Weak Governance Structures Research Articles

Why is patient safety so hard in low-income countries? A qualitative study of healthcare workers' views in two African hospitals.

BackgroundThe views of practitioners at the sharp end of health care provision are now recognised as a valuable source of intelligence that can inform efforts to improve patient safety in high-income countries. Yet despite growing policy emphasis on patient safety in low-income countries, little research examines the views of practitioners in these settings. We aimed to give voice to how healthcare workers in two East African hospitals identify and explain the major obstacles to ensuring the safety of patients in their care.MethodsWe conducted in-depth, face to face interviews with healthcare workers in two East African hospitals. Our sample included a total of 57 hospital staff, including nurses, physicians, technicians, clinical services staff, administrative staff and hospital managers.ResultsHospital staff in low-income settings offered broadly encompassing and aspirational definitions of patient safety. They identified obstacles to patient safety across three major themes: material context, staffing issues and inter-professional working relationships. Participants distinguished between the proximal influences on patient safety that posed an immediate threat to patient care, and the distal influences that generated the contexts for such hazards. These included contexts of severe material deprivation, but also the impact of relational factors such as teamwork and professional hierarchies. Structures of authority, governance and control that were not optimally aligned with achieving patient safety were widely reported.ConclusionsAs in high-income countries, the accounts of healthcare workers in low-income countries provide sophisticated and valuable insights into the challenges of patient safety. Though the impact of resource constraints and weak governance structures are particularly marked in low-income countries, the congruence between accounts of health workers in diverse settings suggest that the origins and solutions to patient safety problems are likely to be similar everywhere and are rooted in human factors, resources, culture and behaviour. While additional resources are essential to patient safety improvement in low-income settings, such resources on their own will not be sufficient to secure the changes needed.Electronic supplementary materialThe online version of this article (doi:10.1186/s12992-015-0096-x) contains supplementary material, which is available to authorized users.

Foreign Direct Investment from China: Sense and Sensibility

Inspired by psychological studies on human judgment, this article represents the first attempt to provide a systematic account of how various heuristics and cognitive biases can influence public perception as well as regulatory response to foreign direct investment. In particular, it catalogues the main social and cognitive mechanisms through which various well-organized interest groups can exploit public fear of foreign direct investment from China. By closely studying two cases — the U.S. Congress’ hostile response to CNOOC’s attempted acquisition of Unocal and the European Commission’s increased antitrust scrutiny of Chinese state-owned enterprises’ acquisitions in Europe — this article shows how fear of Chinese investment can lead to counterproductive regulatory response. Contrary to the popular perception that Chinese state-owned enterprises are mere puppets of the government, the article draws attention to the pervasive but neglected agency problems that have powered the surge of Chinese outward investment. It calls for more effortful thinking by western policymakers and cautions against extreme precautionary measures for investment from China. At the same time, however, it questions the wisdom of overseas investment by Chinese state-owned enterprises. Empire building incentives, exacerbated by weak corporate governance structures and the lack of financial disclosure, make it highly likely that state assets are squandered in overseas acquisitions.

An ecosystems perspective for food security in the Caribbean: Seagrass meadows in the Turks and Caicos Islands

Drawing attention to interactions between processes affecting biodiversity loss in marine environments and effects on food security, we draw on research in the Turks and Caicos Islands (TCI), a UK Overseas Territory in the Caribbean. Seagrass meadows provide ecosystem supporting services critical for human wellbeing. They are declining globally due to coastal development, poor land management, and destructive fishing practices. These systems are linked to traditional ways of life with multiple intangible values representing an important cultural resource for coastal communities. Using the lens of food security, we undertake interdisciplinary social–ecological research, to better understand the governance of ecosystem services and the food system in TCI. Research draws on mixed qualitative methods and data gathered via SeagrassWatch, fish surveys and meta-analysis of fish assemblages, revealing anthropogenic stressors exposing TCI to economic and environmental shocks characteristic of small island Caribbean states. We find growing concern regarding the islands׳ high dependence on food imports, coupled with declining availability of local fish and seafood across socio-economic groups. Weak governance structures put TCI׳s marine resources under increasing threat, with consequences for food security. We argue for the application of the precautionary principle, suggesting conservation actions through societal participation and stakeholder engagement.

Germany in a Changing World

Germany in a Changing World

Early Adoption of IFRS as a Strategic Response to Transnational and Local Influences

In recent years, International Financial Reporting Standards (IFRS) have been adopted by nations throughout the world. Proponents and standard setters assert that IFRS will produce a number of benefits including improved transparency, international comparability, market efficiency, and cross-national investment flow. In this study, we examine factors that contributed to the early national-level adoption that occurred prior to broad global acceptance of IFRS. Using a conceptual framework of institutional theory and resource dependence, we propose that the interplay of transnational pressures and local factors influenced the level of adoption. We predict differential adoption as a strategic response at three levels of either require IFRS, permit IFRS, or do not allow IFRS, using a sample of 71 countries. As predicted, countries with greater resource dependency, as evidenced by weak governance structures and weak economies, were the early adopters who were more likely to require the use of IFRS. Further, resource dependence also trumps nationalistic pressures against transnational conformity. Our findings raise concerns that required adoption may not always be accompanied by an appropriately supportive infrastructure; thus, there are implications not only for adoption of IFRS, but also for the diffusion of other transnational regulation that influences global business environment.

Violence in South African Schools: Perceptions of Communities about a Persistent Problem

Multiple incidents of violence in South African schools have elevated the issue to being a national concern. The aim of this article is to report on an investigation into the perception of school communities regarding conditions that make violence such a persistent problem in schools. Located within the critical emancipatory research (CER) paradigm, the article emanates from a larger community engagement project, which is a sequel to a study on the dynamics of violence in schools conducted in 2011*. Qualitative data were collected in 2013 through a series of focus group discussions involving 698 participants in two provinces. Preliminary findings reveal that weak leadership, ineffective or dysfunctional governance and management structures, poor parental participation, lack of teacher professionalism and an overall lack of accountability militate against successful implementation of intervention strategies. It is then suggested that mobilising communities, empowering and equipping them with relevant knowledge and skills is likely stimulate appropriate action towards the reduction of violence in schools. DOI: 10.5901/mjss.2014.v5n14p198

Generating political priority for global surgical care

Abstract Background Despite the high burden of surgical conditions, the provision of surgical services historically has been a low global health priority. Drawing on social science scholarship concerning how issues come to attract attention, we examined factors that have shaped political priority for global surgical care. Methods We drew on a published public policy framework that consists of four categories: (1) actor power, (2) issue framing, (3) the contexts within which actors operate, and (4) characteristics of the issue itself. We triangulated between several sources of data, including 30 semi-structured interviews with members of global surgical networks and Ministries of Health in low-income countries, published scholarly literature, and reports from organisations involved in surgery provision and advocacy. Findings Although surgical care has the potential to gain political priority, several factors hinder the acquisition of attention and resources. First, with respect to actor power, there is no policy community cohesion, unifying political entrepreneur, or mobilisation of civil society to champion the cause. The surgery community is fragmented and primarily composed of a small number of surgeons and anaesthesiologists concerned with the state of surgical care in low-income countries who have yet to collectively define their objectives and propose specific courses of action. Second, concerning framing, difficulties exist surrounding problem definition and positioning of surgical care, both internally among the surgical community and externally with political stakeholders. For example, an absence of consensus exists concerning what constitutes so-called essential surgery, and even whether that term should be used. Third, with respect to context, the community has made insufficient efforts to capitalise on political opportunities such as the Millennium Development Goals. Finally, concerning characteristics of the issue, there are few data to capture the burden of surgical diseases, which are needed to convince political leaders that surgery provision is a crucial, unmet need. Interpretation To advance global priority for surgery, proponents will need to surmount three challenges: (1) a weak governance structure that impedes achievement of collective goals; (2) disagreement on solutions; and (3) the absence of an effective public positioning of the issue. These findings have broad implications for understanding why some global health issues come to attract priority, while others remain neglected. Funding None.

CEO Entrenchment at Network Level

For agency theorists, managerial entrenchment is one of the costliest manifestations of agency problems. CEOs in their attempt to neutralize the discipline of corporate governance mechanisms cause substantive losses to firms’ shareholders. In this study, we broaden the concept of managerial entrenchment by considering the network of firms in which CEOs serve as board members. Unlike the traditional agency theory’s assumption that entrenchment occurs within the firm, we move the focus from the firm to the network of firms with board ties to the focal firm and suggest that CEOs may create a network of directorships in order to entrench themselves at a network level. We posit that this will happen when firms’ internal governance structure are strong and their performance prospects are relatively poor. In creating this network of ties, ideal targets are companies with weak governance structures and located in distant sectors from focal firms. We therefore hypothesize that CEOs will make use of these ties when bad performance is realized. These predictions are empirically supported using a panel data on 4,007 US corporations for the period 2004-2012.

SMEs -The Smart Enterprises

Small and Medium Enterprises (SMEs) are crucial for the economic growth and stability of any country and play a vital role especially for developing countries as they facilitate economic activity and provide employment thus contributing to poverty reduction. In the Indian context they can be considered as the backbone of national economy. The major constraints of SMEs are finance for initial capital and working capital, Line of credit from the suppliers, new technology to produce quality products/ give service, ability to hire qualified and professional staff for production, service and marketing. Majority of the banks consider lending to SMEs an unattractive venture due to a range of factors including information asymmetries and consequently high transaction costs, collateral requirement, financial products not meeting SME sector requirements in medium to long term Information asymmetries, due to inefficient legal system and weak governance structures of SMEs, result in higher transaction costs on the supply side. On the demand side we find most of the SMEs tend to shy away from formal modes of financing due to the high cost of credit, lengthy procedures, collateral requirements and lack of awareness about the benefits of corporate governance. External finance cannot be obtained by firms in their start-up phase as their management structures are not transparent and usually have intangible assets. International investors are often reluctant to invest in developing countries because their institutions do not provide an adequate level of security for their investment particularly in terms of enforceability of legal rights and governance framework. MNCs and international investors will be willing to forge partnership with SMEs only when their level confidence and trust increases regarding transparency and governance of the local partner. Another problem for most of the SMEs being family owned enterprises is that there is no clarity on the roles resulting in credibility problems and inability to arrive at strategic decisions. Good governance is vital for the development of a healthy and competitive corporate sector. For SMEs, corporate governance is about the respective roles of the shareholders as owners and the managers. It is about establishing rules and procedures to manage and run the enterprise. It has been empirically tested that good governance practices of a company gives a positive signal to investors. With the globalization of markets, international capital flows have become extremely valuable source of external financing. Good corporate governance leads to development of a framework that provides adequate protection to the interests of stakeholders and reinforces the fiduciary responsibilities of those vested with the authority to act on behalf of the stakeholders. This paper would analyze the current status of Indian SMEs and how, the introduction SMART governance frame work can make the SMEs SMART Enterprises.

Legal protection of investors, corporate governance, and investable premia in emerging markets

We examine the interaction between the legal protection of investors, corporate governance, and investable premia in emerging markets. In a multi-country setting and using a novel dataset we find that better-governed firms experience significantly greater stock price increases upon equity market liberalization. We look to see whether well-governed firms in poorly governed countries enjoy an investability premium as measured by Tobin's q. We find that they do. Investors look beyond the seemingly weak country-level governance structures, and focus on corporate governance.

The Level of African Engagement at the World Trade Organization from 1995 to 2010.

This article analyses the level of individual and collective participation of African World Trade Organization (WTO) Members in the Organization over a 15 year period, from 1995 to 2010. Specifically, it compares participation levels in three core areas of the WTO: regular committee work; Doha multilateral negotiations; and, dispute settlement. Primary data are collected and examined. Analysis showed that individual and collective participation by African WTO Members was nominal, minimal and largely ineffectual in relation to the group's significant membership share, in areas identified as priority, and compared to members' participation from other regions. The results of the analysis strongly suggest that the described level of participation of African countries is explained by the continuing inertia of a “special and differential exemption orientation”; misalignment in coordinating capital-driven domestic trade policy and economic reforms with the African WTO "Geneva frontline"; misallocation of negotiators across the core areas of work; a small trade share; and, to a lesser extent, specialised capacity handicaps. Furthermore, analysis indicated that the degree of engagement of participation of African WTO Members could be explained by levels of personal commitment and professional engagement of individual negotiators, regardless of capacity constraints and weaknesses. There were evident relationships between the level of African participation and the governance and institutional structures from which negotiators originated. Negotiators from systems with fragile democracies and weak governance structures tended to be tentative, largely inactive, inconsistent in participation and ineffectual in engagement. Within this overarching explanatory framework, specific variables have intervened in different combinations in the three areas of work to influence the levels of engagement, such as trade share levels, specific commercial interests, and competitiveness rankings. In this analysis, over a 15-year period, it is concluded that although African negotiators better expressed concerns and drew attention to their problems, a consistent, high quality level of participation and engagement has not been attained across the three core areas of WTO work. As a consequence, successful attainment of set objectives has remained elusive.

The Disciplining Effect of the Internal Control Provisions of the Sarbanes–Oxley Act on the Governance Structures of Firms

This study examines whether the internal control provisions under the Sarbanes–Oxley Act (SOX) have a disciplining effect on the governance structures of firms. We find that audit committee members and outside directors of firms that disclose material weaknesses (MWs) under Section 302 of SOX are more likely to leave the firms compared to their counterparts in a matched sample of control firms without such weaknesses, and they lose more outside directorships than their counterparts in the control firms. These results are consistent with the notion that the labor market imposes reputational penalties for internal control failures. Although the MW firms have weaker governance structures than the control firms prior to the MW detection, they show significantly greater improvement in governance structures than the control firms following the detection of these weaknesses. We also find that the market reacts positively to the improvement in audit committee size and board independence, suggesting that the improvement restores investor confidence in financial reporting. Overall, the results in this study show that the internal control provisions of SOX have a disciplining effect on the governance structures of firms.

Investing in Connections: Corporate Jets and Firm Value

While shareholders have strong incentives to limit value-destroying perquisite consumption, it is challenging to identify such perquisites. Many corporate assets that enable forms of perquisite consumption also provide operational benefits. Corporate jets represent a potent example. We find business-related flights increase firm performance. Our results also highlight the channels through which jet use can either enhance or destroy firm value. Consistent with the benefits of information gathering and monitoring, firms with soft and complex information that is difficult to transmit remotely are more likely to fly to company subsidiaries and plants, and these flights positively affect firm value. In contrast, among firms with weak governance structures where flights are more likely motivated by agency factors, jet use is more likely to be value-decreasing. The ability to differentiate has important implications in today’s activism environment.

Tunneling and the decision to go private: Evidence from Hong Kong

We examine a sample of going-private transactions in the Hong Kong stock market from 1989 to 2008. Privatized firms experienced large negative abnormal returns prior to the announcement of going private transaction, particularly in those firms with weak corporate governance structure and a high level of related party transactions. The likelihood of a firm to go private is high in those poorly governed firms with large free cash flow. Our evidence suggests that controlling shareholders carry out self-dealings that lead to value losses and depressed stock prices. When remaining public is no longer attractive, controlling shareholders take the firm private by paying a relatively low premium to minority shareholders.

Are mutual fund fees excessive?

There is a long running debate over whether competition in the mutual fund industry limits the ability of investment advisors to charge fees that are disproportionate to the services they provide. We posit that disproportionately high fees are prevalent in funds with multiple share classes and those with weak governance structures. Using a comprehensive sample of index mutual funds for the from 1998 to 2007, we find that internal governance mechanisms matter primarily for funds with relatively small share classes where investors often face increased search costs and/or restricted access to competitive mutual funds. Additionally, we find that funds managed by publicly held sponsors are associated with disproportionately higher fee spreads (about 28 basis points). The results are robust to the inclusion of board characteristics, share class structure, and investment objectives. Overall, our findings suggest that competition and agency considerations are important determinants in the pricing of mutual funds.

Are Mutual Fund Fees Excessive?

There is a long running debate over whether competition in the mutual fund industry limits the ability of investment advisors to charge fees that are disproportionate to the services they provide. We posit that disproportionately high fees are prevalent in funds with multiple share classes and those with weak governance structures. Using a comprehensive sample of index mutual funds for the from 1998 to 2007, we find that internal governance mechanisms matter primarily for funds with relatively small share classes where investors often face increased search costs and/or restricted access to competitive mutual funds. Additionally, we find that funds managed by publicly held sponsors are associated with disproportionately higher fee spreads (about 28 basis points). The results are robust to the inclusion of board characteristics, share class structure, and investment objectives. Overall, our findings suggest that competition and agency considerations are important determinants in the pricing of mutual funds.

Disclosures of material weaknesses by Japanese firms after the passage of the 2006 Financial Instruments and Exchange Law

We investigate the disclosures of material weaknesses in internal control mandated for Japanese firms under the 2006 Financial Instruments and Exchange Law. We find that the presence of a material weakness is more likely for firms that are younger, have better growth prospects, have a volatile operating environment, are financially constrained, and have weak governance structures. We examine the role of Japan’s main banks in this process and find that the likelihood of a material weakness is higher for firms with stronger links with their main banks. We also show that the financial health of the main banks themselves—proxied for by the banks’ BIS ratios and bad loan ratios—increases the likelihood of a material weakness in affiliated firms. This paper provides novel insights into the determinants of material weaknesses of Japanese firms since the passage of the law. Results from this study contribute to the literature on material weaknesses and relationship banking.

Disclosures of Material Weaknesses by Japanese Firms after the Passage of the 2006 Financial Instruments and Exchange Law

We investigate the disclosures of material weaknesses in internal control mandated for Japanese firms under the 2006 Financial Instruments and Exchange Law. We find that the presence of a material weakness is more likely for firms that are younger, have better growth prospects, have a volatile operating environment, are financially constrained, and have weak governance structures. We examine the role of Japan's main banks in this process and find that the likelihood of a material weakness is higher for firms with stronger links with their main banks. We also show that the financial health of the main banks themselves -- proxied for by the banks' BIS ratios and bad loan ratios -- increases the likelihood of a material weakness in affiliated firms. This paper provides novel insights into the determinants of material weaknesses of Japanese firms since the passage of the law. Results from this study contribute to the literature on material weaknesses and relationship banking.

Firm Performance, Corporate Governance and Managerial Reward

The aim of the paper is to test two hypotheses: on one hand, the aim is to analyse if firm’s executive rewards can be explained just by the hierarchical structure of the firm (Model One) while on the other we want to study the correlation between the level of Chief Executive Officer (CEO) compensation, the quality of firms’ corporate governance and firm performances (Model Two). A comparison of the results obtained will be helpful for two reasons: if the level of reward is not only a function of hierarchy (Model One) or economic performances (Model Two) it will be interesting to compare the excess of compensation due to managerial discretion obtained in the two models and check if the results obtained show a similar trend. Furthermore, if the excess of compensation due to managerial discretion will be positive, model two will help us to understand if this “inefficiency” is due to a weak corporate governance structure or to the nature of the ownership of the firm.

Multinationals, CSR and Partnerships in Central African Conflict Countries

ABSTRACTAttention has increased for the potential role of multinational enterprises (MNEs) in helping address conflict issues and/or furthering peace and reconciliation as part of their corporate social responsibility (CSR) policies. However, while existing literature emphasises the importance for MNEs to collaborate with various stakeholders, including non‐governmental organizations (NGOs), research on the scope, peculiarities, and impact of such cooperation has been limited, particularly in those countries in Central Africa with a fragile state and weak governance structure. Furthermore, until recently, MNEs and NGOs in conflict countries had antagonistic relationships, which have created impediments for positive engagement. This paper examines MNEs and conflict issues, including interactions with NGOs, and sheds light on possible MNE contributions to peaceful societies by highlighting a few innovative partnerships of MNEs and non‐business partners in Central Africa. Innovative partnerships take the conflict context into account, have a learning or capacity‐building component, are part of a more comprehensive development plan yet are embedded at the community level, and tackle issues directly related to the conflict, such as governance, human rights, artisanal mining, and transparency. The paper also discusses implications of such activities for the role of the state in fragile contexts. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.