Independent directors and firm performance in family controlled firms: evidence from Indonesia

We analyse the relationship between board structure and firm performance in family‐controlled firms using a sample of Indonesian non‐financial companies. We find that the share of independent directors on the board has an insignificant relationship with firm performance. We suspect that the result is driven by the lack of institutional reforms in relation to the appointment of independent directors. Our analysis shows strong empirical support for the proposition that family control (family ownership and family involvement on the board) is negatively related to firm performance. However, the significant effect of family ownership disappears when family involvement on the board is taken into the model. This result indicates that family ownership is more detrimental to firm performance whenever the family is highly involved in control decisions. Our results suggest that Indonesia needs to implement governance reforms that prevent majority owners from exercising excessive control over firms.     

Consumer Perceptions of Sustainability: A Free Elicitation Study

While sustainability has long been conceptualized as comprising three pillars (ecological, economic, and social), extant research and practice tends to focus on the ecological dimension of sustainability. Sustainable products and services are often marketed as a proxy for “environmentally appropriate” without considering other dimensions. As a result consumers may be under the misconception that sustainability is a one-dimensional concept and the way that researchers and marketers are employing this term may be perpetuating this (mis)understanding. This research explores the way that consumers interpret this construct. The results lend support to the argument that a one-dimensional operationalization of sustainability may be underestimating the importance of the social, economic, and time dimensions in consumer perceptions.     

Male nudity in advertisements: A modified replication and extension of gender and product effects

This article explores the relatively unknown effects of male nudity in print ads on selected consumer responses. A previously used experimental design that examines different model dress levels in conjunction with two different products was replicated to test dress level, respondent, and product effects. Multivariate analysis of variance results indicated that respondent gender and dress level of the model significantly affect measures of mood, attitude toward the advertiser, attitude toward the ad, and attitude toward the brand. These findings provide important information to advertisers considering using male nudity or suggestive poses in ads and provide support for oppositesex and product congruency effects found previously in other research. She received her D.B.A. from Louisiana Tech University. Her research has appeared in theJournal of Business Ethics, Journal of Health Care Marketing, and numerous conference proceedings. His research has been published in regional journals and conference proceedings. His articles have appeared in journals such as theJournal of the Academy of Marketing Science, Journal of Marketing Research, Journal of Personal Selling and Sales Management, Journal of Advertising, Journal of Business Research, Journal of Retailing, andJournal of Business Ethics.     

Further results on comparative statics under uncertainty. A comment on Machnes

This paper re-examines the results in Machnes (1993). When a risk-averse firm faces both uncertain demand and uncertain fixed costs, the Arrow-Pratt theory of decreasing absolute risk aversion may be too weak to yield unambiguous comparative statics. Herein, it is shown that the stronger notions of risk behavior proposed by Ross (1981) and Kimball (1993) are useful in providing intuitive results in this context.     

Conceptualizing Innovation Orientation: A Framework for Study and Integration of Innovation Research*

The term innovation orientation has been frequently used in the innovation literature, but with a mix of conceptualizations and meanings. Drawing from work found in the innovation, management, and marketing literatures over the past 35 years, the concept of innovation orientation as a system is conceptualized and defined in this article. The domain of innovation orientation is delineated as a multidimensional knowledge structure and a framework for understanding innovation orientation and its consequences in an organizational context are developed. The framework defines the innovation orientation knowledge structure as composed of a learning philosophy, strategic direction, and transfunctional beliefs within an organization that define and direct the organizational strategies and actions toward specific innovation‐enabling competencies and processes. These innovation‐oriented firm competencies are in the areas of resource allocation, technology, employees, operations, and markets. The framework then explains that these appropriately developed innovation‐enabling competencies lead to innovation outcomes, specifically ideal innovation form, type, and rate that, in turn, affect firm performance. An inventory of propositions for future research that correspond to the innovation orientation concept is also presented in this comprehensive framework. This study provides two important contributions to the existing innovation literature. First, the article examines the vast innovation literature to arrive at a clear definition of the innovation orientation construct to provide a consistent conceptualization for future research. Second, the article develops a comprehensive, organized framework for understanding innovation orientation and its effects. In doing this, the framework extends the dynamic capabilities research stream by offering an explanation of how innovation orientation fosters the development of organizational competencies and makes it possible for a firm to recognize and respond to shifts in market dynamism.     

Ethical Issues in the Evolution ofCorporate Governance in China

China is establishing its corporate governance structures by emulating the stylized Anglo-American model. However, the country does not yet have the necessary formal and informal institutions, or the financial infrastructure to make these structures work effectively. Corruption, stock market manipulation, tax cheating, fraudulent dealing, all manners of plundering of state assets and the lack protection of shareholders' rights are some of the more conspicuous manifestations of the ethical issues that have emerged in this mismatch. This study shows how these issues arise in the context of the characteristics of country's economic and corporate governance development. It evaluates various potential policy responses that may be implemented to improve governance effectiveness and diminish the damage from those problems.     

Multinationals, Hedging, and Capital Structure under Exchange Rate Uncertainty

This paper examines the interplay of the financing and hedging decisions of a risk-averse multinational firm having a wholly-owned foreign subsidiary. Exchange rate risk management of the multinational firm is shown to have direct impacts on its international capital structure decision and on its currency of denomination decision. If a currency forward market exists, the multinational firm will devise its international capital structure so as to minimize the global weighted average cost of capital. Or else the multinational firm has to rely on a money market hedge through issuing more foreign currency denominated debt and less domestic currency denominated debt, thereby resulting in a higher global weighted average cost of capital. JEL Classification Numbers: D81, F23, G32     

Environmental responsibility in SMEs: does it deliver competitive advantage?

Small and medium sized enterprises (SMEs) can gain a competitive advantage and create sustainable business by adopting environmental good practices. However, the perceptions of SMEs and their approach to environmental improvements suggest that there are some fundamental misunderstandings and difficulties in achieving this in practice. A questionnaire‐based study of SMEs and their responses to the current requirements of environmental good practice was carried out in South Yorkshire. Follow‐up interviews and factory visits were also carried out. The study aimed to assess the ability of SMEs to create a competitive advantage by adopting environmental good practice and making environmental improvements to their business. The main findings were that most organizations surveyed believed environmental issues to be issues affecting their business. However, the meeting of these requirements was seen as a cost that was not transferable to customers in terms of added benefits and few organizations could show that it led to a competitive advantage. Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment.