Sam Garg

Board Leadership and CEO Departures in Entrepreneurial Firms

This paper examines the assignment of leadership positions in the newly formalized boards of directors of entrepreneurial firms at their initial public offering (IPO). We find that higher status directors are more likely to be assigned chair positions of various committees and the overall board. Importantly, when directors are under-valued in these assignments of leadership positions, the CEO is more likely to be dismissed. We suggest that this occurs because under-valued directors engage in negative and uncooperative behaviors towards the CEO who is typically a central figure in assigning the newly available chair positions at IPO. Our study offers a richer understanding of venture board evolution at the key milestone of IPO, broadens the extant view of board leadership beyond CEO duality, and highlights the unintended negative consequences of the mandatory board committee structure at IPO. We also contribute a novel, socially-informed logic of CEO departures beyond the traditional focus on firm performa...

Mis-assignment of Board Leadership Positions at IPO and Firm Performance

In preparing for the initial public offering (IPO), entrepreneurial firms formalize their board of directors and assign chair positions to committees and the overall board. Since leadership positio...

Director Exit: The Prestige-Power Gap in Newly Public Ventures

We examine intra-board social hierarchies as the drivers of director exits from venture boards in the early years after the initial public offering (IPO). Building on the observation that directors...

What is different about innovation in Asia

East Asia, a group of countries including the ASEAN group as well as Taiwan, South Korea and China2 have witnessed a high economic growth during the 1980s and the first half of the 1990s. It has been convincingly argued that this economic growth was fuelled by adding foreign direct investment to a large pool of local, often highly skilled labour. But it has become clear that this formula has reached its limits (Lingle, 1997; Krugman, 1994), particularly after the financial crisis of 1997–9. Moreover, the emergence of China as a manufacturing base for the world and the recent developments in India in particular in the service industries have rendered it improbable for most companies operating from East and South East Asia to pursue a competitive strategy exclusively based on low prices and thus low production factor costs. One can expect that China, and in a later stage India, will be the major sources of low-cost production for the rest of the world (Clarke, 1999). Even if the labour costs rise in the coastal provinces of China or the main cities of India, there will always be a pool of cheap labour a little bit further into the inner provinces and the countryside. China and India will remain exporters of price deflation for many years to come. Most economic commentators argue thus that a macroeconomic strategy based on capital injection to leverage the available workforce will not be sufficient any more and that East and South East Asian countries and their companies will have to invest in the development of new products, services and processes (APO, 2003; Wolff and Yoshida, 2001).

Creating new organizations in Asia for the new challenges

We learned from our case studies and survey research that many managers still complain that the traditional organizational structures in Asian firms hinder innovation. One of the first priorities for the firms that want to innovate is to explore how they can adapt their organization and organizational culture to make it more conducive to innovation. If you feel you can identify with a tradition fighter, as described in the previous chapter, the ideas that we develop here will be of high priority to you.

What to do next

We have come to the end of our endeavour. It is time to review the objective we set ourselves at the beginning of this book. From any recent analysis of the competitive landscape in Asia you will have learned that some major changes are taking place. The emergence of China as a leader in manufacturing, and in the near future in design and development, and the rapid rise of India as a provider of IT and IT-enabled services, change the macroeconomic constraints under which other Asian firms have to operate. Competing on low-cost production and low sales prices is becoming increasingly difficult for firms from other parts of Asia. Also, within India and China the low-cost/low-price competition is constantly renewed and is moving inwards and towards more rural areas. For many firms the only effective response to this change in the competitive scene is to move up the value chain. That is what firms from the industrialized sectors such as Japan, Western Europe or the USA have done in the past. This is what Asian firms need to do today. Moving up the value chain will require more innovation. Innovation in products, services and processes is the only effective answer to this new competitive situation.

Overcoming the underdog mentality

Up to this point, we have covered a few topics that are generic to innovation but which require special attention in Asia. We provided examples of organizational change. We discussed some specific ideas related to markets and the marketing of Asian innovations. We gave inspirational case studies on how to mobilize the resources needed for innovation. And in Chapter 7 we examined how to make a profit from innovation efforts.

What do we already know about innovation management

This book is about how to innovate in Asia. We are not arguing that the fundamental concepts of innovation management are very different in Asia from those in Europe, Japan or North America. We learned through our interviews that the implementation of these concepts is influenced by the specific characteristics in the environment. This may sound obvious: implementation is always contingent on the environment. Our contribution is to go beyond a general statement and offer a more detailed analysis of these characteristics and their specific impact. But before we attempt to understand how these characteristics impact companies in Asia, we need to know a bit more about some of these innovation management concepts.

What is different about the implementation of innovation management in Asia

The core thesis we develop in this book can be summarized as follows: The innovation management lessons described in the previous chapter apply in Asia as well as they do in the rest of the world. But their implementation needs to take into account the specific hurdles that exist in non-Japan Asia.

Markets and marketing

Innovation needs a different mindset, as we discussed in Chapter 4. But more importantly innovation begins with a customer. Without a comprehensive understanding of customers, innovation by a company is essentially its own private imagination. And, more often than not, such imagination is not commercially fertile. As we discussed in Chapter 3, a substantial disadvantage for innovation by Asian companies is that they are far removed from the sophisticated and leading markets in industrialized countries. Japan, the US and some of the leading European markets, are geographically far away and culturally different from Asia. Asian markets are perceived to be small and unreceptive to innovative goods and services. Even if attempts are made by Asian companies to offer innovative goods and services in such markets, customer irresponsiveness is a significant hurdle. In the survey described in Chapter 3, we saw that the lack of reliable market data and sophisticated customers score in the top six hurdles for innovation for the whole group of respondents. Lack of customer input during the development phase, the inadequate number of early adopters and the absence of customer feedback affect the quality of innovation. There is also a lack of reliable market data in most markets in Asia. Finally, the heterogeneity of Asian markets is a formidable challenge.