Showing papers on "Corporate governance published in 1997"

A Survey of Corporate Governance

Abstract: This article surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world. CORPORATE GOVERNANCE DEALS WITH the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. How do the suppliers of finance get managers to return some of the profits to them? How do they make sure that managers do not steal the capital they supply or invest it in bad projects? How do suppliers of finance control managers? At first glance, it is not entirely obvious why the suppliers of capital get anything back. After all, they part with their money, and have little to contribute to the enterprise afterward. The professional managers or entrepreneurs who run the firms might as well abscond with the money. Although they sometimes do, usually they do not. Most advanced market economies have solved the problem of corporate governance at least reasonably well, in that they have assured the flows of enormous amounts of capital to firms, and actual repatriation of profits to the providers of finance. But this does not imply that they have solved the corporate governance problem perfectly, or that the corporate governance mechanisms cannot be improved. In fact, the subject of corporate governance is of enormous practical impor

Understanding Governance: Policy Networks, Governance, Reflexivity and Accountability

Abstract: Understanding Governance asks: * What has changed in British government over the past two decades, how and why? * Why do so many government policies fail? * What does the shift from government to governance mean for the practice and study of British government? This book provides a challenging reinterpretation which interweaves an account of recent institutional changes in central, local and European Union government with methodological innovations and theoretical analysis. It emphasizes: the inability of the 'Westminster model', with its accent on parliamentary sovereignty and strong executive leadership, to account for persistent policy failure; the 'hollowing out' of British government from above (the European Union), below (special purpose bodies) and sideways (to agencies); and the need to respond to the postmodern challenge, rethinking the methodological and theoretical assumptions in the study of British government.

A General Theory of Network Governance: Exchange Conditions and Social Mechanisms

Abstract: A phenomenon of the last 20 years has been the rapid rise of the network form of governance. This governance form has received significant scholarly attention, but. to date, no comprehensive theory for it has been advanced, and no sufficiently detailed and theoretically consistent definition has appeared. Our objective in this article is to provide a theory that explains under what conditions network governance, rigorously defined, has comparative advantage and is therefore likely to emerge and thrive. Our theory integrates transaction cost economics and social network theories, and, in broad strokes, asserts that the network form of governance is a response to exchange conditions of asset specificity, demand uncertainty, task complexity, and frequency. These exchange conditions drive firms toward structurally embedding their transactions, which enables firms to use social mechanisms for coordinating and safeguarding exchanges. When all of these conditions are in place, the network governance form has adv...

Effects of Trust and Governance on Relational Risk

Abstract: In transaction cost economics, trust has been treated as redundant or even misleading. This study tested the effects of governance and trust on the risk perceived by agents of firms in alliances. T...

Corporate Elite Networks and Governance Changes in the 1980s

Abstract: Changes in corporate governance practices can be analyzed by linking the adaptations of individual firms to the structures of the networks in which firms' decision makers are embedded. Network structures determine the speed of adaptation and ultimate patterns of prevalence of governance practices by exposing a firm to particular role models and standards of appropriateness. The authors compare the spreads of two governance innovations adopted in response to the 1980s takeover wave: poison pills (which spread rapidly through a board‐to‐board diffusion process) and golden parachutes (which spread slowly through geographic proximity). The study closes with a discussion of networks as links between individual adaptation and collective structures.

European integration and supranational governance

Abstract: We argue that European integration is provoked and sustained by the development of causal connections between three factors: transnational exchange, supranational organization, and European Community (EC) rule-making. We explain the transition, in any given policy sector, from national to intergovernmental to supranational governance, in two ways. First cross-border transactions and communications generate a social demand for EC rules and regulation, which supranational organizations work to supply. We thus expect that Community competences will be unevenly constructed, both across policy sectors and over time, as a function of the intensity of these demands. Second, once EC rules are in place, a process of institutionalization ensues, and this process provokes further integration. Although we recognize the importance of intergovernmental bargaining in EC politics, our theory is not compatible with existing intergovernmental theorizing.

From the Positive to the Regulatory State: Causes and Consequences of Changes in the Mode of Governance

Abstract: Since the late 1970s European governments have been forced to change their traditional modes of governance in response to such trends as increasing international competition and deepening economic and monetary integration within the European Union. Strategic adaptation to the new realities has resulted in a reduced role for the positive, interventionist state and a corresponding increase in the role of the regulatory state: rule making is replacing taxing and spending. The paper's first part identifies three sets of strategies leading to the growth of the regulatory state as external or market regulator, and as internal regulator of decentralised administration. The second part examines major structural changes induced by changes in regulatory strategies. The institutional and intellectual legacy of the interventionist state is a major impediment to the speedy adjustment of governance structures to new strategies. It would be unwise to underestimate the difficulties of the transition from the positive to the regulatory state, but it is important to realise that international competition takes place not only among producers of goods and services but also, increasingly, among regulatory regimes. Regulatory competition will reward regimes in which institutional innovations do not lag far behind the new strategic choices.

Why people don't trust government

Abstract: Preface Introduction: The Decline of Confidence in Government Joseph S. Nye, Jr. PART ONE: The Scope and Performance of Government The Evolving Scope of Government Ernest R. May Measuring the Performance of Government Derek Bok Fall from Grace: The Public's Loss of Faith in Government Gary Orren PART TWO: The Menu of Explanations Is It Really the Economy Stupid? Robert Z. Lawrence Social and Cultural Causes of Dissatisfaction with U.S. Government Jane Manbridge The Polarization of American Parties and Mistrust of Government David C. King The Politics of Mistrust Richard E. Neustadt PART THREE: Data on Public Attitudes toward Governance Changing Attitudes in America Robert J. Blendon, John M. Benson, Richard Morin, Drew E. Altman, Mollyann Brodie, Mario Brossard, And Matt James Postmaterialist Values and the Erosion of Institutional Authority Ronald Inglehart Public Trust and Democracy in Japan Susan J. Pharr Conclusion: Reflections, Conjectures, and Puzzles Joseph S. Nye, Jr., and Philip D. Zelikow Notes Contributors Index

Financial markets and corporate strategy

Abstract: The second European edition of Financial Markets and Corporate Strategy provides comprehensive coverage of financial markets and corporate finance, brought to life by real world examples, cases and insights. Placed in a truly international context, this new and updated edition takes an academic and practical view-point to guide students through the challenges of studying and practicing finance. Aimed specifically at an international audience, this edition boasts hundreds of references to new and relevant non-US research papers from top finance journals. Whilst retaining the well respected structure of the successful US text, Professor David Hillier has also made a number of additions which include: Fully updated research, data and examples in every chapter. Coverage of the global financial crisis, the impact it made on the financial markets and the lessons being learnt by the finance industry. A stronger emphasis on corporate governance and agency theory. Updates on accounting standards, bankruptcy laws, tax rules and tax systems.

Anthropology of policy : critical perspectives on governance and power

Abstract: Arguing that policy has become an increasingly central concept and instrument in the organisation of contemporary societies and that it now impinges on all areas of life so that it is virtually impossible to ignore or escape its influence, this book argues that the study of policy leads straight into issues at the heart of anthropology.

The global revolution in public management: Driving themes, missing links

Abstract: Since the late 1970s, a truly remarkable revolution has swept public management around the world. Understanding this revolution means sorting through three issues: the basic ideas of reform; the connections between the reforms and governmental processes, like budgeting and personnel; and the links between these processes and governance. These reforms have proven surprisingly productive but, in the process, they have raised a new generation of fundamentally important issues that have been largely unexplored.

Governance, administration and development: making the state work

Abstract: Development and Its Administration - Organizational Environments: Comparisons, Contrasts and Significance - The Policy Process: Political Decisions about Technical Matters - Bureaucracy: Obstructing or Facilitating Development? - Administrative Reform: The Continuing Search for Performance Improvement - Planning for Development: The Solution or the Problem? - Decentralization Within the State: Good Theory but Poor Practice? - Public Enterprise Reform: Private Sector Solutions - Beyond the Market, Beyond the State: The Rise of Non-Governmental Organizations - The International Environment: External Influences on Internal Issues - Conclusion: What Future for the Public Sector?

Assessing and Managing the University Technology Business Incubator: An Integrative Framework

Abstract: Seeks to develop a framework for assessing and managing university-based technology business incubators (UTBI). Three related areas of knowledge are used to develop this framework: (1) business incubation support, (2) university's involvement in technology and business development support, and (3) organizational effectiveness approaches. The conceptual model that is created is based on three sets of variables: (1) performance outcomes, (2) management policies and their effectiveness, and (3) services and their value-added. Performance outcomes are further divided into program growth and sustainability, tenant firm's survival and growth, contributions to sponsoring-university's mission, and community-related impacts. Management policies are broken down by goals, structures and governance, financing and capitalization, operational policies, and target markets. Services are examined in terms of shared incubator services and university-related services. In order to test the validity of this model, data were gathered from 30 five-year and older U.S. facilities. Four of these facilities were analyzed using a comparative evaluation approach. Using these four facilities, the analysis shows that the proposed model is flexible and easy-to-use in assessing and managing the performance of UTBIs. This model will help those assessing UTBIs to better understand performance and areas for improvement. (SRD)

Capitalism and its future: remarks on regulation, government and governance

Abstract: The article relates capitalism's distinctive dynamic to the nature of the wage relation and self-valorization of capital. Capitalism has no final telos: its future remains open in the face of structural changes and social struggles. This source of capitalist dynamism also opens it to external influence. Some key changes in the 'government and governance' of economics and politics are also discussed. These include: the denationalization of statehood, a partial de-statization of politics, and the internationalization of policy regimes. Among counter-trends are the survival of the national state as an instance of meta-governance.

Breaches in the Boardroom: Organizational Identity and Conflicts of Commitment in a Nonprofit Organization

Abstract: In recent years, agency theory has substantially influenced research on corporate governance. Organizational sociologists have critiqued the agency theory model of boards as limited and have studied how the functioning of boards is shaped by structural, political, and cognitive contexts. Building on their work, this paper empirically studies the cultural embeddedness of boards in a nonprofit organization called Medlay. It shows how organizational identity---the members' shared beliefs about the central, enduring, and distinctive characteristics of the organization---influences the construction and enactment of the director's role and shapes interactions among board members and managers. The findings demonstrate that the role of the director is shaped by Medlay's Janus-faced identity, as both a volunteer-driven organization and a family of friends; directors see themselves as vigilant monitors and as friendly, supportive colleagues. The findings also portray how some board members' scrutiny of the budget, including “lavish” travel expenditures, surfaces the contradictions in Medlay's identity, and creates conflicts for directors. Should board members take manager to task and thereby exercise vigilance and uphold the ideal of volunteer control, or should they safeguard the principle of friendship and avoid all conflict? An influential subset of directors and top managers resolved the budget issue and preserved Medlay's identity by using different “face-saving” strategies to make directors feel that they had been vigilant, and to affirm sentiments of cooperation. More generally, this study extends the literature on corporate governance by showing how organizational identity influences the construction and enactment of the director's role. It introduces the idea of “conflicts of commitment,” a form of intra-role conflict that arises when directors are besieged by conflicting aspects of the organization's identity. When actions occur that breach the expected role performance of board members, latent contradictions in the organizational identity emerge, and directors are faced with the conflict of upholding one dimension of identity while undermining the other. The study also contributes to research on organizational identity by proposing a model of how organizational and individual identities shape the board role through the processes of identification and action, and how a hybrid identity generates the potential for intra-role conflict.

Corporate image: Employee reactions and implications for managing corporate social performance

Abstract: Corporate image is a function of organizational signals which determine the perceptions of various stakeholders regarding the actions of an organization Because of its relationship to the actions of an organization, image has been studied as an indicator of the social performance of the organization Recent research has determined that social performance has direct effects on the behaviors and attitudes of the organization's employees To better understand these effects, this study develops and empirically tests a model which links corporate leaders' actions, employees' perceptions of corporate image, and the employees' level of association with the organization The effects of managing the social environment of an organization on its employees' perceptions of image, attitudes, and intended behaviors are discussed

Shareholder Activism and Corporate Governance in the United States

Abstract: I survey corporate governance activity by institutional investors in the United States, and the empirical evidence on whether this activity affects firm performance. A small number of American institutional investors, mostly public pension plans, spend a trivial amount of money on overt activism efforts. They don't conduct proxy fights, and don't try to elect their own candidates to the board of directors. Legal rules, agency costs within the institutions, information costs, collective action problems, and limited institutional competence are all plausible partial explanations for this relative lack of activity. The currently available evidence, taken as a whole, is consistent with the proposition that the institutions achieve the effects on firm performance that one might expect from this level of effort -- namely, not much.

The Defects of Stakeholder Theory

Abstract: Stakeholder theory has been widely offered as a corrective to perceived defects of business and business ethics, and as an alternative model of corporate governance. Indeed, it is now advocated so commonly as to have become a new orthodoxy. Far from being a source of improvements, however, stakeholder theory is fundamentally misguided, incapable of providing better corporate governance, business performance or business conduct. Stakeholder theory is indeed intrinsically incompatible with all substantive objectives, and undermines both private property and accountability.

Corporate Governance: Its scope, concerns and theories

Abstract: This paper outlines the conceptual, cultural, contextual and disciplinary scope of the rapidly evolving topic of corporate governance As a basis for improving the rigour of research and analysis, some definitions are suggested Reasons for the diversity of view-points and concerns are considered To provide an orientation for new scholars and those from specialised disciplines, recent surveys of corporate governance are reviewed from their ethnocentric, contextual, and intellectual contingencies The prospects of developing the topic as a “science of organization” are considered along with areas for future research

Credibility of Rules and Economic Growth: Evidence from a Worldwide Survey of the Private Sector

Abstract: An indicator of the credibility of rules is constructed from broad cross-country survey data and it is shown that low credibility is associated with lower rates of growth and investment. Economic theory and case study evidence have long suggested that institutional factors, such as well-defined property and contract rights, may be crucial in explaining differences in economic performance across countries. Much of the recent discussion about governance has, for example, focused on the role of corruption and its consequences for investment and growth. By comparison, the empirical literature relating institutional factors with growth has been relatively scarce and has mainly concentrated on crude proxies such as political instability and macroeconomic volatility. The problem of most of these variables in that they inadequately capture the uncertainties that are relevant for entrepreneurs. Brunetti, Kisunko, and Weder propose new measures of institutional uncertainty based on the subjective evaluations of entrepreneurs. They surveyed the private sector in a broad cross-section of countries. The survey was designed to capture institutional factors such as the predictability of rules, entrepreneurs' fears of policy surprises and reversals, their perception of safety and security of property, the reliability of the judiciary, and their problems with bureaucratic corruption. The authors construct and test a summary indicator of the credibility of rules, as well as its components in standard cross-country growth and investment regressions. The main findings: The overall indicator of credibility is significantly related with higher rates of investment and growth. The credibility indicator calculated for the subsample of small local companies is even more closely related to the growth performance. The subindicators security of persons and property and predictability of rule-making are most closely associated with growth. The indicators of corruption, perceived political instability, and predictability of judiciary enforcement are most closely associated with investment. Preliminary results for an extended sample - including transition economies - indicate that institutional factors may also help to explain differences in economic performance in these countries. This paper - a product of the Office of the Chief Economist and Senior Vice President, Development Economics- was produced as a background paper for World Development Report 1997 on the role of the state in a changing world. The study was funded in part by the Research Support Budget under the research projects Cross-Country Indicators of Institutional Uncertainty (RPO 680-51), and Indicators of Government Quality as Perceived by the Private Sector (RPO 681-52).

Examining the Emergence of Hybrid IS Governance Solutions: Evidence From a Single Case Site

Abstract: The prior IS literature points to the importance of organizational context for predicting a firm's IS governance solution. However, for the most part this literature assumes that firms adopt a uniform IS governance solution for all business units and that this solution can be predicted by context variables at the overall organization level. The purpose of this study is to increase our knowledge about why firms implement a hybrid IS governance solution in which a subset of IS functions that includes systems development is decentralized to some business units, but not to other business units, in the same enterprise. A theoretical framework of context variables at the business unit level is first developed. An embedded, single case study provides an initial test of eight propositions derived from the framework, as well as an opportunity for theory building. Data are collected utilizing both deductive and inductive methods from IS and non-IS executives of a divisionalized Fortune 500 firm in which a uniform decentralized solution for systems development in place for almost a decade has recently been replaced by a hybrid solution. The case study findings suggest that a configuration of four variables characterizes a business unit context conducive to decentralized systems development governance organic decision-making, high business unit autonomy, a differentiation competitive strategy, and an unstable industry environment. As predicted, however, the influence of these variables is likely to be overridden and a “deviant” solution adopted when deficiencies in IT capabilities are perceived and there is a culture that supports structural change at the business unit level. Additional interview and survey data collected from the key stakeholders are then analyzed in order to develop a richer understanding of the dimensions of the IT capabilities construct at the business unit level. The notion of absorptive capacity provides a theoretical argument for the emergent findings. Implications for researching today's increasingly complex IS governance forms are then drawn.

Introduction: the problem-solving capacity of multi-level governance

Abstract: In the post-war decades, advanced capitalist economies have developed in symbiosis with democratic political systems with a high capacity for effective regulation and welfare-state compensations. As economic integration deepens globally and even more so within the European Community, national capacities to regulate and to tax mobile capital and firms are reduced, whereas governance at European or international levels is constrained by conflicts of interest among the governments involved. Nevertheless, as the contributions to this volume show, the effectiveness of problem-solving at the national as well as at the European and international levels varies considerably from one field to another. In this introduction, I attempt to identify the factors that could explain the varying intensity and direction of competitive pressures on national regulatory systems, as well as the greater or lesser political feasibility of European or international regulation.