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How concentrated owners improve the performance of Asian firms: Filling voids or imposing effective governance?

Marc van Essen (Department of International Business, Darla Moore School of Business, University of South Carolina , Columbia, South Carolina, USA)
Pursey P.M.A.R. Heugens (Department of Strategic Management and Entrepreneurship, Rotterdam School of Management, Erasmus Universiteit , Rotterdam, The Netherlands)
Patricio Duran (Boeing Institute of International Business, Chaifetz School of Business, Saint Louis University , St. Louis, Missouri, USA)
Sabrina F. Saleh (Department of International Business, Darla Moore School of Business, University of South Carolina , Columbia, South Carolina, USA)
Steve Sauerwald (Department of Managerial Studies, College of Business Administration, University of Illinois at Chicago , Chicago, Illinois, USA)
Hans van Oosterhout (Department of Strategic Management and Entrepreneurship, Rotterdam School of Management, Erasmus Universiteit , Rotterdam, The Netherlands)
En Xie (Advanced Institute of Business, School of Economics and Management, Tongji University , Shanghai, China)

Multinational Business Review

ISSN: 1525-383X

Article publication date: 17 January 2020

Issue publication date: 15 April 2020

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203

Abstract

Purpose

The purpose of this study is to investigate how concentrated owners add value to Asian firms. While prior research suggests that relational owners (i.e., business groups, top management team, board, government, banks, families, and corporation) may help firms fill institutional voids, this study proposes that it is transactional owners (i.e., foreign and institutional investors) lacking this ability who contribute most to firm performance. As these owners frequently hail from contexts with well-developed corporate governance traditions, they tend to have experience with the design and implementation of such governance practices.

Design/methodology/approach

This study involves a meta-analysis covering 276 studies from 17 Asian countries.

Findings

This study shows that transactional owners impose effective governance practices such as separating the chief executive officer (CEO) and Chair roles and assuring board independence. These practices promote decisions benefiting all shareholders, such as preventing diversification and financial over-leveraging.

Originality/value

This study contributes to the comparative corporate governance literature by showing that implementing internal governance practices helps improve firm performance in Asia. It also contributes to the owner identity literature by opening the black box of how transactional and relational owners differentially affect firms’ strategic behavior. Overall, this study yields a more nuanced understanding of what transactional owners contribute to Asian firms.

Keywords

Citation

van Essen, M., Heugens, P.P.M.A.R., Duran, P., Saleh, S.F., Sauerwald, S., van Oosterhout, H. and Xie, E. (2020), "How concentrated owners improve the performance of Asian firms: Filling voids or imposing effective governance?", Multinational Business Review, Vol. 28 No. 1, pp. 39-63. https://doi.org/10.1108/MBR-07-2019-0078

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited