Recruitment paused Corporate governance and non-market strategy
- ERIM PhD RSM 2018 SE_CGNMS
Modern era corporate leaders are not only confronted with a host of activities by stakeholder activists seeking to influence their decisions, but also have to deal with an external environment whereby the boundaries between politics and business become increasingly blurred. Indeed, reports about corporate donations to political parties, intense lobbying, or the appointment of politicians to the board have become the norm. It therefore appears that firms increasingly recognize the need to complement their competitive strategies with non-market strategies involving corporate political activities. However, scholarly discourse remains relatively silent on the question how firms simultaneously embed competitive and non-market strategies into their overall governance architecture. The objective of this project is to enhance our theoretical and empirical understanding of how the systematic adoption of non-market strategies shape the governance practices and architectures of firms.
Corporate Governance, Non-market strategy, Stakeholder management, Corporate Political Activities, , Social Movements
Corporate governance is about the organizational architecture, including the structure and identity of the firm’s ownership, through which modern corporations develop and exploit their resources in order to create value for their shareholders and stakeholders. Research in this area has offered a wealth of insights into the antecedents and performance implications of governance structures across space and time, and has been of great practical value for managers, investors, and regulators around the world.
Although the corporate governance literature has focussed mostly on the question how corporate governance practices and architecture of firms may help to secure return on investment for the liquid and often uninvolved shareholders of publicly listed firms, there has been an increasing appreciation of the insight that firm performance and survival are often critically dependent on the continued support of multiple stakeholder interests, both inside and outside the firm.
One key challenge for firms is that their stakeholders often have conflicting views on the most effective use of organizational resources, implying that firm leadership will have to balance these competing interests when making strategic decisions. Such decisions often require a balancing of economic and social goals. Mergers and acquisitions, for example, may be good for shareholders because of potential synergies between the resources and business models of the firms involved, but may have negative consequences for employees who may lose their jobs and communities that may lose economic activity and tax revenues as a result of the restructuring needed to realize these synergies.
Strategic decisions become even more complicated when local communities, NGOs, or even governments target the firm with a host of activities seeking to influence firm decisions and their outcomes, or when regulation or public policy stand in the way of firms developing and rolling out their business models across national borders, as the ride hailing company Uber recently experienced in Europe. In such cases, firms will have to develop so-called non-market strategies to complement their commercial and market strategies, involving corporate political activities, such as lobbying for example, or developing plans to enter which market with which product or service based on a careful analysis of the regulation, institutions, politics and stakeholders involved in each market.
Although research in management has long addressed the antecedents and consequences of specific stakeholder management and lobbying practices, it is mostly silent on how the increasing need to develop non-market strategies and stakeholder management practices shape the governance practices and architectures of firms, and what the antecedents and consequences may be of firms embedding stakeholder management and non-market strategies more firmly into their overall governance architecture. This research project seeks to address this gap in the literature and strives to answer questions like:
• Why do activist stakeholders or NGOs target firms to pursue their objectives, and how does this differ from targeting by shareholder activists, for example?
• How do firms respond to NGO, stakeholder, or social movement targeting, and how does this differ from managerial responses to shareholder activism?
• What type of stakeholder management and non-market strategy activities do firms engage in, and to what degree are such activities connected to, or embedded in, the overall governance architecture of firms?
• What are the factors driving firms to engage in stakeholder management and non-market strategy activities, and what may explain differences between firms in the degree to which such practices are embedded in their overall governance architecture?
• How does the firm’s governance structure influence non-market strategy (antecedents, approaches, tactics, or outcomes)?
• To what extent can non-market strategies conflict with the interests of other stakeholders? Specifically, under which conditions do corporate political activity and corporate social activity act as complements? When do they act as substitutes?
• How do institutional differences across countries influence the outcomes of non-market strategies? How do multinational corporations govern non-market strategy across institutional contexts? How do activist stakeholders and NGOs coordinate actions against MNCs across institutional contexts?