Corporate Governance Mechanisms and Firm Performance:Evidence from Finland

This paper examines the association between corporate governance attributes and firm performance of Finnish firms during 1990 – 2000. The empirical results suggest that corporate governance matters for firm performance. First, univariate test results indicate that firms characterized by a high (efficient) level of corporate governance have delivered greater stock returns, are higher valued based on the measure of Tobin’s Q, and exhibit higher ratios of cash flow to assets, on average, in comparison to their counterparts characterized by a low (inefficient) level of corporate governance. Second, controlling for a number of well-known determinants of stock returns, we find evidence that firms categorized by inefficient corporate governance have delivered inferior returns to shareholders during the investigation period. Finally, after controlling for several common determinants of firm value, we find that firms characterized by efficient corporate governance have been valued higher during the investigation period, measured by Tobin’s Q.

Corporate Brand Repositioning with CSR as the Differentiating Factor: A Study on Consumer Perceptions

Purpose – This research paper studies how the strategy of repositioning enables marketers to communicate CSR as their brand’s differentiating factor. It aims at understanding how consumer perceptions can be managed to generate brand value through corporate brand repositioning when CSR is the differentiating factor. The purpose of this paper is to answer the following research question: How can consumer perceptions be managed to generate brand value through corporate brand repositioning when CSR is the differentiating factor? The two research objectives were: 1. to build a model, which describes the different components of consumer perceptions involved in generation of brand value through repositioning when CSR is the differentiating factor, 2. to identify the most critical components in the context of the case company, IKEA for generation of brand value during the process of corporate brand repositioning Design/methodology/approach – This paper is based on the literature review covering the logic of brand value generation, repositioning strategy and consumer perceptions connected to CSR activities. A key concept of the positioning theory, the brand’s differentiating factor, was explored. Previous studies have concluded that desirability of the differentiating factor largely determines the level of brand value-creation for the target customers. The criterion of desirability is based on three dimensions: relevance, distinctiveness and believability. A model was built in terms of these desirability dimensions. This paper takes a case study approach where the predefined theoretical framework is tested using IKEA as the case company. When developing insights on the multifaceted nature of brand perceptions, personal interviews and individual probing are vital. They enable the interviewees to reflect on their feelings and perceptions with their own words. This is why the data collection was based on means-end type of questioning. Qualitative interviews were conducted with 12 consumers. Findings – The paper highlights five critical components that may determine whether IKEA will fail in its repositioning efforts. The majority of the critical components involved believability perceptions. Hence, according to the findings, establishing credibility and trustworthiness for the brand in the context of CSR seems primary. The most critical components identified of the believability aspect were: providing proof of responsible codes of conduct via conducting specific and concrete CSR actions, connecting the company’s products and the social cause, and building a linkage between the initial and new positioning while also weakening the old positioning. Originality/value – Marketers’ obligation is to prepare the company for future demands. Companies all over the globe have recognized the durable trend of responsibility and sustainability. Consumer´s worry about the environmental and social impact of modern lifestyles is growing. This is why Corporate Social Responsibility (CSR) provides brands an important source of differentiation and strength in the future. The strategy of repositioning enables marketers to communicate CSR as their brand’s differentiating factor. This study aimed at understanding how consumer perceptions can be managed to generate brand value through corporate brand repositioning when CSR is the differentiating factor.

Factors affecting perceptions of corporate social responsibility implementation: an emphasis on values

This dissertation is a broad study of factors affecting perceptions of CSR issues in multiple stakeholder realms, the main purpose being to determine the effects of the values of individuals on their perceptions regarding CSR. It examines perceptions of CSR both at the emic (observing individuals and stakeholders) and etic levels (conducting cross-cultural comparison) through a descriptive-empirical research strategy. The dissertation is based on quantitative interview data among Chinese, Finnish and US stakeholder groups of industry companies (with an emphasis on the forest industries) and consists of four published articles and two submitted manuscripts. Theoretically, this dissertation provides a valuable and unique philosophical and intellectual perspective on the contemporary study of CSR `The Harmony Approach to CSR'. Empirically, this dissertation does values assessment and CSR evaluation of a wide variety of business activities covering CSR reporting, business ethics, and three dimensions of CSR performance. From the multi-stakeholder perspective, this dissertation use survey methods to examine the perceptions and stakeholder salience in the context of CSR by describing, comparing the differences between demographic factors as well as hypothetical drivers behind perceptions. The results of study suggest that the CSR objective of a corporation's top management should be to manage the divergent and conflicting interests of multiple stakeholders, taking others than key stakeholders into account as well. The importance of values as a driver of ethical behaviour and decision-making has been generally recognized. This dissertation provides more empirical proof of this theory by highlighting the effects of values on CSR perceptions. It suggests that since the way to encourage responsible behaviour and develop CSR is to develop individual values and cultivate their virtues, it is time to invoke the critical role of moral (ethics) education. The specific studies of China and comparison between Finland and the US contribute to a common understanding of the emerging CSR issues, problems and opportunities for the future of sustainability. The similarities among these countries can enhance international cooperation, while the differences will open up opportunities and diversified solutions for CSR in local conditions.

Towards Explaining the Tasks and Roles of the Boards of Directors

While previous research has helped to improve our understanding of corporate governance and boards of directors, less is known about the factors that affect boards’ tasks and roles and directors’ motivation and engagement. This requires knowledge of how board decisions are being made and the internal and external factors that affect the decision-making process. Large inferential leaps have been made from board demographics to firm performance with equivocal results. This thesis concentrates on how the institutional, behavioral and social identification factors impact the enactment of board roles and tasks. Data used in this thesis were collected in 2009 through a mailed survey to Finnish large and middle-sized corporations. The findings suggest that firstly, the national context of an organization is reflected in board roles and shapes how and for what reasons the board roles are carried out; secondly, the directors’ human and external social capital invariably impacts their engagement in board tasks and that conflicts among directors moderate those relationships; finally, directors’ identification with the organization, its shareholders and its customers affect the directors’ involvement in board tasks. By addressing the impact of organisational context, board-internal behaviour and social identification of board members on board roles and tasks, this thesis firstly complements the shareholder supremacy view as the only reason for the board’s involvement with specific tasks; secondly questions the existence of the board as separate from its institutional context; and thirdly questions the view that a board is a ‘black box’, subject to a selection of input demographic variables and producing quantifiable results. The thesis demonstrates that boards are complex organisational bodies, which involve much interaction among board members. Director behaviour and its influence on board decision making is an important determinant of board tasks and boards are likely subjected to inter-group tensions and are susceptible to the influence of internal and external social forces.

Work/Family Reconciliation: Corporate Management, Family Policies, and Gender Equality in the Finnish Context

Work/family reconciliation is a crucial question for both personal well-being and on societal level for productivity and re-production throughout the Western world. This thesis examines work/family reconciliation on societal and organisational level in the Finnish context. The study is based on an initial framework, developing it further and analysing the results with help of it. The methodology of the study is plural, including varying epistemological emphasis and both quantitative and qualitative methods. Policy analysis from two different sectors is followed by a survey answered by 113 HR-managers, and then, based on quantitative analyses, interviews in four chosen case companies. The central findings of the thesis are that there indeed are written corporate level policies for reconciling work and family in companies operating in Finland, in spite of the strong state level involvement in creating a policy context in work/family reconciliation. Also, the existing policies vary in accessibility and use. The most frequently used work/family policies still are the statutory state level policies for family leave, taking place when a baby is born and during his or her first years. Still, there are new policies arising, such as a nurse for an employee’s child who has fallen ill, that are based on company activity only, which shows in both accessibility and use of the policy. Reasons for developing corporate level work/family policies vary among the so-called pro-active and re-active companies. In general, family law has a substantial effect for developing corporate level policies. Also headquarter gender equality strategies as well as employee demands are important. In regression analyses, it was found that corporate image and importance in recruitment are the foremost reasons for companies to develop policies, not for example the amount of female employees in the company. The reasons for policy development can be summarized into normative pressures, coercive pressures and mimetic pressures, in line with findings from institutional theory. This research, however, includes awareness of different stakeholder interests and recognizes that institutional theory needs to be complemented with notions of gender and family, which seem to play a part in perceived work/family conflict and need for further work/family policies both in managers’ personal lives and on the organisational level. A very central finding, demanding more attention, is the by HR managers perceived change in values towards work and commitment towards organisation at the youngest working generation, Generation Y. This combined with the need for key personnel has brought new challenges to companies especially in knowledge business and will presumably lead to further development of flexible practices in organisations. The accessibility to this flexibility seems to, however, be even more dependent on the specific knowledge and skills of the employee. How this generation will change the organisations remains to be seen in further research.