The grounding of the “flying bank”

Aaron Hermann (The University of Adelaide Business School, Adelaide, Australia)
Hussain G. Rammal (International Graduate School of Business, University of South Australia, Adelaide, Australia)

Management Decision

ISSN: 0025-1747

Publication date: 3 August 2010

Abstract

Purpose

The purpose of this paper is to demonstrate the importance of effective, knowledgeable and accountable management and board structures in business organisations. Using the case of Swissair, the paper aims to demonstrate the importance of competent industry knowledgeable executive boards, with regard not only to company profits and sustainability but also to stability and socially responsible decision making.

Design/methodology/approach

An explanatory and descriptive case study approach was undertaken utilising historical data and literature‐based information and research on Swissair. The analysis of the case is guided by the use of the Resource Dependence and Group Conformity theories.

Findings

The findings suggest that the alliance and acquisition strategy pursued by Swissair's management and the lack of leadership and accountability by the CEO and Chairman of the board were the main contributing factors to the company's collapse.

Practical implications

The implications include impacts on the way in which European organisations are governed and the composition of the management teams and Board of Directors. Additional implications include changes to the legislation in Europe, more specifically Switzerland and the European Free Trade Alliance, aimed at the prevention of similar future collapses.

Originality/value

The paper's originality stems from the application of decision making and group theory, coupled with corporate governance ideas applied in a practical sense to the contemporary case of Swissair in a manner previously not considered, to demonstrate the importance of effective, knowledgeable and accountable management and board structures in organisations. Value is demonstrated with the recent issues experienced by Austrian Airlines and its subsequent acquisition by Lufthansa, indicating a need to address the corporate governance requirements in the European airline industry.

Keywords

Citation

Hermann, A. and Rammal, H. (2010), "The grounding of the “flying bank”", Management Decision, Vol. 48 No. 7, pp. 1048-1062. https://doi.org/10.1108/00251741011068761

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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