A longitudinal analysis of the impact of firm resources and industry characteristics on firm-specific profitability

Using a dynamic heterogeneous panel data model, we examine the relationship between firm-specific resources (corporate management capabilities, employee value-added and technological competence) and firm-specific profitability and the potential moderating effects of industry characteristics on this relationship. We find that firm-specific resources enhance both accounting-based measures (return on assets and return on sales) and market-based measure (Tobin’s q) of firm-specific performance. Moreover, industry characteristics moderate the relationship between firm-specific resources and firm-specific profitability. Managerial implications are discussed.

Is the German system of corporate governance converging towards the Anglo-American model?

This paper analyses whether the German corporate governance is converging towards Anglo-American practices. We summarise the extant empirical evidence on the various governance mechanisms that economic theory suggests ensure efficiency and describe recent legal developments. We find no clear signs of convergence in form, i.e. the main distinctive features of the German system have remained largely unaltered. However, changes occurred over the last decade (specially in the legal framework) suggest a certain convergence in function, i.e. some governance mechanisms have effectively incorporated aims and/or goals generally associated with the Anglo-American model.

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.

Rivalry and strategic groups: what makes a company a rival?

Strategic group literature has generated a significant amount of research over recent decades. However, the rivalry implications of strategic group have remained unclear. This paper analyses rivalry and strategic groups in the house building industry in a small town from a cognitive approach. We consider rivalry as a subjective and directional phenomenon. Estimating rivalry as the direct identification of competitors we try to explain whether similarity affects rivalry and what factors make a company a “rival”. Results show that perceived rivalry is strongly related to size, past performance, subjective similarity and strategic group structure.

Activity-based diversification,corporate governance,and the market valuation of commercial banks in the Gulf Commercial Council

This article examines the effect on market valuation of both corporate governance and the diversity of activities conducted by GCC commercial banks. It shows evidence on the endogenous effect of corporate governance and the characteristics of the banking industry in determining the diversification level of a bank. Empirical findings show a bias in results using ordinary least squares regressions. When controlled for endogeneity, they indicate a negative (but weak) association between the diversification index and the market valuation—consistent with the agency-based hypothesis. Interestingly, foreign banks and corporate shareholders are effective monitors who invest in more diversified GCC banks with higher valuation multiples. Conversely, domestic corporate shareholders—related by a complex web of relationships—invest in less diversified banks with a lower market valuation. In addition, diversified commercial banks with either subsidiaries in developed countries or involvement in market-based activities have higher market valuation. The latter may be explained by the effect on performance of the recent bubble in the Arab stock market.

Managerial dominance and audit committee independence in Spanish corporate governance

The purpose of this paper is to analyse whether the independence of audit committees is affected by the degree of control exerted by managers over the board of directors. Results from a sample of 75 listed Spanish companies show that the majority of firms that voluntarily adopted an audit committee between 1998 and 2001, made an effort to guarantee their independence from management. The degree of independence is shown to be determined by the proportion of inside directors on the board, the same person holding both the CEO and board chairperson positions, and the level of management ownership. These findings may have political implications because existing regulations do not limit the presence of inside directors on audit committees. The presence of inside directors may compromise effectiveness, turning audit committees into instruments of management to provide the appearance of monitoring.

Autonomy and Regulation of State Agencies: Reinforcement,Indifference or Compensation?

This paper analyses the relationships between the autonomy and regulation of state agencies in Norway, Ireland and Flanders (Belgium). The empirical basis is provided by broad surveys of public sector organizations carried out in 2002–2004. Three hypotheses on these relationships are formulated and examined, indicating different patterns. The reinforcement hypothesis, stating a negative relationship does not get any support. On the other hand, the compensation hypothesis, stating a positive relationship gets some support. In general, however, the indifference hypothesis, stating low or no correlations seems to be the most adequate. The hypotheses are also linked to prevalent administrative doctrines, and the empirical findings indicate how relevant they are.

Crises and Natural Disasters: a Review of Two Schools of Study Drawing on Australian Wildfire Experience

The connection between “schools” of study focusing on crises and on natural disasters is explored. After considering the rise of separate schools, the article notes significant attempts to integrate them and suggests that, while natural disasters and other big crises have much in common, there are still some important differences that need to be taken into account in designing relevant management systems. Drawing particularly on Australian wildfire experience, the article then looks more briefly at the question of political leadership in disaster situations, and at serious problems that often occur in the reporting of those situations.

The Public Sector’s Use of Agencies: A Dynamic Rather than Static Scene

It is an occupational hazard in the study of organizations that we tend to view them as static arrangements, as though what is observed and reported today tells us all we need to know about them. But organizations are dynamic rather than static phenomena, being constantly affected by adjustments to meet the effects of fading past arrangements or approaching new arrangements. Simple “snapshots” taken at a particular moment in history are never likely to reveal all the relevant nuances. This article comments on this problem as it affects non-departmental public bodies often described loosely as “agencies”, by (a) drawing attention to some relevant theoretical contributions to the political science and organization theory literature, and (b) giving some examples of changes in the style of agency formation and operation over the years, mostly drawn from the Australian public sector.

Giddens’ structuration theory and its implications for management accounting research

The purpose of this essay is to briefly review the pillars and the rationale of Giddens’ theory of structuration, and offer a snapshot of the impact of these ideas on research in management accounting. Conceptualised as a way of making sense of social life, structuration theory represents a sensitizing device for researchers, which has be drawn upon “in a selective way in thinking about research questions or interpreting findings” (Giddens, Modernity and self-identity: Self and society in the late modern age, 1991). In the following pages the duality of structure, the modalities of structuration, the concept of double positioning, the theory of the subject as well as concepts such as ontological security, routines or trust will be reviewed as essential elements of a vocabulary originally framed within Giddens’ The constitution of society (1984). The essay ends sketching the work of Macintosh and Scapens (Management accounting and control systems—an organisational and behavioural approach, 1990), who broke new ground to interpret management accounting systems in light of structuration theory terms and concepts, as well as some of the more recent works in accounting that have built on Giddens’ latest ideas on the The Consequences of Modernity (1990).

Investigating modular organizations

This paper explores a new organizational form—modular organization—through a case-study approach. The aim is to isolate the specific properties that set this form apart from other known organizational forms. The case studies examined focus on the manufacturing process of small, medium and large companies in different industries, and provide a clear picture of modular organization. The analysis shows that modular organizations are an innovation per se and not the mere outcome of modular products. Modular organizations leverage decomposition by employing small units within a larger organization. Each unit is responsible for a specific domain, it is quasi-independent and makes autonomous decisions on various business issues. Modular organizations deal with suppliers directly, and are characterized by a flat structure. Companies based on modular organization can improve their efficiency in the high-tech and mature markets, and fully exploit their resources.

Public Organizational Birth and Death: Understanding the Exigencies of an African Political Environment

This research examines the application of theories of organizational birth and death in transitional and undemocratic political settings. Through the case study of the birth and death of the Ministry of Supplies and Marketing in Kenya, the author determines that theoretical explanations of organizational formation and demise do not necessarily fit a uniform profile. Under unstable and undemocratic environments, public organizations that are brought to life through decrees may also be unexpectedly vanished without following a logical and predictable cyclical sequence.

Foreign direct investment through partial acquisitions: hostage effect or conflicts enhancement

Basing on Internalization Theory (IT) and Knowledge Based Theories of the firm (KBTF), as well as on the recent Hostage Theory of Partial Acquisitions, the different performances of foreign direct investments (FDIs) made through joint ventures, total and partial acquisitions are analyzed. The study includes an analysis of the impact that the experience related to the host country accrued by the investing firm has upon each entry mode’s performance. By focusing on recent international expansion through FDIs of listed Spanish firms, an empirical analysis is carried out. The stock market reaction to FDIs is used as a measure of performance. Our results confirm the role of accrued experience as a factor conditioning the costs inherent to each entry mode.

Perceptions of Nonprofit Funding Decisions: A Survey of Local Public Administrators and Executive Directors of Community-Based Housing Organizations (CBHOs)

This article compares how local public administrators and executive directors of community-based housing organizations (CBHO) perceive nonprofit funding decisions. The article’s findings suggest that both groups shared perceptions about the scope of affordable housing and factors influencing its funding. Yet, important differences existed. Public administrators were ambivalent about nonprofit capacity and affordable housing outcomes. They also underestimated the importance of networks, partnerships, and minority leadership. Professionals in the nonprofit sector underestimated fair housing concerns and overestimated the importance of promoting homeownership. These insights improve our understanding of the connection between funding patterns, public-nonprofit sector relations, local governance, and administrative structures.

Breaking the Vicious Cycle: Public Involvement in the Immigration Plan for the Nanji Islands, China

A centralized political context such as China provides a harsh environment for public involvement program that intends to share decision-making power with the public, however, there are still learning opportunities that can survive and prepare the public for a meaningful participation in the future. This article illustrates this point by designing a public involvement program that is implementable and educational in Nanji Islands, China. The public involvement program is designed to solve conflicts and tension regarding to an immigration plan between the public and local government and organized by a third party. It includes information sharing, public representatives election, and negotiation meeting between public representatives and governmental officials. The six-dimension framework from Alterman’s classic work is employed to test its feasibility within the local context.

Political Influence and Bureaucratic Autonomy

The establishment of autonomous public bodies during the past two decades has created a highly fragmented public sector. Using a dataset with more than 200 Dutch public sector organisations, this article examines three related sets of questions: to what extent a relationship exists between formal and de facto autonomy; the level of influence that interested parties exert upon those organizations; whether a relationship exists between levels of formal and de facto autonomy and the level of influence exercised by these parties. We find that formal autonomy does not reinforce de facto autonomy; organizations with less autonomy report higher levels of political influence when policy autonomy is concerned; and that organizations with more autonomy report higher societal influence on their financial autonomy.

Government Governance (GG) and Inter-Ministerial Policy Coordination (IMPC) in Eastern and Central Europe and Central Asia

This paper focuses on the function of Inter-ministerial Policy Coordination (IMPC) and its critical role in governance. Following a definitional section, the authors give an overview of public sector governance in Eastern and Central Europe and Central Asia and discuss the application of governance principles to Inter-Ministerial Policy Coordination in these regions. They conclude with specific examples from the Republic of Macedonia and Central Asia.

Citizen Support for Hospital Privatization: A Hierarchical Cross-National Analysis

The movement for a new public management (NPM) holds that citizens will put aside partisan and ideological differences to support more efficient service delivery. Focusing on hospital privatization, a multi-national sample is utilized to investigate this assertion. Generalized hierarchical linear modeling (GHLM) is employed as the method of statistical analysis. The findings with regard to privatizing hospitals reveal that citizens develop their policy position by reference to a combination of symbolic political variables, service demand, self-interest, information levels, and political efficacy. The results cast doubt on the assertion that partisan differences will be set aside as citizens consider privatization reforms.

Australian evidence on corporate governance attributes and their association with forward-looking information in the annual report

We investigate the role played by a firm’s corporate governance framework in the decision to voluntarily disclose forward-looking information in the published financial reports of Australian companies in 2000 and 2002. With respect to the year 2000, the corporate governance category, audit quality, consisting of the presence and independence of the audit committee, its meeting frequency, the use of a big 6 auditor and the auditor’s independence, is positively associated with the disclosure of forward-looking information. The corporate governance category, board committees, consisting of the appointment and independence of a compensation committee and the creation of a nomination committee, and the overall efficacy of the corporate governance system are also positively associated with the disclosure of forward-looking information. However, corporate disclosure does not seem to be driven by the same factors in 2002 since in that year none of the governance categories is significantly associated with the firm’s decision to publish forward-looking information in financial reports.