Mutual Trust : A Critical Linkage Between Value Appropriation and Value Maximization

Although value appropriation and value maximization are fundamental for any firm's economic activities, previous research has tended to treat them separately and to focus on each issue while taking the other for granted. This paper suggests that the two processes, i.e., value appropriation and value maximization, are not separate; rather, they are highly interrelated and reinforce each other through mutual trust among major stakeholders, a crucial linkage between the two processes. Specifically, this paper presents that fair value appropriation - i.e., appropriating value to the stakeholders in proportion to their stakes in the firm - contributes to the development of trust from the stakeholders, not only directly, but also indirectly through strengthening moral obligations of internal organizational members, particularly managers, to the stakeholders. The present paper also shows how mutual trust with the stakeholders leads to value maximization. After examining the reinforcing effects of value maximization on value appropriation, this paper concludes with some discussion about social legitimacy of a firm and the roles of managers

The Influence of Multinational Corporations on Institutional Diffusion in Emerging Markets: Evidence from Hiring the Disabled in Korea

Institutional theory has largely ignored the institutional diffusion across borders although it is a common phenomenon in this interconnected world. We examined the influence of the MNC on institutional diffusion in emerging markets. In a research setting of hiring the disabled in Korea, hypotheses were tested with a sample of 948 firms including 101 MNC subsidiaries. Results support the propositions that MNC subsidiaries from major advanced economies hire more disabled workers, and this tendency is diffused to subsidiaries from other countries in Korea. However, we failed to find the evidence that MNC subsidiaries exert isomorphic pressures to local players

CEO labor market and R&D investment in high-technology firms: an empirical study on the disciplinary effect of CEO labor market

AbstractPrevious corporate governance research has paid little attention to the role of chief executive officer (CEO) labor markets in controlling CEO behaviors because the CEO labor market has been considered inefficient. With the increasing mobility of top executives across firms, however, the potential of CEO labor markets to serve as an external disciplining force has been growing. In this study, we argue that CEOs will be more pressured to engage in desirable behaviors as the CEO labor market becomes more efficient. Using a longitudinal sample of S&amp;P 1500 firms in high-technology industries in United States from 2011 to 2019, we found that CEOs tend to increase R&amp;D investment as CEO labor market supply increases. We also found that the tendency is greater when external CEO succession is more frequent in the market. Our results demonstrate that CEO labor markets have the potential to function as an effective external governance mechanism.</jats:p

CEO labor market and R&amp;D investment in high-technology firms: An empirical study on the disciplinary effect of CEO labor market

Copyright © The Author(s), 2022. Published by Cambridge University Press in association with Australian and New Zealand Academy of Management.Previous corporate governance research has paid little attention to the role of chief executive officer (CEO) labor markets in controlling CEO behaviors because the CEO labor market has been considered inefficient. With the increasing mobility of top executives across firms, however, the potential of CEO labor markets to serve as an external disciplining force has been growing. In this study, we argue that CEOs will be more pressured to engage in desirable behaviors as the CEO labor market becomes more efficient. Using a longitudinal sample of S&amp;P 1500 firms in high-technology industries in United States from 2011 to 2019, we found that CEOs tend to increase R&amp;D investment as CEO labor market supply increases. We also found that the tendency is greater when external CEO succession is more frequent in the market. Our results demonstrate that CEO labor markets have the potential to function as an effective external governance mechanism.N