Corporate Governance in the 21st Century: Japan's Gradual Transformation

The 'lost' decade of economic stagnation in Japan during the 1990s has become a 'found decade' for regulatory and institutional reform. With nearly all areas of the 'law in the books' reviewed, revised and rewritten, the Japanese legal system is no longer the system that foreign commentators felt they were finally starting to understand by the 1980s. Nowhere is this more evident than in corporate governance. Corporate and securities legislation has been comprehensively revamped over 1993-2007, creating a more flexible and transparent regime for shareholders and managers. Financial markets law and regulatory institutions have changed, too, creating a new context for Japan's 'main banks' as alternative or additional outside monitors of managerial performance in borrowing firms. Even the legislation surrounding labour regulations has been amended, reinforcing the lifelong security privileges for elite employee-stakeholders, yet also hastening the growth of other atypical employment relationships. But how do such legislative reforms affecting key players in Japanese firms, covering areas central to the design of Japanese capitlaism, play out in the 'law in action'? Overall, this book argues that a significant gradual transformation has occurred. Although this is evident also in other advanced industrialised democracies, such as Germany, Japan reveals especially complex interactions in the various fields that sometimes emphasise different ways of achieving such transformation.

Managerial cognition and reputation : does communication about firms’ intangibles affect performance?

Corporate reputation is viewed as fundamental to firm performance, growth and survival and the maintenance and enhancement of that reputation is a key responsibility of senior executives. However, relatively little is known about the main dimensions of corporate reputation and the amount of attention given to them by senior executives. Based on the corporate reputation and intangible resources literatures, thirteen reputational elements were identified and the amount of attention given to those elements in a large, longitudinal sample of annual reports from Australian firms was measured using computer aided text analysis. This identified five, main reputational dimensions that were both stable over time and related to firms’ future financial performance.

The relationship between Internet use and perceived performance in retail and professional service firms

lnformation technology (IT) and, in particular, the Internet is dramatically impacting on the services sector. This paper specifically investigates the relative impact of several forms of internet use on perceived performance for two groups of service organisations - retail service firms and professlonal health service firms. Using a mailed out self-administered questionnaire, 625 completed questionnaires were obtained and 43 per cent of respondents reported that they used the lternet. Thus the final usable sample in the study comprised 262 respondents. Results showed that the Internet does significantly influence perceived performance in both types of service firms. However,there are differences in the forms of lntemet use between the two service groups and their relative effect on performance. For retail firms, use of transactional function, such as ordering, selling and payment was found to be positively related to increases in perceived performance. In contrast, for professional health service firms, the ability to search for information on products and/or services was found to be positively associated with perceived performance. Finally, theoretical and managerial implications of the findings of this study are discussed.

Strategies for appropriate technology and competitive performance in infrastructure construction

Earlier research developed theoretically-based aggregate metrics for technology strategy and used them to analyze California bridge construction firms (Hampson, 1993). Determinants of firm performance, including trend in contract awards, market share and contract awards per employee, were used as indicators for competitive performance. The results of this research were a series of refined theoretically-based measures for technology strategy and a demonstrated positive relationship between technology strategy and competitive performance within the bridge construction sector. This research showed that three technology strategy dimensions—competitive positioning, depth of technology strategy, and organizational fit— show very strong correlation with the competitive performance indicators of absolute growth in contract awards, and contract awards per employee. Both researchers and industry professionals need improved understanding of how technology affects results, and how to better target investments to improve competitive performance in particular industry sectors. This paper builds on the previous research findings by evaluating the strategic fit of firms' approach to technology with industry segment characteristics. It begins with a brief overview of the background regarding technology strategy. The major sections of the paper describe niches and firms in an example infrastructure construction market, analyze appropriate technology strategies, and describe managerial actions to implement these strategies and support the business objectives of the firm.

Occupational driver safety : conceptualising a leadership-based intervention to improve safe driving performance

Occupational driving crashes are the most common cause of death and injury in the workplace. The physical and psychological outcomes following injury are also very costly to organizations. Thus, safe driving poses a managerial challenge. Some research has attempted to address this issue through modifying discrete and often simple target behaviors (e.g., driver training programs). However, current intervention approaches in the occupational driving field generally do not consider the role of organizational factors in workplace safety. This study adopts the A-B-C framework to identify the contingencies associated with an effective exchange of safety information within the occupational driving context. Utilizing a sample of occupational drivers and their supervisors, this multi-level study examines the contingencies associated with the exchange of safety information within the supervisor-driver relationship. Safety values are identified as an antecedent of the safety information exchange, and the quality of the leader-member exchange relationship and safe driving performance is identified as the behavioral consequences. We also examine the function of role overload as a factor influencing the relationship between safety values and the safety information exchange. Hierarchical Linear Modelling found that role overload moderated the relationship between supervisors’ perceptions of the value given to safety and the safety information exchange. A significant relationship was also found between the safety information exchange and the subsequent quality of the leader-member exchange relationship. Finally, the quality of the leader-member exchange relationship was found to be significantly associated with safe driving performance. Theoretical and practical implications of these results are discussed.

Four years on – are the Gazelles still running? A longitudinal study of firm performance after a period of rapid growth

Gazelles, or very rapidly growing firms, are important because they contribute disproportionately to economic growth. There is a concern that some of these firms pursue growth too aggressively resulting in lower subsequent performance. We investigate the relationship between growth and subsequent profitability for gazelle firms, and how this is moderated by firm strategy. Previous empirical research regarding the growth-profitability relationship for firms in general is rather inconclusive, with only one study specifically investigating gazelle firms. Likewise, there are theoretical arguments both for and against growth leading to profitability that equally apply to gazelle firms. Further, while contingency theory might suggest the relationship depends on the firm’s strategy, earlier studies have not investigated this relationship. We address these questions using longitudinal data (seven years) for a sample of 964 Danish Gazelle firms. Our study finds a clear positive relationship between growth and subsequent profitability among gazelle firms. Moreover, this relationship is stronger for firms pursuing a broad market strategy rather than a focus or niche strategy. An important managerial implication is that the growth strategy should be clearly integrated with the general strategic orientation of the firm.

The moderating effect of knowledge sharing on the relationship between manufacturing activities and business performance

This paper investigates the critical role of knowledge sharing (KS) in leveraging manufacturing activities, namely integrated supplier management (ISM) and new product development (NPD) to improve business performance (BP) within the context of Taiwanese electronic manufacturing companies. The research adopted a sequential mixed method research design, which provided both quantitative empirical evidence as well as qualitative insights, into the moderating effect of KS on the relationships between these two core manufacturing activities and BP. First, a questionnaire survey was administered, which resulted in a sample of 170 managerial and technical professionals providing their opinions on KS, NPD and ISM activities and the BP level within their respective companies. On the basis of the collected data, factor analysis was used to verify the measurement model, followed by correlation analysis to explore factor interrelationships, and finally moderated regression analyses to extract the moderating effects of KS on the relationships of NPD and ISM with BP. Following the quantitative study, six semi-structured interviews were conducted to provide qualitative in-depth insights into the value added from KS practices to the targeted manufacturing activities and the extent of its leveraging power. Results from quantitative statistical analysis indicated that KS, NPD and ISM all have a significant positive impact on BP. Specifically, IT infrastructure and open communication were identified as the two types of KS practices that could facilitate enriched supplier evaluation and selection, empower active employee involvement in the design process, and provide support for product simplification and the modular design process, thereby improving manufacturing performance and strengthening company competitiveness. The interviews authenticated many of the empirical findings, suggesting that in the contemporary manufacturing context KS has become an integral part of many ISM and NPD activities and when embedded properly can lead to an improvement in BP. The paper also highlights a number of useful implications for manufacturing companies seeking to leverage their BP through innovative and sustained KS practices.

Identifying key enablers to improve business performance in Taiwanese electronic manufacturing companies

Purpose – Integrated supplier management (ISM), new product development (NPD) and knowledge sharing (KS) practices are three primary business activities utilised to enhance manufacturers' business performance (BP). The purpose of this paper is to empirically investigate the relationships between these three business activities (i.e. ISM, NPD, KS) and BP in a Taiwanese electronics manufacturing context. Design/methodology/approach – A questionnaire survey is first administered to a sample of electronic manufacturing companies operating in Taiwan to elicit the opinions of technical and managerial professionals regarding business activities and BP within their companies. A total of 170 respondents from 83 companies respond to the survey. Factor, correlation and path analysis are undertaken on this quantitative data set to derive the key factors which leverage business outcomes in these companies. Following empirical analysis, six semi-structured interviews are undertaken with manufacturing executives to provide qualitative insights into the underlying reasons why certain business activity factors are the strongest predictors of BP. Findings – The investigation shows that the ISM, NPD and KS constructs all play an important role in the success of company operations and creating business outcomes. Specifically, the key factors within these constructs which influenced BP are: supplier evaluation and selection; design simplification and modular design; information technology infrastructure and systems and open communication. Accordingly, sufficient financial and human resources should be allocated to these important activities to derive accelerated rates of improved BP. These findings are supported by the qualitative interviews with manufacturing executives. Originality/value – The paper depicts the pathways to improved manufacturing BP, through targeting efforts into the above-mentioned factors within the ISM, NPD and KS constructs. Based on the empirical path model, and the specific insights derived from the explanatory interviews with manufacturing executives, the paper also provides a number of practical implications for manufacturing companies seeking to enhance their BP through improved operational activities.

Knowledge sharing for strengthening manufacturing operation and business performance

Manufacturing companies have strived to enhance managerial and technical capabilities to improve business performance. Building these capabilities requires effective share of knowledge - the strategic resource. Specifically, knowledge sharing (KS) between different manufacturing departments can improve manufacturing processes since leveraging organisational knowledge plays an enssential role in achieving competitive advantage. This paper presents an empirical investigation into the impact of KS on the effectiveness of supply chain management (SCM) and the product development process (PDP) in achieving desired business performance (BP). A questionnaire survey was administered from electronic manufacturing companies operating in Taiwan. 168 valid responses were received and used to statistically examine the relationships between the concepts (SCM, PDP, KS, BP). The study findings reveal that within the Taiwanese electronic manufacturing companies KS is an essential enabler for facilitating the effectiveness of SCM and PDP in achieving desired BP.

Dynamic capabilities and performance : strategy, structure and environment

Dynamic capabilities are widely considered to incorporate those processes that enable organizations to sustain superior performance over time. In this paper, we argue theoretically and demonstrate empirically that these effects are contingent on organizational structure and the competitive intensity in the market. Results from partial least square structural equation modeling (PLS-SEM) analyses indicate that organic organizational structures facilitate the impact of dynamic capabilities on organizational performance. Furthermore, we find that the performance effects of dynamic capabilities are contingent on the competitive intensity faced by firms. Our findings demonstrate the performance effects of internal alignment between organizational structure and dynamic capabilities, as well as the external fit of dynamic capabilities with competitive intensity. We outline the advantages of PLS-SEM for modeling latent constructs, such as dynamic capabilities, and conclude with managerial implications.

The relationship of entrepreneurial orientation, Vincentian values and economic and social performance in social enterprise

This study focuses on the managerial question “should social enterprises become more entrepreneurial?” It adapts the Covin and Slevin (1989) entrepreneurial orientation scale to measure the adoption of entrepreneurship by a social enterprise, and develops a scale that combines a Vincentian based focus to serve the poor with a propensity to take a more entrepreneurial approach toward business as a measure of a social value orientation (SVO).

Social enterprises and the performance advantages of a Vincentian marketing orientation

This study focuses on the managerial issue of should social enterprises (SEs) become more marketing oriented. It adapts the Kohli et al. (J Mark Res 30:467–477,1993) MARKOR marketing orientation scale to measure the adoption of marketing by SEs. The items capture Vincentian-based values to leverage business in service to the poor as a measure of a Vincentian marketing orientation (VMO). A VMO is an organisational wide value-driven philosophy of management that focuses a SE on meeting its objectives by adopting a more marketing orientated approach to serve the needy and poor in a just and sustainable manner. SEs that exhibit a VMO seek to understand and respond to both the needs of their beneficiaries and stakeholders. They are constantly generating,disseminating, and responding to environmental, beneficiary, and stakeholder information and develop their business propositions to more effectively and efficiently meet the needs of the poor, while guided by a philosophy of leveraging business for social good. This study of SEs in Australia found that a VMO is strongly and positively correlated with social, economic, and environmental performance. These findings suggest that SEs may benefit by leveraging marketing capabilities to better serve their beneificiaries and stakeholders.

Examining the new product innovation – performance relationship: Optimizing the role of individual-level creativity and attention-to-detail

New product innovation has been identified as the key to firms' marketplace success, profit and survival. Yet, the failure rate for new products is high. Because of the high costs associated with new product development, there is considerable theoretical and managerial interest in how to minimize the high failure rates of new products and what separates new product winners from losers. This study focuses on individual level ambidexterity – namely head of the R&D departments' capacity to engage in creativity and attention-to-detail simultaneously, a skill involving different centers of attention, and relying on somewhat incompatible behaviors and processes. The ability to engage in these behaviors simultaneously is seen as being ambidextrous. Drawing from the data of 150 advanced manufacturing firms in India (gathered from one CEO and one head of the R&D department for each firm), the results show that when an individual head of R&D engages heavily only in creativity, too many new, risky ideas may come and when he/she engages heavily only in attention-to-detail, he/she may suffer through a lack of novel ideas. Both approaches limit individual's contribution to enhancing product innovation – financial performance relationship. The results also show that an individual head of R&D needs to engage in high levels creativity and attention-to-detail in the pursuit of enhancing product innovation to achieve superior financial performance.

Dynamics of reverse salience as technological performance gap: An empirical study of the personal computer technology system

The evolution of technological systems is hindered by systemic components, referred to as reverse salients, which fail to deliver the necessary level of technological performance thereby inhibiting the performance delivery of the system as a whole. This paper develops a performance gap measure of reverse salience and applies this measurement in the study of the PC (personal computer) technological system, focusing on the evolutions of firstly the CPU (central processing unit) and PC game sub-systems, and secondly the GPU (graphics processing unit) and PC game sub-systems. The measurement of the temporal behavior of reverse salience indicates that the PC game sub-system is the reverse salient, continuously trailing behind the technological performance of the CPU and GPU sub-systems from 1996 through 2006. The technological performance of the PC game sub-system as a reverse salient trails that of the CPU sub-system by up to 2300 MHz with a gradually decreasing performance disparity in recent years. In contrast, the dynamics of the PC game sub-system as a reverse salient trails the GPU sub-system with an ever increasing performance gap throughout the timeframe of analysis. In addition, we further discuss the research and managerial implications of our findings.

SME international performance in Latin America: The role of entrepreneurial and technological capabilities

SMEs from emerging markets in Latin America are increasingly engaging in internationalization. Nevertheless, there is limited research into how these firms achieve international performance. This study proposes and tests a conceptual model that considers managerial and technology-related capabilities and their impact on international performance of SMEs. The model uses confirmatory factor analysis (CFA) to develop the underlying multi-item constructs and structural equation modeling (SEM) to test the model with data from 233 Chilean SMEs. Specifically, the model considers the role of international entrepreneurial orientation and Internet capabilities on international market performance, taking into account the mediating effect of international entrepreneurial opportunity recognition and technology-related international networks. Results show that international entrepreneurial opportunity recognition and international networks mediate the relationship between international entrepreneurial orientation and Internet marketing capabilities on SME international performance.