Power and paradigms : the Dutch response to pressures for shareholder value

Bezemer, Pieter-Jan, Zajac, Edward J., Naumovska, Ivana, van den Bosch, Frans A.J., & Volberda, Henk W. (2015) Power and paradigms : the Dutch response to pressures for shareholder value. Corporate Governance : An International Review, 23(1), pp. 60-75.

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In recent years, research aimed at identifying and relating the antecedents and consequences of diffusing organizational practices/ideas has turned its attention to debating the international adoption and implementation of the Anglo-American model of corporate governance, i.e., a shareholder-value-orientation (SVO). While financial economists characterize the adoption of an SVO as necessary and performance-enhancing, behavioral scientists have disputed such claims, invoking institutional contingencies in the appropriateness of an SVO. Our study seeks to provide some resolution to the debate by developing an overarching socio-political perspective that links the antecedents and consequences of the adoption of the contested practice of SVO. We test our framework using extensive longitudinal data from 1992-2006 from the largest listed corporations in the Netherlands, and we find a negative relationship between SVO adoption and subsequent firm performance, although this effect is attenuated when accompanied by greater SVO-alignment among major owners and a firm’s visible commitment to an SVO. This study extends prior research on the diffusion of contested organizational practices that has taken a socio-political perspective by offering an original contingency perspective that addresses how and why the misaligned preferences of corporate owners will affect (i) a company’s inclination to espouse an SVO, and (ii) the performance consequences of such misalignment.This study suggests when board members are considering the adoption of new ideas/practices (e.g., SVO), they should consider the contextual fitness of the idea/practice with the firm’s owners and their interests.

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ID Code: 78568
Item Type: Journal Article
Refereed: Yes
Keywords: corporate governance;, practice/idea diffusion, ownership structure;, firm performance, the Netherlands, shareholder value orientation
DOI: 10.1111/corg.12093
ISSN: 1467-8683
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BUSINESS AND MANAGEMENT (150300)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
Copyright Owner: Copyright 2014 John Wiley & Sons, Inc
Deposited On: 10 Nov 2014 22:25
Last Modified: 09 May 2015 00:57

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