What makes organizations so similar? We contend that the engine of rationalization and bureaucratization has moved from the competitive marketplace to the state and the professions. Once a set of organizations emerges as a field, a paradox arises: rational actors make their organizations increasingly similar as they try to change them. We describe three isomorphic processes-coercive, mimetic, and normative—leading to this outcome. We then specify hypotheses about the impact of resource centralization and dependency, goal ambiguity and technical uncertainty, and professionalization and structuration on isomorphic change. Finally, we suggest implications for theories of organizations and social change.

The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields (Chinese Translation)

We develop a theoretical model to describe and explain variation in corporate governance among advanced capitalist economies, identifying the social relations and institutional arrangements that shape who controls corporations, what interests corporations serve, and the allocation of rights and responsibilities among corporate stakeholders. Our “actor-centered” institutional approach explains firm-level corporate governance practices in terms of institutional factors that shape how actors' interests are defined (“socially constructed”) and represented. Our model has strong implications for studying issues of international convergence.

https://www.jstor.org/stable/pdfplus/30040732.pdf

The Cross-National Diversity of Corporate Governance: Dimensions and Determinants

Instead of traditional principal–agent conflicts espoused in most research dealing with developed economies, principal–principal conflicts have been identified as a major concern of corporate governance in emerging economies. Principal–principal conflicts between controlling shareholders and minority shareholders result from concentrated ownership, extensive family ownership and control, business group structures, and weak legal protection of minority shareholders. Such principal–principal conflicts alter the dynamics of the corporate governance process and, in turn, require remedies different from those that deal with principal–agent conflicts. This article reviews and synthesizes recent research from strategy, finance, and economics on principal–principal conflicts with an emphasis on their institutional antecedents and organizational consequences. The resulting integration provides a foundation upon which future research can continue to build.

Corporate governance in emerging economies: A review of the principal-principal perspective: Review paper

Instead of traditional principal-agent conflicts espoused in most research dealing with developed economies, principal-principal conflicts have been identified as a major concern of corporate governance in emerging economies. Principal-principal conflicts between controlling shareholders and minority shareholders result from concentrated ownership, extensive family ownership and control, business group structures, and weak legal protection of minority shareholders. Such principal-principal conflicts alter the dynamics of the corporate governance process and, in turn, require remedies different from those that deal with principal-agent conflicts. This article reviews and synthesizes recent research from strategy, finance, and economics on principal-principal conflicts with an emphasis on their institutional antecedents and organizational consequences. The resulting integration provides a foundation upon which future research can continue to build.

Review Paper Corporate Governance in Emerging Economies: A Review of the Principal-Principal Perspective

This study offers a sociopolitical perspective on the international spread of corporate governance models. We unpack the heterogeneity of interests and preferences across and within types of shareholders and senior managers over time in an analysis of the adoption of a shareholder value orientation among contemporary German firms. Using extensive data on more than 100 of the largest publicly traded German companies from 1990 to 2000, we find that the influence of major shareholder groups (e.g., banks, industrial corporations, governments, and families) and senior manager types (differing educational backgrounds and ages) can be clearly observed only after redefining these key actors according to common interests and preferences. We also find evidence that German firms engage in decoupling by espousing but not implementing a shareholder value orientation but show that the presence of more powerful and more committed key actors reduces the likelihood of decoupling. We discuss the implications of our finding...

The Diffusion of Ideas over Contested Terrain: The (Non)adoption of a Shareholder Value Orientation among German Firms:

Comparative corporate governance: Competitive implications of an emerging convergence

Corporate governance guidelines are a mechanism that a firm can enact which should reduce agency costs and better align the interests of boards and the suppliers of capital. This study examines stock price reactions primarily attributable to institutional investors occurring when corporations announce the enactment of corporate governance guidelines. A final sample of 77 firms was derived from the first announcement of corporate governance guidelines exclusive to the SEC-EDGAR database. The results indicate that good governance does matter. Firms that announced the enactment of corporate governance guidelines experienced increased stock prices following the announcements. There was an immediate (days 1–4) reaction for firms that provided all or part of the guidelines’ substance; a delayed (days 8–10) reaction occurred for those firms that only referenced the guidelines’ enactment. Additionally, firms with either a potentially greater following or that had a previous history of acrimonious relations with stakeholders were rewarded by the announcement of the enactment of guidelines.

Does Good Governance Matter to Institutional Investors? Evidence from the Enactment of Corporate Governance Guidelines

Corporate experiences with consequences of the Sarbanes-Oxley Act of 2002 (SOX), changes in the listing standards for the New York Stock Exchange (NYSE) and NASDAQ Stock Market, Inc (NASDAQ), recent corporate scandals, and the emergence of activist investors have fostered a climate of intense scrutiny of corporate governance structures and activities The effects of these changes are expected to increase shareholder activism, especially institutional shareholder activism (Whitehouse, 2007) Indeed, the 2007 proxy season reflected increased evidence of shareholder activism (Brewer, 2007) The scholarship on corporate governance since Berle and Means (1932) has generally assumed the separation of ownership and control to be an inevitable attribute of public corporations (Bainbridge, 1995), causing the research to focus on the consequences of the separation The consequences of the separation are generally referred to as agency costs (Jensen and Meckling, 1976) and agency theory has been the predominant paradigm for understanding and explaining corporate governance issues Within the discussion of the consequences of ownership structure, the proper role of institutional investors and the reduction of agency costs "has spawned a generation of corporate literature" (Garten, 1992: 588) Despite the disincentives of prior and existing constraints against collective action, "free-riding" by some shareholders (ie, that all investors will share in the gains generated by the efforts of a single activist investor or small group of activist investors) (Black, 1998) and "free-walking" (ie, that rather than expend time and money trying to improve the performance of a company in its portfolio, an institutional investor will just sell the shares of the under-performing company and walk away) (Ingley and van der Walt, 2004), some shareholder activists find that the gains from activism often outweigh its costs (Rubach, 1999) Prior research has demonstrated that: (1) many institutional owners are activists (Brown, 1998), (2) their activism is expressed in a variety of forms from confrontational to relational (Ryan and Schneider, 2002; Useem, 1996), and (3) their activism can affect firm performance (Chaganti and Damanpour, 1991) While much has been learned about the ways in which institutions attempt to influence governance and the consequences of these attempts, at least one central question remains unaddressed: which institutions are most likely to be activists? To answer this question, this study examines Ryan and Schneider's model (2002) of the antecedents of institutional investor activism The article proceeds as follows First, we discuss specific determinants of activism as proposed by Ryan and Schneider (2002) and develop the bases for our hypotheses Next, we present the sample, data collection, variables, and analytical methods employed to test the hypotheses This is followed by the results of the analyses Finally, we discuss the implications of the findings for both researchers and practitioners and address the limitations and additional opportunities for future research DETERMINANTS OF ACTIVISM Ryan and Schneider (2002) argue that the type of institutional investor determines whether an institutional investor will practice shareholder activism While other influences are possible, this study examines several determinants of institutional shareholder activism proposed by Ryan and Schneider (2002) that are measurable through survey data, yet parsimoniously capture areas likely to ignite activism: fund size, investment time horizon, performance expectations, pressure sensitivity, legal restraints, and portfolio management (internal versus external) (see Figure I) The research is consistent with a call for investigation of more finely-grained measures of institutional investors by Sundaramurthy et al (2005) Fund Size Previous research on large investors (e …

https://www.jstor.org/stable/info/40604646

Determinants of Institutional Investor Activism: A Test of the Ryan-Schneider Model (2002)

This study analyzes entrepreneurship from the perspective of a potential Latin American necessity entrepreneur. The analysis contains an overview of the culture of entrepreneurship in Latin America and the Caribbean regions. Necessity entrepreneurship and its practice in Latin America and the Caribbean is examined using the latest Global Entrepreneurship Monitor (GEM) data. Finally necessity entrepreneurship among Latin American immigrants in developing and developed countries, especially the United States is described. In all cases the necessity entrepreneur is faced with numerous institutional obstacles, though the obstacles differ in each region. These obstacles often prevent individual's entrepreneurial activities from being as productive as they could be, leading to different degrees of contribution to overall economic growth. Possible solutions to the institutional obstacles are identified.INTRODUCTIONIn 2007, 20.7 percent of all the businesses in the state of Texas were owned by Hispanic entrepreneurs (Echeverri-Carroll & Kellison, 2012). There was a 40.2 percent increase (in five years) in the number of Hispanic owned businesses in Texas. The figure went from 319,340 in 2002 to 447,589 in 2007 (Echeverri-Carrol & Kellison, 2012). The recent US census revealed that the Hispanic-American population in the United States will grow three times faster than any other ethnic group over the next 20 years (Roberts, 2013). This rapid growth will very likely affect the American economy as immigrants are nearly twice as likely to create new businesses (Herman & Smith, 2010). The causes for this early entrepreneurship activity include both a home country culture which supports entrepreneurship activity and conditions in the United States which both encourage and necessitate the creation of new ventures. This study will examine both the causes for immigrant entrepreneurship activities and the barriers, especially the institutional barriers, faced by immigrants from Latin American countries.ENTREPRENEURSHIP CULTURE WITHIN LATIN AMERICAIt is well established that entrepreneurship is the engine of economic growth in developed and developing economies (Reynolds, 1997; Schumpeter, 1934). Studies performed by the Global Entrepreneurship Monitor (GEM) have revealed that Latin America has especially high levels of entrepreneurial activity (Larroulet & Couyoumdjian, 2009). When it comes to entrepreneurship rates, Latin America is the second highest region in the world, exceeding those of the European Union, Asia, and North America. Evidence shows that approximately 18 percent of Latin American people of working age have participated in entrepreneurial activities (Larroulet & Couyoumdjian, 2009). The high level of entrepreneurial activity is consistent across all of the Latin American countries that participated in the GEM study, showing that the entrepreneurial pattern is consistent (Larroulet & Couyoumdjian, 2009).These trends have not changed in the last few years. The latest GEM study (the 2013 Global report) reveals that the general populations in Latin America and the Caribbean aim to engage in entrepreneurial activities; 32.5 % of the working population (aged 18-64) have expressed the intention to engage in entrepreneurial activities (see Table 1). Again, of the adult population of working age (aged 18-64), 18.5 % of Latin American and Caribbean people are engaged in early stage entrepreneurial activities (see Table 2). GEM defines early stage entrepreneurial activity (TEA) as including individuals in the process of starting a new venture as well as those operating a business for less than 42 months (Amoros & Bosma, 2014: 12). If the analysis only includes the ten Latin American countries in the 2013 GEM survey, the number of TEA entrepreneurs jumps to over 20%. For Latin America and the Caribbean Region, there is quite a variance in the presence of early stage entrepreneurial activity (TEA) with Surinam only at 5. …

Necessity Entrepreneurship: A Latin American Study

INTRODUCTION Microfinance institutions (MFIs) have become fixtures of the international community. For over thirty years, MFIs have successfully supported entrepreneurship by lending money to needy people all over the world (Richardson, 2009). The growth of the microfinance and microlending has spawned considerable research interest in this industry and its international growth. Much of the prior research has examined the product and service offerings of MFIs, management best practices, MFI clientele, and policy issues and their impacts (see Brau & Woller's (2004) literature review of microfinance). Brau and Woller (2004) found that scholarly inquiries into microfinance and microlending have generally lagged behind industry developments. In Iraq, the United States government through the U.S. Agency for International Development (USAID) has successfully created programs that have provided more than 132,000 microloans worth a combined value of over $300 million. The loans have averaged $1500 at 1518% interest rates with a repayment rate of over 98%. (US Federal News Service, 2009). The microfinance loans from MFIs working with USAID have resulted in more than 130,000 jobs being sustained or created (Iraq Microfinance Industry (IMFI), 2010). In contrast, microfinance and microlending, while achieving considerable success internationally, have not generally succeeded in the United States. Microlending in the US has experienced high default rates, failures in meeting program goals, and a general lack of self-sufficiency or sustainability (Richardson, 2009). Sustainability as used herein refers to survivability, not the social responsibility focus that sustainability has begun to assume. This article will examine the factors that contribute to the success and failure of microlending efforts, and compare the specific reasons for the success of the USAID programs in Iraq and the general failure of microlending and microcredit efforts in the US. DETERMINANTS OF MICROLENDING SUCCESS/FAILURE Microfinance generally refers to the informal and formal arrangements that offer financial services to the poor (Brau & Woller, 2004). While it has existed for centuries, microfinance came on the international scene during the 1970s as a serious effort to create and formalize financial services for the poor (Richardson, 2009; Brau & Woller, 2004). Domestic use of the terms "microenterprise" and "microfinance" did not appear for another decade (Burrus, 2005). A microenterprise is a business with five or fewer employees. Many of these businesses have no employees other than the owners (Burrus, 2005). The purpose of microfinance is to provide economic opportunities, including financial capital and services, to the poor in the hope that the cycles of poverty can be broken through new business development (Crabb, 2008). Microfinance offers people living in poverty access to basic financial services, such as loans, savings, money transfer services, and insurance needed to run their businesses (Consultative Group to Assist the Poor (CGAP), 2009). At best, commercial banks in developing countries serve only 20% of the population (Richardson, 2009). MFIs have stepped in to fill this void, lending to individuals that traditional lenders have ignored due to high transaction costs and risks (Richardson, 2009). There are now thousands of MFIs servicing 100-200 million of the world's poor (Brau & Woller, 2004). The individual amount of the microloans in developing countries ranges from $10 to over $1000 with durations usually of less than two years. Borrowers are not usually required by microlenders in developing countries to put up collateral or undergo credit checks (Richardson, 2009). Since the 1970s, MFIs in developing countries have been very successful, while those in the United States have seen limited success. Defining success for MFIs has been problematic. MFIs normally have dual objectives of financial development and social improvement. …

Michael J. Rubach

Papers

Comparative corporate governance: Competitive implications of an emerging convergence

Does Good Governance Matter to Institutional Investors? Evidence from the Enactment of Corporate Governance Guidelines

Determinants of Institutional Investor Activism: A Test of the Ryan-Schneider Model (2002)

Necessity Entrepreneurship: A Latin American Study

The Determinants of the Success of Microlending: A Comparison of Iraq and the United States