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)

Drawing on the literature on CEO succession research and impression management, the present study examines how the selection of CEO successors affects their motivation to initiate postsuccession strategic change. Based on the perspective of reference-dependence in prospect theory, the study also explores the impact of boards' reference-point setting on the intensity of CEO successors' inclination to change corporate strategy after assuming office.,Two-stage Heckman model and a spline function analysis are used to analyze data of 4,373 firm-year observations from Chinese listed companies between 2001 and 2016.,The empirical findings indicate that the intensity of CEO successors' willingness to change corporate strategy is diluted by the gap between the focal firm's performance on succession and its prior performance, while it is strengthened by the gap between the focal firm's performance on succession and the industry-average level of performance,By establishing a theoretical model, the present study analyzes the process of CEO selection to explore the role of boards of directors in this process and its effect on CEO successors' willingness to initiate postsuccession strategic change. Significantly, this study shows that the boards of directors would adopt internal and external reference setting when evaluating CEO successors in the postsuccession phase, which would impact the intensity of successors' motivation to manage impression by initiating postsuccession strategic change.

CEO selection, reference setting, and postsuccession strategic change

Purpose




The authors contend that immediately following the initial public offering (IPO), the new owners that replace the original ones are likely to request changes in two corporate governance mechanisms, board of directors and top management teams (TMTs). Following these alterations, the purpose of this paper is to propose that such changes will be detrimental for the performance of young entrepreneurial firms.




Design/methodology/approach




This study examines the post-IPO governance changes in young entrepreneurial firms. The sample consists of 185 companies that went public between 2001 and 2005. A hierarchical linear regression approach with the appropriate control variables is adopted to test the proposed hypotheses.




Findings




The results revealed that, following the changes in ownership structure post-IPO, changes are observed in one of the corporate governance mechanisms the authors considered, boards of directors, but not TMTs. Consistent with the general theme of this study, the authors also observed a negative impact of changes in boards of directors on subsequent firm performance; this was not the case with TMTs.




Research limitations/implications




Contrary to the fundamental contentions of agency theory, the results highlight the need for adopting a different approach for young entrepreneurial firms.




Practical implications




The findings highlight the importance of preserving the entrepreneurial efficacy of young entrepreneurial firms.




Originality/value




This paper challenges the fundamental contentions of agency theory in the case of young entrepreneurial firms. The results demonstrate that post-IPO shareholders’ interference with the governance mechanisms results in lower performance.

Detrimental effects of post-IPO corporate governance changes: The case of young entrepreneurial firms

Interfirm relationships or networks take a variety of forms and can potentially provide significant synergy for the participants. Yet, most of research studies, to date, have primarily analyzed interfirm networks based upon one paradigm/ perspective. This review aims to examine a complete theoretical basis of network research and looks for research gaps and practical implications for both researchers and practitioners. Specifically, it summarizes six conceptual perspectives regarding interfirm networks: motivational, relational, structural, evolutionary, interactional, and governance, in order to address similarities and differences among different perspectives. With this purpose in mind, the relevant literature is reviewed and, at the conclusion of each conceptual perspective, areas of research that require more development and investigation are identified. Finally, suggestions for managers contemplating or engaged in interfirm networks are presented. Introduction The network paradigm originally built upon the notion that economic actions are embedded in a social network of relationships. In essence, organizations can be interconnected with other organizations through a wide array of social networks in order to improve effectiveness and efficiency. For instance, through examining a variety of forms of collaboration, ranging from consortia to joint venture, to franchising, to dealership, Fabrizio (2011) found collaboration among firms of different sizes helps to overcome weaknesses without increasing transitional costs. Other scholars found that firms organized in networks have higher survival chances and that prestigious partners help firms to go to IPO faster (Gulati, Dialdin & Wang, 2002). In addition, networks may also enable firms to gain access to capital in order to sustain operations and investment, while lower the transitional costs (Khanna & Rivkin, 2001). For instance, research findings show that network members in China reported higher financial performance and productivity (Keister, 1998). Further, networks may reduce consumer uncertainty attitudes towards the brand. For instance, Ingram and Baum's (1997) study of chain affiliation of Manhattan hotels suggests that a hotel that joins a high status hotel chain signals its high status. Recent literature on networks attempted to examine the knowledge transfer among connected firms. For instance, the vertical networks between Toyota and its suppliers and among suppliers themselves facilitate knowledge learning and provide members learning and productivity advantages over non-members (Dyer & Nobeoka, 2000). Traditional economic literature identified that a firm has at least three alternatives in order to maintain its strategies, such as searching for suppliers and new markets (Mariti & Smiley, 1983): the firms have options to develop a cooperative agreement with other firms, firms may make resources available to individual market transactions, and firms may organize themselves internationally. The last two alternatives can illustrated by the technological approach based upon economies and diseconomies of scale and Adam Smith's principle of division of labor--refined and elaborated by Stigler (1951), Coase (1937), and Williamson (1975). However, recent empirical evidence shows that the maxim of "networks matter" may contradict the traditional economics of scope/scale and successful exploitation of personal or organizational relationships is essential for firms to gain and maintain competitive advantages (Khoja, 2010). As such, practitioners should be vigilant to develop relationships in networks. By definition, a network describes a collection of actors (e.g., persons, divisions, firms, countries) and their connections (lacobucci, 1996; Thorelli, 1986). Brass, Galaskeiwica, Greve, and Tsai (2004) define a network as "a set of nodes and the set of ties representing some relationships, or lack of relationships, between the nodes" (p. …

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A Review of Interfirm Networks: A Deeper Understanding of the Relationships Paradigm

The purpose of this study is to assess the post-IPO performance structures of young entrepreneurial firms. Based on the propositions of the signaling model, I propose that the firm IPO performance is a determining factor in post-IPO changes in ownership structures. Furthermore, I contend that the new owners that replace the original ones in young IPO firms will be prone to request changes in corporate governance mechanisms such as top management team membership and the boards of directors based on the need to have their own agents looking after their interests as recommended by the agency theory. Following these alterations in corporate governance mechanisms, I propose such changes will be detrimental for the performance of the young entrepreneurial firms as these firms, due to their uniqueness, are still in great need of the tacit knowledge provided by their original decision makers. Finally, moderating effects of the environmental dimensions of dynamism, complexity and munificence are hypothesized to impact the relationship between the rate of change on corporate governance mechanisms and firm performance. In the literature review section I review studies that explore why firms go public, the main areas of IPO research, the importance of executives and directors in young entrepreneurial firms, the theories related to IPO performance and its measures, the uniqueness of these firms and the potential impact of environment on decision making

Detrimental effects of interventions with the corporate governance mechanisms of young entrepreneurial firms

This study investigates a fairly broad array of factors which may influence Chinese corporate governance and examines the relationships between firm age, top management team age, board structure, ownership structure and firm performance in publicly-listed Chinese firms. As we anticipated, owing to the unique context of corporate China, results support a negative relationship between firm age and firm performance, a positive relationship between percentage of independent directors and firm performance, and a positive relationship between the presence of foreign blockholders and firm performance. This study also found a positive relationship between the percentages of shares owned by the state as a blockholder and firm performance, but found that neither private nor institutional blockholders influence firm outcomes. Results also indicate that the relationship between top management age and firm performance is mediated by firm size. The expected negative relationship between CEO duality and performance and positive relationship between board size and firm performance is not supported. These results indicate that there are some unique features of Chinese governance practices that need to be considered by researchers seeking to test the applicability of western theories in the Chinese context. Introduction In 1949, when Mao Zedong and his comrades formed the People's Republic of China, they probably never imagined that China would one day have a dynamic market-based economy measured in the trillions of dollars. In the early 1990's the transition to a market economy began with the liberalization of business practices, the privatization of small and medium-sized state owned enterprises, and the preparation of large institutions for private ownership. With the transition from state to private ownership have come issues of corporate governance and leadership, as well as the potential for agency problems. The separation of ownership by principals and decision control by hired managers creates the classic agency relationship, which has long been thought to materially influence the welfare of principals (Jensen & Meckling, 1976). In a centrally-planned economy, most state owned firms pursue goals other than wealth maximization. The agency relationship and its costs are neglected in such situations as enterprises essentially act as subsidiaries of the only market player, the state. While agency concerns were moot in the communist system, as China has moved toward a market economy, agency problems have become more of an issue (Hua, Misesing, & Li, 2006). Today, governance issues commonly confronted by western firms are becoming more and more familiar to both private and partially state-owned Chinese firms. We believe there are some unique issues related to corporate governance that need to be considered vis-a-vis Chinese firms. Researchers suggest that the composition of the board, the experience of the top management team (TMT), the firm's ownership structure and even the firm's history within the transitional economy may affect the performance of newly-formed, for-profit enterprises (Sun, Li, & Zhou, 2005; Firth, Fung, & Rui, 2006a & b, 2007;Chen, 2001;Wei, Lau, Young, & Wang. 2005). For Chinese companies, some of the prescriptions of western literature should hold, while others may not, owing to the unique dynamics of China's business climate where business processes include both western governance practices along with traditional socialist views. China is a rapidly emerging economic power. The widely-held assumption appears to be that this transformation has been proportional to the Chinese government's movement toward laissez faire economic policies. It is, however, also possible that a portion of China's success is owing to the government's continued involvement in the private sector--its middle way to privatization of the economy. A better understanding of the unique governance practices of China should be interesting to business scholars, given the increasing importance of China's economy in the global marketplace. …

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The Unique Nature of Chinese Corporate Governance Practices

Using longitudinal data, this study investigates the impact of managerial ownership, director ownership, state ownership, firm size, and blockholders on initial public offerings (IPOs) of Chinese listed companies from 1991 to 2007. Underpricing of IPOs is examined at three specifically identified time periods which we call the primitive stage, the development stage, and the maturity stage. Our results indicate that those corporate governance factors we examined in this study exhibit different characteristics at different stages for Chinese publicly listed companies which signify a need to assess the impact of governance mechanisms on IPO processes of emerging economies from a different perspective. Introduction This study examines the initial public offerings of Chinese publicly traded companies and illuminates some of the unknowns of this dynamic economy. The process of China's market economy reform has been experimental and gradual. Since the reform started in 1978, there has been remarkable growth in the Chinese economy. Since the two Chinese stock markets were formed in the early 1990s, hundreds of companies have been privatized and have gone public (Sun, Li, & Zou, 2005). Although the idea was to create a free market economy in which business practices reflect those of western counterparts, scholars call for more in-depth studies about the uniqueness of the Chinese quasi-free-market structure (Firth, Fung, & Rui, 2006; 2007). Popular research areas such as corporate governance of listed firms (Chert, 2001) and State-Owned-Enterprises (Hua, Miesing, & Li, 2006) have been investigated, while initial public offerings (IPOs) and related issues have only recently received attention (Deng & Dorfleitner, 2008; Kao, Wu, & Yang, 2009). Sanders and Boivie (2004) proposed that in emerging industries, there are qualitative factors rather than objective factors that serve as signals for the valuation of firms. The authors argue that "in highly uncertain environments investors attempt to reduce their uncertainty through screening firms and sorting their valuations based on new firms' use of observable agency control mechanisms" (Sanders & Boivie, 2004:170). Going beyond that, this study considers some of these observable mechanisms and makes a connection between them and IPO firm performance in China. There is evidence characterizing the Chinese IPO market as one in which there is a prevalence of uncertainty and information asymmetry (Ma, 2007). As China is considered a rising star in the 21st century, assessing the progress of the IPO process in China is important. Particularly, this study assumes that different governance mechanisms may have different impacts on firm valuation at different points in time in the evolution of the Chinese new issue market. Although the study is retrospective, the results may provide insights into the future of the Chinese IPO market and IPO markets in other emerging economies. This study examines the impact of managerial ownership (Kroll, Waiters, & Le, 2007), director ownership (Kroll, Walters, & Wright, 2008), firm size (Dalton, Daily, Johnson, & Ellstrand, 1999), state ownership (Sun et al., 2005), and blockholders (Daily, Dalton, & Rajagopalan, 2003) on IPO underpricing (Arthurs, Hoskisson, Busenitz, & Johnson, 2008) at three specific points in time. A review of the literatural indicates that an explanation of the temporal changes in the relationships between firm governance and IPO performance has not been done. This study provides a road map for academicians in analyzing the impact of governance issues on IPOs in emerging economies and provide fresh insights into the impacts of various corporate governance devices in emerging economies that are likely to differ from earlier findings related to mature western markets. Conceptual Development Classical agency theory proposes that executives act as agents of the shareholders or principals (Jensen & Meckling, 1976). …

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Yan Liu

Papers

The Unique Nature of Chinese Corporate Governance Practices

An Inquiry into Chinese Initial Public Offerings from a Corporate Governance Perspective