Balancing the trade-off between learning prospects and spillover risks: MNC subsidiaries’ vertical linkage patterns in developed countries

This paper investigates local vertical linkages of foreign subsidiaries and the dual role of such linkages as conduits for learning as well as potential channels for spillovers to competitors. On the basis of data from 97 subsidiaries, we analyze the quality of such linkages under varying levels of competition and subsidiary capabilities. Our theoretical development and the results from the analysis document a far more complex and dynamic relationship between levels of competition and MNCs’ local participation in knowledge intensive activities, i.e. learning and spillovers, than previous studies do. We find a curvilinear relationship between the extent of competitive pressure and the quality of local linkages confirming our argument of a trade-off between learning prospects and spillover risks. Furthermore, the level of subsidiary capabilities moderates this relationship.     

Corporate political activity in less developed countries: The Volta River Project in Ghana, 1958–66

The article expands existing categorisations of political and economic governance by including literature on less developed countries (LDCs). In four consecutive negotiations between the US multinational Kaisers and the US and Ghana governments in the early 1960s, it is argued that the company reached levels of influence that are at odds with existing explanations. In order to understand corporate political activities in LDCs, analysis needs to go beyond static factors (political risk) and include dynamic factors such as diplomatic relations and ‘arenas of power’, and consider the role of the investor's home country relative to the host economy.     

Business Ethics and the ‘End of History’ in Corporate Law

If social scientists take natural science as a model, they may err in their predictions and may offer facile ethical views. MacIntyre assails them for this, but he is unduly pessimistic about business, and in rejecting the separation thesis he raises some difficulties about naturalism. Aristotle’s views of the good life and of the close relationship between internal and external goods provide a corrective to MacIntyre, and in fact suggest how virtues can support social capital and thus prevail within and among firms in competitive markets. Aristotle’s views are not necessarily inimical to those underlying modern democratic capitalism, but they raise questions about the limits to the good life. The separation thesis misses the importance of addressing the questions with both empirical and ethical resources.     

The best and the brightest or the least successful? Self-employment entry among male wage-earners in Sweden

This paper analyzes self-employment entry among Swedish-born male wage-earners. Is it the best and the brightest or the least successful that become self-employed? The residual from an income regression is used as an indicator of who belongs to which group. We find that both wage-earners who receive a lower income than predicted, i.e. have a negative residual, and those who receive a higher income than predicted, i.e. have a positive residual, are more likely to become self-employed than those who receive an income close to the predicted one. However, splitting self-employment into different types depending on corporate form and number of employees, we find that the self-employed are drawn from both tails of the residual distribution only if it is a matter of unincorporated firms. Wage-earners who become self-employed and start an incorporated firm are only drawn from the top of the residual distribution. Using self-employment income and turnover as measures of self-employment performance, we find a positive linear relationship between the income residual and performance.     

Measuring reputation in global markets—A comparison of reputation measures’ convergent and criterion validities

Corporate reputation has become one of the most important intangible assets for maintaining and enhancing firms’ competitiveness in the global marketplace. Researchers have shown considerable interest in measuring the corporate reputation construct, resulting in a lack of consensus on valid measurement approaches. Against this background, we discuss commonly used reputation measures from a conceptual as well as theoretical perspective, and empirically compare them in terms of convergent validity and criterion validity. By examining the measures’ psychometric properties, both theoretically and empirically, this study provides guidance for their reasonable application in business research and practice.     

Conflict and Innovation in International Joint Ventures: Toward a New Sinified Corporate Culture or ‘Alternative Globalization’ in China

Deng Xiaoping's open-door economic policy provides an opportunity for international economic cooperation and development. Our study attempts to investigate how conflicts between Chinese workers and foreign investors as manifested in human resources management arise, evolve and get resolved in Sino–foreign joint ventures. It hypothesizes that conflicts as such can be functional or dysfunctional and that both partners believe that it is in their best interest to resolve the conflicts. The conflict resolution process witnesses all parties engaging in a process of purposeful learning and unlearning and creating a new sinified corporate culture that best suits the evolving business culture and social milieu in China today – as China experiments with the idea of developing socialism with Chinese characteristics. The guiding conceptual framework of our study is that of convergence theory. We argue that the socio-economic and cultural convergence between China and the West has produced a common hybrid of cross-cultural innovations in China or, in a global perspective, ‘alternative cultural globalization’. This hybridizing convergence is best exemplified by the gradual localization and sinification of the Western corporate culture in Sino–foreign enterprises in China today.     

Corporate diversification and CEO turnover in family businesses: self-entrenchment or risk reduction?

Our study investigates differences in CEO turnover between focused and diversified firms to determine whether diversification strategies are necessarily associated with governance efficiency in family businesses. We find that large family CEO firms are more likely to engage in corporate diversification than are small non-family CEO firms and their CEOs are seldom replaced. Large family CEO diversified firms also have lower turnover sensitivity relative to focused firms. The results imply that the CEOs of diversified firms have entrenched themselves, thereby increasing agency costs within family businesses. However, we fail to find diversification discounts in family businesses. It is interesting that CEOs tend to diversify their businesses in order to decrease firm risk. Founding families favor risk-reducing decisions in order to maintain family wealth and prestige; suggesting that family businesses are more interested in survival than growth. Although family businesses may benefit from risk reduction, a negative relationship between diversification level and CEO turnover is still evidence of poor corporate governance. Agency theory may not completely account for the adoption of diversification strategies in family businesses and corporate diversification may weaken the effectiveness of internal monitoring mechanisms.

Chinese immigrant entrepreneurs’ involvement in internationalization and innovation: Three Canadian cases

In international entrepreneurship literature, entrepreneurs moving across borders have received less attention than other entrepreneurs. Also, only scant attention has been paid to immigrant entrepreneurs’ contributions to their organizations. This paper aims to contribute to the emerging international immigrant entrepreneurship literature by studying Chinese immigrant entrepreneurs’ roles in their firms’ international and innovative activities in Canada, China, and other countries. It is based on three cases of Chinese entrepreneurs who established businesses in Canada. We conclude that these immigrants’ experience of doing business in China and Canada, their network relationships and knowledge of these markets quickened their firms’ internationalization considerably. Moreover, these firms became active in product or service innovation as the case immigrants also involved other immigrants and locals. Consequently, immigrant entrepreneurs should actively use their connections both in their new country of residence and also in their previous home country, but to become even more successful, they should also reach beyond their ethnic ties.     

Performance,reputation, and social responsibility in the UK's financial services: a post-‘credit crunch’ interpretation

This paper's origins lie in a perceived paradox whereby companies in Britain's financial services sector were externally promoted as ‘world class’ yet on a major peer survey of company reputations performed relatively weakly. The nature of this is explored across several components of reputation and reasons for the gap suggested. Recent events are seen as somewhat resolving the paradox; low reputation has apparently been justified by crises in the sectors; however, if that were the case, it raises questions about how any gap between reputation and reality came about and who was responsible for creating a false impression.     

Alignment or entrenchment? Corporate governance and cash holdings in growing firms

This study contends that the association between corporate cash holdings and corporate governance is subject to the investment environments that firms face. For example, firms with an abundance of investment opportunities have a strong incentive to hold cash in order to maintain their competitive positions. Shareholders accept high levels of cash holdings in such growing firms if corporate governance can protect their interests. This study examines the effects of corporate governance on cash holdings for a sample of high-tech firms. The results show that CEO ownership, the directorship of venture capitalists (VCs), and independent directors play critical roles in corporate cash policy. In addition, the boards are more effective when the firms' CEOs are also their founders or when VCs hold a large stake of company shares. The effects of corporate governance are more significant in younger firms while the effects of firm-specific economic variables are more significant in older firms in the sample.     

Resistance to Change in the Corporate Elite: Female Directors’ Appointments onto Nordic Boards

In this empirical study, we investigate the variation in firms’ response to institutional pressure for gender-balanced boards, focusing specifically on the preservation of prevailing practices of director selection and its impact on the representation of women on the board of directors. Using 8 years of data from publicly listed Nordic corporations, we show societal pressure to be one of the determinants of female directorship. Moreover, in some corporations, the director selection process may work to maintain “a traditional type of board”. In such boards, demographic diversity among male members appears to be associated with a lower share of female directors, although we cannot establish wether this reflects discrimination or a desire to maintain critical competencies. With this paper we add to the theoretical understanding of the factors underlying female board appointments by adopting an institutional theory lens to study female board representation. Viewing the demands for gender-balanced boards in terms of societal pressure for the de-institutionalization of the prevailing norms and practices, we highlight preferences for maintaining established practices as a potentially important barrier to institutional change. On these grounds, we conjecture on the relationship between the gender diversity of boards and other diversity dimensions. We suggest that a board room gender quota (if implemented) is supplemented by policies to ensure the transparency of board changes, in order to prevent the crowding out of other diversity dimensions.     

Does partnering with the World Bank shield investors from political risks in less developed countries?

This study explores whether partnering with the World Bank’s International Finance Corporation (IFC) protects foreign investors from aggressive actions by host countries’ governments. Building on the obsolescing bargaining model, we theorize that host states fear that hostile actions towards IFC-supported investments will damage their relationships with the World Bank. Within this context IFC support deters host government aggression towards investments. We assess our argument using country-level panel data as well as interviews with a sample of high-level managers. Findings suggest that IFC-support helps to reduce host state aggression against investing firms.     

Take the money or run? Investors' ethical reputation and entrepreneurs' willingness to partner

Drawing on the multi-principal–agent perspective, this research models the influence of venture capitalists' reputation for ethical behavior on entrepreneurs' willingness to partner decisions. We test our model using a two-study design. Study one, a conjoint experiment, revealed that explicit knowledge of past unethical behavior negatively affects entrepreneurs' willingness to partner. Interaction effects revealed that factors previously shown to influence the entrepreneurs' evaluations—investor value-add and investment track record—become largely contingent upon and often subjugated by investors' ethical reputation. Study two, a traditional between-subjects scenario experiment, revealed that when entrepreneurs develop their own perceptions about the ethicality of an investor's prior behaviors, the ethical dimension remains highly influential. Further, we find that as the consequences of rejecting funding become more severe (e.g., possible bankruptcy), entrepreneurs become increasingly willing to partner with unethical investors. We also find that high fear of failure entrepreneurs are less willing to partner with unethical investors than their low fear of failure counterparts.     

Corporate identity management in the banking sector: effects on employees’ identification,identity attractiveness,and job satisfaction

This paper analyzes the effects of corporate identity management (CIM) on employees’ responses. Specifically, it advances previous literature by exploring how CIM dimensions affect identity attractiveness, organizational identification, and job satisfaction from the employees’ perspective. The empirical study is aimed at 293 branch managers in the Spanish banking sector, an industry facing changes in the corporate identity of many financial entities. The results show the relative importance of each dimension and help brand managers to anticipate the effects of CIM practices. Of all the dimensions, it highlights the key role of the employee–client focus strategy.     

Corporate Social Responsibility Engagement in Kenya: Bottom Line or Rhetoric?

Abstract

Over the last three decades, the concept of Corporate Social Responsibility (CSR) has sparked considerable debate in the literature on management research. While previous research on the relationship between CSR and firm performance has largely been based on data gathered in developed countries, this paper examines the relationship between CSR and firm performance in Kenya, using a sample of 352 firm-years during the period 2005–2012. CSR was measured using four dimensions relevant to Kenya: employee CSR, product/service CSR, community CSR and environmental CSR, and aggregated using my own CSR index. Firm performance was measured using both ROA and ROE. Content analysis was used to collect data from the financial reports of companies. The results indicate a positive and significant relationship between employee CSR, product/service CSR and community CSR and firm performance; environmental CSR, on the other hand, was not significant. The overall CSR index was found to be positive and significant to both measures of firm performance.     

Directors’ Roles in Corporate Social Responsibility: A Stakeholder Perspective

We propose that corporate directors are important in helping organizations deal with two major issues of stakeholders. First, directors can help manage the interests of organizational stakeholders, and second, they assist in protecting the interests of their organizations as stakeholders in society. Their contribution can be conceptualized as the directors’ roles in corporate social responsibility (DR-CSR). We identify two types of DR-CSR, organization-centered and society-centered roles. Based on a study of 120 corporate directors, we observe that the more concern that corporate directors have for stakeholders, the more likely that they will perceive the need to perform their DR-CSR effectively.     

‘Impression management’ in Chinese corporations: a study of chairperson's statements from the most and least profitable Chinese companies

The purpose of this study is to investigate whether ‘impression management’ exists in Chinese corporate annual reports. Despite flourishing in the Western context, the literature regarding impression management has not yet received any significant development pertinent to China and its cultural norms. The following question is raised: do the most profitable Chinese listed companies disclose information in their chairmen's statements in a way that is significantly different from those of least profitable companies? The results indicate impression management motives do underlie chairman's statements in the Chinese context in a number of ways, as we suggest in this contribution.     

Inducing Corporate Social Responsibility: Should Investors Reward the Responsible or Punish the Irresponsible?

Journal of Business Ethics - Investors with a pro-social or sustainability agenda increasingly attempt to influence firm managers to adopt socially responsible behavior, either through...     

Corporate Social Responsibility in Western Europe: An Institutional Mirror or Substitute?

In spite of extensive research on corporate social responsibility (CSR) and its link with economic and social performance, few studies have investigated the institutional determinants of CSR. This article draws upon neo-institutional theory and comparative institutional analysis to compare the influence of different institutional environments on CSR policies of European firms. On the basis of a dataset of European firms, we find that firms from the more liberal market economies of the Anglo-Saxon countries score higher on most dimensions of CSR than firms in the more coordinated market economies (CMEs) in Continental Europe. This result lends support to the view of voluntary CSR practices in liberal economies as being a substitute for institutionalized forms of stakeholder participation. Meanwhile, CSR tends not to mirror more institutionalized forms of stakeholder coordination. Instead, in CMEs, CSR often takes on more implicit forms. Our analysis also shows that national institutional and sectoral-level factors have an asymmetric effect – strongly influencing the likelihood of firms adopting ‘minimum standards’ of CSR, but having little influence on the adoption of ‘best practices’.