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.

[Reviews] Turkey and the European Union: prospects for a difficult encounter

Book review of 'Turkey and the European Union: Prospects for a Difficult Encounter', edited by Esra Lagro and Knud Erik Jorgensen, Basingstoke and New York: Palgrave Macmillan, 2007 Pp. xii þ 240; 1 table; 1 figure; index; ISBN 9780230019553; £47.00 (hb).

Super-villains of the "real world": the political use of the characterization of villains in Chistopher Nolan's "Dark Knight Trilogy"

It is almost a tradition that celluloid (or digital) villains are represented with some characteristics that remind us the real political enemies of the producer country of the film, or even enemies within the country according to the particular ideology that sustains the film. The case of Christopher Nolan The Dark Knight trilogy, analyzed here, is representative of this trend for two reasons. First, because it gets marked by political radicalization conducted by the US government after the attack of September 11, 2001. Secondly, because it offers a profuse gallery of villains who are outside the circle of friends as the new doctrine “either with us or against us” opened by George Bush for the XXI century. This gallery includes from the very terrorists who justify the War on Terror (Ra's al Ghul, the Joker), to the “radical left” (Bane, Talia al Ghul) including liberal politicians (Harvey Dent), and corrupt that take advantage of the softness of the law to commit crimes with impunity (Dr. Crane, the Scarecrow).

The African National Congress and its Critics: 'Predatory Liberalism', Black Empowerment and Intra-Alliance Tensions in Post-Apartheid South Africa

Post-apartheid South Africa is characterized by centralized, neo-liberal policymaking that perpetuates, and in some cases exaggerates, socio-economic inequalities inherited from the apartheid era. The African National Congress (ANC) leadership’s alignment with powerful international and domestic market actors produces tensions within the Tripartite Alliance and between government and civil society. Consequently, several characteristics of ‘predatory liberalism’ are evident in contemporary South Africa: neo-liberal restructuring of the economy is combined with an increasing willingness by government to assert its authority, to marginalize and delegitimize those critical of its abandonment of inclusive governance. A new form of oligarch power, combining entrenched economic interests with those of a new ‘black bourgeoisie’ promoted by narrowly implemented Black Economic Empowerment policies, diminishes prospects for broad-based socio-economic transformation. Because the new policy environment is failing to resolve tensions between global market demands for increasing market liberalization and domestic popular demands for poverty-alleviation and socio-economic transformation, the ANC leadership is forced increasingly to confront ‘ultra-leftists’ who are challenging its credentials as defender of the National Democratic Revolution which was the cornerstone in the anti-apartheid struggle.

Shifting Thresholds, Contested Meanings: Governance, Cross-border Co-operation and the Ulster Unionist Identity

Cross-border (North/South) co-operation between the Republic of Ireland and Northern Ireland was an indelible feature of the form of governance provided by the Belfast Good Friday Agreement (1998). Previous efforts to establish North/South co-operation had all foundered but the establishment and initial operation of the Agreement's cross-border institutions proved to be uncontroversial. However, during its implementation, other areas of the Agreement gave Ulster unionists more pressing cause for concern. These areas of concern included the release of paramilitary prisoners, police reform, the 'decommissioning' of Irish Republican Army (IRA) weaponry, and the unionist perception that the 'Britishness of Northern Ireland' was being actively eroded. These concerns served to emphasise and strengthen political and cultural borders between communities at a regional and local level within Northern Ireland. They also threatened the pro-Agreement unionists' contestation of unionist ideological orthodoxy, a contestation that was undertaken in an attempt to adapt the Ulster unionist identity to the shifting thresholds of the state.

Genealogies of Partition: History, History-Writing and 'The Troubles' in Ireland

Contemporary political disputes have a long history of expression and contestation through the genre of history-writing in Ireland. The role of history writing and political science writing during the nearly 40 years of the so-called 'Troubles' has been no exception to this. Battles between competing versions of what the conflict 'is about', mediated through academic and popular texts have themselves in turn become constitutive of it. This builds upon centuries of the representation of the complicated politics of this island as 'an issue' in British domestic politics - first 'the Catholic question', then 'the Irish question'. The location of political power outside the island for centuries has created successive battles for the representation of sectional interests in a metropolitan centre. The skills of propaganda, history writing, newspaper writing have consequently been deployed at a remarkable level of skill and intensity. In the recent period one of the consequences of this has been the removal from the debate of the actuality of partition; this builds upon a particular historical representation of partition as an historical inevitability. To seek to restore partition to the debate is not to call for its undoing but to recognise that seeking to circumvent debates about its origins in the key period of democratisation in Irish politics (1880-1920) has been counter-productive. This essay examines the genealogies of partition in Irish and international contexts in the light of these battles for representation, and aims to return a lost dimension to the debate about the so-called 'Troubles'in Ireland. The genealogy of partition is the issue that has been marginalised in academic study and this has affected both policy and politics.

The trade unions membership dynamics and union members’ trajectories

This text presents an analysis of aggregated membership’s dynamics for Spanish trade unions, using ECVT data, as well as union memberships’ trajectories, or members’ decisions about joining the organization, permanency and responsibilities, and subsequent attrition. For the analysis of trajectories we make use of information of the records of actual memberships and the record of quitting of CCOO, and of a survey-questionnaire to a sample of leavers of the same union. This study allows us to confirm a linkage between the decision and motivations to become union member, to participate in union activities, the time of permanency, and the motives to quit the organization. We also identify five types of union members’ trajectories, indicating that, far from views that assert a monolithic structure, unions are complex organizations.