IE University

About: IE University is a education organization based out in Segovia, Castilla y León, Spain. It is known for research contribution in the topics: Corporate governance & Context (language use). The organization has 527 authors who have published 1709 publications receiving 64682 citations.

Safety and Ethics in the Global Workplace: Asymmetries in Culture and Infrastructure.

Abstract: This study described and analysed the circumstances surrounding a fatal car accident involving personnel of a multinational corporation in a developing country. For some companies, road accidents are the leading cause of work-related fatalities in developing countries. This reality highlights the ethical dilemmas encountered in a global workplace. Questions as to how a company addresses safety concerns outside the standard work environment, the ethics of operating in a risky environment and the requirements for international consistency in compensation standards for loss of life were addressed. The authors argued that multinational companies should localize health and safety practices to address the important asymmetries between different regions of the world regarding social, cultural and infrastructural issues. Furthermore, the authors analysed the leadership role that should be played by multinational companies to help and support national governments to reduce traffic fatalities in developing countries. From this perspective, the article represents a contribution for the body of knowledge dealing with the business–society relations. The authors used an action research approach to address these issues, both in response to the particular incident and to contribute to the body of research in this field.

Investment Policy, Internal Financing and Ownership Concentration in the UK

Abstract: This paper investigates whether investment spending of firms is sensitive to the availability of internal funds. Imperfect capital markets create a hierarchy for the different sources of funds such that investment and financial decisions are not independent. The relation between corporate investment and free cash flow is investigated using the Bond and Meghir [Review of Economic Studies, 61 (1994a) 197] Euler-equation model for a panel of 240 companies listed on the London Stock Exchange over a 6-year period. This method allows for a direct test of the first-order condition of an intertemporal maximisation problem. It does not require the use of Tobin's q, which is subject to mis-measurement problems. Apart from past investment levels and generated cash flow, the model also includes a leverage factor which captures potential bankruptcy costs and the tax advantages of debt. More importantly, we investigate whether ownership concentration by class of shareholder creates or mitigates liquidity constraints. When industrial companies control large shareholdings, there is evidence of increased overinvestment. This relation is strong when the relative voting power (measured by the Shapley values) of the combined equity stakes of families and industrial companies and the Herfindahl index of industrial ownership are high. This suggests that a small coalition of industrial companies is able to influence investment spending. In contrast, large institutional holdings reduce the positive link between investment spending and cash flow relation and hence suboptimal investing. Whereas there is no evidence of over- or under-investing at low levels of insider shareholding, a high concentration of control in the hands of executive directors reduces the underinvestment problem.

Is top management team-supply chain manager interaction the missing link? An analysis of risk-bearing antecedents for supply chain managers

Abstract: Supply chain managers (SC managers) may make less than optimal decisions for the firm when facing compensation and employment risks. The purpose of this paper is to study two relevant factors (target setting and strategic importance of the supply chain function) that may drive SC managers to perceive more or less risk to their welfare.,The study combines survey data from 133 firms with secondary data in order to reduce source bias and enhance the validity of results. The authors also conducted interviews with supply chain and human resources managers.,The results show that top managers can alter SC managers’ perceived risks. Ambitious targets drive compensation risk but not employment risk. The supply chain function’s strategic importance, on the other hand, decreases employment risk but increases compensation risk.,The authors emphasize two ways that the top management team (TMT) influences SC managers’ perceived personal welfare but acknowledge that there may be others factors. Due to the topic sensitivity, the authors could not collect data on all variables (e.g. individual characteristics) that may affect risk perception. The findings are based on Spanish firms and may not be generalized to other contexts.,This research proposes three suggestions. First, compensation and employment risks should be considered separately when designing compensation and evaluation systems. Second, appropriate performance targets may put compensation risk in a reasonable range that is neither too high to prevent risky-yet-beneficial decisions nor too low to allow nonfeasance. Third, escalating the supply chain’s strategic importance effectively offsets employment risk.,Scholars have repeatedly shown the negative outcomes of SC managers’ perceived compensation and employment risks. Yet, little attention has been given to their antecedents. The study explores two relevant antecedents and provides integrative empirical evidence regarding actions top leaders can take to manage SC managers’ perceived risk and subsequently enhance firm performance.