Governance Choices Research Articles

Pacts of Molotov Ribentrop: Liebe war es nie

Many Lithuanians and even historians still believe that the fate of Lithuania, Latvia and Estonia was already unconditionally decided after the secret agreements between the Soviet Union and Nazi Germany on 23 August and 28 September 1939. In fact, the course of history might have turned out differently had it not been for the mistaken choice of the Finnish government and the self-isolation and indecision of the US with regard to the European situation in the spring of 1940.

Punishment or reward? Environmental information disclosure in Chinese listed companies based on evolutionary game systems

AbstractIn February 2022, the Chinese government implemented a mandatory environmental information disclosure policy for publicly traded corporations. To assess the factors influencing environmental information disclosure, we developed a tripartite evolutionary game system model based on strategic interactions between the government, enterprises and the public. Afterwards, we conducted a simulation to examine the systemic interaction equilibrium among the parties involved. Additionally, we assessed critical factor changes in decision‐making for three stakeholders: initial strategy selection, related policy subsidies, regulatory penalties and public incentives. Incorporating Gaussian white noise into the evolutionary game model enhances the realism of simulations, allowing for a more accurate representation of how random disturbances affect decision‐making among the government, the public and enterprises. The study reveals that the active participation of the public in information disclosure activities has a certain degree of substitution effect on the government's choice to regulate high‐quality information disclosure by enterprises actively. The penalty mechanism is more effective than the subsidy mechanism. The public's decision‐making process is susceptible to the direct economic benefits that enterprises can gain from disclosing low‐quality environmental information.

An investigation of the factors underlying informal settlement growth: The case of Burayu City, Ethiopia

Informal settlements in developing countries’ cities are becoming more and more widespread. The city of Burayu is no exception to this trend. To address the challenges involved, it is important to understand the reasons for the prevalence and perseverance of informal settlement. However, there is a lack of institutional and actor perspectives to investigate the process and factors driving the growth of informal settlement in Burayu city. This study investigates the process and precipitating factors underlying the growth of informal settlements based on institutions, structure and agency and social non-compliance perspectives. Primary data for this study were gathered via key informant interviews, questionnaires, and observations. Secondary data were obtained from the empirical data. This study revealed that local informal institutions such as social networking play a crucial role in the growth process of informal settlement by fostering an informal written contract of sale. The study also identified rural-urban migration, speculation, locational choice, and lack of good governance as precipitating causes for the growth of informal settlement. In addition, actors use formal institutional loopholes to engage in informal buildings. Therefore, along with government structure ineffectiveness, the behavior of informal actors’ was also identified as an important, albeit often neglected, factor in the growth of informal settlements. Identifying the impact of various informal actors' behaviors on the proliferation of informal settlements is vital not only for improving relationships among actors but also for introducing relevant institutions to control informal actors to improve land governance.

Strategic dynamics of local governments in regional collaborative governance: An evolutionary game theory analysis of haze pollution response in the Fen-Wei Plain, China

Regional collaborative governance has become a key strategy for environmental protection, especially in reducing transboundary pollution transfer. This study, set against the backdrop of environmental governance in China's Fen-Wei Plain, employs evolutionary game theory to deeply analyze the strategic choices of local governments in managing haze pollution. We developed a model incorporating 14 key variables to systematically explore the emission reduction strategies of local governments under various policy environments. Through numerical simulations, we not only validate the effectiveness of the model but also focuses on how incentives and punishments from the central government influence the stability of local governments adopting a “strict enforcement” strategy. We find that appropriate incentives from the central government can significantly enhance the tendency of local governments to choose a “strict enforcement” strategy for emission reduction. Under certain conditions, whether adopting “strict enforcement” or “superficial enforcement,” both can lead to an Evolutionarily Stable Strategy (ESS). Moreover, the intensity of rewards and penalties from the central government and the benefits of collaborative governance by local governments are key factors determining the stability of strategies. Our findings underscore the importance of establishing performance-oriented incentive mechanisms, refining reward and punishment measures, and focusing on sustainable and adaptable governance strategies. The strategic recommendations provided by this study offer important guidance for balancing incentives and punishments, thereby stimulating local government enthusiasm for governance, which supports high-quality environmental protection and sustainable development goals.

Why continue social concertation, not lobby?: Strategic choices of labor, management, and government through social learning

Why continue social concertation, not lobby?: Strategic choices of labor, management, and government through social learning

Ensuring Peace, Public Order and Stability In The Context of Preventing Violence In Islamic Urban Design and City Planning

Islamic cities exhibit distinctive features aimed at preventing violence, promoting human well-being, and safeguarding the rights of individuals. These characteristics encompass deliberate choices in urban planning and governance. Key attributes include a mosque-centric layout, expansive public squares, green spaces, organized urban fabric, and efficient administrative management. The maintenance of public order was entrusted to the head of state in the capital and governors in other regions, with additional officials such as commanders, ḳāḍīs (judges), Muḥtasib (market overseer), Ṣāḥib al-S̲h̲urṭa (chief of police), and ʿasas (security officers) appointed to ensure security and peace. Akhism provide additional assistance at this stage. This research will delve into Islamic cities' physical infrastructure and institutional framework, focusing on violence prevention. Given Islamic urbanism's diverse geographical spread and historical evolution, the study will analyze select early-period cities, considering urban plans and administrative systems to facilitate comparative analysis.

Rating Politics: Sovereign Credit Ratings and Democratic Choice in Prosperous Developed Countries – A Summary of the Argument

Abstract This article summarizes the core argument of ‘Rating Politics: Sovereign Credit Ratings and Democratic Choice in Prosperous Developed Countries’, co-authored by Zsófia Barta and Alison Johnston and published by Oxford University Press. The book shows that credit rating agencies have become central actors in global governance by dint of their propensity to assign penalties and rewards to the political and policy choices of sovereign governments. It explores the logic according to which those penalties and rewards are meted out, and argues that these rewards and penalties not only constitute a violation of democratic sovereignty, but potentially undermine long-term economic growth and social and political stability, thereby also weakening countries’ long-term debt-servicing capacity.

Decoding India’s AI Governance Strategy and its Implications for the U.S.-India Bilateral Relationship

India is developing a unique approach to the governance of artificial intelligence (AI) and is staking out a leadership role in multilateral dialogues on responsible AI. This paper reviews India’s available AI governance choices, as the country defines its regulatory model, and highlights their associated trade-offs. It also analyses these choices in light of the government’s national priorities, as well as India’s perceived advantages and weaknesses in various industries that might utilize AI systems. With this background, this paper examines how India’s current approach to AI governance may impact the trajectory of U.S.-India technology cooperation.

The Political Side of Social Enterprises: A Phenomenon‐Based Study of Sociocultural and Policy Advocacy

AbstractThis study explores the often‐overlooked political dimension of social enterprises, particularly their advocacy activities aimed at influencing public policy, legislation, norms, attitudes, and behaviour. While traditional management research has focused on commercial activity and the beneficiary‐oriented aspects of social enterprises, this paper considers their upstream political activity. Using a phenomenon‐based approach, we analyse original survey data from 718 social enterprises across seven countries and six problem domains to identify factors associated with their engagement in advocacy. Our findings reveal that public spending and competition in social enterprises’ problem domains, as well as their governance choices – legal form, sources of income, and collaborations – are significantly associated with advocacy activities. We propose a new theoretical framework to understand these dynamics, positioning social enterprises as key players in markets for public purpose. This research underscores the importance of recognizing the political activities of social enterprises and offers new insights for studying hybrid organizing and organizations that address complex societal challenges. By highlighting the integral role of advocacy, our study contributes to a more comprehensive understanding of how social enterprises drive social change, not only through direct service provision but also by shaping the broader sociopolitical environment.

Clawback enforcement heterogeneity and the horizon of executive pay: empirical evidence

Purpose Clawback provisions entitle shareholders to recover previously awarded incentive compensation after the discovery of accounting manipulation or misconduct. The author evaluates the impact of clawback enforcement heterogeneity on the horizon of executive compensation. Design/methodology/approach The author provides empirical tests to evaluate the impact of clawback adoption decisions. The author deals with the endogeneity of clawback adoption decisions through an instrumental variables strategy that exploits the transmission of governance choices within firms’ networks. Findings While the author finds that clawback adoption reduces the frequency of accounting manipulation, this reduction is accompanied by heterogeneous effects on the horizon of executive pay across firms. Clawback adopters with high director independence, high leverage, high managerial termination payments and low executive ownership tilt their compensation toward the short-term. Practical implications The results, robust to alternative specifications, suggest that clawbacks allow strong-enforcement firms to tilt compensation toward the short-term, offsetting some of the direct manipulation disincentives generated by the clawback. The stock market reacts positively to the adoption in firms with weak enforcement, suggesting that clawbacks significantly reduce the managers’ rent-extraction capacity. Originality/value Using a novel empirical and identification approach, the results suggest that clawbacks allow strong-enforcement firms to tilt compensation toward the short-term, offsetting some of the direct manipulation disincentives generated by the clawback.

Governance and the relationship between corruption and FDI in Africa: a threshold regression analysis

ABSTRACT Research on the institutional environment, corruption, and FDI highlights an important facilitating relationship between these factors. The effect of corruption on FDI vis-à-vis the grabbing hand vs. the helping hand hypotheses has been previously examined with suggestions that both hypotheses can co-exist under the assumption that the FDI-corruption relationship depends on the level of institutions. This study revisits this relationship for 34 African countries over the 2005 to 2019 period using the dynamic panel threshold model, which allows for an endogenous threshold variable. Previous studies that have examined this relationship using a threshold regression approach are either not based exclusively on African countries (where the implication of this relationship is more salient) or use a threshold regression that assumes exogeneity of the threshold variable. This study examines the facilitating nature of governance measures – political stability, government effectiveness, rule of law and regulatory quality – on the corruption-FDI relationship. The results indicate significant threshold effects and shows that while the grabbing hand hypothesis is consistent with the data irrespective of the institutional proxy used, the helping hand hypothesis is sensitive to the choice of governance. These results agree with the strand of literature that supports a weak helping hand hypothesis.

The distinctiveness effect: How cross-country dissimilarities influence governance decisions

Transaction cost theory is one of the most commonly used theories to explain how firms govern their economic activities. In the context of cross-border collaborations, transaction cost theory proposes that dissimilarities between the partners’ home countries, which constitute a key source of behavioral uncertainty, affect how collaborations are governed (i.e. whether firms opt for equity joint ventures or non-equity alliances). Although many firms are likely to face more than one dimension of dissimilarity—for example, in terms language and religion, as well as culture—studies in transaction cost theory typically focus on how each source of dissimilarity impacts governance choices independently, in isolation. We integrate insights from research on decision-making and social psychology into the logic of transaction cost theory to theorize about how multiple dimensions of dissimilarity interactively impact governance choices in collaborative agreements, such that the influence of a given level of dissimilarity is not independent of the level of dissimilarity in other dimensions. Specifically, we propose that the impact of dissimilarity on a given dimension on these governance choices will be lower, that is, negatively moderated, when dissimilarities on other dimensions are higher. For example, a given level of cultural distance will have a greater impact on governance choice when linguistic distance is low (because cultural distance becomes more distinctive) as compared to a case when linguistic distance is not low. Our analysis of 21,951 cross-border non-equity alliances and equity joint ventures yields support for our predictions.

Expressways and policy choices of local governments

We examine how intercity road connection affects the policy choices of local governments, using the construction of China’s national expressway as a natural experiment. We show that peripheral counties reduced the level of spending and changed the spending composition since the expressway connection. They became less involved in spending competition, increased the effective tax rate on private firms, and slowed down the privatization of state-owned firms. These results are consistent with the view that mobile capital tends to relocate from peripheral areas to core regions with a lower trade cost. We further show that such changes in government policies contribute significantly to the output decline in these regions after the expressway connection.

Research on the Dilemma and Optimization Strategy of Rural Digital Governance under the Urban-Rural Co-Governance Pattern

Under the concept of "co-construction, joint governance and sharing", digital technology has become an important driving force for the co-governance of urban and rural communities, which is of great significance to improve the modernization level of governance. At the same time, the digital transformation of rural governance can promote the digital transformation of rural agriculture, ecology, governance, culture, life style and other aspects, and promote the process of agricultural and rural modernization. On the basis of practical investigation, this topic uses AHP-SWOT analysis to comprehensively analyze the influencing factors and strategic choices of rural digital governance, and discusses the application scenarios of digital governance combined with factor analysis, and puts forward an optimization strategy for how to effectively promote rural digital governance at the present stage. This paper aims to explore how digital technology can promote the improvement of rural governance level, and provide practical inspiration for the government's governance decisions in rural life and production.

Local government behavior in rural construction land marketization in China: An archetype analysis

There are various rural construction land marketization (RCLM) patterns in China. Explorations on the factors influencing the differences between patterns can provide policy inspirations for establishing a unified land market in China. Archetype analysis enables us to reveal the structural relationships between various factors and elucidate reappearing patterns in the cases. Based on 29 cases, this study analyzes the effects of different factor combinations on the behavioral choices of local governments using the archetype analysis approach. Six archetypes are extracted, and the main findings from the archetype analysis are as follows: 1) The combination of active rural land markets and the effective operation of village autonomy or informal dialogue mechanisms led by rural elites promote the emergence of self-organization models for RCLM. Local governments mainly play guiding, supervisory, and service roles. 2) When the self-organization model is challenging to sustain, local governments participate in the process of RCLM with different mechanisms due to social benefits orientation. 3) In certain well-developed rural areas with a high level of industrialization and limited land resources, extensive government intervention has emerged as a new governance model to achieve regional coordinated development goals. Our work reveals the mechanisms through which local governments play a role in the reform and innovation of RCLM, and it contributes to a better understanding of local government positioning in the future RCLM reform process.

Evolutionary game and system dynamics for analysis on stakeholder strategies of regional high-speed rail project in investment decision stage

This paper studies the strategic choices under the conflict among stakeholders of regional high-speed rail project at the investment decision stage in the context of the ‘high-speed rail controversy’. This study develops a tripartite evolutionary game model among the central government, the local government and China Railway, analyzes the evolutionary stability strategy, discusses the influence of multiple factors on the choice of tripartite strategy, and further calculates and analyzes the stability of the equilibrium point in the tripartite evolutionary game system. Then the dynamic change trend of strategy choice brought by the change of each factor is investigated through system dynamics simulation. The results show that the lower the intervention cost and reward to the other two parties, and the increase of the opportunity cost of non-intervention and punishment to the other two parties, the faster the convergence of the central government's choice of intervention strategy. The increase of the rewards and punishments, and the increase of negotiation profits, non-negotiation costs, and loss of reputation for non-negotiation, and the decrease in the negotiation costs and non-negotiation profits all contribute to the shortening of the convergence time of the local government's choice of negotiation strategy. The increase of the rewards and punishments, the increase of support profits, the loss of reputation for non-support, and the decrease of the profits for non-support and the extra cost for support will promote the convergence of China Railway's choice of the support strategy. Finally, the simulation results are discussed so as to target feasible coordination strategies, which provides a theory basis for the practice of conflict coordination among stakeholders of regional high-speed rail project at the investment decision stage.

Political trust and legitimacy crisis in the age of COVID-19: an assessment of the EndSARS protest in Nigeria

The article examined the manifestations of political trust deficits associated with people's response to policy choices of Nigeria's government during the COVID-19 pandemic. Like many other states, the African states and particularly the Nigerian government adopted WHO-recommended containment measures to limit the spread of the virus and the associated catastrophe. These measures included lockdowns, shutdowns, social distancing, and personal hygiene among other preventive procedures. Even though the pandemic was relatively less endemic in Africa, as per official statistics, African states swiftly implemented the WHO containment measures, which impacted negatively on the livelihood of the average household, who depends on daily incomes for survival. The worsening living condition caused by the containment measures expectedly deepened resentment against governments in Africa with already poor records of public service delivery, accountability, transparency, and human rights. Nigeria was one of the African countries that experienced citizens' backlash and violent outrage against government policy choices during the COVID-19. Under the guise fighting police brutality, youths staged mass anti-government protests that transformed into large scale violence, particularly in the southern parts of the country otherwise known as the “EndSARS Protests.” The protests were conceived against police brutality in the enforcement of COVID-19 measures. This article examined the outbreak of EndSARS protests as a transformation of the deepening of political trust deficits in age of COVID-19. It adopted qualitative approach using documentary evidence such as newspaper reports and official documents as instruments of data collection. The Institutional Performance Theory guided the article. The theory assumes that the actual performance of government determines citizens' level of trust and confidence in public institutions. The article found that perennial government inefficiency, limited accountability and transparency as well as poor human rights records of the government and its agencies, particularly the police exacerbated an already existing political trust deficits amongst the people in Nigeria. This was manifested in the outburst of a large-scale violent outrage by the youths as protest to the government containment measures and widespread dysfunctional governmental institutions and particularly police brutality. The article concluded that building trust is particularly important for governments, as this can be achieved through output sense, the provision of public goods, or social support.

Research on Carbon Allowance Allocation Mechanism in Oligocompetitive Industries under Carbon Trading

In response to global warming, countries have implemented measures to control greenhouse gas emissions. The government's choice of carbon quota allocation mechanism is crucial to the effectiveness of emission reduction and control. This paper presents a master-slave game model where the government leads and the oligopolistic competitors follow. The aim is to explore the conditions under which the government chooses the allocation mechanism, providing managerial insights for the government's allocation of quotas.

Relationship between the implementation of formal board processes and structures and financial performance: the role of absolute family control in Colombian family businesses

PurposeWe investigate the effect of the adoption of formal board structure and board processes on firm performance in Colombian family firms, in a context where firms can choose specific aspects of board structure and processes. We deploy insights from the behavioral governance perspective to develop arguments about how family businesses may choose board elements based on their degree of control over the firm (absolute control or less), and its effect on firm performance.Design/methodology/approachWe use an unbalanced data panel of 404 firm-year observations. The data was obtained from the annual financial and corporate governance reports of 62 Colombian stock-issuing firms for the period 2008–2014 – due to change in regulation, data could not be added beyond 2014. Panel data technique with random effects was used.FindingsThe results show that board structure is positively associated with financial performance, however, this relationship is negative in businesses where family has absolute control. We also found that there is a negative association between board processes and performance, but positive association in family-controlled businesses.Originality/valueOur research contributes to research streams on effects of family control in firm choices and on the interactive effect of governance choices and institutional context and more generally how actors interact (rather than react) with their institutional context.

The evolutionary analysis of investment in CCS-EOR under dual carbon target—From the perspective of multi-agent involvement

Carbon capture and storage with enhanced oil recovery (CCS-EOR) technology plays a crucial role in achieving dual carbon targets in China. And the rapid diffusion of technology requires collaboration among various stakeholders involved in industrial chain of CCS-EOR project and then it will cause conflict of interest among the participants. In order to solve the problem existing in CCS-EOR promotion and propel the rapid deployment of low-carbon technology in China, the paper constructs a tripartite evolutionary game model by incorporating the strategic choices of coal-fired power plants, oilfield enterprises and governments into the framework, explores the respective dynamic evolutionary path of three parties and analyzes the impact of each parameter change on the system evolution results Through the numerical simulation, the paper identifies the optimal evolutionary path to spur the application of CCS-EOR and determine their strategy choices of three involved subjects in the game framework. Based on the sensitivity analysis, results are given as follows: (1) The government's clean electricity subsidy and carbon utilization subsidy have pushed the timing of CCS retrofitting significantly forward, but the initial investment subsidy has little impact on it; (2) Under the cooperation mode of coal-fired power plants and oilfield enterprises, the optimal cost-sharing ratio of the initial investment for coal-fired power plants is about 0.4 to promote both sides to reach cooperation faster. Once it exceeds 0.4, the probability of cooperation between them will be significantly reduced; (3) The carbon tax policy effectively propels the development of CCS-EOR technology. When the carbon tax rises from 30 CNY/t to 120CNY/t, power plants will conduct CCS retrofitting investment two years in advance.