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Corporate Governance, Managers' Independence, Exporting, and Performance of Firms in Transition Economies

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  • Igor Filatotchev
  • Natalia Isachenkova
  • Tomasz Mickiewicz

Abstract

Using data on 157 large companies in Poland and Hungary, this paper employs Bayesian structural equation modeling to examine the relations among corporate governance, managers' independence from owners in terms of strategic decision making, exporting, and performance. Managers' independence is positively associated with firms' financial performance and exporting. In turn, the extent of managers' independence is negatively associated with ownership concentration, but positively associated with the percentage of foreign directors on the firm's board. We interpret these results as indicating that concentrated owners tend to constrain managerial autonomy at the cost of the firm's internationalization and performance, but board participation of foreign stakeholders enhances the firm's export orientation and performance by encouraging executives' decision-making autonomy.

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Bibliographic Info

Article provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.

Volume (Year): 43 (2007)
Issue (Month): 5 (October)
Pages: 62-77

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Handle: RePEc:mes:emfitr:v:43:y:2007:i:5:p:62-77

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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=111024

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Keywords: corporate governance; exporting; performance; strategic independence;

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References

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  1. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco," NBER Working Papers 5715, National Bureau of Economic Research, Inc.
  2. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," NBER Working Papers 5879, National Bureau of Economic Research, Inc.
  3. Richard Scheines & Herbert Hoijtink & Anne Boomsma, 1999. "Bayesian estimation and testing of structural equation models," Psychometrika, Springer, vol. 64(1), pages 37-52, March.
  4. Djankov, Simeon & Murrell, Peter, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," CEPR Discussion Papers 3319, C.E.P.R. Discussion Papers.
  5. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
  6. Mahoney, Joseph T., 1995. "The management of resources and the resource of management," Journal of Business Research, Elsevier, vol. 33(2), pages 91-101, June.
  7. Otto Andersen, 1993. "On the Internationalization Process of Firms: A Critical Analysis," Journal of International Business Studies, Palgrave Macmillan, vol. 24(2), pages 209-231, June.
  8. Yadong Luo & Mike W Peng, 1999. "Learning to Compete in a Transition Economy: Experience, Environment, and Performance," Journal of International Business Studies, Palgrave Macmillan, vol. 30(2), pages 269-295, June.
  9. Klaus Uhlenbruck & Klaus E. Meyer & Michael A. Hitt, 2003. "Organizational Transformation in Transition Economies: Resource-based and Organizational Learning Perspectives," Journal of Management Studies, Wiley Blackwell, vol. 40(2), pages 257-282, 03.
  10. FFF1Jitka NNN1Rychtarikova, 2004. "The case of the Czech Republic," Demographic Research Special Collections, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 2(5), pages 105-138, April.
  11. Finney, R. Zachary & Campbell, Noel D. & Powell, C. Michael, 2005. "Strategies and resources: Pathways to success?," Journal of Business Research, Elsevier, vol. 58(12), pages 1721-1729, December.
  12. Bernard Yeung & Randall Morck & Daniel Wolfenzon, 2004. "Corporate Governance, Economic Entrenchment and Growth," Working Papers 04-21, New York University, Leonard N. Stern School of Business, Department of Economics.
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Citations

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Cited by:
  1. Tomasz Mickiewicz, 2009. "Hierarchy of governance institutions and the pecking order of privatisation: Central-Eastern Europe and Central Asia reconsidered," Post-Communist Economies, Taylor & Francis Journals, vol. 21(4), pages 399-423.
  2. Hopkins, Lucas & Ferguson, Keith E., 2014. "Looking forward: The role of multiple regression in family business research," Journal of Family Business Strategy, Elsevier, vol. 5(1), pages 52-62.
  3. Son Le & Mark Kroll & Bruce Walters, 2010. "The impact of institutional changes on corporate governance mechanisms in transition economies," Journal of Management and Governance, Springer, vol. 14(2), pages 91-114, May.
  4. Bersant Hobdari & Aleksandra Gregoric & Evis Sinani, 2011. "The role of firm ownership on internationalization: evidence from two transition economies," Journal of Management and Governance, Springer, vol. 15(3), pages 393-413, August.
  5. Alvaro, Cuervo-Cazurra, 2011. "Selecting the country in which to start internationalization: The non-sequential internationalization model," Journal of World Business, Elsevier, vol. 46(4), pages 426-437, October.
  6. Calabrò, Andrea & Torchia, Mariateresa & Pukall, Thilo & Mussolino, Donata, 2013. "The influence of ownership structure and board strategic involvement on international sales: The moderating effect of family involvement," International Business Review, Elsevier, vol. 22(3), pages 509-523.
  7. Nisan Selekler-Gökþen & Özlem Yýldýrým-Öktem, 2008. "The Impact Of Board Characteristics On The Internationalization Of Business Group Affiliates," Bogazici Journal of Economics and Administrative Sciences, Bogazici University, Department of Economics, vol. 22(1+2), pages 53-71.

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