Session 234

Constraints and Catalysts on Corporate Growth

Track F

Date: Tuesday, October 13, 2009

 

Time: 11:30 – 12:45

Common Ground

Room: Meeting Room 12


Facilitator:
Karen Schnatterly, University of Missouri

Title: Administrative and Reputational Sanctions on Corporate Fraudulent Firms in Transition Economies

Authors

  • Daphne Yiu, Chinese University of Hong Kong
  • William Wan, City University of Hong Kong

Abstract: This study delineates the complex but understudied political and social process after the conviction of a firm’s corporate financial fraud in a transition economy. Drawing from social cognitive theories and organizational theories on firm legitimacy, we examine the influence of both administrative sanctions and reputational sanctions on firms’ likelihood to initiate governance restructuring after committing corporate financial frauds. We argue that the positive relationship between administrative penalty and a firm’s likelihood to initiate internal governance restructuring is moderated by the political power of the firm. However, such moderating relationships would be attenuated by media coverage and framing. The study aims to provide a complete picture of how media constitutes a moral mechanism for corporate governance in transition economies.

Title: Available Slack, Corporate Governance and Community-Based Firm Performance

Authors

  • Jeffrey Harrison, University of Richmond
  • Joseph Coombs, Virginia Commonwealth University

Abstract: Investments in the community are difficult to justify from a purely economic perspective. Allocations of resources to community causes are highly discretionary and their economic returns are uncertain. The discretionary nature of these investments means that we might expect them to be heavily influenced by organizational slack. The uncertain nature of returns means that the custodians of shareholder welfare (i.e., directors, institutional investors) are likely to find large investments in this area unattractive. In this study we examine the influence of available slack (measured as cash) and governance characteristics on community-based firm performance. We find a positive relationship between available slack and community-based performance. As expected, we also find that effective governance moderates this relationship.

Title: Employing TCE, RBV, and KBV to Predict Knowledge Sourcing Choices

Authors

  • Sofy Carayannopoulos, Wilfrid Laurier University

Abstract: Scholars continue to argue that further work is needed to extend our understanding of how firms choose between various governance modes to source external knowledge. This paper synthesizes transaction cost economics, resource-based view, and knowledge-based view of the firm to develop propositions on knowledge sourcing governance choices. It is distinguished from prior work because it employs a two-dimensional approach to characterizing governance modes, and consequently predicts the choice among a broad range of choices rather than two or three. The paper’s insights contribute to prior work on external knowledge sourcing choices and understanding when a firm will choose to bring knowledge within its boundaries versus simply accessing it. It also extends understanding of how three dominant theoretical perspectives complement each other in predicting governance choices.

Title: Fostering Cooperation in the Presence of Heterogeneous Human Motives: The Role of Community Control

Authors

  • Flore Bridoux, University of Amsterdam

Abstract: We build on social psychologists’ and behavioral economists’ findings regarding heterogeneity of human motives and its implications for cooperation in public good games to advance our knowledge of how to promote cooperation inside firms. More specifically, assuming that organizations are composed of individuals exhibiting the two most common types of motives in social interactions (namely, individualism and strong reciprocity), we show that community control, a type of control to which researchers have paid little attention, is likely to be the most useful type of control to foster cooperation. We discuss the conditions under which community control is effective as well as the drawbacks of this type of control. We also discuss how managers can use outcome, process, and socio-ideological control to reinforce community control.

Title: Performance Dynamics of Oscillating Growth: A Comparison of Organic and Acquisitive Growth Paths

Authors

  • Matthias Brauer, University of Mannheim
  • Tomi Laamanen, University of St. Gallen
  • Florian Waizenegger, Goldman Sachs

Abstract: This paper focuses on the growth paths of the largest, publicly listed European firms between 1996 and 2006. We contribute to research on growth dynamics by showing that in an attempt to grow some firms tend to engage in large growth jumps that tend to cause indigestion effects making the firms oscillate between high and low growth rates. We find that this kind of oscillation is problematic and that firms experiencing relatively strong growth, but at a more stable rate, achieve the highest long-term growth, return on assets, and increases in market capitalization. Overall, our findings contribute to an improved understanding of the dynamics of optimal growth paths – a topic that is of great interest not only to academics but also business practice.

Title: Product Market Competition, Corporate Governance and Legal Origin

Authors

  • Dominic Heesang Chai, Seoul National University
  • Simon Deakin, University of Cambridge
  • Prabirjit Sarkar, University of Cambridge
  • Ajit Singh, University of Cambridge

Abstract: Using the persistence of firm-level profits as a measure of the intensity of product market competition in a panel of 19 countries for the period 1995-2005, we find that common law systems have product markets which are more competitive (in this sense) than civil law ones, and that the intensity of competition is greater in developed economies than in emerging ones. We find a positive relationship between shareholder protection and the persistence of profits in civil law countries. Thus the product market may be an important ‘missing link’ in explaining how legal origin impacts on the economy. Corporate governance rules and product market competition appear to be substitutes in the civil law world, but may be complementary to each other in the common law world.

All Sessions in Track F...

Sun: 10:00 – 11:30
Session 260: Writing Workshop for Doctoral Students and Junior Faculty
Sun: 13:00 – 14:30
Session 261: Shareholder Primacy and Corporate Policy
Sun: 15:00 – 16:30
Session 262: The Role of Government in M&A Activity
Sun: 16:30 – 17:30
Session 310: Corporate Strategy & Governance, IG Meeting
Mon: 12:45 – 14:00
Session 198: Perspectives on CEO Succession
Session 228: Business Groups, Alliances, and Contracts
Mon: 15:45 – 17:00
Session 229: Alliances and Corporate Strategy
Session 230: Ownership Determinants and Consequences
Mon: 17:15 – 18:30
Session 194: CEOs and Top Management Teams
Session 197: Diversity, Identity, and Corporate Governance
Session 233: Top Executives and Directors in Organizational Dynamics
Tue: 10:00 – 11:15
Session 199: Executive Compensation
Session 200: Social Psychological Perspectives of CEOs
Tue: 11:30 – 12:45
Session 195: Competitive Dynamics of Business Groups
Session 234: Constraints and Catalysts on Corporate Growth
Tue: 14:30 – 15:45
Session 226: Relatedness, Dominant Logics, and Other Diversification Logics
Session 231: Institutions and Agents
Wed: 10:00 – 11:15
Session 227: Corporate Strategy & Diversification
Session 232: Stakeholders in the Corporate Governance Equation
Wed: 11:30 – 12:45
Session 196: Behavioral Perspectives on Boards of Directors
Session 225: Acquisitions and Corporate Strategy


Strategic Management Society

Washington DC