Corporate planning—A functional approach

The experience and arts of 295 Chief Executive Officers have been utilized for the study's findings. The analyses suggest that a firm's effective strategic-mix of major organizational functions would depend upon the nature of the particular circumstances which the organization faces. The different organizational settings are formed in the study and the effective strategic-mix of organizational functions have been statistically formulated on the basis of the Chief Executive Officers' judgement of what constitutes the effective strategic-mix of functions for their firm's overall corporate strategy. The relative influences of the General Management function and the functional managements (Marketing, Finance, Production, R & D, etc.) upon the overall corporate strategy have been the inputs for the derivation of the effective strategic-mix of functions. Environment, technology and firm-size have been considered for the formation of the different organizational settings. The study's findings not only provide what the different strategic-mixes for the different organizational settings are but also provide a working analytical framework for comprehensive analyses for the identification of the functions critical to the accomplishment of the overall corporate objectives and goals.     

Corporate planning for a town—a case history

Corporate planning is relatively new in U.K. local government. This article suggests the reasons behind this late development, and outlines the particular problems in local government and the approach adopted in one authority. The author's philosophy is that there is no blueprint for introducing corporate planning and that any approach must be evolutionary, reflecting local circumstances. The article covers the period from 1971 outlining the four main stages of development and includes the effects of local government reorganization in 1974. The views expressed are those of the author and do not necessarily represent those of the borough.     

Corporate planning in domestic airlines— An Indian case study

In this article the author considers the problems of planning in the airline industry, drawing specifically on experience in the domestic Indian airline. The article seeks to examine some of the strategic issues relevant to domestic airlines which, while related here to the Indian environment, may be seen to be pertinent in most developing countries.     

Integrated Management Systems — Opportunities and Risks for Corporate Environmental Protection

Environmental protection in companies is increasingly carried out using Integrated Management Systems (IMS). Based on empirical results, this article examines how IMS can be designed and how the integration affects corporate environmental protection. In particular, we discuss the findings of four empirical studies, which surveyed experiences of German and European companies.Our work shows, that the success of corporate environmental protection does not depend on whether the company has implemented a separate environmental management system or an IMS. What is crucial is the rank of environmental protection within the company's system of objectives. In case of goal conflicts, decision criteria in agreement with the company's system of objectives have to be formulated. Furthermore, the IMS model can have an effect on this issue. The results of a pilot project in the automobile sector are discussed to illustrate how to implement such an IMS on the basis of ISO 14001.Compared to isolated environmental management systems, IMS can even improve environmental protection, because ecological criteria can be considered from the beginning when designing customer-oriented products and processes.     

Evaluating the Evaluators: Should Investors Trust Corporate Governance Metrics Ratings?

Companies are under increasing pressure to have their corporate governance rated by an independent corporate governance metrics firm, such as Institutional Shareholder Services (ISS) or Governance Metrics International (GMI). These rating firms claim to be able to determine how effective and responsive a company’s board is. Institutional investors have begun using these board governance ratings when deciding which firms to include in their stock portfolios. This paper considers whether investors, many of whom claim to be socially responsible, should be relying upon board governance metrics. We find that these metrics are not good indicators of either the quality of a firm’s earnings or of its ethics.     

Corporate Governance in Asian Countries: Has Confucianism Anything to Offer?

Although Confucianism is a resilient cultural tradition in Asian societies, its role in their corporate governance systems is ambiguous. Confucian values have been pushed to the periphery because of a preoccupation in these countries to emulate corporate governance systems from the West. This article argues that Confucianism has much to offer in enhancing director conduct and corporate governance standards. As the attention of the global business community turns eastwards, it is opportune to revive interest in Confucianism and to explore ways in which it can be integrated formally into companies' governance systems.     

Corporate Governance in China—Is Economic Growth Potential Hindered by Guanxi?

Despite the opening of the market and partial privatization of state‐owned companies in China, the state still represents the controlling shareholder in larger companies. By analyzing the weaknesses of Chinese corporate governance we illustrate the framework for harmful corruption. China is characterized by a weak legal system and strong influences of traditions such as guanxi. In this article we analyze the influence of guanxi on the Chinese corporate governance system. We find that guanxi is in general a double‐edged sword, but business‐to‐government guanxi in particular can harm the weak Chinese corporate governance system and hamper its further economic development and growth.     

Corporate social responsibility in the board room – when do directors pay attention?

When do board directors pay attention to corporate social responsibility (CSR) issues? Board directors have traditionally focused on maximizing shareholder profit and viewed corporate governance narrowly as a way to meet this goal. They have paid little or no attention to CSR issues because they see CSR as a contrast to profit maximization. We argue in this article that companies can no longer ignore CSR. We propose that three conditions must be met in order for boards to pay attention toCSR. First, the board must have a mindset that considers CSR as contributing value to the firm. Second, the board must have relevant competences that enable members to understand CSR issues. Third, compensation of top-level management should reflect CSR performance. The first two conditions are directly linked to human resource development because, in order to embrace the specific challenges that CSR possesses, board members must develop an understanding of the CSR field and related challenges and opportunities for the company.     

Governance Choices for Corporate Social Responsibility: to Contribute,Collaborate or Internalize?

Within a competitive business environment where resources are limited, it is increasingly important for senior management to make every investment count. Measuring ‘return on investment’ occurs at every level of operations—so why not also in the arena of Corporate Social activity? Until now, much research has focused on finding the link between corporate social responsibility (CSR) and increased business performance. Researchers have not examined the cost implications associated with the different forms of governance utilized by companies to implement their CSR activities, e.g., outsourcing through charitable contributions, developing an in-house program, or creating a more collaborative model, which benefits both the company and the partner nonprofit organization. Careful examination and evaluation of these costs will help senior management choose the governance structure that will maximize the benefits they reap from CSR activities.Drawing upon insights from organizational economics, this article develops a framework to compare the alternative modes of CSR governance and identifies the key drivers that affect governance choice, including associated costs. Most importantly, it provides a decision-making tool that can guide senior management in this vital choice as a way to contribute to the competitive advantage of the firm.     

Audit Within the Corporate Governance Paradigm: A Cornerstone Built on Shifting Sand?

This paper is a case study‐based investigation of aspects of the current paradigmatic approach to ‘good’ corporate governance, with its focus on the interlinked roles of internal control and risk management procedures, internal audit and external audit, overseen and coordinated by a formal structure of board committees, in particular the audit committee. The evidence that we adduce from the study of four high‐profile cases of perceived accounting and governance failure provides limited assurance that this approach will in fact be cost‐effective or efficient in preventing further such cases of accounting and governance failure. Specifically, issues as to remuneration and fee dependence, lack of relevant knowledge and expertise, social and psychological dependence upon executive management appear to have significantly and negatively affected the quality of decision‐making of governance gatekeepers. This suggests that further consideration of relevant economic, institutional and cognitive/behavioural factors beyond the rational choice model of traditional economics should underpin future developments in required modes and structures of governance.     

Shame on Who? The Effects of Corporate Irresponsibility and Social Performance on Organizational Reputation

This study examines the relationship between corporate irresponsibility, corporate social performance and changes in organizational reputation. By combining attribution theory with expectancy violations theory, we provide the first systematic analysis of how organizational reputations are influenced by attributions of corporate irresponsibility in the context of social expectations. Drawing on a comprehensive and unique corporate irresponsibility dataset, this study reveals that firms previously believed to be most socially responsible are penalized by evaluators when corporate culpability is verified by a court of law. Conversely, firms perceived as least socially responsible were more likely to suffer reputation penalties when accused of irresponsibility, without their culpability established through litigation. Overall, the results of our study suggest that organizational reputations are mostly stable in light of irresponsibility, in that evaluators only penalize certain firms, in certain circumstances. Specifically, reputation penalties occur when highly responsible firms are perceived as hypocritical and least responsible firms were not found culpable by a court of law. Upon reflection on these findings, our study reveals that the mechanisms of social sanction previously assumed to regulate irresponsibility are weaker than currently understood. The theoretical and policy implications of this study are discussed, along with directions for future research on social evaluations.     

Portfolio Flows to Emerging Capital Markets: Do Corporate Transparency and Public Governance Matter?

This paper focuses on flows to emerging capital markets (ECMs) and examines the importance of corporate transparency and public governance in attracting portfolio flows to ECMs. This paper's empirical investigation centers on the hypothesis that ceteris paribus, ECMs with better quality accounting standards and good governance attract higher levels of portfolio equity and bond flows. To assess the incremental impact of each of these factors, a pooled time series, cross‐sectional model was econometrically tested for 17 ECMS over the 1998–2002 time period. Our empirical analysis demonstrates a positive association between public governance, corporate transparency, and portfolio flows after controlling for other macroeconomic factors. The results suggest that good public governance and high accounting quality are important determinants of portfolio flows to ECMs. Finally, the paper establishes that while portfolio equity flows are significantly attracted to ECMs with strong democratic institutions, there is no significant association between portfolio bond flows and the presence of democratic institutions.     

Does the Stock Market Gender Stereotype Corporate Boards? Evidence from the Market's Reaction to Directors' Trades

Attitudes towards male and female managers within organizations are well documented, but how the stock market perceives their relative capabilities is less studied. Recent evidence documents a negative short‐run market reaction to the appointment of female chief executive officers and suggests that female executives are less informed than their male counterparts about future corporate performance. These results appear to dispute the stock market value of having women on corporate boards. However, such short‐run market reactions may retain a ‘gender bias’, reflecting the prevalence of negative stereotypes, where the market reacts to ‘beliefs’ rather than ‘performance’. This study tests for such bias by examining the stock market reaction to directors' trades in their own companies' shares, by measuring both the short‐run and longer‐term returns after the directors' trades. Allowing for firm and trade effects, some evidence is found that, in the longer term, markets recognize that female executives' trades are informative about future corporate performance, although initially markets underestimate these effects. This has important implications for research that has attempted to assess the value of board diversity by examining only short‐run stock market responses.