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The firm's strategic dynamics and corporate governance life-cycle

  • Igor Filatotchev
  • Steve Toms
  • Mike Wright

Purpose – The paper seeks to present a novel conceptual framework that integrates the strategic dynamics of the firm with changes in its governance systems. Design/methodology/approach – The agency research agenda is extended to include other corporate governance roles, such as resource and strategy functions, alongside monitoring and control functions. Theoretical arguments are supported by empirical data related to the founder-manager/IPO, IPO/maturity, maturity/decline and reinvention thresholds. Findings – The paper shows that corporate governance parameters may be linked to strategic thresholds in the firm's life-cycle. Successful transition over a threshold is accompanied by a rebalancing in the structure and roles of corporate governance compared with each previous stage in the cycle. Research limitations/implications – In the absence of longitudinal data relating to firms as they pass through all life-cycle stages the study has been restricted to reporting illustrative data from different studies regarding each strategic threshold. Further research might usefully undertake detailed long-term case studies using a combination of archival and interview data to trace the evolution of firms across the four thresholds. Originality/value – This paper develops a novel conceptual framework that integrates the strategic dynamics of the firm with changes in its governance systems. It rejects the notion of a universal governance template and argues that corporate governance parameters may be linked to transitions from one stage to another in the firm's life-cycle. Accordingly, it argues that changes in a firm's strategic positioning may be associated with rebalancing between the wealth-protection and wealth-creation functions of governance.

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Article provided by Emerald Group Publishing in its journal International Journal of Managerial Finance.

Volume (Year): 2 (2006)
Issue (Month): 4 (September)
Pages: 256-279

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Handle: RePEc:eme:ijmfpp:v:2:y:2006:i:4:p:256-279
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