Is both internal and external pressure needed to effect change in ethical behaviour? See this week’s articles to find out more.
Corporate governance in China: A meta‐analysis
How has the impact of ‘good corporate governance’ principles on firm performance changed over time in China? Amassing a database of 84 studies, 684 effect sizes, and 547,622 firm observations, the authors explore this important question by conducting a meta‐analysis on the corporate governance literature on China.
The weight of evidence demonstrates that two major ‘good corporate governance’ principles advocating board independence and managerial incentives are indeed associated with better firm performance. However, the authors cannot find strong support for the criticisms against CEO duality. In addition, the authors go beyond a static perspective (such as certain governance mechanisms are effective or ineffective) by investigating the temporal hypotheses.
The authors reveal that over time, with the improvement in the quality of market institutions and development of financial markets, the monitoring mechanisms of the board and state ownership become more strongly related to firm performance, whereas the incentive mechanisms lose their significance.
Overall, these findings advance a dynamic institution‐based view by substantiating the case that institutional transitions matter for the relationship between governance mechanisms and firm performance in the second largest economy in the world.
Canan C. Mutlu, Marc Van Essen, Mike W. Peng, Sabrina F. Saleh and Patricio Duran. 2017. Corporate Governance in China: A Meta‐Analysis.
Journal of Management Studies, First published online: 27 December 2017.
Corruption and its effects on FDI: Analysing the interaction between the corruption levels of the home and host countries and Its effects at the decision-making level
This study furthers our understanding of how corruption affects the decision-making process of allocating foreign direct investment. Drawing on the responses of 28 managers in charge of establishing operations in a highly corrupt host country, the authors argue that those firms based in home countries with low levels of corruption are more proactive in preparing to face corruption abroad than those based in countries with high corruption levels.
This means that firms from less corrupt home countries have strategies in place to deal with high corruption abroad. This finding is based on the fact that these firms have stronger pressures to not engage in corruption from their home stakeholders. Also, these firms might not have the experience of dealing with corruption at home, which hinders their potential to deal with corruption abroad. On the other hand, those firms based in highly corrupt home countries do not have clear strategies to deal with corruption abroad. This assertion is based on the fact that these firms might have familiarity in dealing with corruption and thus, might not see it as an obstacle to operating abroad.
Jose Godinez and Ling Liu. 2018. Corruption and Its Effects on FDI: Analysing the Interaction Between the Corruption Levels of the Home and Host Countries and Its Effects at the Decision-Making Level.
Journal of Business Ethics, 147(4), 705–719.
Change above the glass ceiling: CSR and gender diversity in Japanese firms
This article examines how local organisations respond to the global norm of corporate social responsibility (CSR), focusing on the case of workplace gender diversity in Japan. Though many global institutional investors have declared their commitment to CSR principles, whether and how their investments actually improve local practices has yet to be examined.
The authors hypothesise that changes implemented by local firms in response to pressure from global institutional investors are shaped by political dynamics among competing professional groups in organisations. Through interviews with CSR managers and consultants in Japan, the authors find that CSR managers push for gender diversity only in the upper ranks of their organisations. This helps managers limit resistance from human resources managers, who want to maintain the traditional employment system, while still gaining support from investor relations managers, who support changes that are visible to investors.
Findings from panel data analysis further document this change above the glass ceiling. Analysing more than 800 Japanese firms between 2001 and 2009, the authors show that both foreign investment and the within-firm influence of CSR and investor relations managers significantly increased the number of women on boards and in managerial positions but did not improve the lot of those in non-managerial or entry-level positions.
This study contributes to research on diffusion and organisational change by illuminating interprofessional politics in the local implementation of global norms.
Eunmi Mun and Jiwook Jung. 2018. Change above the Glass Ceiling: Corporate Social Responsibility and Gender Diversity in Japanese Firms.
Administrative Science Qtly, 63(2), 409-440.
Corporate Philanthropy and Tunnelling: Evidence from China
This paper examines the association between corporate philanthropy and tunnelling by controlling shareholders. Using a unique dataset from China, the paper finds evidence that firms donating more are less likely to tunnel. The negative association between philanthropy and tunnelling is stronger when firms are faced with more severe agency conflicts, as indicated by lower largest shareholding, fewer growth opportunities, lower state ownership, and weaker product market competition.
The results suggest that companies engaging in philanthropy have incentives to enhance their reputations and improve their relationships with stakeholders.
Jun Chen, Wang Dong, Jamie Tong and Feida Zhang. 2018. Corporate Philanthropy and Tunneling: Evidence from China.
Journal of Business Ethics, 150(1), 135–157.
Business Ethics in the Greater China Region: Past, Present, and Future Research
While business ethics has generated a great deal of research internationally over the last few decades, academic reviews of the business ethics literature remain limited. Moreover, there has been little attempt to date to analyse this literature specifically in the Greater China region, which has been experiencing rapid socioeconomic growth and dynamic evolution of business ethics in recent decades.
This paper addresses this research gap by undertaking a comprehensive and critical appraisal of the business ethics literature on Greater China. In particular, it maps out the existing research findings, identifies limitations in methodology, and suggests future directions for business ethics research in this region.
The findings indicate that the scholarly interests cover 24 research themes, including corporate social responsibility and social performance; ethical beliefs, judgment, values, decision-making, and culture; workplace ethics and behaviour; marketing ethics and consumer behaviour; and sustainability.
This review reveals a growing imbalance between empirical and conceptual/theoretical studies on business ethics. In addition, the published works covered in this review heavily rely on survey method and convenience sampling, with a predominant focus on a single individual level of analysis. Importantly, this study identifies four directions for future research: contextualised theoretical development, addressing multilevel research, developing research design tailored to the Chinese context, and ensuring more diversified and rigorous data collection.
Juelin Yin and Ali Quazi. 2018. Business Ethics in the Greater China Region: Past, Present, and Future Research.
Journal of Business Ethics, 150(3), 815–835.
Cross-country evidence on the role of independent media in constraining corporate tax aggressiveness
Using an international sample of firms from 32 countries, the authors study the relation between media independence and corporate tax aggressiveness. The authors measure media independence by the extent of private ownership and competition in the media industry.
Using an indicator variable for tax aggressiveness when the firm’s corporate tax avoidance measure is within the top quartile of each country-industry combination, the authors find strong evidence that media independence is associated with a lower likelihood of tax aggressiveness, after controlling for other institutional determinants, including home-country tax system characteristics.
The authors also find that the effect of media independence is more pronounced when the legal environment is weaker, and when the information environment is less transparent. The authors contribute to the business ethics literature by documenting the role of independent media as an external monitoring mechanism in constraining corporate tax aggressiveness.
Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim and Gerald J. Lobo. 2018. Cross-Country Evidence on the Role of Independent Media in Constraining Corporate Tax Aggressiveness.
Journal of Business Ethics, 150(3), 879–902.