Roberto Garcia‐Castro

Bundles of Firm Corporate Governance Practices: A Fuzzy Set Analysis

Manuscript Type: Empirical exploration of theory-informed propositions. Research Question/Issue: We explore how the combinations of firm-level corporate governance (CG) practices embedded in different governance national systems lead to high firm performance. Research Findings/Insights: Using fuzzy set/Qualitative Comparative Analysis, we uncover a variety of findings. First, we show that within each of the stylized national CG models, there are multiple bundles of firm-level governance practices leading to high firm performance (i.e., equifinality). Second, we provide evidence of complementarity as well as functional equivalence between CG practices. Finally, we demonstrate that there can be heterogeneity (“differences in kind”) in firm governance practices within each stylized model of CG. Theoretical/Academic Implications: We build on the configurational and complementarity-based approaches to make the following theoretical claims. First, governance practices within firm bundles do not always relate to each other in a monotonic and cumulative fashion as this entails higher costs and possibly over-governance. Second, practices in bundles do not need to be aligned towards the insider or the outsider model (similar in kind). We argue that non-aligned practices can also be complementary, creating hybrid governance forms. Third, we predict functional equivalence across bundles of CG practices which grants firms agency on which of the practices to implement in order to achieve high performance. Practitioner/Policy Implications: We contribute to comparative CG research by demonstrating that there are multiple governance paths leading to high firm performance, and that these practices do not always belong to the same national governance tradition. Therefore, our findings alert of the perils of ‘one size fits all’ governance solutions when designing and implementing CG policies.

Maximizing Stakeholders' Interests: An Empirical Analysis of the Stakeholder Approach to Corporate Governance

The purpose of this paper is to build on the emerging stakeholder model of corporate governance by analyzing the CSR function at board level, board diversity, and stakeholder engagement, and how it relates to financial performance. Based on an empirical study of an international sample of large companies, we find board responsibility for CSR to be a key factor in promoting engagement with primary and secondary stakeholders of the firm. Depending on the legal tradition of the country in which the company is based, we find evidence that board diversity and stakeholder engagement are positively correlated with firm financial performance.

Maximizing Stakeholders’ Interests

This article makes two related contributions to stakeholder theory and corporate governance theory. First, the authors seek to advance firm-level characterization of the emerging stakeholder model of corporate governance by analyzing two relevant dimensions of this model: the corporate social responsibility (CSR) function at the board level and stakeholder engagement. Second, the authors intend to examine the relationship between conformance to the stakeholder model of corporate governance and firm financial performance, taking into account the differences between countries, by using an international sample of large companies. The findings suggest that the traditional distinction between shareholder-centered and stakeholder-centered corporate governance systems also has importance for the CSR strategy.

A Cross-National Study of Corporate Governance and Employment Contracts

Corporate governance (CG) can be seen to operate through a double agency relationship: one between the shareholders and corporate management, and another between the corporate management and the firms employees. The CG and labour management of firms are closely related. A particularly productive way to study how CG affects and is affected by the employment relationship has been to compare CG across countries. The contributions of this paper to that literature are threefold. (1) An integration of aspects of the labour management literature in the CG debate. (2) Based on a sample of about 1000 firms from 31 countries, we find evidence of complementarities between the CG and the labour management of firms. Extreme cases, in general, outperform mixed cases. (3) Firm differences within countries are more important than scholars have assumed so far. We present the results of the study and implications for future research and for practice.

A General Approach to Panel Data Set-Theoretic Research

Management research based on general linear statistical models has been rapidly moving toward a greater and richer use of longitudinal (panel data) econometric methods able to cope with critical issues such as endogeneity and reverse causality. By contrast, set-theoretic empirical research in management, despite its growing diffusion, has been solely focused on crosssectional analysis to date. This article covers this void in longitudinal set-theoretic research. We provide a general framework in which consistency and coverage can be assessed both crosssectionally and across time. The suggested approach is based on the distinction between pooled, between and within consistency and coverage, which can be computed using panel data. We use KLD’s panel (1991–2005) to illustrate how this approach can be applied in the context of longitudinal research.

Measuring Value Creation and Appropriation in Firms: Application of the VCA Model

In related work we introduce the VCA model to estimate the economic value created by a firm and appropriated by its stakeholders, including employees, shareholders, suppliers and customers. This study provides two specific empirical applications. In the first, we use publicly available data from the US airline industry to illustrate how the basic VCA model can be applied and extended to include multiple stakeholder groups. In the second application, we provide estimates for three global automobile companies (GM, Toyota and Nissan), showing how the model can be reformulated using value added when data on suppliers are not available. In both industries we find substantial heterogeneity among firms in the creation and distribution of economic value.

A Decade of Corporate Governance Reforms in Spain (2000-10)

In a narrow sense, corporate governance (CG) deals just with the set of relationships between the firm and its shareholders (Shleifer and Vishny, 1997). From a broader perspective, CG can be understood as the set of relationships between the firm and the shareholders, employees and other stakeholders involved in the governance of the firm (Blair and Roe, 1999; Aguilera and Jackson, 2003, 2010). Following this last, broader perspective, the purpose of this chapter is to review some of the specific features of CG in Spain, with special emphasis on the relationship between Spanish firms and their shareholders, and the current state of the reforms of the employment relationship in Spain.

An Extension of the VCA Model to Estimate Stakeholder Value Appropriation

In this paper we build on Lieberman and Balasubramanian’s value creation-appropriation model (VCA). We show that not only can customers, suppliers and managers be incorporated into the VCA’ baselin...

Value Creation and Appropriation in Firms: Conceptual Review and a Method for Measurement

The notion of value creation by firms is central to strategy. Despite its importance, value creation has been defined in many different ways, often with a narrow focus on shareholders, which can lead to confusion about the notion. In this paper, we clarify some commonly used concepts of value creation. We then discuss one particular concept: economic gain, or the change in economic value created from one period to the next. We elaborate on how such value is created by the firm and distributed among a set of stakeholders, including shareholders, managers, employees, suppliers and customers. We conclude by introducing a method for quantifying this gain and its distribution among stakeholders of the firm.

Toward a Dynamic Notion of Value Creation and Appropriation in Firms: The Concept and Measurement of Economic Gain

The notion of “value creation�? is central to strategy, but its exact meaning is often unclear. Confusion arises because value creation can be reasonably defined in two different ways: (1) as the total economic value created by a firm within a specific interval of time, and (2) as the change in this value over longer intervals. To formalize the latter notion of value creation, we introduce the concept of economic gain, defined as the increase in economic surplus generated by the firm between one time period and another. We discuss the advantages of this concept and show that economic gain can arise through innovation and improvement or through the growth and replication of a superior firm. We complement these discussions with a formal measurement framework that quantifies economic gain from innovation and its distribution among stakeholders, including the firm’s shareholders, managers, employees, suppliers, and customers. As an empirical illustration, we apply the framework to compare value creation and distribution by Southwest Airlines and American Airlines between 1980 and 2010.