State owned enterprises as bribe payers: the role of institutional environment

Our paper draws attention to a neglected channel of corruption—the bribe payments by state-owned enterprises (SOEs). This is an important phenomenon as bribe payments by SOEs fruitlessly waste national resources, compromising public welfare and national prosperity. Using a large dataset of 30,249 firms from 50 countries, we show that, in general, SOEs are less likely to pay bribes for achieving organizational objectives owing to their political connectivity. However, in deteriorated institutional environments, SOEs may be subjected to potential managerial rent-seeking behaviors, which disproportionately increase SOE bribe propensity relative to privately owned enterprises. Specifically, our findings highlight the importance of fostering democracy and rule of law, reducing prevalence of corruption and shortening power distance in reducing the incidence of SOE bribery

Rationalizing ideologies, social identities and corruption among civil servants in Indonesia during the Suharto era

This study investigated how the social identities assumed by individuals as part of their professional roles influence the nature and use of a range of rationalizations for their corruption or the corrupt acts of others. Thirty senior Indonesian public servants were interviewed about the causes and factors that perpetuated corruption during the Suharto era, and how they rationalized corrupt behavior within the role of being a civil servant. Findings revealed that corruption was routine and embedded in the daily activities and administrative structures of Indonesian public servants. Rationalizing ideologies that supported corruption included a denial of responsibility, social weighting and an appeal to higher loyalties. Central to these rationalizations were explanations around the low levels of civil service salaries, poor accountability, and corrupt leadership at senior levels of the government. However, the expression of these rationalizations varied across three social or role identities of the Indonesian civil servant: the professional civil servant, the collegial civil servant, and the corrupt civil servant. The implications of these findings for interventions in organizations in developing countries are discussed

Isomorphic Mutation and Strategic Adaptation in China's CSR Standards for Overseas Investors

At the beginning of the present decade, China has shown preoccupation with its overseas investors’ behaviour in fields like labour, human rights or the environment. Comprehensive, OECD-style environmental, social and governance standards were issued in 2012 by the overseas contractors’ association. One year later, however, the government issued specific, sectorial guidelines for the field of environmental protection only. The divide between industry associations’ approach, favouring comprehensive CSR, and the state’s, paying more attention to the field of environment in its guidelines for overseas operations, is also visible in other normative documents. This chapter focuses on the fields of contracting and mining, as among the most prone to environmental and social wrongdoing by corporations. It first reveals the different CSR approaches at government and industry level as paradoxical, since in China, the government is behind the business associations. The chapter then explains the differences using a theoretic framework that combines sociological neo-institutionalism, with its focus on isomorphism and mechanical alignment to taken-for-granted models, with more recent theories focused on agency. In this context, we discuss the suspicion of decoupling, i.e. adoption of policies that look good without a real intent of implementing them

Quality management as a driver of innovation in the service industry

[EN] This study identifies the combination of factors that lead to quality management reinforcing innovation capability as an organization's strength. The results from 133 Spanish service organizations show that competitive strategy, manager's motivation to adopt quality management, and customer orientation are the key factors that explain the presence of innovation capability as a firm's strength. As some pioneering research points out, the impact of quality management on innovation depends mainly on managers' interpretation of this management philosophy. When quality management focuses on discovering new customer needs and even new markets, it contributes to strengthen the organization's innovation capability.González-Cruz, TF.; Roig-Tierno, N.; Botella-Carrubi, D. (2018). Quality management as a driver of innovation in the service industry. Service Business. 12(3):505-524. https://doi.org/10.1007/s11628-017-0360-750552412

Incentive pay for non-executive directors: The direct and interaction effects on firm performance

© 2017 Springer Science+Business Media, LLC To improve corporate governance and firm performance, institutional investors and influential activists in the US recommend the use of incentive pay for non-executive directors. Policy makers in the UK and Australia, however, recommend against it. Motivated by stark contrast in the recommendations from these Anglo-Saxon countries, this paper investigates the impacts of incentive pay for non-executive directors on firm performance. The findings based on data from 178 listed Australian companies support both recommendations. Firm performance tends to be better when no incentive or high-power incentives are offered to non-executive directors than when low-power incentives are offered. This paper also investigates how incentive pay interacts with monitoring by large shareholders and debtholders to influence firm performance. This paper shows that large shareholder monitoring interacts negatively while debtholder monitoring interacts positively with incentive pay for non-executive directors to affect firm performance. Overall, the findings suggest that governance mechanisms recommended by agency theorists such as performance-contingent pay and monitoring can backfire if they are not designed properly. Both the direct and interaction effects should be considered when practitioners design corporate governance systems