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Corporate governance and national institutions: A review and emerging research agenda

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Abstract

We present a critique of corporate governance research grounded in agency theory and propose that cross-national comparison of corporate governance should consider how the nature and extent of agency relationships differ across different institutional contexts. Building on prior governance studies grounded in sociology and organizational theory we argue that performance outcomes of boards of directors, ownership concentration, and executive incentives may differ depending on the legal system and institutional characteristics in a specific country. Institutions may also affect the extent of complimentarity/substitution among different firm-level governance practices producing patterned variations in firm-level governance mechanisms. Our discussion suggests that researchers need to develop more holistic, institutionally embedded governance framework to analyze organizational outcomes of various governance practices.

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Notes

  1. We see this context-specific view of effectiveness as distinct from agency theory, which often assume that these different elements are combined into a single long-term organizational objective of increasing shareholder value (see Jensen, 2002).

  2. Stewardship and stakeholder theories remove some restrictive assumptions of the agency approach, yet do not provide a comprehensive research framework that links corporate governance with the broader context of different institutional environments (Aguilera et al., 2008; Yoshikawa & Phan, 2001).

  3. Similarly, Williamson (1991: 277) suggested that mainstream corporate governance research is “too preoccupied with issues of allocative efficiency … to the neglect of organizational efficiency in which discrete structural alternatives were brought under scrutiny.”

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Authors and Affiliations

  1. Sir John Cass Business School, City University London, 106 Bunhill Row, London, EC1Y 8TZ, UK

    Igor Filatotchev & Chizu Nakajima

  2. Department of Global Business and Trade, Vienna University of Economics and Business, Augasse 2-6, 1090, Vienna, Austria

    Igor Filatotchev

  3. Freie Universität Berlin, School of Business and Economics, Boltzmannstr. 20, 14165, Berlin, Germany

    Gregory Jackson

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  1. Igor Filatotchev
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Filatotchev, I., Jackson, G. & Nakajima, C. Corporate governance and national institutions: A review and emerging research agenda. Asia Pac J Manag 30, 965–986 (2013). https://doi.org/10.1007/s10490-012-9293-9

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