IDEAS home Printed from https://ideas.repec.org/p/hig/wpaper/29man2014.html
   My bibliography  Save this paper

The Birth Of An Entrepreneurial Board In Emerging Markets: A Russian Case

Author

Listed:
  • Alexander Libman

    (National Research University Higher School of Economics)

  • Tatiana G. Dolgopyatova

    (National Research University Higher School of Economics)

  • Andrey A. Yakovlev

    (National Research University Higher School of Economics)

Abstract

This paper investigates the role of boards in founder-managed firms with concentrated ownership in emerging markets. The existing literature suggests that this type of company, even if they decide to recruit high-profile individuals as directors, rarely empowers the boards in the corporate governance structure. The paper conducts a case study of AFK Sistema—a large Russian investment company which is controlled and managed by the founder. We observe that, contrary to expectations, in this company the founder empowered the board of directors at the same time focusing on recruiting independent (mainly foreign) directors to the board, in spite of the costs associated with this governance structure in the Russian context. Based on this case, we develop a theory of entrepreneurial boards where directors are expected to take the initiative in relations with both internal and external actors and where the empowerment of boards is necessary to provide them with proper motivation.

Suggested Citation

  • Alexander Libman & Tatiana G. Dolgopyatova & Andrey A. Yakovlev, 2014. "The Birth Of An Entrepreneurial Board In Emerging Markets: A Russian Case," HSE Working papers WP BRP 29/MAN/2014, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:29man2014
    as

    Download full text from publisher

    File URL: http://www.hse.ru/data/2014/12/23/1104054418/29MAN2014.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Morten Huse & Robert Hoskisson & Alessandro Zattoni & Riccardo Viganò, 2011. "New perspectives on board research: changing the research agenda," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 15(1), pages 5-28, February.
    2. García-Ramos, Rebeca & García-Olalla, Myriam, 2011. "Board characteristics and firm performance in public founder- and nonfounder-led family businesses," Journal of Family Business Strategy, Elsevier, vol. 2(4), pages 220-231.
    3. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.
    4. Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
    5. Riccardo Viganò & Alessandro Zattoni & Robert Hoskisson & Morten Huse, 2011. "New perspectives on board research," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 15(1), pages 1-4, February.
    6. James D. Westphal & James W. Fredrickson, 2001. "Who directs strategic change? Director experience, the selection of new CEOs, and change in corporate strategy," Strategic Management Journal, Wiley Blackwell, vol. 22(12), pages 1113-1137, December.
    7. Melkumov, Dmitri, 2009. "Institutional background as a determinant of boards of directors' internal and external roles: The case of Russia," Journal of World Business, Elsevier, vol. 44(1), pages 94-103, January.
    8. Yi Jiang & Mike Peng, 2011. "Principal-principal conflicts during crisis," Asia Pacific Journal of Management, Springer, vol. 28(4), pages 683-695, December.
    9. Michael Hitt & M. Tina Dacin & Edward Levitas & Jean-Luc Arregle & Anca Borza, 2000. "Partner Selection in Emerging and Developed Market Contexts : Resource-Based and Organizational Learning Perspectives," Post-Print hal-02276706, HAL.
    10. Olga Lazareva & Andrei Rachinsky & Sergey Stepanov, 2008. "A Survey of Corporate Governance in Russia," Springer Books, in: Robert W. McGee (ed.), Corporate Governance in Transition Economies, chapter 32, pages 315-349, Springer.
    11. repec:elg:eebook:14347 is not listed on IDEAS
    12. Amy J. Hillman & Albert A. Cannella & Ramona L. Paetzold, 2000. "The Resource Dependence Role of Corporate Directors: Strategic Adaptation of Board Composition in Response to Environmental Change," Journal of Management Studies, Wiley Blackwell, vol. 37(2), pages 235-256, March.
    13. Iwasaki, Ichiro, 2008. "The determinants of board composition in a transforming economy: Evidence from Russia," Journal of Corporate Finance, Elsevier, vol. 14(5), pages 532-549, December.
    14. Danny Miller & Isabelle Le Breton‐Miller & Richard H. Lester, 2011. "Family and Lone Founder Ownership and Strategic Behaviour: Social Context, Identity, and Institutional Logics," Journal of Management Studies, Wiley Blackwell, vol. 48(1), pages 1-25, January.
    15. Matthias Benz, "undated". "Entrepreneurship as a non-profit-seeking activity," IEW - Working Papers 243, Institute for Empirical Research in Economics - University of Zurich.
    16. Katalin Takacs Haynes & Amy Hillman, 2010. "The effect of board capital and CEO power on strategic change," Strategic Management Journal, Wiley Blackwell, vol. 31(11), pages 1145-1163, November.
    17. Estrin, Saul & Prevezer, Martha, 2011. "The role of informal institutions in corporate governance: Brazil, Russia, India, and China compared," LSE Research Online Documents on Economics 33552, London School of Economics and Political Science, LSE Library.
    18. Zahra, Shaker A. & Filatotchev, Igor & Wright, Mike, 2009. "How do threshold firms sustain corporate entrepreneurship? The role of boards and absorptive capacity," Journal of Business Venturing, Elsevier, vol. 24(3), pages 248-260, May.
    19. Michael Hitt & M. Tina Dacin & Edward Levitas & Jean-Luc Arregle & Anca Borza, 2000. "Partner Selection in Emerging and Developed Market Contexts : Resource-Based and Organizational Learning Perspectives," Post-Print hal-02312691, HAL.
    20. repec:bla:jfinan:v:58:y:2003:i:2:p:519-548 is not listed on IDEAS
    21. Turhan Kaymak & Eralp Bektas, 2008. "East Meets West? Board Characteristics in an Emerging Market: Evidence from Turkish Banks," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(6), pages 550-561, November.
    22. Catherine M. Daily & Dan R. Dalton, 1993. "Board of Directors Leadership and Structure: Control and Performance Implications," Entrepreneurship Theory and Practice, , vol. 17(3), pages 65-81, April.
    23. Michael L. McDonald & James D. Westphal & Melissa E. Graebner, 2008. "What do they know? The effects of outside director acquisition experience on firm acquisition performance," Strategic Management Journal, Wiley Blackwell, vol. 29(11), pages 1155-1177, November.
    24. Anton Oleinik, 2005. "A Distrustful Economy: An Inquiry into Foundations of the Russian Market," Journal of Economic Issues, Taylor & Francis Journals, vol. 39(1), pages 53-74, March.
    25. Saul Estrin & Martha Prevezer, 2010. "The Role of Informal Institutions in Corporate Governance: Brazil, Russia, India and China Compared," Working Papers 31, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    26. Brian K. Boyd & Katalin Takacs Haynes & Fabio Zona, 2011. "Dimensions of CEO–Board Relations," Journal of Management Studies, Wiley Blackwell, vol. 48(8), pages 1892-1923, December.
    27. Michael Lubatkin & Eric Gedajlovic & William S. Schulze, 2004. "Crossing the threshold from founder management to professional management : A governance perspective," Post-Print hal-02311640, HAL.
    28. Michael N. Young & Mike W. Peng & David Ahlstrom & Garry D. Bruton & Yi Jiang, 2008. "Corporate Governance in Emerging Economies: A Review of the Principal–Principal Perspective," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 196-220, January.
    29. repec:bla:jfinan:v:58:y:2003:i:3:p:1301-1327 is not listed on IDEAS
    30. Scott Shane, 2000. "Prior Knowledge and the Discovery of Entrepreneurial Opportunities," Organization Science, INFORMS, vol. 11(4), pages 448-469, August.
    31. Yadong Luo & Rosalie L Tung, 2007. "International expansion of emerging market enterprises: A springboard perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 481-498, July.
    32. Tatiana Dolgopyatova & Ichiro Iwasaki & Andrei A. Yakovlev (ed.), 2009. "Organization and Development of Russian Business," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-24949-3, March.
    33. Mark Kroll & Bruce A. Walters & Peter Wright, 2008. "Board vigilance, director experience, and corporate outcomes," Strategic Management Journal, Wiley Blackwell, vol. 29(4), pages 363-382, April.
    34. Chris Farrell, 1996. "The economic war among the states: an overview," The Region, Federal Reserve Bank of Minneapolis, vol. 10(Jun), pages 4-7.
    35. Lauren Cohen & Andrea Frazzini & Christopher J. Malloy, 2012. "Hiring Cheerleaders: Board Appointments of "Independent" Directors," Management Science, INFORMS, vol. 58(6), pages 1039-1058, June.
    36. David J. Teece, 2007. "Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance," Strategic Management Journal, Wiley Blackwell, vol. 28(13), pages 1319-1350, December.
    37. Saul Estrin & Martha Prevezer, 2011. "The role of informal institutions in corporate governance: Brazil, Russia, India, and China compared," Asia Pacific Journal of Management, Springer, vol. 28(1), pages 41-67, March.
    38. Desender, Kurt A., 2009. "The Relationship between the Ownership Structure and the Role of the Board," Working Papers 09-0105, University of Illinois at Urbana-Champaign, College of Business.
    39. Miller, Danny & Steier, Lloyd & Le Breton-Miller, Isabelle, 2003. "Lost in time: intergenerational succession, change, and failure in family business," Journal of Business Venturing, Elsevier, vol. 18(4), pages 513-531, July.
    40. Brian R. Golden & Edward J. Zajac, 2001. "When will boards influence strategy? inclination × power = strategic change," Strategic Management Journal, Wiley Blackwell, vol. 22(12), pages 1087-1111, December.
    41. Andres Almazan & Javier Suarez, 2003. "Entrenchment and Severance Pay in Optimal Governance Structures," Journal of Finance, American Finance Association, vol. 58(2), pages 519-547, April.
    42. Ronald C. Anderson & David M. Reeb, 2003. "Founding‐Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1328, June.
    43. Peng, Mike W. & Buck, Trevor & Filatotchev, Igor, 2003. "Do outside directors and new managers help improve firm performance? An exploratory study in Russian privatization," Journal of World Business, Elsevier, vol. 38(4), pages 348-360, November.
    44. Jonas Gabrielsson, 2007. "Correlates of Board Empowerment in Small Companies," Entrepreneurship Theory and Practice, , vol. 31(5), pages 687-711, September.
    45. Eric Gedajlovic & Michael H. Lubatkin & William S. Schulze, 2004. "Crossing the Threshold from Founder Management to Professional Management: A Governance Perspective," Journal of Management Studies, Wiley Blackwell, vol. 41(5), pages 899-912, July.
    46. Chernykh, Lucy, 2008. "Ultimate ownership and control in Russia," Journal of Financial Economics, Elsevier, vol. 88(1), pages 169-192, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dolgopyatova, Tatiana & Libman, Alexander & Yakovlev, Andrei, 2018. "Unintended Benefits of Empowering Boards in Conglomerates: A Case Study of AFK Sistema," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 23(2), pages 177-202.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dolgopyatova, Tatiana & Libman, Alexander & Yakovlev, Andrei, 2018. "Unintended Benefits of Empowering Boards in Conglomerates: A Case Study of AFK Sistema," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 23(2), pages 177-202.
    2. Conan L. Hom & Daniel Samson & Peter B. Cebon & Christina Cregan, 2021. "Inside the black box: an investigation of non-executive director activity through the lens of dynamic capability," Asia Pacific Journal of Management, Springer, vol. 38(3), pages 857-895, September.
    3. Michael Carney & Marc Van Essen & Eric R. Gedajlovic & Pursey P.M.A.R. Heugens, 2015. "What do we know about Private Family Firms? A Meta–Analytical Review," Entrepreneurship Theory and Practice, , vol. 39(3), pages 513-544, May.
    4. Natalia Ortiz‐de‐Mandojana & Juan Alberto Aragon‐Correa, 2015. "Boards and Sustainability: the Contingent Influence of Director Interlocks on Corporate Environmental Performance," Business Strategy and the Environment, Wiley Blackwell, vol. 24(6), pages 499-517, September.
    5. Nurit Nahum & Abraham Carmeli, 2020. "Leadership style in a board of directors: implications of involvement in the strategic decision-making process," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(1), pages 199-227, March.
    6. Razvan Lungeanu & Edward J. Zajac, 2019. "Thinking Broad and Deep: Why Some Directors Exert an Outsized Influence on Strategic Change," Organization Science, INFORMS, vol. 30(3), pages 489-508, May.
    7. Karen Schnatterly & Felipe Calvano & John P. Berns & Chaoqun Deng, 2021. "The effects of board expertise‐risk misalignment and subsequent strategic board reconfiguration on firm performance," Strategic Management Journal, Wiley Blackwell, vol. 42(11), pages 2162-2191, November.
    8. Sadi Boĝaç Kanadlı & Max Bankewitz & Pingying Zhang, 2018. "Job-related diversity: the comprehensiveness and speed of board decision-making processes—an upper echelons approach," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(2), pages 427-456, June.
    9. Michael A. Abebe & Pingshu Li & Keshab Acharya & Joshua J. Daspit, 2020. "The founder chief executive officer: A review of current insights and directions for future research," Corporate Governance: An International Review, Wiley Blackwell, vol. 28(6), pages 406-436, November.
    10. Chan-Jane Lin & Tawei Wang & Chao-Jung Pan, 2016. "Financial reporting quality and investment decisions for family firms," Asia Pacific Journal of Management, Springer, vol. 33(2), pages 499-532, June.
    11. Ichiro Iwasaki & Satoshi Mizobata & Alexander Muravyev, 2018. "Ownership dynamics and firm performance in an emerging economy: a meta-analysis of the Russian literature," Post-Communist Economies, Taylor & Francis Journals, vol. 30(3), pages 290-333, May.
    12. Carl Åberg & Mariateresa Torchia, 2020. "Do boards of directors foster strategic change? A dynamic managerial capabilities perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(3), pages 655-684, September.
    13. Shan Xue & Yi Tang & Yuehua Xu & Chu-Ding Ling & Xiao-Yun Xie & Shenjiang Mo, 2024. "How boards’ factional faultlines affect corporate financial fraud," Asia Pacific Journal of Management, Springer, vol. 41(1), pages 351-376, March.
    14. Ana Paula Pereira dos Passos & Jeferson Lana & Rosilene Marcon, 2023. "Social and political capabilities as nonmarket activities: What are they and how do firms develop them?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2718-2730, November.
    15. Nguyen, Thi Tuyet Mai, 2017. "An examination of independent directors in Vietnam," OSF Preprints ay6dv, Center for Open Science.
    16. Estrin, Saul & Meyer, Klaus E. & Nielsen, Bo B. & Nielsen, Sabina, 2016. "Home country institutions and the internationalization of state owned enterprises: A cross-country analysis," Journal of World Business, Elsevier, vol. 51(2), pages 294-307.
    17. Purkayastha, Anish & Karna, Amit & Sharma, Sunil & Bhadra, Dhiman, 2021. "Board’s human capital resource and internationalization of emerging market firms: Toward an integrated agency–resource dependence perspective," Journal of Business Research, Elsevier, vol. 135(C), pages 391-407.
    18. Alfredo De Massis & Josip Kotlar & Pietro Mazzola & Tommaso Minola & Salvatore Sciascia, 2018. "Conflicting Selves: Family Owners' Multiple Goals and Self-Control Agency Problems in Private Firms," Entrepreneurship Theory and Practice, , vol. 42(3), pages 362-389, May.
    19. Alessandro Hinna & Fabio Monteduro, 2017. "Boards, governance and value creation in grant-giving foundations," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(4), pages 935-961, December.
    20. Anastasia N. Stepanova & Olga O. Kopyrina, 2019. "The Influence Of Ownership Structure And Board Independence On The Cost Of Debt In Bric Countries," HSE Working papers WP BRP 74/FE/2019, National Research University Higher School of Economics.

    More about this item

    Keywords

    board of directors; corporate governance; founder-managed firms; entrepreneurial function; emerging markets;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hig:wpaper:29man2014. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shamil Abdulaev or Shamil Abdulaev (email available below). General contact details of provider: https://edirc.repec.org/data/hsecoru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.