The how and why of a firm’s approach to CSR and sustainability: a case study of a large European company

This paper aims to analyse “how” and “why” a company engages in CSR and sustainability. The “how” concerns the features of the firm’s CSR and sustainability approach, defined in terms of a firm’s strategy (implemented issues, initiatives and activities) and organization (organizational structures and roles and managerial systems adopted). The “why” refers to the key determinants, both internal and external, of CSR and sustainability. Finally, how the firm’s CSR and sustainability approach evolves over time and the relation between CSR determinants in various stages of the CSR evolutionary path are also investigated. The research method is based on the longitudinal analysis of a case study concerning a large multinational company operating in the telecommunications industry in Europe. The analysis of the case study shows that sub-cultural differences in the approach to CSR and sustainability may occur across hierarchical levels and functional units. Moreover, embedding CSR and sustainability principles doesn’t follow a linear and continuous process, made by sequential stages. Indeed, it can be characterized by an up and down evolutionary path, based on different stages with a changing emphasis given to CSR and sustainability issues. Finally, we find that the firm CSR and sustainability approach is not an autonomous choice, but it is a consequence of the contingent role played by both the external and the internal drivers and by their relative importance during the company’s CSR history.     

Dual class shares,board of directors’ effectiveness and firm’s market value: an empirical study

This study aims to identify whether a relationship exists between the controlling shareholders’ voting power and outside directors’ effectiveness in maximizing firms’ financial performance. We analyze a panel data with 3057 observations for the 2000–2012 period using a random effects model, logit and probit regressions, and the two-stage model of Heckman in the Brazilian stock market. Our findings show that firms whose controlling shareholders use dual class shares to leverage their voting power have less independence from the board and worse financial performance and market value. Further, the percentage of outside directors tends to be ineffective in increasing the firm’s value, and in changing the firm’s chief executive officer (CEO) when (1) the controlling shareholder’s voting power is leveraged, or (2) when the CEO assumes a position on the board of directors simultaneously. We interpreted that these results are in line with the arguments in favor of the existence of a new agency cost, which is related to the undue obedience of board members to authority, such as the largest controlling shareholder or the CEO in Brazilian listed firms.     

Can you catch two birds with one stone? The impacts of nominating committee composition on board monitoring and resource provision

While it has long been recognized that boards of directors perform two primary functions – monitoring and resource provision – little research has systematically examined the relationship between these two functions in public corporations. Given the growing external emphasis on the monitoring function by investors and advocates of corporate governance reforms, it is important to understand how such an emphasis impacts the resource provision function. In addition to identifying the composition of the nominating committee as a key to understanding the relationship, we propose two mechanisms through which the formation of an independent nominating committee in response to the external emphasis on monitoring leads to a decline in board resource provision. One mechanism is through a decline in information sharing between top managers and the nominating committee in new director selection, which results in a divergence between board capital and the firm's specific resource needs. The other is through decreased trust between the CEO and the board, which results in a less collaborative CEO-board relationship. To alleviate this negative impact that an external emphasis on monitoring has on resource provision, we propose that boards can bring non-CEO executives back onto nominating committees as inside directors. Our theoretical analysis contributes to the understanding of how the composition of the nominating committee influences board monitoring and resource provision, and has important implications for corporate governance research and practices.     

The military imprint: The effect of executives’ military experience on firm pollution and environmental innovation

This study focuses on military experienced executives (CEO and chairman) and their effect on two types of firm environmental strategy: firm pollution and environmental innovation. From the perspective of imprinting theory, we find that executives with military imprint, which, so we argue, instills a sense of following rules and stewardship for the collective, negatively relate to firm pollution and positively relate to firm environmental innovation. The strength of military imprint at its formation is shaped by whether focal executives had a military officer rank. In addition, working in an environment with strong pro-military culture sustains and even strengthens the military imprint. Analyses of data from 6,664 firm-year observations of heavily polluting industries from Chinese listed firms between 2013 and 2017 largely support our hypotheses (see Table 4 for overview of various tests). Overall, our efforts of extending imprinting theory to leadership literature suggest that the imprinting effect of military experience persists in executives’ decision-making processes. Furthermore, this study contributes to imprinting research by emphasizing the importance of considering imprint formation and imprint persistence.     

The illusion of independence: Spun-off firms’ risk-taking as a function of status and attachment to the parent firm

This paper examines the post-divestiture behavior of spun-off firms. Drawing on the spin-off literature and middle-status conformity theory, we argue that spun-off firms—as newly independent and publicly traded firms—tend to limit their risk-taking behavior to match the expectations of a crucial audience, i.e., security analysts. Following the logic of middle-status conformity theory, we hypothesize that firms with mid-level status are particularly susceptible to analysts' pressures, whereas high- and low-status firms are free to take greater risks. Crucially, however, we propose that this relationship is less pronounced for spun-off firms that are more attached to their parent firms, as formal and informal linkages between these two types of firms can endure beyond the separation and limit spun-off firms' independence. Using a dataset of 102 spin-off transactions occurring between 1995 and 2010, we find empirical support for a U-shaped relationship between spun-off firms' status and risk-taking. This relationship is attenuated when spun-off firms are more attached to their parents. We contribute to the spin-off literature by demonstrating that a spun-off firm's post-divestiture behavior is determined by the capital market audience's expectations and the attachment to the parent firm. In so doing, we also contribute to the literature on middle-status conformity theory by identifying a boundary condition of the theory. Additionally, we make a methodological contribution by combining ideas from the spin-off and institutional theory literature to develop a particularly comprehensive measure of attachment.     

The value of a firm’s engagement in ESG practices: Are we looking at the right side?

Firms allocate many resources to environmental, social, and governance (ESG) issues and to growth options as if they were independent sources of value. Challenging this view, this paper explores the interplay of a firm's engagement in ESG practices and growth options in determining its total value. We draw upon real options reasoning to explain how ESG practices can carry two opposite (trust-enhancing and risk-reducing) forces, driving an inverted U-form relationship between ESG performance and growth options value. Moreover, we argue that ESG performance and growth options are likely to build substitutive insurance mechanisms which might exert a negative moderating effect of growth options on the relationship between ESG performance and a firm's total value. Empirical analyses of ESG scores and growth options values on a panel of U.S. firms from 2009 to 2018 provide substantial support for our hypotheses. Our results show that the inverted U-form relationship between ESG performance and growth options value becomes stronger for the environmental and social pillars. Our evidence on the moderating effect of growth option values also provides valuable insights for interpreting prior conflicting empirical evidence on the association between ESG performance and a firm's total value.     

Understanding top managers’ careers: How does career variety impact tenure on the board?

Career variety has recently received attention in management literature in general, and top management literature in particular. While existing publications have predominantly linked career variety to individual adaptability, agility or competences, this paper focuses on the relationship between top managers’ career variety and their tenure on the board. We rely on the boundaryless career approach and argue that there is a negative relationship between career variety and board tenure. Drawing on a sample of executive directors in UK FT 100 firms, we provide empirical evidence that increased career variety leads to shorter tenure on the board. We also reveal that this relationship is further strengthened with international educational experience. In addition, we show that in-house work experience mitigates the negative association between career variety and board tenure. We contribute to the literature on top managers’ careers by unravelling the consequences that career variety during early and mid-stages of a career has on tenure on the board – and hence on career stability in later stages of a career.     

The effects of board size and ‘busy’ directors on the market value of Italian companies

This paper presents evidence that corporate governance quality measured by (1) the board size and (2) the fraction of directors that serve on more corporate boards, influences the market value of firms. The analysis is based in Italy, a country that is characterized by family and concentrated ownership, low legal protection of investors and pyramidal firm structures. Our empirical results suggest that the level of ‘busy-ness’ of corporate directors as a measure of board effectiveness has a significant influence on firm’s market performance. By contrast, we find limited evidence that board size has a substantial impact on the market valuation, except in small and medium enterprises and in some specific industry sectors.

External resource provision and the international performance of SMEs – A contextual analysis

This paper investigates whether different categories of links (core and discretionary) to external resource providers are associated with the international performance of SMEs, as well as the perceived importance of external links for providing specific forms of assistance toward internationalization. A study of 180 internationally active SMEs examines whether these features vary according to the SMEs' contexts, specifically their industry and level of home economy development. The relevance of these two contexts is theoretically informed by resource dependence, environmental munificence and institutional perspectives. SME decision-makers' attribution of importance to discretionary external links predicts stronger international performance, but this is not the case with core market transactional links. Different external parties emerge as important sources of specific forms of assistance toward internationalization. Many of these results are associated with the SME's industry and home economy context. The paper concludes with a new contextually-informed model of SME egocentric networking and implications for practice.     

Does state ownership really matter? The dynamic alignment of China's resource environment and firm internationalization strategies

Recent research suggests that unequal access to home country institutional resources affects firm internationalization strategies. We add to this debate, based on an analysis of state-owned (SOEs) and non-state-owned (NSOEs) Chinese mining firms, by developing a more dynamic and multi-layered understanding of this interplay. We find that home institutional support can be ownership-based or performance-based, whereby the former benefits SOEs and the latter favors high-performing NSOEs. Combined, these support structures serve as institutional control mechanisms in promoting competition, performance and loyalty to national policies. In addition, they establish a permanent link between firm- and home country-specific assets and incentivize firms to develop dynamic resource access capabilities at home and abroad. Our findings inform our understanding of the firms-institutions nexus and Chinese foreign direct investment dynamics, especially in industries of strategic importance to the state.     

The relationships between firm’s strategy,resources and innovation performance: resources-based view perspective

Besides basic competitive priority (quality, cost, delivery and flexibility), innovation has been recognised as one of the primary sources of competitive advantage for manufacturing industry to compete in global markets. This paper, therefore, presents an empirical study on the relationship between firm strategy, resources and innovation performance. Drawing from the grounded theory of resource-based view, and using 218 responses from Thai production/operation managers, this paper shows that differentiation strategy had a positive relationship with both internal capital or internal resources (represented by knowledge and creativity management) and networks capital or external resources (represented by customer and supplier network). The findings also revealed that only internal capital had a positive effect on innovation performance. Finally, contributions to industry practitioner, academia and national agency in supporting and promoting innovation are presented.     

The role of the board in shaping foundations’ strategy: an empirical study

This paper investigates the relationships of the choice of philanthropic strategy with board capital (diversity and networks), board activities (board processes, internal board committees, and board effectiveness), and CEO leadership. Using a sample of 110 Italian foundations, the research shows that board processes have the strongest positive association with an evolved strategic approach to philanthropic institutional grant-giving, while board diversity and strong CEO leadership are associated with the strategic approach only under certain conditions. In particular, good governance processes (e.g., training the board, self-evaluation of trustees, setting the stage for effective board and committee meetings, implementing control software, and steering meetings to improve the board’s analysis) are positively associated with evolved strategic approaches to philanthropy (e.g., signaling other funders for the best grantees, improving the performance of grant recipients, and advancing selected social fields’ state of knowledge and practice).     

Multinationals’ political activity for institutional change: Evidence from Spain during the international crisis of 2008

International crises generate uncoupling between multinational enterprises (MNEs) and the institutional environment. In these settings, industry associations of MNEs have an incentive to engage in institutional change by taking a role as institutional entrepreneurs in order to generate change within the existing, unsuitable institutions. However, MNEs can also try to avoid such institutions or try to adapt to them. Because the antecedents and outcomes of these three forms of engagement in institutional change (institutional avoidance, adaptation, and entrepreneurship) have been scarcely studied in Europe, this reflection examines the case of Spain during the international crisis and analyses the coordinated action of MNEs through their associations in seven industries. The discussion of 30 pieces of evidence regarding the engagement in institutional change in Spain suggests a model that proposes relevant antecedents of different forms of engagement and the expected outcomes resulting from the chosen forms, among them: co-evolution and co-involution.     

Factors influencing a firm’s decision to conduct remanufacturing: evidence from the Thai automotive parts industry

This paper aims to investigate the key factors influencing the decision-making process of firms in conducting remanufacturing activities, using the Thai automotive parts as a case study. Our results show that on average, business feasibility is the most influential determinant driving the decision-making of firms, followed by areas of the firm’s strategic factors, and policy factors. In terms of individual factors, product maturity is ranked first as the most important factor for a firm to engage in remanufacturing activities, followed by financial aspects, availability of skilled workers and technical aspects. Policies related to trade, intellectual property rights and the environment are identified as the least crucial factors in affecting the decisions of firms. Characteristics of firms and products matter in ranking the factors influencing a firm’s decision to conduct remanufacturing.     

Digital platforms’ boundaries: The interplay of firm scope,platform sides,and digital interfaces

This article explores what factors drive digital platform firms to set or modify their boundaries. Building on economics, strategic management, and information systems research, I suggest that digital platforms make strategic decisions over three distinct types of interrelated boundaries: (1) the scope of the platform firm (what assets are owned, what labor is employed, and what activities are performed by the firm), (2) the configuration and composition of the platform's sides (which distinct groups of customers have access to the platform), and (3) the digital interfaces (that specify the 2-way exchange of data between the platform firm and each of its sides). In this article, I explore the interdependence between these seemingly separate decisions and the role of some important moderating variables. These moderators include whether the platform is a transaction or an innovation platform, and the extent to which the platform has developed from its initial formation stage. My work explains why we see so much variation in boundaries across platforms and over time.     

What’s in a name? Decomposing corporate reputation to assess the relative impact of temporal, firm and industry level factors

While the perceptual nature of corporate reputation is rarely contested, the role of governance and firm financial performance does not have the same consensus. As reputation is an embedded capability that cannot be distinctly valued or traded, the ambiguity in reputation generation clouds researchers’ attempts to understand the relative importance of the underlying causal factors, particularly firm-specific attributes like board characteristics, governance and ownership—independent of the firm’s financial performance over time. Utilizing a resource—based view, we develop a theoretically grounded framework that enables us to deconstruct corporate reputation and parse out the impact at multiple levels and the factors therein. We decompose reputation into time, firm and industry level factors, offer hypotheses on the relative importance of the factors at each level, and thereafter we simultaneously assess within and across the temporal, firm and industry levels to quantify the impact of the causal factors. We find that 49.65 % of the variation in corporate reputation is firm-specific, independent of financial performance, while industry-specific variables account for just 5.04 %. The temporal factors including the multi-level interaction terms explain 46.06 % of reputational variation, of which financial performance accounts for only 18.53 % and the “halo effect” of prior financial performance is short-lived. Furthermore, the commonly accepted factors explain only 26.44 % of the total variation in corporate reputation, and some of the governance and ownership indicators contradict generally accepted agency expectations.     

The influence of learning activity on low-skilled workers’ skill improvement in the South Korean manufacturing industry

The main purpose of this study was to explore how low-skilled worker’s learning activity influences skill improvement. Using a unique 2007 Human Capital Corporate Panel data-set from the South Korean manufacturing industry, we operationalize skill improvement over time among low-skilled workers. A worker is classified as ‘low skilled’ if he or she has a low education level and poor technical skills. Regression models show that low-skilled workers’ informal learning positively influences their skill improvement. In contrast, we note that supervisors negatively influence skill improvement of low-skilled workers when measuring the change in technical skill proficiency. Quality circle programmes also have a positive influence on skill improvement. In conclusion, skills can be improved through planned interventions that increase collaboration on the job. The results from this study help to highlight the importance of designing learning interventions for low-skilled workers that take account of their underlying education and skills.     

The impact of family owners’ monitoring on CEO turnover decisions and the role of trust

Even though there is clear evidence that large shareholders play an effective monitoring role over poorly-performing CEOs, the monitoring of family owners is yet quite unexplored. This study investigates the impact of family ownership on the CEO turnover-performance sensitivity, examining two potential factors that can affect the ability of the family owners in ensuring a prompt replacement of an underperforming CEO. First, we examine whether the monitoring of family owners is weakened by the existence of family ties with CEO. Second, we investigate whether the monitoring of family owners over professional CEOs is affected by the cultural propensity to trust or distrust a stranger. Our findings show that family owners are able to ensure a prompt replacement of an underperforming CEO only when the CEO is not a family member but rather an outside professional. Moreover, we find that the effectiveness of the family’s monitoring over professional CEO is weaker in environments characterized by the cultural propensity to distrust a stranger, rather than in contexts characterized by the cultural feeling to trust an outsider.     

Preemptive or promotive: The differential impact of strategic leaders’ political connections on firm long-term investment in China

Research on corporate leaders' political connections has remained silent on the impact of heterogeneity of political resources on firm behaviors and of how strategic leaders differentially leverage these resources. We propose that a firm whose chair had ascribed bureaucratic connections as opposed to achieved political connections acquires different types of resources and chair differentially leverages the resources when making long-term investment. These effects are weaker when a firm is performing well. Our analyses of Chinese firms from 2003 to 2016 generally support these predictions. This study contributes to literature on political connections by providing greater specificity with respect to the heterogeneity of political resources and offering new insights into how strategic leaders leverage these resources. This study also contributes to the literature on board chairs and corporate governance by suggesting that when considering a firm's long-term plan, chair plays an important role and it is also important to monitor chair behaviors. Finally, it highlights the role of the interface between strategic leaders and state matters when considering the antecedents of long-term investment.