The effect of ownership composition on corporate financial performance in the European frontier markets

Purpose

This study investigates the influence of ownership composition on market-based and accounting-based financial performance in the European frontier markets (EFMs), a target region for global investors.

Design/methodology/approach

Ownership composition is defined as shareholders' concentration and structure (i.e. foreign, domestic, state and free-float), whereas financial performance is measured as Tobin's Q and return on assets. The system generalised method of moments panel data estimation technique is employed on a sample of 241 companies.

Findings

Findings reveal that companies from European Union (EU) frontier markets are controlled, on average, by one to five large shareholders. Being a signal of expropriation rationale of majority shareholders regardless of the capital structure, this highly concentrated ownership and decision-making model negatively affects the market-based and accounting-based financial performance of the companies and thereby supports the agency theory in the frontier markets.

Research limitations/implications

The findings provide empirical evidence for authorities, investors, analysts and corporations regarding the effect of ownership percentage and structure in the Eastern European region, assisting also other frontier and emerging markets in corporate governance and other regulatory decisions.

Originality/value

The ownership–performance relationship varies from developed to emerging markets with conflicting results. This study provides evidence on monitoring and expropriation effects of majority shareholders in the context of different categories of shareholders. In doing so, it combines the analysis of both ownership concentration and structure in the EFMs.

The impact of entrepreneurial education on the propensity of business students to support new ventures: A moderated mediation model

This research aims to investigate the role of financial self-efficacy in mediating the relationship between entrepreneurial education and venture capital intention, as well as the moderating influence of government support on the relationship between financial self-efficacy and venture capital intention. The target population consists of Lahore students from public and private universities who have already studied entrepreneurship. Based on the 250 responses to the online survey the findings show the mediating role of financial self-efficacy between entrepreneurial education and intention toward venture capital. Moreover, it also indicates the moderated effect of government support on the relationship between financial self-efficacy and intention toward venture capital. This study will not only help the curriculum committees in business schools to design entrepreneurial education outlines that enable the students to explore the different financing modes by including financial knowledge to cope with financial challenges but also to the government officials in devising financing plans accompanied by their expertise in the development of a business.

Exploring the journey of Responsible Business Model Innovation in Asian companies: A review and future research agenda

Responsible Business Model Innovation is increasingly becoming a relevant challenge in academic research and business practice, mainly in the Asian context. Changes in business models are widely acknowledged as a key strategy for achieving long-term innovation. However, little is known about the design journey of Responsible Business Model Innovation. By applying the knowledge-based view and stakeholder theory, this paper introduces the founding pillars of Responsible Business Model Innovation, namely: Corporate Social Responsiveness, Inclusiveness, and Reflective Knowledge Exchange. Based on the analysis of extended bodies of literature published between 2011 and 2021 on business model innovation, sustainability innovation, stakeholder theory and responsible innovation, the article explores the state of the art of business ethics and dynamic capabilities in Asian organizations. Findings show that recent research in the field of sustainability and ethical values are improving the impact on business models, thus encouraging the advent of Responsible Business Model Innovation. This article contributes to the emerging field of responsible innovation and offers novel theoretical and practical implications for academy and practitioners, including a first attempt to develop a road map to be followed to achieve of sustainable and ethical values for business and society at large.

From family business orientation to organisational citizenship behaviour: prosocial behaviour in family business performance

Purpose

This article seeks to understand the role of prosocial behaviour and moral obligation in family business to explain the indirect relationship between family business orientation and citizenship behaviour.

Design/methodology/approach

This study proposes a model to examine the role of moral obligation and prosocial behaviour in such a relationship to understand a link between family orientation and organisational citizenship behaviour. The authors provide empirical evidence to test the hypothesis by conducting an online survey of family business behaviour in the Indonesia context.

Findings

The family business orientation has a significant impact on citizenship behaviour, while prosocial behaviour and moral obligation offer an additional contribution. The results suggest that family business performance demonstrates how a family that owns the business sets the social purposes from various performance alternatives beyond profit, such as family orientation, prosocial behaviour, moral obligation and organisational citizenship behaviour.

Originality/value

This study extends the agency and stewardship theory by examining how family business performance becomes different from other firm performance where the mainstream of economic theory argues that the business attempts to maximise profit for the stakeholders. The findings suggest that incorporating the theory of social practice in family business enhances the concept of prosocial behaviour in family business value.

Emerging Market Multinational Family Business Groups and the Use of Family Managers in Foreign Subsidiaries

Little is known about the internationalization behavior of Emerging Market Family Business Groups (EFBGs) and their strategic usage of family managers in foreign subsidiaries facing uncertainty due to institutional differences. Informed by the resource-based view of the firm and by institutional theory, we hypothesize that family managers are an EFBGs-specific resource used to mitigate institutional uncertainty caused by larger institutional distances occurring between home and host countries. Moreover, family managers are used differently depending on the regional focus of the EFBGs, which further strengthens the critical role that family manager’s play in management and control across the business groups. We employ 5-year panel data on Taiwanese EFBGs, and our results indicate that family managers tend to be assigned by EFBGs with stronger operations outside the home region, and in foreign subsidiaries where strong differences in regulative and cognitive institution may exist. We contribute to the continuing understanding of family ownership in the management of EFBGs, and the research of internationalization of firms on managing foreign subsidiaries.

Organizational knowledgeable responses to institutional pressures – a review, synthesis and extension

Purpose

The purpose of this paper is to critically review and explore how organizations knowledgeably respond to unfavorable institutional environments that exert institutional pressures and thereby limit their decision-making and eventually their actual behavior.

Design/methodology/approach

Based on a thorough structuration and analysis of the literature in management and related fields, the authors present a comprehensive synthesis of organizational knowledgeable responses to institutional pressures.

Findings

Based on the review, the authors categorize organizational knowledgeable responses into three major types – passively responding to avoid non-conformity, reactively mitigating institutional pressures and proactively developing institutional environments toward less interfering setups.

Research limitations/implications

The authors discuss the enabling conditions for the categorized organizational knowledgeable responses as well as limitations to their application. They identify research gaps and formulate research questions to offer promising avenues for future work. The authors expect this detailed synthesis to lay the framework for investigating how the knowledge-based view of the organization influences its knowledgeable response to institutional pressure.

Practical implications

The authors elaborate on distinct passive, reactive and proactive strategies, which firms can apply to cope with institutional pressures. The contribution of this study will be of relevance to practitioners managing organizations in the face of unfavorable institutional setups, as well as to policymakers engaged in the development of institutions and interacting with affected organizations.

Originality/value

This study provides a valuable overview on developments in institutional theory, particularly on contributions to the “nascent literature” that examines heterogeneous organizational knowledgeable responses to institutional pressures.

Socioemotional Favoritism: Evidence from Foreign Divestitures in Family Multinationals

We theorize how family and non-family CEOs in family multinational enterprises (FMNEs) divest foreign subsidiaries. In doing so, we propose an integrative framework that supplements the socioemotional wealth perspective by introducing the notion of socioemotional favoritism. Using this framework, we hypothesize and find that family CEOs are less likely to divest than non-family CEOs by analyzing 161 Korean manufacturing FMNEs between 1998 and 2003. We also find that family CEOs avoid divesting foreign subsidiaries with larger affective endowments, particularly those under family control through threshold ownership and those located in host countries where families have already lost ownership of subsidiaries through past divestitures. We conclude by discussing the implications of our findings for the family firm literature.

From corner store to superstore: a historical analysis of Sainsbury’s co-evolution

Purpose

The purpose of this study is to explore the conceptualisation of co-evolution using a corporate history research approach. While the application of the co-evolutionary perspective to the organisational-environmental relationships has uncovered significant evidences, little is understood about how the co-evolutionary process occurs over time between organisations and their institutional environment.

Design/methodology/approach

A co-evolutionary corporate history approach in used, as the authors investigated Sainsbury’s historical trajectory, exploring the role specific family members played in the evolution of the firm and the co-evolution of Sainsbury’s with its environment. This research design framework encompasses longitudinal archival analysis which incorporates both external and internal engagement which fostered Sainsbury’s joint evolution.

Findings

The findings from this study clearly suggest that certain organisations can and do co-evolve with their environment. However, organisations need to build legitimate cases for co-evolution to occur. In addition, they need to acquire certain resources that can be used to stimulate changes within their institutional environment.

Originality/value

Through a corporate history archival analysis, this study presents a UK company’s evolutionary narrative. The authors contribute to the growing literature on co-evolution in management studies by presenting a detailed historical narrative and interpretation of Sainsbury’s evolution at different time periods.

Translating Institutional Change to Local Communities: The Role of Linking Organizations

We examine the processes and mechanisms of translating broader field-level change to the local community, drawing on insights from the inhabited institutions perspective and community-based institutionalism. In particular, we develop the concept of linking organizations as key actors in institutional change that connect the broader field and community levels. We use multiple forms of qualitative data, collected over a two-year time frame, to study the processes of a community foundation, the ‘Rainbow Wellness Foundation’, as a linking organization that engaged five community coalitions to embed a new wellness approach, locally. Our findings suggest that linking organizations interpret the central tenets of the approach, define them locally around relevant aims, and regulate community organizations’ adherence, to ensure legitimacy with the field. In addition, by engaging and negotiating with the community and helping manage ambiguity, linking organizations enable local ‘filling-in’ of these models with practices that meet community needs and interests. This study contributes to the literature on institutional change by identifying the activities of linking organizations as agents that translate broader field change, locally.

Transnational Institutions in Developing Countries: The Case of Iranian Civil Aviation

The proliferation of transnational institutions in the form of protocols, conventions, regimes and standards is a growing influence on organizational practice. Recent work on the origins and impact of transnational institutions focuses upon processes in ‘core’ states, but their influence in developing countries has not received much attention. In this paper we narrate a case study of the diffusion of two institutional regimes represented by the International Civil Aviation Organization (ICAO) and the International Air Transport Association (IATA) in Iranian civil aviation. The case study describes a seemingly frictionless and uncontested embedding of the emergent international aviation regime in post-World War II Iran and a severe challenge to those institutions in the years following Iran's Islamic revolution. We characterize the rise and decline of these regimes as a double process of institutionalization and de-institutionalization, and identify political and technical factors that drive institutional change. We discuss several theoretical and policy implications stemming from the experience of transnational aviation institutions in Iran.

Institutional Entrepreneurship, Partaking, and Convening

This paper proposes that processes of institutional change vary depending on the form taken by the three factors that define them: agency, resource mobilization, and opportunity. The paper builds on a conceptualization of agency that considers that change may result from diverse forms of agency (i.e. strategic, routine, and sense-making). It develops the concept of resource mobilization, focusing on the process as opposed to the skills required for mobilization. It then suggests that the mobilization of resources, support and acceptance, accompanying the diffusion and legitimation of institutional changes may follow leverage, partaking, or convening processes. Finally, the paper defines institutional opportunity as an objective condition of organizational fields, suggesting that fields may be opportunity opaque, transparent, or hazy. Opportunities, of course, only become real when perceived by actors. Building on current sociological work, the paper suggests that actors’ perception of the opportunity transparency of fields varies with their temporal orientation and social networks. Considering the possible variations of agency, resource mobilization, and opportunity, and how they may combine, the paper defines three profiles of institutional change: entrepreneurship, partaking, and convening.

Organizational Knowledge Creation in the Chinese Context

This paper elaborates theories of organizational knowledge creation by exploring the implications of institutional change for organizational knowledge creation in Chinese organizations of different ownership forms. Using a dynamic institutional perspective, we discuss prominent characteristics of the Chinese context and develop propositions about knowledge creation patterns in different organizational forms. We also theorize about the effects of increasing institutionalization on patterns of organizational knowledge creation in China and the consequent implications for innovation. We conclude with a discussion of the theoretical implications of this model and suggestions for further research.

Origins and opportunity: 150 years of New Zealand entrepreneurship

In this examination of New Zealand entrepreneurship in the period 1840 to 1990, we document the origins of New Zealand entrepreneurs, and explore the differences between New Zealand, UK, and United States entrepreneurial history. Historical data is further analysed to depict the rise of alternative entrepreneurial growth strategies and the evolution of industry and financing structures, unique to the New Zealand business environment.

Employment and Market Innovation in Chinese Business Group Affiliated Firms: The Role of Group Control Systems

Prior research has suggested a number of potential benefits to firm membership in business groups. These benefits include availability of capital and other resources not readily accessible in an open market, the facilitation of entrepreneurship, plus information and risk sharing advantages. We suggest that another important benefit is the assistance of group control systems in helping the firm to manage conflicting pressures in the institutional environment and facilitate coevolution of these conflicting pressures. To empirically demonstrate the relevance of this viewpoint, we examine the case of China where business groups facilitate institutional transition, actively balancing market pressures to increase levels of innovativeness in firms with institutional pressures emanating from the government to maintain high employment levels. Using data from a broad sample of more than 1,000 Chinese affiliate firms in more than 200 business groups, we find that government policy, ownership and managerial mindset influence the political goal of maintaining high employment levels, while interdependence among group affiliate firms is related to lower employment levels. However, while government ownership and the government managerial mindset were negatively related to market innovation activities, group financial and cultural control systems positively affected the tendency of affiliate firms to focus on market innovation.

Designing Organizations that Design Environments: Lessons from Entrepreneurial Expertise

Human artifacts lie on the interface between their inner environments and their outer environments. Organizations, therefore, are apt subjects to be studied through a science of the artificial. Furthermore, organizational design happens at two interfaces: first, at the interface between organizational founder(s) and the firms they design, and second, between the firms and the environments in which they operate. We use recent developments in the study of entrepreneurial expertise to show why an effectual logic of design is necessary at the first interface, and what its consequences are for designing at the second. In particular, we use the exemplar case of Starbucks to codify three key characteristics of the design problem at the first interface — namely, Knightian uncertainty, goal ambiguity and environmental isotropy. We then use an `alternate histories' method to trace four strategic options — namely, planning, adaptation, vision and transformation — for designing at the second interface. In the final analysis, organizational design is important because effectuators using transformational approaches not only design organizations, but concurrently end up designing the environments we live in.

Origins and opportunity: 150 years of New Zealand entrepreneurship

In this examination of New Zealand entrepreneurship in the period 1840 to 1990, we document the origins of New Zealand entrepreneurs, and explore the differences between New Zealand, UK, and United States entrepreneurial history. Historical data is further analysed to depict the rise of alternative entrepreneurial growth strategies and the evolution of industry and financing structures, unique to the New Zealand business environment.