmental performance. To extend this line of research, the carbon disclosure of worldwide banks is examined. In particular, we focus on specific governance strategies: board of director monitoring and managerial incentives. Panel data are employed on a sample taken from 330 bank-year observations in the period after the financial crisis. The results show an increase in environmental performance through the implementation of managerial incentives related to climate change, associated with the highest level of responsibility of the board of directors. Overall, the present study contributes to both the academic literature and corporate governance, highlighting the importance of banks' business strategy on climate change risks and opportunities with respect to environmental performance goals.     

SFAS 133 and income smoothing via discretionary accruals: The role of hedge effectiveness and market volatility

This study investigates whether the Statement of Financial Accounting Standard No. 133 (SFAS 133) influences firms’ income smoothing via discretionary accruals decisions. Moreover, we investigate whether the level of hedge effectiveness and market volatility affects the impact of SFAS 133 on firms’ income smoothing via discretionary accruals decisions. Consistent with our predictions, we find a significant increase in income smoothing via discretionary accruals activity after the adoption of SFAS 133. We also find that income smoothing via discretionary accruals after the adoption of SFAS 133 increases with the level of hedge ineffectiveness. By contrast, we find that perfect hedgers do not engage in more income smoothing via discretionary accruals after the adoption of SFAS 133. Finally, we find that the higher the market volatility is the larger the income smoothing is via discretionary accruals after the adoption of SFAS 133. This implies that higher market volatility makes it more difficult for firms to meet hedge accounting requirements, thereby increasing unmanaged earnings volatility and income smoothing. Prior studies suggest that regulators are expressing concern about the effect of earnings management on the quality of reported earnings and the functioning of capital markets (e.g., Barton, 2001 ). In this regard, our findings imply that accounting standard setters should take into account the trade‐off between transparency and income smoothing.