Archive for the ‘corporate governance’ Category

local activists don’t matter, firms still shop for low regulation nations

Phil Rocco draws my attention to the following article in Business and Politics, by Patrick Bernhagen*, Neil J. Mitchell and Marianne Thissen-Smits which argues that global agreements about labor don’t really do much:

Business and public partnerships in socially responsible behavior have become a central pillar of global governance, but one that is unevenly developed in different countries. Despite the transnational character of business operations, national context is of theoretical as well as policy significance. To explain crosscountry variation in corporate commitment to social responsibility we investigate the political conditions that encourage firms to participate in the United Nations Global Compact. Drawing on a theory of corporate social responsibility as motivated by self-interest and external pressure, we examine the influence of external actors and the locally specific mobilization of bias. Analyzing participation levels in 145 countries, we find that a democratic regime and Global Compact participation by countervailing groups are associated with higher levels of business participation in the program. Contrary to earlier studies relying on smaller numbers of countries, we find no evidence that a country’s relationship with the UN or the domestic political strength of environmental interests account for cross-national variation in corporate engagement with the Global Compact.

Check it out.

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Written by fabiorojas

May 14, 2013 at 12:22 am

defensive practice adoption and organizational stigma

Is there any relationship between accusations of corporate deviance and the diffusion of new practices? My coauthor, Ed Carberry, and I think so. In a new paper that just came out in the Journal of Management Studies we show that firms began using stock option expensing, a practice that used to be seen as quite problematic and undesirable by executives and boards, after a series of scandals rocked the corporate world in the early 2000s, causing firms to look for new ways to restore their credibility. Stock option expensing became a tool that companies could use to distance themselves from the stigma associated with corporate scandal. Our analyses show that firms facing media scrutiny around claims of corporate fraud and firms that were targets of shareholder activism around corporate governance were much more likely adopt stock option expensing. Firms that faced both intense media scrutiny and shareholder activism were especially likely to adopt the practice. We argue that in the period directly following the Enron scandal stock option expensing became seen as an impression management tactic that firms could use to restore confidence in their accountability to the public.

The title of the paper is “Defensive Practice Adoption in the Face of Organizational Stigma: Impression Management and the Diffusion of Stock Option Expensing.” You can download the paper on my website. Here is the abstract.

Although most diffusion research focuses on firms adopting new practices to maintain their legitimacy, this paper examines a setting in which firms adopted a controversial practice to defend themselves against relating to corporate deviance. We argue that understanding defensive adoption requires attending to both the dynamics of organizational stigma and impression management, and test our theoretical claims by  analysing the diffusion of an accounting practice, stock option expensing (SOPEX), following the Enron scandal. We first provide evidence that the media and shareholder activists transformed the practice into a  defensive device by theorizing it as a solution to problems relating to corporate fraud and corporate governance. Using event history analysis, we then show that corporations that became targets of stigma- inducing threats were more likely to adopt SOPEX and that the media were a key force channeling these threats.

Written by brayden king

October 17, 2012 at 2:10 pm

ASA session with recidivist guest blogger Jerry Davis: From corporate collapse to anarchist utopia?

The theme for this year’s ASA meeting is “Real utopias,” and Erik Wright commissioned a bunch of us to write up utopian blueprints for our particular domains.  Erik wanted the essays to be posted months in advance in order to encourage people to read, think about, and comment on them.  The annual meeting could then be spent in productive discussions rather than one-way transfers.

My session, “Re-imagining the corporation,” may be of interest to orgtheory types.  It’s a morose chronicle of the collapse of the corporation as a social institution in the US, followed by a more cheerful account of how we might deal with apocalyptic climate change and societal collapse using the shrewd insights of organization theory.

The essay is posted at the Real Utopia website, and the session will take place Saturday 12:30-2:10 in the ever-popular “Room TBA.”  Hope to see some people there.

Here is an executive summary:

Read the rest of this entry »

Written by Jerry Davis

August 14, 2012 at 3:14 am

why was teresa sullivan asked to resign?

The big news in academic circles recently is the resignation of Teresa Sullivan as the president of the University of Virginia. I’ve been slow to catch on to the importance of this topic and have to admit that I don’t understand the complex politics motivating this move. What compelled the Board of Visitors to ask for her resignation?

The story I’ve heard from a number of news sources is that certain members of the board, and clearly not all since the move was initiated without a vote from the full board, were unhappy with Sullivan’s “incremental” pace in creating change to the institution. But what changes did they want? Based on the emails of board members involved in the ouster, one of the topics that keeps coming up is online education. But that can’t be the real or entire reason for worrying about Sullivan’s strategy.  Every university in the country is aware of the potential that online education offers, but none of the elite institutions have yet figured out how it’s going to play out in the long run. Some universities are experimenting with online offerings, but it’s still at a developmental stage.

Others have speculated that the reason was that the Board wanted to see the university run like a business, a vision that Sullivan did not share. But if you read a strategic memo issued by Sullivan in May, you can see that she was actively engaged with the university’s budget situation. She was making efforts to control costs and optimize revenue streams. As you’d expect from any competent president, as it appears she was, Sullivan was keenly aware of the operational needs of the university.

Sullivan’s own public statement about the resignation suggests that the board was unhappy with her style of leadership. They wanted her to run the university in a more autocratic style, a style she did not believe was conducive to good university governance : “Corporate-style, top-down leadership does not work in a great university. Sustained change with buy-in does work.”  Taking this statement as a signal of the disagreement between the two parties, the board probably wanted Sullivan to make some moves that would have been unpopular with some of the faculty and Sullivan was unwilling to make those decisions without some faculty support. I’d like to know more about what those unpopular actions were.

What am I missing here?  I’d appreciate it if anyone else who is much better informed about the context could shed some light.

Written by brayden king

June 20, 2012 at 3:39 pm

child abuse and the catholic church

Remember a few years ago when we had that massive child abuse scandal in the Catholic church? What was the consequence of that? If you read the wiki, the answer seems to be that the Church lost a lot of money ($1.5bn by one estimate) and some priests had to retire or resign. Almost no one went to jail, and the Catholic church seems to have suffered few consequences aside from bankruptcy and losing properties. The Catholic church seems to have retained its legitimacy as an organization.

This raises a question for me: What does the child abuse scandal teach us about the resilience of organizations? For example, would other religious organizations be so resilient in the face of such serious charges? Is the Catholic Church unique? Or do religious groups have an above average ability to survive this sort of scandal?

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Written by fabiorojas

March 9, 2012 at 12:35 am

conference for orgtheory in developing regions

Writing from the home office in Switzerland, Tim draws my attention to a conference for management PhD scholars interested in development. From the call for papers for the UNDP Development Academy:

The oikos UNDP Young Scholars Development Academy 2012 provides PhD students and young scholars working on poverty, sustainable development, and the informal economy from an Organisation and Management Theory perspective a platform to present and discuss their on-going research projects with fellow students and senior faculty.

Research on inclusive business models, market development and sustainability between the informal and formal economy is a promising and challenging field for young researchers and PhD students. It calls for a multitude of methods, combination of disciplines in strategy, organisation studies, sociology, anthropology and economics, and new research designs, e.g. market ethnography in organisation studies.

Great opportunity for orgtheory PhD students and tenure track/post docs. Check it out.

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Written by fabiorojas

February 8, 2012 at 12:15 am

steve jobs at work

For Apple fan boyz and girlz, a short television feature from 1988 focusing on Jobs as new CEO of NEXT. HT: Ben Casnocha.

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Written by fabiorojas

January 7, 2012 at 12:48 am