Corporate Services in Poor Areas: A Case Study with Participative Multistakeholder Involvement

Corporations that provide services such as water, sewage disposal and electricity in poor countries or deprived areas face political, social and economic problems that make it difficult to simultaneously favor the interests of shareholders and other relevant stakeholders. In this paper a case study is presented in which a company, Aguas Argentinas, promoted innovative and participative multistakeholder involvement that produced benefits for all parties. Key factors in the model employed were the generation of credibility and trust, adaptive management to the specific situation of deprived areas, stakeholder dialogue, and participation. It is argued that understanding corporate citizenship as reciprocity and common effort in solving interdependent problems were fundamental to the success of the company in this case.     

The financial crisis,investor activists and corporate strategy: will this mean shareholders in the boardroom?

The concept of stakeholder engagement is gaining increasing attention in the mainstream media and may feature as part of a corporation’s strategy for corporate social responsibility. Not only are boards considering how they might engage with key stakeholders, but stakeholders are also pursuing greater participation in the strategic decisions of companies in which they invest. While this is an emerging concept in companies governed by unitary boards, as in North America, the issue of stakeholder engagement in various forms is also entering debate in other countries around the world. In general, however, the idea of shareholder or stakeholder representation on the boards of most UK and Commonwealth companies is anathema. Forces now influencing the development of strategies for stakeholder engagement and the rise of active investors include changing corporate governance rules which give investors more power in the election of directors, the increasing role of pension plans and hedge fund investment groups which have produced investors who keep a close eye on company performance and value, and a sluggish or turbulent stock market as a result of the financial crisis initiated by the credit crunch in the sub-prime mortgage markets. In this paper the phenomenon of stakeholder representation is examined and results of a recent survey conducted among a large sample of New Zealand directors are presented. The findings suggest that these traditionally oriented boards are increasingly inwardly focused and are without an agenda for building and managing shareholder and stakeholder relations. Accordingly, such boards are unlikely to regard stakeholder engagement as a serious strategic issue and are thus also likely to miss significant opportunities in the changed business environment to benefit from stakeholder support.     

上市公司高管更替模式对企业绩效的影响

本文以上市公司2005-2009年间高管更替数据为研究样本,引入了高管团队重组和战略连续性作为中介变量,探讨了不同高管更替模式对企业绩效的影响路径。研究结果表明,上市公司高管强制更替外部聘任对高管团队重组有正向影响,对战略连续性有负向影响,对企业绩效有负向影响,其中高管团队重组和战略连续性在强制更替外部聘任与企业绩效之间起到中介效应;上市公司高管强制更替内部聘任对高管团队重组影响不显著,对战略连续性有正向影响,对企业绩效有正向影响,其中战略连续性在强制更替内部聘任与企业绩效之间起到中介效应;另外,高管团队重组对企业绩效有负向影响,战略连续性对企业绩效有正向影响。     

Pyramids and the separation between direction and control of non-financial Italian family companies

This paper uses a multiple case study analysis of ten Italian business groups controlled by families to answer the following research questions: Does the controlling shareholder, through the parent company at the top of the pyramidal group, always exercise the direction activity of the subsidiaries? If not, why does the parent company not exercise that activity, delegating it to its subsidiaries? What is the degree of separation between control and direction within the group? A high percentage of our sample declares not to be directed by the parent company. However, the presence of family members on the subsidiaries’ boards and the low boards’ independence makes the separation between direction and control more apparent than real. The credibility of the separation is questioned mostly for those non-directed subsidiaries that operate in the same sector. Our analysis suggests some elements, in order to understand in which cases the direction activity by the parent (or its delegation to the subsidiaries) should be interpreted positively or negatively in terms of controlling shareholder expropriation, by proposing to use the degree of separation between direction and control as a proxy to assess indirectly the degree of that expropriation.     

并购后高管变更、合法性与并购绩效——基于制度理论的视角

并购后的高管变更对于企业的并购绩效具有重要的影响,但目前的研究结论没有取得一致性。本文基于制度理论的视角引入合法性的概念,通过123份并购样本实证分析了并购后高管变更、合法性以及并购绩效之间的关系。研究结果显示:并购后高管变更与并购的外部合法性和内部合法性之间均存在显著的负相关;而外部合法性和内部合法性对于并购绩效具有显著的积极作用。本研究结论对于我国企业的并购后高管变更决策以及如何提升并购绩效具有理论指导意义。     

Fiduciary obligation and the importance of an environmental accounting standard

Financial measurement is currently the key to the analysis of corporate performance. To date, analysts have not considered the environmental impact of corporate behavior—much less a wider view of social and economic impacts. Environmental sustainability reports, though still an emerging reporting tool, can begin to address the obligations of fiduciaries to look beyond short-term financial reports to a more complete understanding of a firm's long-term impact on worlwide issues of environmental, social and economic well-being. Environmental reports can frame the strategic planning of a company within the context of its natural supply chains, the approval of its customers, and the world in which workers play and live. Successes and failures are measured and reported to allow managers to adjust plans as necessary. The competitive instinct of corporate managers can be tapped through comparative reports to catalyze invention or imaginative programs that save environmental and corporate resources. Joan Bavaria discusses corporate transparency in terms of environmental reports, through the Global Reporting Initiative that is being organized by CERES (The Coalition of Environmentally Responsible Economies). One potential result of a common reporting format would be that investors, operating in a climate of expanded concepts of fiducial responsibility, could make choices consistent with the goals of sustainable enterprise.     

Information security governance: pending legal responsibilities of non-executive boards

The study shows that a structural conflict of interest in non-executive boards exists due to missing corporate governance structures and a lack of awareness for legal issues with regard to information security risks. Non-executive boards receive information on strategic security threats as a part of their oversight function to fulfill investor interest in transparency. At the same time, they act as representatives of company stakeholders and have an interest to counteract to information security risks based on the stakeholder’s risk disposition. If not properly structured by corporate governance rules, these different interests may lead to regulatory aberrations on non-executive board level. The study analyses a Deutsche Telekom AG case where non-executive board members, employees, and journalists fell victim to a spying scandal subject to the German telecommunications secrecy law in 2005–2006. The analysis demonstrates how the handling of information security on non-executive board level bears governance risks as well as legal risks that are insufficiently addressed in corporate governance research. The paper contributes to avoid a reproduction of events in the future, by suggesting the principle of a segregation of duties on non-executive boards as well as providing an overview of relevant legislative requirements that clarify tasks of non-executive board members with regard to information security. The study therefore helps protecting corporations and their stakeholders from similar consequences of missing corporate security governance.     

Corporate social responsibility as a source of employee satisfaction

Corporate social responsibility has received an increasing amount of attention from practitioners and scholars alike in recent years. However, very little is known about whether or how corporate social responsibility affects employees. Because employees are primary stakeholders who directly contribute to the success of the company, understanding employee reactions to corporate social responsibility may help answer lingering questions about the potential effects of corporate social responsibility on firms as well as illuminate some of the processes responsible for them. To begin our chapter, we provide a brief history of scholarship on corporate social responsibility and highlight some of the major challenges researchers in this area currently face. We then discuss why corporate social responsibility may represent a special opportunity to influence employees’ general impression of their company. Next, we identify four distinct paths through which corporate social responsibility may affect employees’ relationship with their company that correspond to four universal psychological needs: security, self-esteem, belongingness, and a meaningful existence. Finally, we offer an agenda for micro-level research on corporate social responsibility.     

Managing stakeholder pressures: Toward a typology of corporate social performance profiles

Why do some firms ignore some stakeholders while courting others? We propose two key drivers of firms' social postures and derive from this analysis a novel typology of corporate social performance (CSP) profiles. Although we expect that other drivers exist, we argue that a useful starting point for understanding any given CSP profile is to consider the pressure exerted on an organization by its stakeholders in conjunction with its level of resource endowment. Our preliminary typology identifies six distinct CSP profiles that reflect different opportunities and risks for stakeholder management: the CSP Vanguard, Opportunist, Generalist, Minimalist, Specialist, and Laggard. All else equal, the first two CSP profiles imply more nonmarket opportunities than risk, whereas we expect Laggards and Specialists to face greater risk in their responses to social and environmental issues. According to our framework, Generalists and Minimalists probably operate between these two extremes of business risk. Our conceptual analysis seeks to advance research and practice for more strategic stakeholder management.     

The Role of NGOs in Ameliorating Sweatshop‐like Conditions in the Global Supply Chain: The Case of Fair Labor Association (FLA), and Social Accountability International (SAI)

Over the last 20+ years, globalization has made international trade and investment more efficient and productive. In the absence of coordinated global regulatory regimes, it has also made multinational corporations (MNCs) impervious to social concerns in the countries where they operate. There is considerable debate in the academic, political, and business arena as to the causes of the apparently inequitable distribution of benefits between labor and capital. Notwithstanding, the relative merits of this debate, and facing tremendous societal pressure, companies have adopted voluntary codes of conduct to ensure that workers making products for them in poor and developing countries are protected from hazardous working conditions and receive wages that meet local laws and market conditions. These codes, however, suffer from a lack of credibility and proof of substantive compliance. A new type of nongovernmental organization (NGO) has emerged that monitors a company's compliance with prespecified standards and provides assurance to the external stakeholders that the company has fulfilled its voluntary obligations. From an historical perspective, this has been an innovative phenomenon where the monitoring organization purports to act as an honest broker to ensure all concerned that the company/industry has fulfilled its obligations. In this article, we undertake a thorough examination of two such organizations, that is, Fair Labor Association, and Social Accountability International, that have played a pioneering role in bridging the gap between societal expectations and corporate performance. We examine their governance structures, operating procedures, monitoring standards, and public disclosure of findings, and above all, their success in improving the level of corporate compliance with their self‐created codes or standards. Unfortunately, our findings and conclusions are disappointing. In our view, the two groups have mostly failed to meet their avowed goals. Rather than using their NGO status to help companies improve their code compliance, they have suffered from managerial capture and have been reduced to corporate apologists.     

International acquisition performance and experience: A resource-based view. Evidence from French acquisitions in the United States (1988–2004)

Does an acquirer with extensive acquisition experience outperform an acquirer with little or no acquisition experience? Does an acquirer with varied growth mode experience (i.e. a company undertaking not only acquisitions but also joint ventures) outperform a company that has very homogeneous experience (i.e. a company growing exclusively through acquisitions)? The main purpose of our article is to examine these two questions in-depth and to attempt to provide some answers. The questions led us to analyze the valuation effect of the acquirer's experience for 291 French acquisitions in the United States. The results were mixed with regard to the relationship between acquisition performance, acquisition experience and heterogeneous experience. On the one hand we found no relationship between the acquisition performance and heterogeneous experience of French acquirers, which is not consistent with the literature on stock market valuation of homogeneous “experience trajectories” [Singh, H., Zollo, M., 1998. The impact of knowledge codification, experience trajectories and integration strategies on the performance of corporate acquisitions. Working Paper INSEAD, 98,62,SM.]. On the other hand, our findings indicate that the relationship between the acquisition performance and acquisition experience of French acquirers follows a curvilinear (inverted U-shaped) distribution.     

A fundamental approach to strategy development

The problem of developing sound business strategy is probably more difficult now than it has been at any time since the war. In the midst of conflicting pressures of inflation, recession, unemployment, business failures, and social and political upheaval, today's businessman faces an environment which is both unfamiliar and uncertain. The lack of predictability concerning economic affairs can make it seem impossible to plan effectively for the future. Yet without sound strategy today, corporate survival itself may be called into question. What should be done?In this, the first of two articles, the author suggests that the key to strategy development now is to focus more than ever before on ‘fundamentals’. For the individual business, market share appears to be paramount, as is shown by the ‘experience curve effect’, a concept developed by the Boston Consulting Group in the course of its international work in advising companies on corporate strategy problems. Relative competitive position thus becomes the required simple but fundamental strategic goal. However, the quest for a superior market share must take place within the confines of an appropriately defined strategic business segment.In a further article in the February 1977 issue of LRP the author will go on to expand these conclusions concerning individual businesses, considering their implications for the sound development of strategy for the multi-business company.     

Strategic planning in a turbulent international environment

What we have argued in this paper is that fundamental changes in the multinational corporate environment are taking place raising proaches to multinational environmental surveillance and multinational strategic management. We arenot offering this as a forecast of what the future will bring. Instead, we are proposing this framework to point to the need for greater environmental orientation and adaptation. MNCs are now in a double squeeze and managers must unlearn past models and criteria to understand problem. But the challenge is more than conventional corporate planning. The problematique can be decribed as one of multinational strategic management. In the area of environment we need research and learning to address three basic questions:What is the MCE? What concepts of the environment should be considered for strategic management? What parameters should be monitored? What are some consequences of the concept of interdependence and turbulence?What multinational environmental surveillance should be done? What methodologies are needed? How can these be made operational? How can the corporation be educated to behave in the new mode required in view of these changes?What new strategic issues and challenges lenges emerges from the MCE? What new demands must be factored into the multinational corporate planning processes? What new content does the changing environment procedure? How can the broadening field of opportunities and threats be systematically mapped and understood?     

Beyond the “silo view” of strategic management and corporate governance: evidence from Fiat,Telecom Italia and Unicredit

While corporate governance and strategic management have for a long time suffered from artificial separation and, therefore, generally been tackled in a secluded manner, their combined organizational impact makes them stringently related to one another in the firms’ evolution. In this paper, we argue that, transcending the “silo view” of corporate governance and strategic management, time has come to acknowledge that, depending on circumstances and time periods, within a firm is possible to detect the relative dominance of corporate governance over strategic management, rather than the leadership of strategic management over corporate governance. Drawing on a contingency approach, we dissect the relationships (and the mechanisms that control it) between the strategic function (i.e., which defines the firms’ strategy and supervisions its implementation) and the governance function (i.e., the congruence assessment between the firm strategy selected and the interests of the ownership and of other relevant stakeholders represented in the board of directors and the effectiveness appraisal of the entrepreneurial action). Then, by performing a thorough retrospective qualitative analysis of three relevant case-histories of Italian firms (Fiat, Telecom Italia and Unicredit) operating in three different industries (automobile, banking and telecommunications), we surmise that, either in corporate governance (board) oriented or in strategic management (CEO) oriented companies, the ‘real’ problems arise when the quality of corporate governance or strategic management is poor. Interestingly, we eventually suggest to adopt a value-based approach to the relationship between corporate governance and strategy that may fruitfully complement the contingency perspective taken at the onset of the work.     

Managing design and designers for strategic renewal

For producers of traditional or high-tech consumer durables seeking to differentiate themselves from their competitors, the role of the product designer is increasingly taking a key role. In fact design and designers can contribute to corporate strategic renewal, and this paper proposes a framework for understanding how this can be achieved. Building on a study of outstanding innovators in product design – names such as Apple, Alessi and Bang & Olufsen – the authors describe design-driven renewal as a four-phase process stimulated and supported by design, combining continuous product innovation with the periodic revision of the strategic course of the company. For each phase, it discusses the specific role of managers and the most common pitfalls that arise from poor management of the process.     

Key survival issues: Practical steps toward corporate environmental sustainability

Environmental pressures and growing societal commitment to the ideal of “sustainable development” pose profound strategic challenges for business. Recognition of the significance of sustainable development for business and eagerness to “do something” has lead to a number of responses from companies. The most effective corporate response is to build an environmentally sustainable business. The Environment Council through its work had developed an elegantly simple and proven approach to producing and implementing a strategy for doing this.This approach involves recognising that corporate strategic environmental opportunities and threats fall into three inter-related categories; Resources, Innovation, and Values. Applying the simple technique of a Strenghts, Weaknesses. Opportunities and Threats (SWOT) analysis of the business against these fields enables managers to establish the organisation's environmentally-driven key survival issues (KSIs) - environmental threats and opportunities to which the company has to develop the right response to ensure survival and prosperity. Every business has perhaps two or three key survival issues, though few seems to know what they are and even fewer are doing anything serious about them. The article gives some guidance on identifying key survival issues and how to develop a consistent corporate response.     

Earnings management and audit quality: stakeholders’ perceptions

This paper examines the perceptions of Libyan Commercial Banks’ (LCBs) stakeholders regarding the role of the external auditor in relation to earnings management (EM). A total of 28 semi-structured interviews were carried out with a range of LCB stakeholders comprising preparers of financial statements, users, regulators and academics. A questionnaire survey of stakeholders which yielded 102 Responses (response rate 53%) was also carried out. A variety of views were held which varied to some extent according to stakeholder group. A widely held perception amongst interviewees was that the auditor has the ability to detect EM practices but may not be able to prevent it. However questionnaire respondents were, in aggregate, more confident of the auditor’s ability to deter EM due to the influence of the audit report. The paper provides insights into stakeholders’ perceptions of the quality of bank audits. The findings are of particular relevance to regulators, and specifically, the Central Bank of Libya. Perceptions of audit quality raise questions about its guidance and regulations especially in connection with audit firm rotation. Perceptions of audit quality, and therefore, of the credibility of financial statements should be of interest to all stakeholders. The importance of the banking sector for society has been amply demonstrated in recent years. A well-functioning audit function is a key component of its regulation. To the best of our knowledge, this paper is the first to examine issues related to banks’ audit quality and audit firm rotation in Libya.     

Why ownership matters

The main argument of this article is that corporate planners have tended to concentrate on subjects such as control of business strategies, financial management and global economic assessment; they have paid too little attention to the ownership of corporate entities. Apart from the overwhelming economic and social arguments in favour of dispersed ownership, there is increasing evidence that companies which adopt a positive planning approach to the ownership of their business will derive wider benefits. Much more statistical and attitudinal evaluation is required; individual companies need to support the macro-work of academic research with detailed micro-studies at the company level. If these studies continue to support the basic argument, there are positive steps which each company will be able to take to support the cause of wider ownership.     

Strategy and the “business portfolio”

In this article the author goes on to develop the conclusion reached in his previous article which appeared in the December edition of Long Range Planning. These conclusions concerned the requirements for strategic success for an individual business, here they are developed into their implications for strategy development in the typical multibusiness company.It is argued that relative competitive position and growth are the two fundamental parameters which must be considered in determining the strategy that an individual business should follow when viewed within the context of the company's overall ‘business portfolio’. The likely patterns of business strategy which will lead to overall corporate success are discussed and contrasted with those which can lead to disaster.The key is that strategies should be made to differ widely from business to business, as a function of the growth and relative competitive position of each business and the company's overall resource position particularly with respect to cash. The ‘across the board’ defensive measures which many companies have adopted in recent years as their response to the pressures of inflation and recession are therefore argued to be singularly inappropriate for the long term. The ‘business portfolio’ concept provides a superior approach for developing the differentiated strategic business objectives which are necessary for any company to make the most of its opportunities.     

Coaching im Mittelstand – Wer ist der Mittelstand?

Medium-Sized companies usually have a specific organizational structure and corporate culture. This has implications for Human Resource Management, which is less systematized in medium-sized companies in comparison to larger organizations. What does ?medium-sized business“ mean and who is meant with that? Which typical values form its culture? What are the specific conditions for coaching in medium-sized businesses? Does a coach need special qualifications for this sector? This paper attempts to answer these questions and stays close to the everyday business of medium-sized companies. Concrete Examples will explain specific topics and coaching solutions for medium-sized businesses.