Corporate Strategic Decisions Research Articles

PERANCANGAN MODEL PENGUKURAN KINERJA CORPORATE SOCIAL RESPONSIBILITY (CSR) DI BPD JATIM

Companies that realize the importance of CSR do so to obtain a corporate image, this practice uses social activities for corporate marketing activities. Publication in the media is one of the mediums in obtaining a positive image for the company. BPD East Java has been carrying out CSR activities since 2007 but has a measuring tool such as a special KPI to measure the effectiveness of its CSR activities. So that the purpose of this research is to design a key performance indicator (KPI) of CSR activities at BPD East Java. This research uses a qualitative research method with a modified participation action research (PAR) approach or modified action research, which is carried out to obtain an overview of CSR activities in BPD East Java. Then the researchers made a measuring instrument or KPI to determine the effectiveness of CSR activities using the model: prism performance. The results of the KPI design are then discussed with relevant stakeholders for evaluation. The validation of the BPD East Java BPD CSR KPI is carried out by submitting the KPI design proposal to the company which is considered to understand the object of research with the company's real conditions and has a role in making corporate strategic decisions.

Social environment and corporate payouts

We investigate if macro-level social capital, which captures the notions of trust and honesty, has any effects on corporate payout policy. We find that firms situated in U.S. states (or counties) with higher levels of social capital (SC) have higher dividend payouts (DP). These results survive a battery of robustness tests dealing with inference and various forms of endogeneity. We find that the positive SC-DP association is more prominent when monitoring is weak. We also find that the positive SC-DP association remains when we account for internal social capital, political corruption, federal and state income taxes, and other possible dividend clienteles such as in-state pension funds and pension-age populations. Our study contributes to the literatures that regional locations and social considerations constitute clienteles who affect important corporate strategic decisions such as corporate payouts.

The environmental effect of trade liberalization: Evidence from China's manufacturing firms

AbstractWhile prior literature on trade liberalisation and the environment has mostly focused on the macroeconomic ramifications, this study explores at the firm level whether and how changes of trade barriers brought about by China's accession to the WTO may impact on its manufacturing firms’ environmental performance. Adopting a difference‐in‐differences (DID) methodology, we document the effects of tariff reductions on improving firm‐level SO2 emission intensity, and the key corporate strategic decisions responsible for delivering the observed results, with robustness tests covering other major pollutants. In response to trade liberalisation, firms are found to increase labour resources for environmental protection and to improve their production processes to reduce emission intensity. This study contributes to the literature by investigating at the level of the operating firm how output and input tariff reductions may impact on environmental performance and uncovering for the first time the specific actions responsible for the results.

“Accelerating” and “jumping” internationalization

PurposeIn recent years, the phenomena of “accelerating” and “jumping” during the international expansion of Chinese enterprises have attracted a lot of attention from scholars. However, while a CEO’s career horizon can significantly affect his or her enterprise’s strategic decision-making, few studies have explored the role of CEO career horizon in terms of “accelerating” and “jumping” internationalization.Design/methodology/approachBased on a sample of China’s A-share listed manufacturing companies from 2008 to 2017, this study explores the impact of CEO career horizon on the internationalization pace and international rhythm of enterprises.FindingsFirst, the shorter the CEO’s career horizon, the more likely the CEO can avoid risky strategic decisions, which ultimately causes a negative relationship between CEO career horizon and the internationalization pace and rhythm of the enterprise. Second, for larger and older boards of directors, there is a more negative impact of the CEO’s short-term career horizon on the internationalization pace and internationalization rhythm of the company. However, given a larger proportion of female directors and non-executive directors, the CEO’s short-term career horizon has a weaker negative impact on international pace and the rhythm of internationalization.Originality/valueFirst, based on upper echelon theory, this study interprets the influence of CEO career horizon on the time dimension of corporate internationalization (including internationalization pace and international rhythm), deepening the theory’s explanatory power. Second, by clarifying the important predictive effect of CEO career horizon on internationalization pace and international rhythm, this research enriches extant research on both variables’ antecedents, as well as that on the influence of CEO career horizon. Finally, by introducing the regulatory role of the board’s supervisory ability, this study clarifies the boundary conditions for the influence of the CEO’s career horizon on international pace and rhythm, and it expands the literature on how CEOs and boards of directors can influence corporate strategic decisions during the internationalization process.

Democratizzare l'economia, promuovere l'autonomia dei lavoratori e l'uguale cittadinanza nel governo dell'impresa: una proposta.

The corporate governance doctrine of shareholder value primacy was one of the main determinants of the devastating increase of unacceptable inequalities in most developed countries during the last thirty years. This suggests to consider corporate governance as a matter of social justice before than efficiency. Reforms have thus to be viewed in the perspective of pre-distribution – viz. the pre-distribution of rights, capabilities, and powers that non-financial corporate stakeholders should be granted in order to influence the process of creation and initial distribution of wealth and income. In particular, the policy proposal suggested in this paper is the introduction of what we call Works and Citizenship in company Councils. It innovates with respect to similar experiences in European countries (viz. Germany and the Neder- land) by including in the Council all the employees related to a given company, in- dependently on their labor contracts, also allowing participation of workers included in the supply chain or in the business network of a main company. It moreover introduces the participation of external stakeholders like consumers and local communities affected by the company’s environmental externalities. Councils would have legal rights/powers of consultation on all the corporate strategic decisions and a co- determination power (veto power) on all the decisions of direct interest for employ- ees. This allows them an intervention “in good time” on the formation of the corporate strategies and thus can be seen as complementary to Unions-Management negotiations at company level.

Competitiveness and managerial discretion: an empirical investigation at the national-level

PurposeThe purpose of this paper is to examine the national-level predictors of country competitiveness using the concept of managerial discretion. The objective is to empirically link the strategic management discipline particularly the upper echelon theory to the concept of country performance measured by competitiveness.Design/methodology/approachThis paper tests the proposed relationship between managerial discretion and country competitiveness using a sample of 18 countries from 6 different regional clusters. Discretion scores are generated from survey responses of prominent senior management consultants, while country competitiveness is measured via the Global Competitiveness Index developed by the World Economic Forum. A multi-level regression analysis on the panel data set spanning 10 years of national competitiveness levels is used to empirically demonstrate the association between managerial discretion and country competitiveness.FindingsThe authors show that managerial discretion is a direct predictor of national competitiveness through its ability to provide CEOs with a wider array of actions to innovate and enhance firm performance which will ultimately contribute to country competitiveness.Practical implicationsThe positive influence of managerial discretion on country competitiveness provide an interesting framework to examine the influence of firms over public policy-making. Additionally, with businesses becoming increasingly globalized, the profile of countries becomes of a great importance and can become a tool for corporate strategic decisions, such as: market entry strategies.Originality/valueBy linking the well-known term of competitiveness to the concept of managerial discretion, the authors provide a totally new approach to assess country performance. Additionally, this paper contributes to the growing literature of managerial discretion by discovering new national-level consequences.

USING ACCOUNTING INFORMATION FOR STRATEGIC DECISION-MAKING IN A MULTI-SEGMENTED COMPANY

The reason of being of corporate accounting is not only to record, interpret and present data about existing business processes, but also to provide information for supporting main decision-making activities of management. This article presents basic problems outlining the relationship between accounting and strategic management of companies. The main ideas are connected with the philosophy of presenting information in financial and management reports, on the one hand, and the levels of management activities and their relationship to the development strategy of the organization, on the other hand. The aim is to trace the relationship between the segmental accounting and the strategic management of diversified organizations and to highlight problem areas, deserving management attention. The research methods of analysis and synthesis have been used. The outcomes of the research show that choosing a proper cost structure and allocation basis at operating segment level will contribute to increasing the capabilities of managers to make better corporate strategic decisions.

Some New Theories of Industrial Growth and Structural Change

Structural Change is the basis for many decisions such as government fiscal and monetary policies, government interventions, corporate-expenditure decisions, corporate strategic decisions, portfolio management decisions in finance; household allocation decisions, etc.. Structural change in industries and national economies is increasingly more difficult to detect partly because of the growth and dominance of Complex Systems and “Networks” in modern industries and economies – such Networks and Complex Systems include GVCs (global value chains), retail store networks; franchising networks; internet networks; services networks; credit-chains in industries; online social networks; etc.. The relationship between Complexity and Structural Change is well established in the physics, applied math and economic dynamics literatures. Traditional definitions and modeling of structural change have erroneously focused on changes in labor, technological progress, market share, and or capital – which are grossly inadequate in the new economy and post- global financial crisis (as confirmed by changes in the global retailing and housing industries and other industries). Also the modeling of structural change seems to be constrained by the availability of data, and often omits the relationship between structural change on one hand, and globalization, financial stability and international financial contagion. This article: i) introduces the Operations Strategy Model of structural change, explains how it differs from the Lewis Model of Structural Change; and explains the often omitted relationship between operations strategy (of companies and government agencies) and structural change; ii) reviews the relationship between Complexity and Structural Change; iii) introduces other new models/theories of Structural Change in industries; iv) explains the symbiotic relationship between structural change on one hand, and economic growth, financial stability, financial contagion and globalization; v) discusses the significant gap between academic research and practice and explains some issues and factors that should be considered in the development and testing of structural change models; vi) explains how alternative risk premia can be generated from new models of structural change. Some of the innovations in this Article are that: i) Structural Change is analyzed and modelled as time-sensitive large-scale aggregated Network-Decisions (or sets of Network-Decisions) in Complex Systems, wherein Structural Change begins, evolves and ends as groupings of decisions made by individuals (mostly), corporations and government agencies over time. ii) Structural Change is modelled as being subject to “Short-term” Chaos (and short-term sensitivity to “Initial Conditions”, time and variable/processes) which is muted in many cases by changes in “Aggregated Decisions” and Decision Patterns.

UNDERSTANDING THE ROLE OF OR/MS IN THE STRATEGIC DECISIONS OF COLOMBIAN ORGANISATIONS - AN EXPLORATORY STUDY

ABSTRACT Operational Research & Management Science has been defined as the field that provides analytical methodologies to make better decisions. It offers an ample set of tools to facilitate the analysis of complex organisational issues and enlighten decision-making. Nonetheless, it has also been argued that the role it actually plays for corporate strategic decisions is not as key as one would expect it. This article aims at exploring the role that OR/MS plays at the corporate level of a sample of Colombian organisations.To this end, primary information was collected through an online survey that sought to identify the various types of problems they commonly face, the tools mostly employed, and the processes they normally follow. The results suggest limited use of tools at the corporate level of the organisations surveyed. We conclude the paper with some reflections and recommendations for reversing this situation that are worthy of further research.

The Institutional Settings for the Development of Public Services through State-Owned Enterprises in Brazil

ABSTRACTThe findings of this study make a timely contribution to the development of public services. Based on the institutional analysis and development (IAD) framework, this study analyzes under which institutional settings state-owned enterprises (SOEs) can be social and financial options for public service provision in Brazil. Applying a multi-case research design, this study’s findings show that SOEs can be a suitable option for Brazilian social and financial development when: markets are weak or noncompetitive; if few decisional players act; if political interference is minimized regarding operational decisions; and if corporate control is effective to avoid mismanagement and corruption. Brazilian SOEs are effective economic and social tools, but they need to peroxide value improve their corporate control (in the case of Petrobras) and strategic centralization decisions (in the case of Eletrobrás) .

Real options theory in strategic management

Research summary: This article provides a review of real options theory (ROT) in strategic management research. We review the fundamentals of ROT and provide a taxonomy of this research. By synthesizing and critiquing research on real options, we identify a number of important challenges as well as opportunities for ROT if it is to enhance its impact on strategic management and potentially develop into a theoretical pillar in the field. We examine how ROT can inform the key tensions that managers face between commitment versus flexibility as well as between competition versus cooperation, and we show how it can uniquely address the fundamental issues in strategy. We conclude with suggestions on future research directions that could enhance and unify the thus‐far distinct main approaches to real options research.Managerial summary: Real options theory (ROT) applies the heuristics and valuation models originally designed for financial securities to the domain of corporate investment decisions (e.g., joint ventures [JVs], foreign direct investment, research and development [R&D], etc.) and strategic decision making under uncertainty. This article provides a synthesis of this body of research in strategic management and related disciplines. We suggest how ROT can address fundamental issues of strategy, including the dilemmas managers face between commitment versus flexibility as well as between competition versus cooperation. We discuss how three distinct approaches to real options analysis can complement each other, and we identify some of the main challenges and opportunities for ROT to become a theoretical pillar in strategy. Copyright © 2016 John Wiley & Sons, Ltd.

"Boardroom Segregation, Investment Responsiveness, and Firm Performance: The Role Of CEO Centrality"

How do informal social ties among board directors influence corporate strategic investment decisions? Investigating internal social structure within corporate boards, we argue that boardroom segregation, defined as clustering of board members based on their social ties, reduces a company’s investment responsiveness and impedes its financial performance. We also argue that the negative effects of boardroom segregation will be mitigated by the presence of a CEO maintaining many social ties with board directors. Our theoretical model and hypotheses are tested using a sample of 46,292 firm-years from 1999-2013. The results suggest that CEOs may exert positive influences on board deliberations, in contrast to previous research that largely focuses on the influences of the board on top management and the negative effects of CEO-director connections.

The Role of Sovereign Ratings in M&A Markets: Empirical Evidence from Latin America and South East Asia

Sovereign ratings have not only been regarded as an indicator of country risk for foreign investors, but also as a determining factor for capital market conditions of domestic firms. Although they have attracted growing interest in academic research, the extant literature has so far rendered only minor attention to their role in corporate strategic investment decisions. This paper focuses on the influence of sovereign ratings on domestic and cross‐border M&A decisions in a sample of Latin American and South East Asian countries. The empirical results lend support to the proposition that sovereign ratings condition the level of activity in domestic M&A markets as well as the attractiveness of domestic M&A targets for foreign acquirers. Moreover, the foreign bidders’ choice of ownership stakes in acquisitions appears to be affected. The paper thus highlights the relevance of sovereign ratings as a country‐level factor to be considered in studies of corporate investment behavior.

The Case of T-Mobile USA. Inc. (2010-2013): Failed Strategic Alliances and Corporate Governance

T-Mobile’s strategy, decisions and Strategic Alliances were sub-optimal, didn’t result in sustainable growth; and could have resulted in Deadweight Losses (in both the prices of telecomm services and in T-Mobile’s stock prices) and reduced Social Welfare (in terms of increased uncertainty; adverse effects of the stock market; employee morale; and the adverse effects of T-Mobile’s apparent financial distress on its customers, suppliers, shareholders and employees). T-Mobile’s Corporate Governance problems illustrate the weaknesses of Goodwill/Intangibles accounting (IFRS and GAAP), the securities regulation in the US and European Union, Sarbanes Oxley Act, the US FSOC’s “Non-financial SIFI criteria” and the Dodd Frank Act. This article: i) reviews the earnings management, asset-quality management and poor strategic decision making within T-Mobile during 2010-2014; ii) introduces theories of, and biases in Corporate Intrapreneurship, Corporate Governance and enterprise-risk management; iii) characterizes T-Mobile’s problematic strategic alliances; and provides evidence of patterns of failed strategic decisions; iv) provides evidence of, and characterizes Regulatory Failure within the context of Corporate Intrapreneurship and Strategic Decisions; v) summarizes key factors that may affect companys’ receptiveness to corporate venturing proposals.

Современные проблемы формирования корпоративных стратеги- ческих решений в России

Современные проблемы формирования корпоративных стратеги- ческих решений в России

The International Integrated Reporting Council: A call to action

• <IR> aims to encourage longer term thinking. • <IR> may achieve broader thinking about value creation and the business model. • Calls for accounting academics to input into the IIRC's consultation processes. • Role for accounting academics in developing new accountings. • Identifies areas for further research. This paper sets out the case for integrated reporting and its potential to change the thinking of corporate actors leading to the further integration of sustainability actions and impacts into corporate strategic planning and decision making. It calls for academics to engage with the process and to contribute to the development of new forms of accountings to help ensure this potential is reached. It suggests areas of further research to facilitate this. The paper was written in response to John Flower's paper titled “The International Integrated Reporting Council: A story of failure.”

Value creation through cross-border mergers and acquisitions by the Indian pharmaceutical firms

Purpose – Cross-border mergers and acquisitions (M&amp;A) have given the opportunity to the emerging market multinationals to add value while implementing the strategy of internationalization. The Indian pharmaceutical firms are also adopting this strategy and the purpose of this paper is to determine the evidence of value creation for their international M&amp;A activity. Design/methodology/approach – In total, 30 cross-border M&amp;A are examined for value addition through accounting (PAT as percentage of net worth, PAT as percentage of capital employed, research and development (R&amp;D) expenses as percentage of operating expenses) and shareholder return (cumulative abnormal returns) measures of the acquirer firm ex-ante and ex-post M&amp;A. The difference in mean values of the variables after the M&amp;A event is determined through Student's t-test. The time horizon selected for accounting variables was five years and the abnormal stock market returns were calculated using domestic market model with the event window being 40 days. Findings – The results indicate no statistically significant difference in the mean values of all the measures except R&amp;D expenses as percentage of operating expenses for the acquirer Indian firms before and after the M&amp;A event. The mean values of abnormal returns were less than those before the M&amp;A activity. Research limitations/implications – The study does not include a control group of Indian firms engaged wholly in domestic M&amp;A activity or those firms who have not merged or acquired at all. Practical implications – The study may point out toward no significant ex-ante value creation in terms of the selected profit measures but it suggests the probability of the strategy being adopted as a solution to problems like the transfer of tacit knowledge in case of technology led competitive advantages in the pharmaceutical industry and the rise of R&amp;D activity. Originality/value – The Indian pharmaceutical industry has been experiencing waves of international M&amp;A activity since 2005 after the implementation of Product patent Act, 2005. However, little research has been done on the sector to understand the value creating implications of such corporate strategic decisions.

Independent board of directors and corporate sustainability: A South African and Nigerian perspective

This paper examined the stance of independent directors on corporate sustainable development initiative in South Africa and Nigeria. This has become apposite considering the role of independent directors in corporate strategic decisions and performance. It is believed that independent boards strive to direct corporate decisions to protect the investors and thus improve financial performance. Given that sustainability initiative is currently occupying a vital strategic position in protecting firms against inherent and imminent climate change and financial risks, the paper undertakes a survey of South African and Nigerian companies to ascertain the role of independent directors on corporate sustainable development initiatives. Using a mix method of primary and secondary data analysis, the paper finds that independent boards in both countries of study understand the importance of sustainability; however a pragmatic stance on sustainability is more visible in South Africa where independent boards are members of and/or participate in nominating corporate sustainability committees. The paper suggests the need for improved detailed disclosure on sustainability in the Nigerian corporate annual reports; the Nigerian Stock Exchange may boost this initiative by establishing a social and environmental reporting index supported by an annual survey of company sustainability disclosure. It also suggests the need to include sustainability awareness and interest in the metrics that are used in the appointment of independent boards in Nigerian companies

An Event Study of the Delisting of Hospitality Stocks in the United States

Managers make important corporate strategic investment decisions such as mergers and acquisitions to improve the long-term competitiveness of their organizations; while at times they may be forced to manage for the short-term in order to satisfy the demands from the stock market. However, there is a lack of empirical research to examine the short- versus long-term view of management decision-making. This study analyses the mergers and acquisitions activities in the hospitality industry and particularly, investigates delisting behaviour of publicly traded hospitality firms and whether companies exhibit distinct patterns before delisting. Consolidation is prevalent in a maturing industry such as hospitality which currently faces a fiercely competitive global environment. The results of the study show that there is substantial difference between hospitality and non-hospitality stocks: not much information leakage in the delisting of hospitality stocks and a marked increase in institutional holdings with time...

Impact of business diversification on South African construction companies' corporate performance

PurposeThe purpose of this paper is to investigate and examine whether there is any significant relationship between the extent of business diversification and the performance of construction firms in South Africa. The rationale for the examination stems from the view that the relationship between diversification and the performance of construction firms raises important issues in strategic management and cross‐border business. In contractors' growth however, there is a dearth of empirical research and theoretical arguments regarding the effects of business diversification on construction company performance in South Africa.Design/methodology/approachThe study employed the use of a case study and archival approaches using semi‐structured interviews to elicit primary qualitative and quantitative data over a period of five years for large construction companies listed in Grade 7‐9 on the Construction Industry Development Board (cidb) contractor register. The scope of services and geographic diversification are computed from the sourced data. Dependent variables are the measure of performance using Return on Total Asset (ROTA), Return on Capital Employed (ROCE) and Profit Margin (PM); independent variables used are service/Product Diversification (PD) and Geographic Diversification (GD); while control variables used are size, age, technical capability and capital structure of the construction firms.FindingsIt emerged that established construction companies on the cidb contractor registers perform and diversify more in their service/product better than the newly upgraded contractors and this was evident in their performance with respect to profit margin. The results also indicated that there are no statistically significant differences in the performance of diversified and undiversified firms, although diversification was found to have a positive impact on the corporate performance of construction companies.Originality/valueThe outcomes of the research are useful to decision makers and managers of construction companies, as they will help in making viable corporate strategic diversification decisions. The study also engenders a better understanding of the effect of both product and geographic diversification on the performance of contractors.