Isomorphic effects of managerial and directoral career paths

The extensive array of interlocking directorate research remains near-exclusively cross-sectional or comparative cross-sectional in nature. While this has been fruitful in identifying persistent structures of inter-organisational relationships evidence of the impact of these structures on organisational performance or activity has been more limited. This should not be surprising because, by their nature, relationships have strong longitudinal and dynamic qualities that are likely to be difficult to isolate through cross-sectional approaches. Clearly, managerial practice is inevitably strongly conditioned by the specific contingencies of the time and the information available through networks of colleagues and advisers (particularly at board level) at the time. But managerial and directoral capabilities and mental sets are also developed over time, particularly through previous experiences in these roles and the formation of long-lasting 'strong' and 'weak' relationships. This paper tests the influence of three longitudinal dimensions of managers and directors' relationships on a set of indicators of financial performance, drawing from a large dataset of detailing historic board membership of UK firms. It finds evidence of isomorphic processes through these channels and establishes that the longitudinal design considerably enhances the detection of performance effects from directorate interlocks. More broadly, the research has implications for the conception of collective action and the constitution of 'community'.

Relational dimensions of corporate governance in translation: networked governance in China and India

The effectiveness of corporate governance mechanisms has been a subject of academic research for many decades. Although the large majority of corporate governance studies prior to mid 1990s were based on data from developed market economies such as the U.S., U.K. and Japan, in recent years researchers have begun examining corporate governance in transition economies. A comparison of China and India offers a unique environment for analyzing the effectiveness of corporate governance. First, both countries state-owned enterprise (SOE) reform strategies hinges on the Modern Enterprise System characterized by the separation of ownership and control. Ownership of an SOE’s assets is distributed among the government, institutional investors, managers, employees, and private investors. Effective control rights are assigned to management, which generally has a very small, or even nonexistent ownership stake. This distinctive shareholding structure creates conflict of interest not only between management (insiders) and outside investors but also between large shareholders and minority investors. Moreover, because both governments desire to retain some control—in part through partial retained ownership of commercialized SOEs, further conflicts arise between politicians and firms. Second, directors in publicly listed firms in both countries are predominantly drawn from institutions with significant non-market objectives: the government and other state enterprises, particularly in China, and extended families, particularly in India. As a result, the effectiveness of internal governance mechanisms, such as the number of independent directors on the board and the number of independent supervisors on the supervisory committee, are likely to be quiet limited, although this has yet to be fully evaluated. Third, because of the political nature of the privatization process itself, typical external governance mechanisms, such as debt (in conjunction with appropriate bankruptcy procedures), takeover threats, legal protection of investors, product market competition, etc., have not been effective. Bank loans have traditionally been viewed as grants from the state designed to bail out failing firms. State-owned banks retain monopoly or quasi-monopoly positions in the banking sector and profit is not their overriding objective. If political favor is deemed appropriate, subsidized loans, rescheduling of overdue debt or even outright transfer of funds can be arranged with SOEs (soft budget constraints). In addition, a market for private, non-bank debt is limited in India and has yet to be established China. There is no active merger or takeover activity in Chinese stock markets to discipline management. Information available in the capital markets is insufficient to keep at arm’s length of the corporate decisions. In light of the above peculiarities, China and India share many of the typical institutional characteristics as a transition economy, including poor legal protection of creditors and investors, the absence of an effective takeover market, an underdeveloped capital market, a relative inefficient banking system and significant interference of politicians in firm management. Su (2005) finds that the extent of political interference, managerial entrenchment and institutional control can help explain corporate dividend policies and post-IPO financing choices in this situation. Allen et al. (2005) demonstrate that standard corporate governance mechanisms are weak and ineffective for publicly listed firms while alternative governance mechanisms based on reputation and relationship have been remarkably effective in the private sector. Because the peculiarities are significant in this context, the differences in the political-economies of the two countries are likely to be evident in such relational terms. In this paper we explore the peculiarities of corporate governance in this transitional environment through a systematic examination of certain aspects of these reputational and relationship dimensions. Utilising the methods of social network analysis we identify the inter-organisational relationships at board level formed by equity holdings and by shared directors. Using data drawn from the Orbis database we map these relations among the 3700 largest firms in India and China respectively and identify the roles played in these relational networks by the particularly characteristic institutions in each case. We find greatly different social network structures in each case with some support in these relational dimensions for their distinctive features of governance. Further, the social network metrics allow us to considerably refine proxies for political interference, managerial entrenchment and institutional control used in earlier econometric analysis.

Reaching across organisational, sectoral and geographical boundaries: exploring the learning potential of an EU cross-border project

Research This paper outlines some of the key findings from an evaluation of the project and demonstrates that EC funded projects such as this, which seek to promote cross border collaboration and understanding (i.e. across organisational, sectoral and geographical boundaries) offer considerable learning potential – not least about variances in health politics across different communities. However, for this learning to be realised a comprehensive system of knowledge management needs to be an integral part of project planning alongside a system for sustaining embryonic professional networks. The concept of managing relationships was also a key part of the projects success. Executing a project funded by the EU demands the development of complex organisational skills to negotiate all the administrative challenges en route to successful completion and this project in particular relied for its success on the development of social relationships of trust and mutual respect across national, professional and social boundaries. Context A three–year European Commission funded project designed to exchange a wide range of staff (professional semiprofessional and voluntary staff in health and social care) project led by the University of Greenwich (UK) and the Université Catholique de Lille, France was completed this year (February 2008). The project was complex because it involved working in different national contexts, was multi-disciplinary, and demanded the negotiation of multiple boundaries. Theories A mixed method evaluation including written reports gathered immediately after each exchange visit and a post hoc series of individual interviews and focus groups was conducted in order to gain qualitative information (from the participants perspective) on their experiences and to identify any learning gained. Results Analysis of the data provided evidence of learning on a number of levels; personally, inter and intra professionally and organisationally as well as across sectors and also from a project management perspective. The learning crystallised around the extent of the differences noted by the participants between the UK and the French health and social care systems despite geographical proximity, common membership of the EU and many shared challenges in health and social care. The extent of these differences, noted at every level from policy to practice proved a rich source for reflection on organisational philosophies, ways of working, distribution of resources, professional roles and autonomy and professional registration and mobility - in short on health politics at ‘macro’ and ‘micro’ levels.