When does Ethical Code Enforcement Matter in the Inter-Organizational Context? The Moderating Role of Switching Costs

Drawing on signaling theory, we suggest that a supplier’s enforcement of ethical codes sends signals about the supplier that affect a buyer’s decision to continue their commitment to the supplier. We then draw on side-bet theory to hypothesize how switching costs influence the importance of a supplier’s enforcement of ethical codes in predicting a buyer’s continuance commitment to a supplier. We empirically test our model with data from 158 purchasing managers across three manufacturing industries. Results confirm the connection between ethical code enforcement and continuance commitment, but suggest that a supplier’s enforcement of ethical codes matter less when switching suppliers is perceived as too costly.     

Legal Protection,Corruption and Private Equity Returns in Asia

Although trustworthiness has been described as a source of competitive advantage, its value extends to organizational governance and wealth creation. We identify the importance of the commitment–compliance continuum in the decision to trust and note that trustworthiness is a subjective perception viewed through each person’s mediating lens. That lens and each person’s interpretation of the social contract impact one’s commitment to cooperate. We suggest five propositions that integrate trustworthiness, governance, and wealth creation.     

Corporate Autonomy and Buyer–Supplier Relationships: The Case of Unsafe Mattel Toys

This article analyses supplier–buyer relationships where the suppliers adapt to the buyers’ needs and expectations to gain mutual advantages. In some cases, such closely knit relationships lead to violations of the autonomy of one or both partners. A concept of corporate autonomy (CA) is developed to analyze this problem. Three different facets can be distinguished: rule autonomy, executive autonomy, and control autonomy. A case study of Mattel’s problems with lead-contaminated toys produced in China shows that the CA of buyer and supplier can be restricted as a result of a dysfunctional partnership involving a moral dilemma.     

Determinants of related-party transactions: Evidence from China’s listed companies during 2002–2006

This study attempts to shed light on the relationship between related-party (RP) transactions and internal governance factors of China’s listed companies. An analysis of a sample of 69 049 RP transactions during 2002–2006 reveals strong evidence that the likelihood of RP transactions is higher for companies with high concentration of ownership, but lower for companies with strong bargaining power of the second and third largest shareholders. There is also clear evidence showing that large compensation for outside directors is associated with greater size of RP transactions, whereas increased average compensation for the three top executives tends to decrease the number of RP transactions. Our results also reveal that the pluralism arraignment, i.e. the same person holding both positions of the board chairman and the chief executive, increases the size of RP transactions significantly. This finding suggests that pluralism reduces the balance of power in corporate governance.      

Corporate Social Responsibility and Employee–Company Identification

This study proposes two identification cuing factors (i.e., CSR associations and CSR participation) to understand how corporate social responsibility (CSR) relates to employees’ identification with their firm. The results reveal that a firm’s CSR initiatives increase employee–company identification (E–C identification). E–C identification, in turn, influences employees’ commitment to their company. However, CSR associations do not directly influence employees’ identification with a firm, but rather influence their identification through perceived external prestige (PEP). Compared to CSR associations, CSR participation has a direct influence on E–C identification. On the basis of these findings, it is argued that CSR performance can be an effective way for companies to maintain a positive relationship with their employees.     

打开领导有效性的黑箱:领导行为和领导下属关系研究

This study is an integration of the leader-focused perspective and leader-follower exchange perspective, attempting to understand the relationship between leadership styles, leader-member relationship, and their joint impact on followers’ effectiveness, satisfaction, extra effort and organizational commitment. 615 respondents from five big pharmaceutical companies in China participated in this study. Results show that: (1) transformational leadership has positive influence on followers’ effectiveness, satisfaction, extra effort and organizational commitment; contingent reward has positive influence on effectiveness; management-by-exception leadership has negative influence on satisfaction; laissez-faire leadership has negative influence on effectiveness and satisfaction. (2) Leader-member exchange partially mediates the relationship between transformational, contingent reward, management-by-exception, laissez-faire leaderships and followers’ effectiveness, extra effort, satisfaction and organizational commitment. Translated and revised from Guanli shijie 맜理世界(Management World), 2006, (9): 87–93     

Platforms for Cross-Sector Social Partnerships: Prospective Sensemaking Devices for Social Benefit

We employ a Layers of Workplace Influence theory to guide our study of whistleblowing among public accounting audit seniors. Specifically, we examine professional commitment, organizational commitment versus colleague commitment (locus of commitment), and moral intensity of the unethical behavior on two measures of reporting intentions: likelihood of reporting and perseverance in reporting. We find that moral intensity relates to both reporting intention measures. In addition, while high levels of professional identity increase the likelihood that an auditor will initially report an observed violation, the auditor’s commitment to the organization drives perseverance in reporting. Results may assist organizations and researchers in their understanding of antecedents to whistleblowing as a form of corporate governance and of the effect of these antecedents on whistleblowing perseverance.     

Does Good Governance Matter to Institutional Investors? Evidence from the Enactment of Corporate Governance Guidelines

Corporate governance guidelines are a mechanism that a firm can enact which should reduce agency costs and better align the interests of boards and the suppliers of capital. This study examines stock price reactions primarily attributable to institutional investors occurring when corporations announce the enactment of corporate governance guidelines. A final sample of 77 firms was derived from the first announcement of corporate governance guidelines exclusive to the SEC-EDGAR database. The results indicate that good governance does matter. Firms that announced the enactment of corporate governance guidelines experienced increased stock prices following the announcements. There was an immediate (days 1–4) reaction for firms that provided all or part of the guidelines’ substance; a delayed (days 8–10) reaction occurred for those firms that only referenced the guidelines’ enactment. Additionally, firms with either a potentially greater following or that had a previous history of acrimonious relations with stakeholders were rewarded by the announcement of the enactment of guidelines.     

Corporate Responsibility in Scandinavian Supply Chains

This article examines corporate responsibility in the supply chains of four of the largest Scandinavian multinational corporations – IKEA, Nokia, Novo Nordisk, and StatoilHydro – and offers two key findings. First, these Scandinavian companies have all implemented responsible supply chain practices where suppliers in developing nations, and the communities of these suppliers, are engaged as key stakeholders and treated as partners. Second, these supply chain practices all share the common bond of having honesty and the establishment of trust-based relationships at their foundation. As a result, these Scandinavian companies have developed a “cooperative advantage” in their ability to form successful, long-term partnerships in their respective supply chains.     

The Influence of an Organisation’s Corporate Values on Employees Personal Buying Behaviour

This article explores the influence that an organisation’s corporate values have on employees’ behaviour and values both within and outside the work environment. In particular, it focuses on the impact of these values on the personal buying behaviour of employees. The empirical research was undertaken within a case study organisation that produces wine in Spain and involved interviews with senior management, an analysis of company documentation, as well as group discussions with employees supported by an employee survey. The article argues that an organisation’s corporate values influence not only its employees’ behaviour within the work environment, but also impacts on their global values system outside of the work environment. In particular, this was evident within the employees’ buying behaviour practices in relation to supplier loyalty and environmental concern. This has implications for business ethics as an organisation’s value system may go beyond the purely business context. Organisations need to be aware of their impact on employees’ behaviour outside of the work environment; this is particularly the case for multinational companies working across many cultures.     

Corporate Governance Reforms: Redefined Expectations of Audit Committee Responsibilities and Effectiveness

Comprehensive regulatory changes brought on by recent corporate governance reforms have broadly redefined and re-emphasized the roles and responsibilities of all the participants in a public company’s financial reporting process. Most notably, these reforms have intensified scrutiny of corporate audit committees, whose role as protectors of investors’ interests now attracts substantially higher visibility and expectations. As a result, audit committees face the formidable challenge of effectively overseeing the company’s financial reporting process in a dramatically changed – and highly charged – corporate governance environment. This paper discusses the new expectations of audit committee responsibilities and effectiveness in the wake of corporate governance reforms, key challenges, “whistleblower” provisions and shortcomings, and provides some directions for future research.     

Embedding CSR Values: The Global Footwear Industry’s Evolving Governance Structure

Many transnational corporations and international organizations have embraced corporate social responsibility (CSR) to address criticisms of working and environmental conditions at subcontractors’ factories. While CSR ‹codes of conduct’ are easy to draft, supplier compliance has been elusive. Even third-party monitoring has proven an incomplete solution. This article proposes that an alteration in the supply chain’s governance, from an arms-length market model to a collaborative partnership, often will be necessary to effectuate CSR. The market model forces contractors to focus on price and delivery as they compete for the lead firm’s business, rendering CSR observance secondary, at best. A collaborative partnership where the lead firm gives select suppliers secure product orders and other benefits removes disincentives and adds incentives for CSR compliance. In time, the suppliers’ CSR habit should shift their business philosophy toward pursuing CSR as an end in itself, regardless of buyer incentives and monitoring. This article examines these hypotheses in the context of the athletic footwear sector with Nike, Inc. and its suppliers as the specific case study. The data collected and conclusions reached offer strategies for advancing CSR beyond the superficial and often ineffectual ‹code of conduct’ stage.     

组织学习及其作用机制的实证研究

The organizational learning construct and its effective mechanism are two research issues. This study is based on a survey of 908 managers and employees from 43 companies in different regions of China. The results of exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) show that organizational learning in Chinese enterprises is a multi-dimensional construct comprising of inter-organizational learning, organization-level learning, collective learning, individual learning, exploitation learning and exploration learning. The results of hierarchical linear modeling (HLM) reveal that the unit-level dimensions of organizational learning affect employee’s satisfaction and emotional commitment through the mediation of individual learning. In organizations characterized by high level of organization-level learning and low level of exploitation learning, there is a strong correlation between employees’ satisfaction/emotional commitment and their turnover intention. Hierarchical regression analysis (HRA) also indicates that organizational learning affects perceived organizational financial performance through the full mediation of organizational innovation. Some implications are discussed for organizational learning research and practice. Translated and revised from Guanli Kexue Xuebao 管理科学学报 (Journal of Management Sciences in China), 2007, 10(5): 48–61     

Supplier price concessions: A longitudinal empirical study

The competitive nature of today’s business-to-business markets requires companies to continually look for ways to reduce costs; one of the easiest of which is to demand price reductions from suppliers. In this research, price reduction demands and the corresponding concessions given by 238 suppliers to the six major North American Automotive original equipment manufacturers during 2001–2007 are analyzed utilizing a simultaneous equation model. The three stage least squares estimates indicate that suppliers are willing to give higher price concessions when buyers align specific interfacing characteristics and processes with their suppliers so that the suppliers perceive greater opportunities for future business and profit. These results provide, for the first time, an understanding of the dynamic nature of the impact of buyer–supplier relational components on supplier price concessions.

An evaluation of corporate governance evaluation, governance index (CGI NK ) and performance: Evidence from Chinese listed companies in 2003

In the present paper, based on samples of 2003, empirical analyses of Corporate Governance Index (CGI ^NK ) and its six dimensions of listed companies in China, the index of controlling shareholders’ behaviors, board governance index, top management governance index, information disclosure index, stakeholders’ governance index, and supervisors committee governance index, are carried out and the results show that CGI ^NK is positively associated with the return on assets (ROA), net assets per share (NAPS), earnings per share (EPS), operating cash flow per share (OCFPS), total assets turnover (TAV), rate of total assets growth (ITA) and Z-score. These indicate that good corporate governance mechanisms improve profitability, stock expansion ability, operating efficiency, growth and development potential, as well as financial flexibility and safety of listed companies. Corporate governance mechanisms of controlling shareholders, board of directors, top management, information disclosure, stakeholders and supervisors committee are largely responsible for decision-making and decision-execution mechanisms, and furthermore, they have direct and profound effects on the performance and value of listed companies. Translated from Zhongguo Gongye Jingji 中国工业经济 (China Industrial Economy), 2006, (4): 98–107     

Environmental and Economic Dimensions of Sustainability and Price Effects on Consumer Responses

The lack of attention to sustainability, as a concept with multiple dimensions, has presented a developmental gap in green marketing literature, sustainability, and marketing literature for decades. Based on the established premise of customer–corporate (C–C) identification, in which consumers respond favorably to companies with corporate social responsibility initiatives that they identify with, we propose that consumers would respond similarly to companies with sustainability initiatives. We postulate that consumers care about protecting and preserving favorable economic environments (an economic dimension of sustainability) as much as they care about natural environments. Thus, we investigate how two sustainability dimensions (i.e., environmental and economic) and price can influence consumer responses. Using an experimental method, we demonstrate that consumers favor sustainability in both dimensions by giving positive evaluations of the company and purchase intent. In addition, consumers respond more negatively to poor company sustainability than to high company sustainability. In comparison, consumers respond more negatively to the company’s poor commitment to caring for the environment than to the company’s poor commitment to economic sustainability. We also find that consumers do not respond favorably to low prices when they have information about the firm’s poor environmental sustainability. Finally, we find support for an interaction effect between consumer support for sustainability and corporate sustainability; that is, consumers evaluate a company more favorably if the company shares the consumers’ social causes. Overall, we conclude, from our empirical study, support for the idea that consumers do respond to multiple dimensions of sustainability.     

Environmental Respect: Ethics or Simply Business? A Study in the Small and Medium Enterprise (SME) Context

In recent years there have been ever-growing concerns regarding environmental decline, causing some companies to focus on the implementation of environmentally friendly supply, production and distribution systems. Such concern may stem either from the set of beliefs and values of the company’s management or from certain pressure exerted by the market – consumers and institutions – in the belief that an environmentally respectful management policy will contribute to the transmission of a positive image of the company and its products. Sometimes, however, ethics and market rules are not enough to deal with this situation and specific laws must be considered. This is the case when companies base their activity on the ‹ethics of self-interest’ concentrating their efforts on projecting an adequate image – e.g. environmental respect – rather than fundamentally behaving in environmentally respectful ways. This article, taking as reference the SME context, discusses the reasons for implementing environmentally friendly systems. Both ethics and business seem to be relevant and, therefore, a certain balance between market and interventionism seems to be necessary.     

Product market competition, board structure, and disclosure quality

This paper empirically investigates the mechanism through which product market competition (PMC) affects disclosure quality of listed companies. Based on a sample of listed companies with disclosure quality report from Shenzhen Stock Exchange during 2003–2008, PMC is found to display a U-shaped relationship with disclosure quality, which demonstrates the strategic effect of PMC on disclosure quality. PMC is also found to enhance the board of directors’ role in disclosure quality, which demonstrates the governance effect of PMC on disclosure quality. These results enhance the understanding of the role of PMC on disclosure.     

Corporate Identity,Ethics and Reputation in Supplier–Buyer Relationships

Multi-national corporations (MNCs) have been criticised for not behaving ethically in some situations, which could have a negative effect on their reputation. This study examines the ethics of a large MNC in its relationship with its suppliers. A brief literature review of corporate identity, business ethics and buyer–supplier relationships is undertaken. The views and perceptions of the buying staff and the suppliers to a large South African MNC are obtained and discussed. The results indicate that this MNC has a good corporate reputation among both its suppliers (an important stakeholder) and its own buying department. The existence and implementation of formal codes of ethics was found to be a necessary, but not sufficient condition for good ethical practice. Candid relationships with suppliers emerged as a second and important factor. Ethical perceptions of buyers by suppliers are driven by the management of corporate identity, through the elements of ethical standards and candid relationships. We present a model of corporate identity/reputation in Buyer–Supplier Relationships. Michael Bendixen is a Professor of Research Methodology and Statistics at the H. Wayne Huizenga School of Business at Nova Southeastern University, Florida. His research interests include business ethics, governance and culture. His articles have appeared in the European Journal of Marketing, Industrial Marketing Management, Journal of Business Research, Journal of International Business Studies and Journal of Marketing Management amongst others. Russell Abratt is a Professor of Marketing at the H. Wayne Huizenga School of Business at Nova Southeastern University, Florida. His research interests include corporate identity management and business ethics. His articles have appeared in the Journal of Business Ethics, Journal of Business and Psychology, European Journal of Marketing, Journal of Marketing Management, Industrial Marketing Management, and Business Horizons amongst others.     

The Agency Problems Embedded in Firm’s Equity Investment

We find that agency problems are embedded in firm’s excess and abnormal equity investments that are mainly dictated by controlling shareholder’s motives and ethical choices manifested in ownership and board structure. The excess equity investment is gauged with respect to industry average. The abnormal equity investment is specifically referred to the number of nominal investment companies that are fully controlled by the controlling owners while subject to little governance. Our empirical evidences of 345 Taiwanese non-financial listed firms show that firm’s excess and abnormal equity investments are negatively correlated with controlling shareholder’s cash flow rights while are positively correlated with the control–cash flow deviation, and board affiliation. The results are supportive of the positive incentive hypothesis and the negative entrenchment hypothesis put forth by La Porta et al. (2002, Journal of Finance 57, 1147–1171) and Claessen et al. (2002, Journal of Finance 57, 2741–2742). The negative relation between equity investment and firm’s value further supports the agency postulation that corporate excess and abnormal equity investments represent a leeway for controlling shareholder to exploit wealth of minority shareholders. This study potentially contributes to the literature of business ethics by portraying an empirically testable linkage from controlling owner’s ethical choices to his actions and therefore firm’s value. Yin-Hua Yeh, Ph.D., is Professor and Director of the Graduate Institute of Finance at Fu-Jen Catholic University (FJU) in Taiwan. He is also the Director of the Center for Corporate Governance and Business Ethics at FJU. His main research and teaching areas are corporate governance, corporate finance, and merger and acquisition. Tsun-Siou Lee, Ph.D., is Professor of Finance at National Taiwan University. His main research and teaching areas are corporate governance, futures and options, and financial innovation. Pei-Gi Shu, Ph.D., is Professor of Business Administration at Fu-Jen Catholic University in Taiwan. He is also the Vice Dean of Management College at FJU. His main research and teaching areas are mutual funds and behavioral finance.