The impact of remuneration governance on chief executive officer overpayment

Background: Chief executive officer (CEO) payment and company performance are highly controversial, and existing research has focused on this link for decades. The study was conducted in South Africa where corporate governance regulators have introduced measures to improve the relationship between CEO pay and performance. Aim: This research aimed to explore the problem by extending Pepper and Gore’s (2015) behavioural agency theory to examine the moderating effect of remuneration governance on the CEO pay – company performance relationship. Setting: The study focused on the Top 100 listed companies in which several regulations concerning CEO pay were introduced, which provided the opportunity to examine such regulations on the alignment of CEO pay and company performance. Method: Panel data from 67 company annual reports were analysed over two decades with 871 datapoints, divided into three periods corresponding with the introduction of regulations. Analyses included corrected panel standard errors and estimated generalised least squared hierarchical multiple regression and moderated multiple regression analyses. Results: Results showed a statistically significant positive relationship between company performance measures and total CEO remuneration (including long-term incentives [LTIs]) for each of the three periods. We found that LTIs tied to performance-vested criteria and CEO minimum shareholding do enhance pay-performance sensitivity. Results further suggest that the behavioural agency theory is incomplete and researchers should consider the role of remuneration governance in moderating CEO overpayment. Conclusion: Remuneration governance should be refined through the inclusion of retrospective CEO remuneration disclosure to increase pay-performance sensitivity. Contribution: This research contributes to knowledge of CEO payment and company performance

Inward and Outward FDI Country Profiles, Second Edition

This second edition contains a series of 77 standardized country profiles dealing with the inward and outward foreign direct investment (FDI) performance of 40 economies. The profiles have been peer-reviewed by a global network of experts. The publication is intended to contribute to the analysis of trends in foreign direct investment and policy issues related to them. More specifically, the individual profiles discuss FDI trends and developments (country-level developments, the corporate players); effects of the recent global crises; and the policy scene. Each profile contains a standard set of tables, including on FDI stocks and flows, sectoral and geographical FDI distributions, the largest M&As and greenfield investments, the principal foreign affiliates (for inward FDI), and the principal multinational enterprises (for outward FDI). The standardized template used to produce the profiles allows cross-country comparisons. The volume is meant to be a reference tool for anyone interested in foreign direct investment

The implications of South Africa's skills migration policy for country competitiveness

South Africa suffers from a shortage of skills, while at the same time having an excess of unskilled labour. The brain drain and the impact of HIV/Aids are threats to the current skills level in the labour force. Skilled workers generally create jobs for unskilled workers, and the level of skills in the labour force is an attraction for foreign investment. The new international migration policy imposes financial penalties and other restrictions on employers of foreigners with skills. The policy is detrimental to South Africa's competitiveness in the global economy and will deter investors and those needing to utilise skills not available in the South African labour market. A general immigration policy would be more appropriate to attract skilled foreigners to South Africa, where their skills can be absorbed into the labour force by supply and demand forces.

Emerging global contenders: The South African experience

The global strategies of three major South African MNEs are examined with a view to understanding the applicability of existing theories to developing country firms and their emergence as global industry leaders. Emerging market MNEs are motivated by both defensive and offensive considerations. At the same time, home market domination allows potential contenders to develop competitive firm-specific advantages that are non-location based. We propose that successful emerging market MNEs start to build their global positions on the back of asset exploitation, but soon follow with asset seeking behavior. When country specific advantages are less important, contenders can accelerate their development of non-location based FSAs rapidly. Finally, leadership and domestic dominance may be more important than country specific advantages in explaining the success of emerging market MNEs.Emerging markets Globalization MNEs South Africa

Overcoming African institutional voids: Market entry with networks

Purpose: Literature on modes of entry has focussed on firm-level strategies. The predominant theories used are Institutional Theory and the resource based view. Using an alternate approach, network theory, the paper demonstrates an additional mode of entry: multiple firms entering together as an extension of an existing loose network, known as a bridging network. The extension of an external network across borders is an appropriate mode of entry in emerging markets with no preexisting networks or existing networks within a market that are weak, immature or missing. Approach: A conceptual review, which develops four propositions, demonstrating that market entry with bridging networks may be the preferred mode of entry in the presence of institutional voids. Alternative modes may not be viable due to costs and risks associated with overcoming such voids. Findings: Existing theory and case examples supports the contention that market conditions facilitate firms to enter as networks rather than as singular entities. These conditions are found in markets with institutional voids and explain the dominant form of business groups in many countries and the operation of loose strategic alliances in emerging markets. Network entry facilitates market access speed may allow for local ties to remain undeveloped or be a first step in building in-country networks. Originality: This paper heeds to the call for a network ecosystem approach to market entry, arguing that firms may enter as a collective in subsistence and emerging markets which would explain the preponderance of business groups and loose alliances found

The impact of employment equity regulations on psychological contracts in South Africa

This article will show the impact of employment equity legislation on the psychological employment contracts of the three main employee groupings in South African society. This study is important in that it fills the gap in the literature that identifies labour market regulations as an important shaping influence on the psychological contract. More than 500 managers from across South African industry and from all ethnic groups were surveyed to identify differences in psychological contracts and attitudes towards the social transformation regulations. We found that the legislation has impacted differentially on the three groupings mainly in terms of their loyalty to stay with their organizations, the focus on their career development in terms of the external labour market and the degree to which they felt they had been affected by the legislation. Additionally we find that the perceived linkage between job satisfaction and labour turnover is significantly weakened by labour market legislation in the case of the beneficiaries of the legislation, but that this may not be the case for those negatively affected by the legislation. The findings have significant implications for the HRM practices of multinationals operating in societies with significant labour market regulatory interventions