Power and Paradigms: The Dutch Response to Pressures for Shareholder Value

16 Pages Posted: 18 Jan 2015

See all articles by Pieter-Jan Bezemer

Pieter-Jan Bezemer

Queensland University of Technology - School of Management

Edward J. Zajac

Northwestern University - Kellogg School of Business

Ivana Naumovska

Northwestern University - Kellogg School of Management

Frans A. J. Van Den Bosch

Erasmus University Rotterdam (EUR) - Department of Strategic Management and Entrepreneurship; Erasmus Research Institute of Management (ERIM)

H. W. Volberda

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); Erasmus Research Institute of Management (ERIM)

Date Written: January 2015

Abstract

Manuscript Type. Empirical.

Research Question/Issue. 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 sociopolitical perspective that links the antecedents and consequences of the adoption of the contested practice of SVO.

Research Findings/Insights. We test our framework using extensive longitudinal data from 1992–2006 from the largest listed corporations in the Netherlands. 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.

Theoretical/Academic Implications. This study extends prior research on the diffusion of contested organizational practices that has taken a sociopolitical 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.

Practitioner/Policy Implications. This study suggests that, 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.

Keywords: Corporate Governance, Practice/Idea Diffusion, Shareholder Value Orientation, Ownership Structure, The Netherlands

Suggested Citation

Bezemer, Pieter-Jan and Zajac, Edward J. and Naumovska, Ivana and Van Den Bosch, Frans A. J. and Volberda, Henk W., Power and Paradigms: The Dutch Response to Pressures for Shareholder Value (January 2015). Corporate Governance: An International Review, Vol. 23, Issue 1, pp. 60-75, 2015. Available at SSRN: https://ssrn.com/abstract=2551328 or http://dx.doi.org/10.1111/corg.12093

Pieter-Jan Bezemer (Contact Author)

Queensland University of Technology - School of Management ( email )

Brisbane, Queensland 4001
Australia

Edward J. Zajac

Northwestern University - Kellogg School of Business ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Ivana Naumovska

Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States

Frans A. J. Van Den Bosch

Erasmus University Rotterdam (EUR) - Department of Strategic Management and Entrepreneurship ( email )

RSM Erasmus University
Rotterdam, 3000 DR
Netherlands
+31 10 408 1955/2005 (Phone)
+31 10 453 0137 (Fax)

HOME PAGE: http://www.rsm.nl/fvandenbosch

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Henk W. Volberda

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
+31 10 408 2761 (Phone)
+31 10 408 9013 (Fax)

HOME PAGE: http://www.eur.nl/fbk/dep/dep4/faculty_members/Henk_Volberda

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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