Agent and Task Complexity in Multilateral Alliances: The Safeguarding Role of Equity Governance

Multilateral alliances are an inherently complex organizational form; managing these complexities is particularly difficult for alliance partners because alliances are plagued by both internal and external uncertainty. Using insights from transaction cost economics, our study identifies, articulates and tests different forms of alliance complexity and their impacts on alliance governance structure. Specifically, we investigate two forms of alliance complexity: agent and task. We decompose agent complexity into organizational and partner complexity, and decompose task complexity into geographic, transaction and technological complexity. Using a sample of 327 trilateral alliances, the most frequent form of multilateral alliances, we find that three forms of alliance complexity involving internal uncertainty (organizational, partner and technological complexity) favor equity-based governance, whereas external uncertainty in the form of geographic complexity discourages equity-based governance.     

Allocation of Rights and the Organization of Transactions: Elements of a Generative Approach to Organizing

This paper is an attempt to articulate in a systematicfashion how different patterns or forms of organizingare achieved and how one can talk about the variety inand the transformation of these forms. The paperargues that one way to address this fundamentalquestion is to look at how resources and rules can beused in transactions to develop a generative grammarof organizational forms. The theoretical perspectivedeveloped in the paper incorporates the nature ofinterdependencies among social actors in definingtheir relationships and the nature of resources beingtransacted in these relations. As a social system, anyorganizational form that involves regularizedrelations of interdependence between social actors,requires resources in some form or another. Whetherthey are characterized as goods transacted in anexchange situation, human or social capital of actorsin a productive act, or collective control ofproductive skills, they are the necessary componentsof organizing because they give the social actors thecapability to develop their strategic conduct. Inaddition to resources, any organizational form mustalso possess a set of rules that define the nature ofthe transaction among the social agents.The first part of the paper introduces the logic andthe elements of the generative grammar fororganizational forms. The second part applies theseideas to organizational governance structuresespecially the relationship between the owners and themanagers in order to show how different forms ofgovernance structures can be generated based on theallocation of rights among various parties involved. The paper concludes with the suggestion that marketsversus hierarchic governance are very grosscategorization that cannot satisfactorily show thediversity of variations in forms of governance inorganizations.     

Corporate Governance and New Organizational Forms: Issues of Double and Multiple Agency

This paper addresses corporate governance inthe light of two relatively new developments inorganizational form, respectively towardsdevolved initiative within firms andpartnerships between firms. In so doing, itargues for an extension of corporate governancetheory and practice to take better account ofthe problems arising from double and multipleagency. New organizational forms can bereconciled with the requirements for corporategovernance through a number of complementarydevelopments, including the cooptation ofemployees and junior partners into ownershipand governance, more inclusive forms ofcontrol, mutual monitoring and the promotion oftrust.     

Governance Structures,Coordination Mechanisms and Cognitive Models

This paper criticizes the current prevailing ways ofmodelling governance alternatives, and advocates theopportunity and feasibility of a reconceptualizationof governance forms as mixes or configurations ofsimpler and potentially disentangleablecomponents. These components are constituted by abundle of property rights and by a set of coordinationmechanisms. The paper draws on a previous effort atintegrating economic, organizational and sociologicaltheories of governance in a cognitive perspective(Grandori 1995a) and explicitates how some cognitivefoundations of organization theory can be revised tosustain a more fine-grained view of governance. Theimplications for organization design are illustratedin the final section through the solution of someempirical design problems, as well as through areinterpretation of known hybrid arrangements.     

The governance of social enterprises: Mission drift and accountability challenges in hybrid organizations

We examine the challenges of governance facing organizations that pursue a social mission through the use of market mechanisms. These hybrid organizations, often referred to as social enterprises, combine aspects of both charity and business at their core. In this paper we distinguish between two ideal types of such hybrids, differentiated and integrated, and we conceptualize two key challenges of governance they face: accountability for dual performance objectives and accountability to multiple principal stakeholders. We revisit the potential and limitations of recently introduced legal forms to address these challenges. We then theorize about the importance of organizational governance and the role of governing boards in particular, in prioritizing and aligning potentially conflicting objectives and interests in order to avoid mission drift and to maintain organizational hybridity in social enterprises. Finally, we discuss future research directions and the implications of this work for rethinking traditional categories of organizations, namely business and charity.     

Uniformity and Diversity in Turkish Business Groups: Effects of Scale and Time of Founding

This study aims to extend recent theoretical and empirical work that has begun to question the strong homogeneity argument in much of the macro‐institutional literature on nationally dominant forms of organizing. More specifically, the paper develops the proposition that intra‐national variety is likely to be greater in business strategies and structures than in governance patterns. Drawing upon macro‐institutionalist and contingency theories, testable hypotheses are derived from this proposition that postulate relationships between size and time of founding and organizational dimensions of strategy, administrative structure, and forms of governance. These hypotheses are then tested on a sample of business groups that have historically been the dominant form of large business organization in Turkey. Findings did show, as expected, that governance structures remained insensitive to size and time of founding effects. Variety associated with size was apparent in the case of central administrative structures, although features associated with vertical control remained invariant. Hypotheses concerning diversification and internationalization strategies received only partial, and in the latter case, rather weak support. The findings are indicative, however, of divergence resulting from differences in size and institutional conditions of founding.     

Governance and Organizational Eclecticism in the Public Arena: Introductory Perspectives

The Symposium is introduced here in terms of its antecedents and the eclecticism of governance and organizations in the public arena. The all-embracing nature of governance is complemented by organizational diversity and hybridity in constellational formations and networks. Key capacities, recognizing the significance of organizational ownership, regulation and performance, are essential in creating structures, developing policies, taking action and fostering legitimacy in governance. An overview of these matters sets the scene for the analyses in subsequent articles.     

Does governance confer organisational resilience? Evidence from UK employee owned businesses

Current economic crisis has highlighted the importance of an organization’s ability to withstand economic shocks. This has rekindled interest in organization resilience on the one hand, and the relationship between alternative governance forms such as employee owned businesses (EOBs) on the other. We explore this relationship using performance data on 204 publicly traded non-employee owned businesses and 49 EOBs prior to the economic downturn (2004–2008), and during the economic downturn (2008–2009). This data is complemented with a survey of resilience related governance and organizational practices in 41 EOBs and 22 non-EOBs. Our results show that: (a) employee ownership that is combined with employee involvement in firm governance is associated with greater stability in business performance over a business cycle; (b) EOBs have longer investment payback horizon when compared to non-EOBs across a number of activities; (c) Top management in EOBs are more likely to seek employee input in strategic decision making; (d) EOBs are more likely to use employee involvement to achieve tighter coupling between feedback from operations and the setting of strategic direction for the firm. These results suggest that employee stock ownership programs alone are not sufficient to develop higher levels of organizational resilience. Managers must combine employee stock ownership with employee involvement in governance if they wish to build up resilience in advance of adverse economic conditions.     

Perceptions of Legitimacy in Nordic Regional Development Networks

This article examines actors’ views on legitimacy in governance networks in four Nordic countries. The analysis is based on a survey of similar regional development networks in Denmark, Norway, Sweden and Finland. The countries form a continuum, in which the connection between legitimacy and representative democracy is strongest in Denmark and weakest in Finland. Norway and Sweden fall in between the two. Not only the strength, but also the form of the connection, and the weight given to it vary among the countries. Article contributes to the debate on democracy in network governance.     

The cross-border hostile bid fight between Scania in Sweden and the two German companies MAN and Volkswagen: institutional change and the mandatory bid rule

International hostile takeovers provide a unique context for studying how corporate governance mechanisms migrate across countries. This paper is prompted by a case study of the cross-border takeover fight between the target companies Scania (Sweden) and MAN (Germany) and the involvement of the owners of Volkswagen, Porsche (both Germany) and Investor (Sweden), 1999–2014. It reveals how incumbent owners in Germany and Sweden—two countries with a history of corporate control through blockholdings, corporatist-governance, state control (Germany) and multiple voting shares (Sweden)—manage to take advantage of the minority shareholders through arbitraging the differences in implementation of a new governance device across borders. The study focuses in particular on the mandatory bid rule (MBR) that forces a shareholder who passes a certain threshold of ownership to bid for the rest of the shares. The study reveals over twenty incidents of breaches of the idea of the MBR, to the detriment of minority shareholders. Building on institutional theory and sociology, the study provides useful insight into how incumbent actors may use bargaining power to capture a new regulation and circumvent it. Furthermore, the case illustrates the importance of legitimacy in the efforts to converge corporate governance systems. Thirdly, it adds to the critique of the mandatory bid rule in countries with a governance system supporting blockholders. Overall, the study raises a number of important issues regarding how national politics shape corporate governance and responds to new actors and coalitions of actors entering the scene. A convergence of takeover regulation not compatible with the legal framework might result in a less efficient than anticipated outcome of the market for corporate control. These results are consistent with the institutional theory perspective that key actors may have a vested interest in resisting change.     

The Choice of Governance Modes of International Franchise Firms — Development of an Integrative Model

This paper examines the evolution of the international franchise research with special focus on the governance modes of the international franchise firm and develops a new model for the franchisor's choice of the international governance modes. International governance modes in franchising refer to wholly-owned subsidiaries, joint venture franchising, area development franchising and master franchising. Although many studies on the governance modes of the international franchise firm have been published in the last two decades, no prior study develops an integrative framework that investigates the determinants of the international governance modes by combining organizational economics and strategic management perspectives. Specifically, this study explains the governance modes of the international franchise firm by applying transaction cost theory, agency theory, resource-based and organizational capabilities theory and property rights theory.     

International Evidence on the Determinants of Organizational Ethical Vulnerability

This paper proposes a model to explain what makes organizations ethically vulnerable. Drawing upon legitimacy, institutional, agency and individual moral reasoning theories we consider three sets of explanatory factors and examine their association with organizational ethical vulnerability. The three sets comprise external institutional context, internal corporate governance mechanisms and organizational ethical infrastructure. We combine these three sets of factors and develop an analytical framework for classifying ethical issues and propose a new model of organizational ethical vulnerability. We test our model on a sample of 253 firms that were involved in ethical misconduct and compare them with a matched sample of the same number of firms from 28 different countries. The results suggest that weak regulatory environment and internal corporate governance, combined with profitability warnings or losses in the preceding year, increase organizational ethical vulnerability. We find counterintuitive evidence suggesting that firms’ involvement in bribery and corruption prevention training programmes is positively associated with the likelihood of ethical vulnerability. By synthesizing insights about individual and corporate behaviour from multiple theories, this study extends existing analytical literature on business ethics. Our findings have implications for firms’ external regulatory settings, corporate governance mechanisms and organizational ethical infrastructure.     

Converging and Diverging Governance Mechanisms: The Role of (Dys)Function in Long‐term Inter‐organizational Relationships

This paper explores the dynamic interplay of formal/informal governance mechanisms, in terms of functional and dysfunctional consequences for both sides of the dyad, in long‐term inter‐organizational relationships. Using two longitudinal cases of UK defence sector procurement (warship commissioning) we move beyond notions of complementarity and substitution in governance towards a more nuanced view where the governance mix of inter‐organizational relationships can be convergent or divergent. Our findings, showing that relationships can exhibit functional and dysfunctional behaviour simultaneously, lead us to conclude that mismatches in governance mechanisms can be positive as well as negative. In building a context‐dependent understanding of governance we both summarize the (dys)functions associated with formal and informal governance mechanisms and explore their impact on relationship exchange performance over time.     

Governance Choices for Corporate Social Responsibility: to Contribute,Collaborate or Internalize?

Within a competitive business environment where resources are limited, it is increasingly important for senior management to make every investment count. Measuring ‘return on investment’ occurs at every level of operations—so why not also in the arena of Corporate Social activity? Until now, much research has focused on finding the link between corporate social responsibility (CSR) and increased business performance. Researchers have not examined the cost implications associated with the different forms of governance utilized by companies to implement their CSR activities, e.g., outsourcing through charitable contributions, developing an in-house program, or creating a more collaborative model, which benefits both the company and the partner nonprofit organization. Careful examination and evaluation of these costs will help senior management choose the governance structure that will maximize the benefits they reap from CSR activities.Drawing upon insights from organizational economics, this article develops a framework to compare the alternative modes of CSR governance and identifies the key drivers that affect governance choice, including associated costs. Most importantly, it provides a decision-making tool that can guide senior management in this vital choice as a way to contribute to the competitive advantage of the firm.     

Ex-post governance in joint ventures: Determinants of monitoring by JV boards of directors

Considerable advances have been made in corporate governance research in recent years and opportunities exist to consider these developments within alliances. We extend the “scope of operations” hypothesis to the domain of joint ventures. This proposition suggests that the monitoring carried out by boards increases when organizations become more complex. The inherent characteristics of JVs generate unique sources of complexity that are currently unexplored in the corporate governance literature. First, we seek to determine their influence on monitoring by using primary data on JV board monitoring. Second, we adopt the size of JV boards as a proxy for monitoring in order to examine whether the determinants of board size and monitoring in fact coincide and to reveal if certain effects are masked by using board size as a simple proxy for monitoring. Doing so enables us to investigate the black-box of what boards actually do as well as extend governance research to other organizational forms. Our findings confirm that the unique characteristics of JVs influence the information needs by the boards resulting in more monitoring by JV directors. Our findings show there is value in bridging alliance theory and the literature on corporate governance research. We also advance practitioner's understanding by providing suggestions on how to structure JV boards in relation to their complexity.     

Conclusion: Can We Go Home? Roads Taken, Targets Met, and Lessons Learned on Governance and Organizational Eclecticism in the Public Arena

Organizational eclecticism has characterized much of policy and administrative choices in public governance in the last three decades. This concluding article addresses this phenomenon and argues that roads have been taken, targets have been met, and many lessons have been learned in organizing and managing public sector governance, as the articles in this Symposium demonstrate. In the process, experiments have been conducted, some with success, while others with failure, leading to a proliferation of eclectic choices, many unsuited for organizational effectiveness but beneficial to powerful interest groups and politicians, all at the expense of alternative organizational choices and broad-based public interests. Three broad theoretical models/periods are examined, the proliferation of public sector organizational eclecticism is analyzed, and options are suggested concerning alternative organizational choices, resulting in the question: can we go home now?     

关系质量视角下移动虚拟社区治理对组织公民行为影响研究--以知识型移动虚拟社区为例

从关系质量视角出发,探索移动虚拟社区治理对组织公民行为的影响机理。在已有研究的基础上,结合移动虚拟社区的特点,提出移动虚拟社区治理的内涵和构成要素。构建以成员-平台关系质量和成员-成员关系质量为中介变量的移动虚拟社区治理对组织公民行为影响的理论模型,利用结构方程和Bootstrap法对模型进行验证。通过对知识型移动虚拟社区用户的调查,结果显示:社区构建与成员嵌入对成员-平台关系质量与成员-成员关系质量都有显著影响,而社区监管和信息保护却只对成员-成员关系质量有显著影响;成员-平台关系质量与成员-成员关系质量对组织公民行为均具有显著影响,但成员-成员关系质量对组织公民行为的影响更大;移动虚拟社区治理能够通过成员-成员关系质量和部分通过成员-平台关系质量对组织公民行为产生正向影响。     

Beyond the Disciplinary Role of Governance: How Boards Add Value to Spanish Foundations

Due to the significant role of non‐profit organizations in the development of modern societies, these organizations must adjust their boardrooms. Since traditional theories of corporate governance appear to be limited in explaining the changing non‐profit world, we propose an extended model of governance that integrates the traditional arguments of agency theory with a cognitive dimension. Based on a sample of Spanish foundations, we present evidence on the effect of the board composition on foundations' organizational efficiency. We show that board size and independence do not have a definitive effect on the entity's efficiency. Instead, the knowledge diversity inside the boardroom and the active character of trustees have a positive influence on resource allocation. The cognitive dimension of the extended model of governance is critical to explaining how boards impact on organizational performance.     

Remote control: measuring performance for value creation and governance of globally distributed knowledge work

This article examines the governance of globally distributed knowledge work. To measure performance in knowledge work, it is important to focus on what the knowledge workers do and hence view knowledge as something one does, namely the practices, instead of something one has. By following the practices of knowledge work, it was possible to evaluate the effect of measures related to organizational processes, and identify what was not well covered by the measurement tool. Strategic and long term needs such as learning and employee competence are better managed through projects. This article shows how work performance in international organizations needs two different measures: one tool for measuring short-term value creation linked to the organizational processes; and, one tool for measuring long-term value creation linked to the practices of service work made in projects. Global governance of distributed employees is therefore successfully managed through key performance measures and through understanding projects through their multiple contributions, at both an individual and an organizational level. Global long term governance needs are strategic for the entire firm. The paper rests on an in-depth empirical case study of an international professional service firm.     

Participation in Decentralized Local Governance: Two Contrasting Cases from the Philippines

Contrary to the popular assumptions among international donor agencies, preceding studies have questioned the causal relations between decentralization, participation and pro-poor policy outcomes. This article introduces two cases of decentralized city governments in the Philippines: one employs radical forms of civil participation, while the other introduces modest ones, but both of them have been successfully launching pro-poor policies. Through referring these contrasting cases to a “participatory governance” model and a “governance with trusts” model, the paper argues that the approach to local governance is not linear.