The benefit of market-based governance devices: Reflections on the issue of growing economic inequality as a corporate concern

Growing economic inequality in advanced economies is explained by a variety of conditions and mechanisms, but a growing literature emphasises how corporate governance decisions serve to transfer wealth from labour to capital owners, including shareholders. The article introduces the term governance devices to examine how a consistent annual real wage growth (calculated to 1.20 percent) over the period 1997–2017 has been negotiated in Sweden, based on a bilateral market-based industrial agreement between the employer organisation and a confederation of trade unions. The article stresses the importance of governance decisions in counteracting secular stagnation of real wage growth, which reduces the purchasing power in an economy and incurs other externalities. Corporate governance is, therefore, a key mechanism in resolving the issue of how to allocate the residual cash being generated in the corporate production activities so that it benefits all constituencies and balances short-term returns to shareholders and medium-to long-term economic growth and stability.     

Managing corporate community responsibility in multinational corporations: Resolving institutional duality

Addressing calls to explore how subsidiaries of MNCs operating in different institutional contexts resolve institutional duality, this paper brings together dual theoretical explanations from legitimacy and neo-institutional theory, to examine how decision-making for corporate community responsibility (CCR) occurs across ten subsidiaries operating in Sri Lanka. Using qualitative data, it shows that while subsidiaries’ implementation of local CCR conform to that of their parents at an aggregate level, those subsidiaries encountering higher levels of institutional conflict in the host-country, are sanctioned by their parent companies to de-couple their local CCR projects. These findings raise interesting questions about the dynamism in subsidiary responses to resolving institutional duality relevant for future scholarly research.     

Cinderella purchasing transformation: linking purchasing status to purchasing practices and business performance

This paper contributes to the on-going debate about the relevance of the purchasing function for the firm value creation. We empirically examine the role of the purchasing function in improving business performance through an international survey based on 653 responses. Results suggest that purchasing practices related to spend rationalisation have a positive impact on the overall business performance, whereas supplier development & integration and sustainable purchasing have not. Moreover, the purchasing recognition by top managers and other organisational units emerge as a powerful antecedent of all purchasing practices. Instead, pure formal authority provided by the position in the organisation chart (i.e. the report level) does not have any influence on purchasing practices adoption.     

Global sourcing in integrated network structures: The case of hybrid purchasing organizations

An issue for companies in globally competitive markets is to adapt their organizational structures and governance in increasingly complex organizations. At the functional level of purchasing, companies are turning to hybrid purchasing organizations in order to leverage global sourcing benefits. One of the key challenges in this context is to distinguish between categories to be integrated across sites and those that are to remain under the authority of each purchasing location in order to maximize purchasing synergies.This paper presents a purchasing portfolio model that provides a comprehensive view of relevant global synergy dimensions. Based on a literature review, a theoretically-grounded purchasing portfolio model for global sourcing is developed. The theoretical basis stems from information processing theory, organizational buying behavior (OBB) and transaction cost economics. The validity of the model is explored by means of case study research. Complementing the extant literature, the theoretical contribution of the paper lies in not only addressing category selection criteria for exploiting economies of scale, but also for economies of information and learning and economies of process. Furthermore, it provides insights regarding integrated network coordination mechanisms at the functional level of purchasing.     

To be or not to be corporate heritage oriented? A study of managers’ corporate heritage mindsets

Corporate heritage is a research topic in branding with managerial relevance to achieve competitive advantages. Research has mainly focussed on companies with a formal corporate heritage orientation, neglecting other companies. In this study, a novel framework has been developed for analysing managers' corporate heritage mindsets as a precondition for a corporate heritage orientation in a non-heritage-oriented company. Individual managers’ corporate image heritage depicts how managers perceive their company over time, hence revealing their corporate heritage mindset. This article proposes that two managerial mindset dimensions matter – corporate heritage recognition and stance. This abductive study combines theory and empirical findings from an industrial company with a long history, but no corporate heritage orientation. The proposed framework offers companies with a history a way to analyse whether corporate heritage could be recognised and employed. This article contributes to corporate heritage research by broadening the applicability of corporate heritage issues.     

Defining and Dimensionalising Diversity:: Evidence from Corporate Websites across Europe

The corporate ‘diversity statement’ is a new tool increasingly used by large companies to promote diversity management policies on their websites. Through an examination of these on-line texts, we identify how companies construct the meaning of ‘diversity’ through its dimensions. Few companies actually define diversity. However, dimensions of diversity cover a wide-ranging set of individual differences, not just gender and race but other visible and less visible differences that might lead to discrimination in the workplace. By comparing statements from 241 top companies in eight countries (Finland, France, Germany, Netherlands, Norway, Sweden, Switzerland and the UK), we reveal how the definition of ‘diversity’ and its dimensions as used on websites varies across Europe.     

Just-in-time purchasing: an empirical investigation

The just-in-time (JIT) literature suggests that, for JIT to be successful, a manufacturing firm has to make changes in its purchasing operations. However, empirical examination of the JIT purchasing related issues is limited. For example, a literature search identified 49 JIT purchasing articles. Of these, only 14 are empirical studies; two dealing with statistical testing of a few JIT purchasing issues. This comprehensive empirical study is undertaken to investigate (a) changes in the purchasing attributes since JIT implementation, (b) supplier evaluation cri-teria, and (c) problems with JIT purchasing implementation. Statistically significant changes are observed in 28 out of 32 attributes identified in the literature, suggesting that the manufacturing firms are successfully implementing JIT purchasing programmes. Of the 14 supplier evaluation criteria, the empirical investigation shows nine of them being important. Erratic demand for the product and customized product are found to be problematic (but not very problematic as suggested in the JIT literature( in JIT purchasing implementation.     

Corporate social responsibility recognition and support for the arts: Evidence from European financial institutions

This research investigates whether financial institutions that have gained a good reputation in relation to their CSR activities also engage in significant corporate support for the arts (CSA). Using a sample composed of the 42 largest listed European financial institutions, data from 2004 to 2013 (i.e., 420 firm-year observations) and manually collected CSA disclosure information, our findings indicate that entities rewarded for their CSR initiatives are also those that engage in significant CSA. We also find that CSA disclosure reported in the social reports of financial institutions is a predictor for the attainment of a CSR award, whereas that reported in annual reports is not. Our findings suggest that annual and social reports have a different informative relevance, at least in relation to CSR initiatives in the form of CSA, for the stakeholders of financial institutions. Thus, our results provide useful insights for companies’ communication strategies showing, for example, that social reports are the best channel to communicate about CSA.     

Green Purchasing by MNC Subsidiaries: The Role of Local Tailoring in the Presence of Institutional Duality

To examine the essential determinants of green purchasing by multinational corporations’ (MNC) subsidiaries, this study takes institutional theory as a foundation and focuses on the institutional duality associated with localization and globalization. Specifically, we develop a model to explain subsidiaries’ green purchasing and empirically test the model with data from 141 purchasing managers and senior purchasing staff members from subsidiaries in 39 countries. Our results suggest that pressures from headquarters and the local environment do not affect subsidiaries’ green purchasing directly; rather, they exert indirect influences through local tailoring. This study contributes to extant literature by revealing the significance of local tailoring in an MNC context. In addition, our findings offer several implications for practice by providing a roadmap for disseminating green purchasing across the subsidiaries of an MNC, as well as highlighting the importance of both clear communication about the benefits of green purchasing and internal audits.     

Corporate Governance in Russia:: towards a European, US, or Russian Model?

This article analyzes Russia’s emerging corporate governance system taking into account both foreign and domestic influences. It discusses influences on Russia’s corporate governance from other countries, particularly the US, Germany, and France. Aspects of Russian culture and traditions are then examined to see how they might influence the country’s evolving corporate governance system. Although Russia will continue to be influenced by international standards and systems of other countries, the article concludes that Russian corporate governance will evolve into its own unique model reflecting the country’s traditions, values, and culture. Implications for Western investors are discussed.     

Interorganizational Determinants of Environmental Purchasing: Initial Evidence from the Consumer Products Industries*

Environmental purchasing consists of the purchasing function's involvement in activities that include reduction, recycling, reuse, and substitution of materials. Despite the potentially important role that the purchasing function can play in a firm's environmental activities, little research has been performed to date that examines the factors that impact environmental purchasing. The authors develop and empirically test a theoretical model that examines how interorganizational factors both drive and constrain purchasing's involvement in environmental activities. The empirical findings suggest that environmental purchasing activities will be facilitated through increased coordination with suppliers as well as downstream members of the supply chain, including retailers. The results also suggest the need for increased coordination within the firm, particularly between the purchasing function on the inbound side and marketing and distribution functions on the outbound side.     

How Co-operative is Co-operative Purchasing in Smaller Firms?: Evidence from UK Engineering SMEs

Most SMEs do not try to engage in co-operative purchasing arrangements, and even those that do don’t handle them very well. Examining a sample of SME engineering firms from the UK Midlands for signs of more advanced practice, the authors identify three types of behaviour: firms with deliberate strategies (where co-operative purchasing is a consciously-designed and long-term part of management policy); firms with close ties with their suppliers but which still operate fundamentally adversarial policies (where, despite some development of practice, defensive, short-term and ‘low-trust’ attitudes still predominate) and those whose strategies, maybe of long standing, ‘just happened’ and are described as still emergent. The article analyses these positions to yield lessons for managers, recognising that, as firms grow, emergent strategies will need replacing with something more codified.     

风险规避偏好下农副产品自然风险管理策略的选择:外部采购还是农业保险?

在农副产品加工行业,自己种植原材料有利于企业控制产品质量、获取低成本优势。然而,随着全球气候的变暖,恶劣天气等自然风险事件频发,这无疑加剧了农副产品制造商面对的自然风险。实践中,制造商可通过外部采购策略或农业保险策略降低自然风险带来的损失。然而,这两种策略各有利弊,对于风险规避制造商而言究竟哪种策略更为有效需进行深入探析。为此,本文以单周期风险规避农副产品制造商的计划产量决策模型为基础,研究企业自然风险管理策略的选择问题。通过比较研究,找出两种策略的实施条件,并给出农副产品制造商应对自然风险的占优策略。研究结果表明:(1)当制造商风险规避程度较低时,利用外部采购策略避险是无效的。这时,如果农业保险的安全因子足够低,农业保险策略可完全补偿缺货成本,并帮助制造商降低计划产量节约种植成本,进而提高CVaR值、改善运营状态;(2)当制造商风险规避程度较高时,外部采购策略可完全消除自然风险造成的产量波动并帮助企业进入该产品市场,而农业保险则是通过补偿自然风险引发的缺货成本帮助企业进入该产品市场。哪种策略更有效取决于外部采购价格和安全因子的大小关系;(3)随着原材料单位种植成本、不利事件发生概率、最终产品单位收益及单位缺货成本的上升,外部采购策略占优区域逐渐扩大而农业保险策略的占优区域逐渐减少。     

THE TRADE DISCOUNT DECISION: A MARKOV CHAIN APPROACH*

Economic theory indicates that higher returns are required from investments that have higher risk. Two major reasons for offering trade discounts are to stimulate sales and to speed up cash receipts. Both sales increases and the earlier receipt of cash impact the risk/return characteristics of a firm. This study uses a Markov chain model to demonstrate how alternative trade credit policies impact the risk and required returns of a firm. The amount of risk and return per credit sale is calculated, and the coefficient of variation is used as a risk/return measure per credit sale. The study concludes that trade discounts can have a favorable impact on the risk/return characteristics of a firm, even in the absence of increased sales volume. Other discount decision factors which are either directly or indirectly determined in this paper include: (1) the average number of periods for which an account is outstanding, (2) the probability of collection and bad-debt losses over the average account period, (3) the average speed of payment, and (4) the average amount of cash tied up in accounts receivable.     

Purchasing performance management systems: an empirical investigation

This article aims at further developing the purchasing performance management systems (PPMSs) body of knowledge, assuming the wider perspective of the adoption process rather than key performance indicators (KPIs) only. In particular, the research questions are focused on understanding what are the most adopted indicators, what are the key elements characterising the implementation process and what are the differences among different organisational levels and different purchasing categories. The literature provides a framework for classifying purchasing KPIs, identifying the implementation process and the PPMS architecture, thus supporting the empirical research protocol. Nine case studies of large multinationals belonging to different industries are conducted. Empirical evidence shows that companies are still adopting mainly an external perspective, by focusing on performance measurement efforts on suppliers. Widely adopted indicators mainly measure cost, time and quality. However, the purchasing department has acquired an important role within the organisation and new performance indicators have been created; flexibility, innovation and sustainability are becoming increasingly important.     

改良技术共享下改良品联合采购联盟的竞合博弈研究

改良技术共享与联合采购在一定程度上能够降低改良品采购联盟的运作成本。但是，是否选择进行改良技术创新，改良率提高到什么程度，是否进行改良技术共享，形成改良技术共享与联合采购联盟之后如何进行运作成本分摊可以保持其稳定性，是零售商进行改良技术共享后改良品联合采购联盟所需要解决的关键问题。本文基于经典的EOQ模型，建立了改良技术共享下改良品联合采购联盟成员间既有竞争又有合作的竞合博弈模型。首先，当零售商各自进行改良技术创新并在联盟内共享改良技术时，确定了改良技术共享下改良品联合采购联盟的运作策略与总成本；随后，给出了一种分配方案证明改良技术共享下改良品联合采购合作博弈的核是非空的；最后，指出平均分配方案所得到的改良率将低于集中化决策时零售商的最优改良率，并指出在该合作博弈核的极点的成本分摊规则下，此联合采购联盟的总成本是最低的。本文的研究表明，采用平均分摊成本的方案将不能达到系统最优，而采用核的极点的成本分摊方案将可以使成本降低至系统集中化决策时的水平。     

Managing C-suite conflict: The unique impact of internal and external governance interfaces on top management team reflexivity

The ability of Top Management Teams (TMTs) to reflect critically on their own actions represents an important element of effective TMT decision making and governance effectiveness. This paper therefore examines how the TMT-board interface internal to the organization, as well as the TMT interface with the external supervisory authority, shape TMT reflexivity. Drawing from governance and psychological theories, we posit that cognitive conflict at the TMT-board interface can escalate by increasing levels of affective TMT-board conflict, and hereby, harm TMT reflexivity if not managed well. This proposition was tested in a multisource team-level data set collected in the field among TMTs (N = 111 TMT members) and their supervisory boards (N = 152 board members) of 56 Dutch insurance companies. The findings demonstrate that the link between cognitive and affective TMT-board conflict is mitigated by board membership influx. Yet in cases where conflict escalation does occur, its subsequent impact on TMT reflexivity hinges on the degree to which an external supervisory authority monitored TMT actions. The results illustrate that TMT decision making processes can be effectively influenced by internal and external TMT-governance interfaces, yet at different conflict stages, and through different governance actions.     

Living with zombie companies: Do we know where the threat lies?

This paper shows the existence of extreme types of zombie firm, i.e. companies with negative equity that continue to do business despite having lost their entire equity. We explain how these firms are measured and how the riskier ones are defined with different determinants. Using a Spanish sample from 2010 to 2014 an index called the EZIndex is developed that includes four dimensions of the extreme zombie problem: extension, contagion, recovery signs and immediacy. The paper contributes to zombie theory on the one hand by developing a method for ranking zombie firms based on risks and changes over time, and on the other hand by using a log-linear model to detect the riskiest corporate profiles out of all these risky firms. It demonstrates significant implications that need to be considered by the competent authorities not only in terms of their impact as a whole but also in regard to the particular profile of extreme zombie firms: they are less regulated, large and located in regions with large business fabrics.     

Service tasks of board of directors: A literature review and research agenda in an era of new governance practices

In their seminal review article on board of directors, Johnson, Daily, and Ellstrand (1996) distinguished between the control, service, and resource dependence tasks of the board and called for a stronger focus on board service tasks. Following this call, service tasks of boards have been subject to increased scholarly attention, with new theoretical perspectives and methods introduced. This paper aims at presenting the current state of research on board service tasks, departing from, and building on, the contribution of Johnson and colleagues. In doing so, we employ an Input-Process-Output-Context framework and craft an agenda for how future research could accommodate new governance practices and progress the field. Our review is relevant and timely as studies on the subject are gaining traction both in corporate governance and general management journals. Furthermore, our review on board service tasks proposes new alternative approaches to studying corporate governance which are especially appropriate in times in which a rethink of corporate governance frameworks and concepts is urgently needed.     

Shareholders’ Voting at General Meetings: Evidence from the Netherlands

We study annual general meetings of shareholders in the Netherlands. The Dutch corporate governance system is characterized by relatively concentrated shareholdings and large stakes owned by pension funds, banks and insurance companies. The legal protection of shareholders is poor due to the presence of takeover defenses, such as certificates, which deprive shareholders from their voting rights. An analysis of the minutes of 245 general meetings in the period 1998–2002 reveals that on average 30% of the equity capital is represented at the meeting. All proposals at the meeting are sponsored by the management and only 9 out of 1,583 proposals are rejected or withdrawn. Our analyses show that pension funds are the most active and critical shareholders at the meetings, while certificates effectively restrict shareholder rights. Our main conclusion is that the general meetings do not provide shareholders in the Netherlands any significant influence on management.