Large UK Companies Research Articles

Reinforcing green business strategies with Industry 4.0 and governance towards sustainability: Natural‐resource‐based view and dynamic capability

AbstractThe study explores the influence of contextual factors surrounding production planning and green strategic investment decision‐making practices (GSIDMP) in UK companies. We utilize a mixed‐method approach as a research methodology to study the current trend of production planning and GSIDMP. This study's conceptual model is rooted conspicuously in the resource‐based theory (RBT), natural‐resource‐based view, and dynamic capabilities. We empirically examine the nexus among GSIDMP, technological innovation, dynamic capability, and companies' performance. Our study was based on a sample selected from UK‐listed companies, FTSE ALL‐Share Index for the period (2012–2021). Also, the study utilizes data from the UK Innovation Survey (2018–2020) and corporate disclosure through companies' annual reports as a complementary approach for data collection. Findings of this study explore the interdependencies among company dynamic capability, advanced technological innovation and governance mechanisms, and their mediation influence on the nexus between GSIDMP and companies' performance. This study sheds lights on current business innovation strategies. Findings reveal how current practices of production planning and GSIDM in large UK companies shaped by boardrooms absorptive and adaptive capabilities, knowledge‐generating and knowledge‐collaboration capabilities, technological adoption, and corporate governance mechanisms. This study offers insight regarding boardrooms proactive engagement in exploration and exploitation activities to strengthen ambidexterity through various innovation trajectories associated with green production and GSIDMP towards sustainability. We provide managerial implications for decision‐makers, regulators, investors, scholars, and other stakeholders.

Sustainable development goals as unifying narratives in large UK firms’ Twitter discussions

To achieve sustainable development worldwide, the United Nations set 17 Sustainable Development Goals (SDGs) for humanity to reach by 2030. Society is involved in the challenge, with firms playing a crucial role. Thus, a key question is to what extent firms engage with the SDGs. Efforts to map firms’ contributions have mainly focused on analysing companies’ reports based on limited samples and non-real-time data. We present a novel interdisciplinary approach based on analysing big data from an online social network (Twitter) with complex network methods from statistical physics. By doing so, we provide a comprehensive and nearly real-time picture of firms’ engagement with SDGs. Results show that: (1) SDGs themes tie conversations among major UK firms together; (2) the social dimension is predominant; (3) the attention to different SDGs themes varies depending on the community and sector firms belong to; (4) stakeholder engagement is higher on posts related to global challenges compared to general ones; (5) large UK companies and stakeholders generally behave differently from Italian ones. This paper provides theoretical contributions and practical implications relevant to firms, policymakers and management education. Most importantly, it provides a novel tool and a set of keywords to monitor the influence of the private sector on the implementation of the 2030 Agenda.

Modern slavery disclosures in mining: a comparison of large UK and Australian companies

With growing interest in eradication of modern slavery in operations and supply chains the purpose of the paper is to explore disclosures of the top ten listed mining companies in the UK and Australia. Institutional theory provides the foundation for a first examination of comparative modern slavery disclosures in these two countries, at the time one with and one without disclosure legislation. Based on qualitative thematic analysis, major results indicate the UK Modern Slavery Act 2015 to be a catalyst for disclosures made by the sample of UK mining companies, whereas in Australia where no modern slavery legislation was in place, normative and mimetic institutional pressure is not viewed as important and the companies seemed underprepared for impending legislative changes. The paper concludes that transparency based legislation on modern slavery can provide a powerful coercive influence for change, strengthening other forms of normative and mimetic pressure.

Corporate social performance and financial risk: Further empirical evidence using higher frequency data

Using a unique dataset of corporate social responsibility rating – available on a monthly basis – we shed new light on the relationship between corporate social performance (CSP) and firm risk. Where previous studies use annual (at best) measures of CSP, assuming that a change in CSP leads a change in risk, we formally test the direction of the relationship using Granger causality. Looking at large UK companies over 2002–2018 (for a total number of 19,832 firm-months), we reject any causality (either way) between CSP and financial risk (both systematic and idiosyncratic risk). This shows that the CSP-risk relationship is not an endogenous one, contrary to what previous evidence has found. Given the structure of our panel data (long T and short N), we apply GLS based estimator to correct for serial correlation in our panel regressions. We find strong evidence that CSP has a negative impact on idiosyncratic risk; however, the effect of CSP on systematic risk is not statistically significant. The existence of a contemporaneous, rather than lagged relationship doesn't fare well with established CSP theories. Overall, our original approach has opened a new door to further the study of the link between CSP, financial performance and financial risk.

Mandatory CSR Disclosure: An Empirical Analysis of UK Modern Slavery Statements

The Modern Slavery Act 2015 requires large firms doing business in the UK to disclose their efforts to prevent modern slavery within their global supply chains. This paper considers the extent to which companies have complied with the Act and provides an insight into engagement with its underlying objectives. This is achieved through a content analysis of the modern slavery statements published by 934 companies in 2016. As the largest systematic review of UK modern slavery reporting, this paper has international implications due to the globalized nature of modern slavery and the sizeable international shareholder base in large UK companies. Transparency, disclosure, non-financial reporting, disclosure-based regulation, corporate governance, corporate social responsibility, stakeholder, modern slavery act, modern slavery statement, forced labour

“Can you send us a PM please?” Service recovery interactions on social media from the perspective of organizational legitimacy

Drawing on a discursive approach to legitimation (Erkama and Vaara, 2010; Higgins and Walker, 2012; Glozer et al., 2019), this study investigates the (de)legitimation strategies used by companies and (potential) customers in private and public CMC complaint communication, and the interactional dynamics between them. Using the Aristotelian framework of persuasive appeals ethos, logos, and pathos, we analysed (1) 91 emails (replies to complaints from a varied sample of large UK companies), (2) 91 customer reactions to these replies on companies’ public Facebook pages and Twitter, and (3) 383 additional comments to these posts made by the company, the customer, and other stakeholders. The results reveal a clear shift in companies’ private versus public discourse: While they mainly seek legitimacy in email replies by substantiating their complaint decision (logos) and by accommodating to the customers’ feelings (pathos and ethos), their social media interventions are mainly about redirecting customers to a private channel to avoid having to deal with the transactional side of complaint handling in public. Customers, in their turn, delegitimate these companies by primarily criticizing companies’ service failures and service recovery efforts (ethos) and – to a lesser extent – by defending their case (logos) and expressing negative emotions (pathos). In terms of interactional dynamics, the results show that companies are not comfortable with implementing a dialogic approach. Their attempts at discursive finalization, i.e., silencing consumers’ negative feedback, clearly expose social media agents’ lack of agency and power to build up relationships with customers and perform adequate service recovery.

Stewardship regulation and earnings quality: evidence from Japan

Purpose This paper aims to examine if compliance with the Japanese Stewardship Code by institutional investors is related to the earnings quality of their investee companies. It extends the study by Lu et al. who considered this question for large UK companies with high-quality board governance and a rich information environment. This study provides new insights by exploiting the contrasting Japanese setting. Design/methodology/approach The association between Code-compliant institutional investor shareholding and discretionary accruals is examined for Japanese companies in the Nikkei 225 Index. The study period is from the introduction of the Code in 2015 to 2017. Findings A negative association is found between the level of institutional investor Code-compliant shareholding and discretionary accruals, which is robust to tests that address endogeneity. The findings suggest Code-compliant institutional investor shareholding mitigates opportunistic income-increasing earnings management and promotes conservative accounting. Consistent results are found for benchmark beating and accruals quality as alternative earnings quality measures. Originality/value This study offers new insights regarding the efficacy of the Stewardship Code’s policy approach. The findings suggest the stewardship regulatory model is effective when internal governance is weak and external monitoring by institutional investors is a viable substitute or complement.

Strategic investment decision-making practices in large manufacturing companies

Strategic investment decision-making practices in large manufacturing companies

Transformational and digital change: a UK perspective

This article is based on a qualitative interpretivist methodology that helps to analyse, interpret, and explain the meanings that executives and consultants (as social actors), construct regarding so called transformational and digital change in the corporate setting. It explores change interventions through a psychodynamic perspective that recognises many of the forces operating in an organisation may be “under the surface” and may need to be made explicit if collective progress is to be made. The author has attempted to produce research that is relevant to both practitioners and scholars by following some suggestions of Toffel (2016) to bridge the potential gap between perceptions and workplace realities, including conducting site visits, practitioner interviews, and working as a practitioner. The study is exploratory in nature and was primarily concerned with discovering what management practices (if any) are used by executives and consultants in the operationalisation and implementation of transformational and digital change and what (if any) were the implications. It hopefully provides a stimulus for further research. Qualitative interviews and site visits were conducted with executives, consultants, and workers in ten large UK companies who had all taken the decision to instigate multi-million-pound “transformational change” and “digital transformation”. The companies operate across a range of sectors including manufacturing, retail, financial services, food and beverage, and facilities management. This study finds that executives and consultants search for tools and techniques to deliver effective change capability, change leadership, and project management of change. These imply order, rationality, stability, and manageability in change that often takes place amidst absurdity, irrationality, uncertainty, and disorder. Digital transformation is underpinned by new technology, driving new business models, and new “agile” and “iterative” processes, and “dare to fail” ways of working, but it was a century-old doctrine that provided the framework for change. Executives and consultants explicitly and implicitly advocated and enacted the primary functions of management as outlined by Fayol (1916); they were obsessed with accountability and control. Despite the rhetoric of agile and iterative approaches, they were wedded to top–down mechanistic management. The espoused visions, values, principles, and behaviours, were often counterbalanced by the shadow organisation, the covert processes, coalitions, secret alliances, and counter-values. Narcissism and Machiavellian behaviour was rife. In conclusion, this article calls for a move away from mechanistic management to enlightened management, a concept based on the work of Nonaka (2008) that values individuals and interactions over processes and tools. This may go some way to ameliorate the impacts of change at the individual level and bridge the chasm between espoused culture and the living hell of organisational reality.

The influence of corporate social responsibility disclosure on share prices

Purpose – The purpose of this paper is to examine the association between share prices and the level of corporate social responsibility (CSR) disclosure of large UK companies, using CSR data from an independent firm and a time period and setting (the UK) that coincides with increased legislation and increased public awareness of corporate social and environmental issues. Against a background of increased interest by investors in CSR disclosure, prior mixed results on the association between CSR disclosure and share prices suggest the need for further research that overcome some of the identified limitations of the extant literature. Design/methodology/approach – A modified Ohlson (1995) model is used to examine the relationship between CSR disclosure and share prices among the 100 largest UK companies. Three different measures of CSR disclosure are used to ensure robustness of results. Findings – The paper finds that higher levels of CSR disclosure are associated with higher share prices. Furthermore, the paper provides evidence that CSR disclosure by companies operating in environmentally sensitive industries show a stronger association with share prices than CSR disclosure by companies operating in other industries. The paper concludes that CSR disclosure provides incremental value-relevant information to investors beyond financial accounting information. Originality/value – To the best of our knowledge, this is the first paper to provide evidence of the incremental value of CSR disclosure to share price determination in the UK, a country where CSR disclosure is high on the agenda. Our findings provide evidence that CSR disclosures by companies and, in particular, disclosures following the global reporting initiative(GRI) guidelines, are useful to investors and shareholders, as it is related to share price information.

What Stakeholders Expect from Corporations When it Comes to Paying Tax: Corporate Reputation and Optimal Tax Planning

What Stakeholders Expect from Corporations When it Comes to Paying Tax: Corporate Reputation and Optimal Tax Planning

Context effects in the evaluation of business-to-business brand alliances

Brand alliances in the business-to-business domain are becoming increasingly popular. This study investigates the impact of context-related effects on the formation of evaluation perceptions in B2B brand alliances. Assimilation and contrast effects represent the conceptual framework. Employing an experimental design we test the influence of two contextual factors on a range of product attributes: quality perceptions of the known brand ally (valence), and amount of information provided for the brand alliance. Using data collected from a cross section sample of large B2B UK companies we report assimilation effects across different product attributes of the alliance. Positive valence of the known brand ally results in higher evaluations of the brand alliance. In terms of provision of information, we find that, (a) unlike consumer markets, in the B2B domain higher evaluations are the result of detailed information, and (b) the impact of detailed information is significant only for tangible product attributes. Further, we find that valence of the known brand ally and amount of information provided are independent factors. The results add significantly to the knowledge on context effects in B2B brand alliances and lead to a number of managerial recommendations on partner selection and marketing communication of new brand alliances.

Executive Pay and Performance: Did Bankers’ Bonuses Cause the Crisis?

AbstractThis paper examines the pay‐performance relationship between executive cash compensation (including bonuses) and company performance for a sample of large UK companies, focusing particularly on the financial services industry, since incentive misalignment has been blamed as one of the factors causing the global financial crisis of 2007–2008. Although we find that pay in the financial services sector is high, the cash‐plus‐bonus pay‐performance sensitivity of financial firms is not significantly higher than in other sectors. Consequently, we conclude that it unlikely that incentive structures could be held responsible for inducing bank executives to focus on short‐term results.

Executive Pay and Performance: Did Bankers’ Bonuses Cause the Crisis?

This paper examines the relationship between executive cash compensation and company performance for a sample of large UK companies, focusing in particular on the financial services industry, since incentive misalignment has been blamed as one of the factors causing the global financial crisis of 2007/08. We show that base salary and bonuses of UK executives increased substantially over the period 1994-2006, and we provide evidence on the movement in the pay-performance sensitivity over time. We find that although pay in the financial services sector is high, the cash pay-performance sensitivity of banks and financial firms is not significantly higher than in other sectors. This finding of a low sensitivity of pay and performance questions the rationale for regulatory changes to remuneration practices in the banking sector. For all companies we identify an asymmetric relationship between pay and performance: for companies in which stock returns are relatively high, pay-performance elasticities are high, but we find that executive pay is less sensitive to performance when stock returns are low.

Expensing of share-based payments and its impact on large UK companies

This paper investigates the impact of one of the most controversial and strongly-opposed accounting standards of recent years affecting UK companies, IFRS 2/FRS 20. The standard requires the expensing of share-based payments. The findings of the study show that the accounting standards IFRS 2/FRS 20 have had only a modest impact upon selected performance measures. Findings of this research are out of line with previous studies, which examined the position prior to the implementation of mandatory expensing and mainly cover other countries. Given the modest impact, a question arises as to why the standard was opposed so strongly. It could be concluded that the impact of the standard was overstated to fuel opposition.

Employee Participation in Employee Share Ownership: an Evaluation of the Factors Associated with Participation and Contributions in Save As You Earn Plans

The factors associated with participation in and contributions to UK Save As You Earn (SAYE) share option plans are examined. In the absence of a UK literature, the American literature on subscriptions to 401(k) pension plans is drawn upon to develop hypotheses. In addition to the demographic factors (income, age, sex etc.) identified in that literature, the role of attitudinal factors in influencing employee participation and contributions is also investigated. The data source is over 2600 employees in three large UK companies with well‐established SAYE plans. In common with the 401(k) literature, income and age are found to be strong determinants of both participation and contribution levels. Views about the plan are more important than attitudes to the firm in influencing contributions, whilst participation rates are negatively related to commitment (contrary to predictions). These findings are shown to have implications for companies, policy‐makers and researchers.

New Evidence of Relative Performance Evaluation (RPE) in UK Chief Executive Realised Incentive Compensation

In this paper we investigate the association between corporate performance and CEO pay using a panel of 204 large UK companies, between 2003 and 2007. The major and novel contribution of the paper is the focus on payouts from performance-stock option and performance-share plans. We demonstrate that it is crucial to distinguish between the different elements of executive pay and the different performance conditions that attach to those elements if we are to establish a comprehensive understanding of the pay-forperformance relationship. Using fixed-effects regressions, we provide new and convincing evidence that performance-realised short-term pay is determined relative to FTSE-350 market performance and performance-realised long-term pay is determined relative to FTSE-350 sector performance.

Disadvantaged through discrimination? The role of employers in social stratification1

Sociologists have consistently demonstrated that a rather strong association exists between an individual's social class origin and their social class destination, even after controlling for educational attainment. One explanation for this persisting association which is rarely addressed in research in social stratification and mobility is the extent to which class inequalities in access to advantaged class positions are due to discrimination by employers. I set up a field experiment to test whether employers discriminate on the basis of class origin characteristics. I sent letters of job application for professional and managerial occupations to 2560 large UK companies, so as to compare the prospects of equally matched potential employees differing on a range of characteristics, some related to class of origin. The six treatment conditions in the experiment were: the name of the candidate, the type of school attended, the candidate's interests outside work, their sex, the university that they attended and their achieved degree class. Results suggest that employers do pay attention to the class origin characteristics tested here, and that candidates with a name, school type and interests associated with the social elite are more likely to receive a reply to their application than candidates with the equivalent non-elite characteristics. However, the treatment conditions do not, on the whole, have significant effects on the employers' responses in and of themselves. Instead, employers appear to favour particular combinations of characteristics while penalising others.

Why do CEOs hold non‐executive directorships? An analysis of the role of governance and ownership

PurposeThis paper seeks to investigate the holding of non‐executive directorships by CEOs in a sample of 387 large UK companies. The main objective of the paper is to ascertain whether the holding of additional directorships by CEOs is influenced by the governance and ownership characteristics of their companies.Design/methodology/approachThe approach takes the form of an empirical analysis of the holding of non‐executive directorships by 387 CEOs of large UK companies.FindingsThe study finds that 101 CEOs (26 per cent) hold at least one non‐executive directorship but the most any single CEO holds is three with the vast majority holding one other directorship. CEOs who also serve as chairman are more likely to hold non‐executive directorships while CEOs in companies with greater concentration of external ownership are less likely to hold other directorships. The study finds no evidence that either non‐executive representation or managerial ownership (including CEO ownership) influences the holding of additional directorships. The holding of additional directorships is positively related to company size, suggesting that the more complex environment in which CEOs of large companies operate leads to the offer of additional directorships.Originality/valueThe findings are important as they key into an ongoing debate on whether the holding of additional directorships by CEOs is consistent with good governance practice. The evidence presented here provides mixed information for governance regulators. While a significant majority of CEOs do not hold additional directorships, there is evidence that weaker board and external ownership monitoring is associated with a greater likelihood that CEOs will sit on other boards.

The Deterrent Effect of UK Competition Enforcement

The paper briefly reviews previous studies of the deterrent effect of competition enforcement. It then describes the key findings of a recent report commissioned by the Office of Fair Trading on the scale of the deterrent effect of merger control and competition law enforcement in the UK. The research, which was based on in-depth interviews and phone surveys with senior competition lawyers and large UK companies also indicated which sanctions may be more effective at deterring anti-competitive behaviour and provided suggestions for improving deterrence. The paper discusses a number of policy issues raised by the research’s findings.