Income differentials and corporate performance

Purpose – This paper seeks to make the case for new research into the perceived fairness and impact of executive pay. Design/methodology/approach – The paper reviews the literature regarding executive compensation and corporate performance and examines the evidence that a more egalitarian approach to pay could be justified in terms of long-term shareholder value. Findings – There would appear to be no evidence to suggest that the growing gap between the pay of executives and that of the average employee generates long-term enterprise value, and it may even be detrimental to firms, if not the liberal capitalist consensus on which the corporate licence to operate is based. Research limitations/implications – The paper outlines a new approach to tracking income differentials with corporate performance through the development of a corporate Gini coefficient “league table”. Social implications – The proposed research is expected to point towards better practice in executive remuneration, and support the growing momentum for a sustainable and enlightened approach to business, in which the key goal is long-term enterprise value based on a fair distribution of the rewards of business. Originality/value – In producing a deeper understanding of the impact of widening income differentials, the paper should be of interest to senior executives in publicly quoted companies as well as press commentators, government officials and academics.

Corporate governance: quo vadis?

Purpose – This paper aims to examine current research trends into corporate governance and to propose a different dynamic, humanistic approach based on individual purpose, values and psychology. Design/methodology/approach – The paper reviews selected literature to analyse the assumptions behind research into corporate governance and uses a multi-disciplinary body of literature to present a different theoretical approach based at the level of the individual rather than the organisation. Findings – The paper shows how the current recommendations of the corporate governance research models could backfire and lead to individual actions that are destructive when implemented in practice. This claim is based on identifying the hidden assumptions behind the principal-agent model in corporate governance, such as the Hobbesian view and the Homo Economicus approach. It argues against the axiomatic view that shareholders are the owners of the company, and it questions the way in which managers are assessed based either on the corporate share price (the shareholder view) or on a confusing set of measures which include more stakeholders (the stakeholder view), and shows how such a yardstick can be demotivating and put the corporation in danger. The paper proposes a humanistic, psychological approach that uses the individual manager as a unit of analysis instead of the corporation and illustrates how such an approach can help to build better governance. Research limitations/implications – The paper's limited scope can only outline a conceptual framework, but does not enter into detailed operationalisation. Practical implications – The paper illustrates the challenges in applying the proposed framework into practice. Originality/value – The paper calls for the use of an alternative unit of analysis, the manager, and for a dynamic and humanistic approach which encompasses the entirety of a person's cognition, including emotional and spiritual values, and which is as of yet usually not to be found in the corporate governance literature.

It's all about climate change, stupid! Exploring the relationship between environmental law and climate law

This comment analyses the relationship between climate law and environmental law. It examines this relationship from both a normative and a descriptive point of view. Normatively, it brings together various strands from some of the existing literature to form an overall model of the relationship—looking at ‘crowding out’, ‘crowding in’, ‘climate exceptionalism’ and adding in ‘climate unexceptionalism’. In descriptive terms, it considers, inter alia, ‘super wickedness’, instruments and governance, mitigation and adaptation.

The ebbing hegemon? An evolutionary perspective on the emergence of holistic governance and the efficient role of Institutional Investors in Environmental, Social and Governance issues (ESG)

This paper seeks to chronicle the roots of corporate governance form its narrow shareholder perspective to the current bourgeoning stakeholder approach while giving cognizance to institutional investors and their effective role in ESG in light of the King Report III of South Africa. It is aimed at a critical review of the extant literature from the shareholder Cadbury epoch to the present day King Report novelty. We aim to: (i) offer an analytical state of corporate governance in the Anglo-Saxon world, Middle East and North Africa (MENA), Far East Asia and Africa; and (ii) illuminate the lead role the king Report of South Africa is playing as the bellwether of the stakeholder approach to corporate governance as well as guiding the role of institutional investors in ESG.

Evaluating business value of IT towards optimisation of the application portfolio

Information technology has become heavily embedded in business operations. As business needs change over time, IT applications are expected to continue providing required support. Whether the existing IT applications are still fit for the business purpose they were intended or new IT applications should be introduced, is a strategic decision for business, IT and business-aligned IT. In this paper, we present a method which aims to analyse business functions and IT roles, and to evaluate business-aligned IT from both social and technical perspectives. The method introduces a set of techniques that systematically supports the evaluation of the existing IT applications in relation to their technical capabilities for maximising business value. Furthermore, we discuss the evaluation process and results which are illustrated and validated through a real-life case study of a UK borough council, and followed by discussion on implications for researchers and practitioners.

Assessing the business risk of technology obsolescence through enterprise modelling

The problem of technology obsolescence in information intensive businesses (software and hardware no longer being supported and replaced by improved and different solutions) and a cost constrained market can severely increase costs and operational, and ultimately reputation risk. Although many businesses recognise technological obsolescence, the pervasive nature of technology often means they have little information to identify the risk and location of pending obsolescence and little money to apply to the solution. This paper presents a low cost structured method to identify obsolete software and the risk of their obsolescence where the structure of a business and its supporting IT resources can be captured, modelled, analysed and the risk to the business of technology obsolescence identified to enable remedial action using qualified obsolescence information. The technique is based on a structured modelling approach using enterprise architecture models and a heatmap algorithm to highlight high risk obsolescent elements. The method has been tested and applied in practice in two consulting studies carried out by Capgemini involving three UK police forces. However the generic technique could be applied to any industry based on plans to improve it using ontology framework methods. This paper contains details of enterprise architecture meta-models and related modelling.

Global financial crisis: implications for Chinese corporate governance

This paper analyses the role of corporate governance failures and weaknesses in the global financial crisis with reference to the evolution of post-crisis corporate governance arrangements in China. The current crisis presents China with an opportunity to analyse its governance problems, reflect on its weaknesses and implement a strategy to address areas which need attention. This paper opens with a description of China’s exposure to the current global financial crisis and continues to critically evaluate the effectiveness of a free market system on corporate governance. Bratton (2002) maintains that incentive structures that motivate the self-regulatory systems generate less powerful checks against abuse than scholars and practitioners have believed. The paper highlights the need for corporate regulatory bodies and policy makers to revise and re-develop financial services sector regulations. Finally, the paper discusses the need of ethics in organizations - an issue that is beyond legislation. In an increasingly interconnected global economy, it is imperative to increase our understanding of what constitutes an effective corporate governance system. The paper contributes to the corporate governance body of literature within the Chinese context by providing insights into the contributing factors to corporate governance failure that led to the global financial crisis. It also provides policy recommendations for China’s policy makers to seriously consider. The results suggest a need for the re-examination of corporate governance adequacy and the institutionalisation of business ethics.

Managing governance, risk and compliance for post-crisis regulatory change: a model of IS capabilities for financial organizations

The 2008-2009 financial crisis and related organizational and economic failures have meant that financial organizations are faced with a ‘tsunami’ of new regulatory obligations. This environment provides new managerial challenges as organizations are forced to engage in complex and costly remediation projects with short deadlines. Drawing from a longitudinal study conducted with nine financial institutions over twelve years, this paper identifies nine IS capabilities which underpin activities for managing regulatory themed governance, risk and compliance efforts. The research shows that many firms are now focused on meeting the Regulators’ deadlines at the expense of developing a strategic, enterprise-wide connected approach to compliance. Consequently, executives are in danger of implementing siloed compliance solutions within business functions. By evaluating the maturity of their IS capabilities which underpin regulatory adherence, managers have an opportunity to develop robust operational architectures and so are better positioned to face the challenges derived from shifting regulatory landscapes.

Modelling the resistance of Enterprise Architecture adoption: linking strategic level of Enterprise Architecture to organisational changes and change resistance

During the last few years Enterprise Architecture (EA) has received increasing attention among industry and academia. By adopting EA, organisations may gain a number of benefits such as better decision making,increased revenues and cost reduction, and alignment of business and IT. However, EA adoption has been found to be difficult. In this paper a model to explain resistance during EA adoption process (REAP) is introduced and validated. The model reveals relationships between strategic level of EA, resulting organisational changes, and sources of resistance. By utilising REAP model, organisations may anticipate and prepare for the organisational change resistance during EA adoption.

Mens rea in joint enterprise: a role for endorsement?

This paper argues that the problems commonly associated with the joint enterprise doctrine might be alleviated by supplementing the cognitive mens rea standard of foresight with a volitional element that looks to how the defendant related to the foreseen risk. A re-examination of the case law suggests that a mens rea conception of foresight plus endorsement might be within interpretative reach. The paper considers possible objections to such a development but ultimately rejects them. It concludes that it is not necessary to wait for Parliament to put in place reforms: joint enterprise is a creature of the common law, and the common law is able to tame it unaided.

Decentralising natural resource governance in Ghana: critical reflections on the artisanal and small-scale mining sector

This paper critically examines the impact of decentralization on contemporary and future governance arrangements in Ghana’s artisanal and small-scale mining (ASM) sector. The sector, while providing valuable employment in rural areas, is beleaguered by environmental and social issues. Proponents of decentralization argue that re-distributing decision-making authority leads to more responsive, transparent and efficient natural resource management. The analysis presented here, however, demonstrates how weak decentralization has exacerbated the complex, conflictual and clandestine nature of local resource politics surrounding ASM. If future decentralization reforms are going to reverse this trend and improve the governance of ASM in Ghana, then facilitating the participation of traditional authorities is imperative. It is argued that doing so requires addressing the reticence regarding the role of chiefs in resource governance; simply ironing out existing technical issues with decentralization reforms is unlikely to improve the social and environmental performance of ASM in the country. In light of the chronic resource management deficiencies in Ghana, epitomized in the ASM sector, fostering frank political debates on resource governance is becoming urgent.

Anticipatory governance for social-ecological resilience

Anticipation is increasingly central to urgent contemporary debates, from climate change to the global economic crisis. Anticipatory practices are coming to the forefront of political, organizational, and citizens’ society. Research into anticipation, however, has not kept pace with public demand for insights into anticipatory practices, their risks and uses. Where research exists, it is deeply fragmented. This paper seeks to identify how anticipation is defined and understood in the literature and to explore the role of anticipatory practice to address individual, social, and global challenges. We use a resilience lens to examine these questions. We illustrate how varying forms of anticipatory governance are enhanced by multi-scale regional networks and technologies and by the agency of individuals, drawing from an empirical case study on regional water governance of Mälaren, Sweden. Finally, we discuss how an anticipatory approach can inform adaptive institutions, decision making, strategy formation, and societal resilience.

Local authorities as niche actors: the case of energy governance in the UK

This paper draws from work conducted under the NERC-funded project 'Understanding energy governance at local and community levels'(Project Reference: NE/H013598/1). This project was a 24 month study carried out in collaboration with the UK Energy Research Council which began in April 2010. The particular workpackage from which these interviews were drawn specifically explores the role of local authorities in emerging energy and environmental responsibilities, paying particular attention to current institutional structures and how external forces and actors influence local authorities on their decision making and practices. It is concluded that whilst the role of local authorities has been changing in response to energy and environmental ‘landscape’ issues, their influence on the design and implementation of energy policy in the UK will correspondingly remain as an emerging process for the foreseeable future, with the more progressive local authorities continuing to exert political, social/cultural and technological influence over ways of designing, articulating, and engaging with energy governance at the local level.