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In this chapter, we reexamine the notion that socially responsible behavior by firms will lead to increased financial performance. By identifying the underlying processes, institutional settings, and actors involved, we present a framework that is more attentive to the multiplicity and conditionality of the mechanisms operating in the often tenuous connection between firms’ social behavior and financial performance. Building and expanding upon existing analyses of the CSP–CFP linkage, our model helps to explain the mixed results from a wide range of empirical studies which examine this link. It also provides a novel theoretical account to help guide future researches that are more attentive to conditionalities and contextual contingencies.

In the strategic management literature, two mechanisms have been proposed to explain how managers generate economic rents: resource selection, and capability building. Resource selection is a Ricardian perspective where the productivity of resources are heterogeneously distributed among firms (Peteraf, 1993; Wernerfelt, 1984), and managers outsmart the factor markets by selecting resources based on their future values (Barney, 1986). The alternative Schumpeterian perspective is capability building, a mechanism that depends on deployment of resources to affect a desired end (Amit & Shoemaker, 1993; Mahoney, 1995). While capability building requires that managers develop a capacity to manage firm specific tangible and intangible processes, the resource selection mechanism demands managers to accurately assess expectations about the future value of resources.

In this chapter, the authors argue that organizational controls are best depicted and studied as sets of control configurations. Concepts from extant control research streams describing basic control elements as well as ideal types of control systems are used to identify and classify control configurations. The authors present compositional distinctions among four control configurations using a decade-long case study of a start-up company. By displaying how specific control elements are simultaneously distinct and intertwined in this company, the authors reveal significant theoretical insights that can assist scholars in distinguishing between different configurational patterns and in comprehending dynamics present in holistic perspectives of control. The authors conclude by discussing how conceptualizing controls as configurations most accurately reflects both organizational and managerial practice in ways that can motivate the development of new theories and approaches to studying this key aspect of organizational design. Because control configurations inherently reflect interdisciplinary concerns, and because such configurations affect the attainment of strategic goals, this work provides findings and ideas that fit the interests of a broad audience.

Risk-sharing is a crucial issue in order to evaluate the performance of a monetary union. By implementing conventional econometric techniques, this paper intends to estimate the degree of risk-sharing through the cross-ownership of assets within 11 European countries in the period 1971–2014. We show that risk-sharing has been increasing after the launch of the euro due to increased cross-ownership of assets. Nevertheless, we also show that despite the extreme needs for adjustment mechanisms as a reaction to asymmetric shocks in the EMU during the crises, the estimated market risk-sharing mechanism seems to have remained marginal in this period. We also show that the degree of asymmetry (potential benefits from risk-sharing) has declined with the start of the EMU, but it has sharply increased during the crises period. This implies that EMU countries have needed good functioning risk-sharing mechanisms during the crisis, while in this period their estimated performance does not seem to have improved. We interpret these results as the evidence of a missing element of the EMU that forced governments to intervene by means of fiscal policy to tackle the imbalances deriving from the financial crisis. Therefore, we conclude that the weakness in the risk-sharing has been one of the channels that allowed the global financial crisis to mutate in a sovereign debt crisis in the EMU.

Due to climate change and an increasing concentration of the world’s population in vulnerable areas, how to manage catastrophe risk efficiently and cover disaster losses fairly is still a universal dilemma.

This paper applies a law and economic approach.

China’s mechanism for managing catastrophic disaster risk is in many ways unique. It emphasizes government responsibilities and works well in many respects, especially in disaster emergency relief. Nonetheless, China’s mechanism which has the vestige of a centrally planned economy needs reform.

I propose a catastrophe insurance market-enhancing framework which marries the merits of both the market and government to manage catastrophe risks. There are three pillars of the framework: (i) sustaining a strong and capable government; (ii) government enhancement of the market, neither supplanting nor retarding it; (iii) legalizing the relationship between government and market to prevent government from undermining well-functioning market operations. A catastrophe insurance market-enhancing framework may provide insights for developing catastrophe insurance in China and other transitional nations.

First, this paper analyzes China’s mechanism for managing catastrophic disaster risks and China’s approach which emphasizes government responsibilities will shed light on solving how to manage catastrophe risk efficiently and cover disaster losses fairly. Second, this paper starts a broader discussion about government stimulation of developing catastrophe insurance and this framework can stimulate attention to solve the universal dilemma.

Purpose – The purpose of this chapter is to explore the voluntary corporate governance role played by credit rating agencies, closing the ‘trust at a distance’ gap which might otherwise hinder fundraising in debt capital markets.

Methodology/approach – The chapter draws on Giddens’ system trust theory and Foucauldian perspectives of knowledge/power to unpack trust production as a discursive process in financial markets. Foucauldian discourse analytic techniques are used to examine texts deployed by or about Standard & Poor's, the global credit rating agency, leading up to the 2007 credit crunch.

Findings – The texts analysed illustrate the influence of rating agencies in producing trust as well as mistrust in debt instruments.

Research limitations/implications – Rating agencies produce trust by aligning with state regulatory systems, simplifying complex debt instruments with ‘AAA’ and other well-known mnemonics, as well as offering apparent transparency and guarantees.

Practical implications – While influential, rating agencies can only produce trust by proxy. Their contribution to the actual protection of investments is minimal.

Social implications – The analysis highlights the flawed nature of trust relations in debt capital markets as rating agencies’ primary customers are the arrangers and issuers of debt rather than the investors who seek protection from risk.

Originality/value – The chapter sheds light on the deliberate nature of trust production in financial markets. Five trust/mistrust production practices are introduced – protecting, guaranteeing, aligning, making visible and simplifying. Strategic trust production is established as part of corporate governance ideology in financial markets.

The resolution of conflicts between shareholders and managers, at minimal cost, is the goal of corporate governance. In 1999, an intriguing series of events occurred that dramatically reshaped the Canadian airline industry. This clinical study considers these events in relation to four corporate governance mechanisms. The results of this clinical study suggest that these four mechanisms may not be sufficient to control a management team that is committed to a course of action and to retaining their positions. In practice, corporate governance can be severely limited, even when the majority of board members are outside directors. In addition, institutional shareholders may not be the disciplining force that theory and logic suggests. Overall, the results imply that managerial entrenchment is a powerful motivating force that may be impossible to counter even for a large, poorly performing corporation that is subject to a very attractive takeover offer.

Territorial food markets and governance have emerged as a key mechanism for the design and implementation new food systems and policies aimed at sustainable cities. However, the many existing policies tend to overlook the way food markets and supply strategies work. This chapter analyses governance in traditional agri-food markets in Brazil, aiming to demonstrate how, in different contexts, the economic interactions between actors are embedded in a set of social institutions (cultural values), which define modes of governance, participation in the markets and can be potential to fostering new (sustainable) rural-urban relations. These institutions challenge and compete with formal regulatory requirements imposed by the public authorities, which often disrupt and/or inhibit the development of local and traditional production and consumption practices, posing obstacles to the fostering rural-urban relations and the construction of solid local policies for food supply. Empirical data refer to three traditional Brazilian markets: the Feira do Pequeno Produtor in Passo Fundo, located in the South of Brazil, the Feira Central de Campina Grande and the Feira de Caruaru, both located in the Northeast of the country. The results point to the necessity and centrality to cities food supply policies recognise, encourage and institutionalise these markets traditional institutions in order to overcome supermarketisation and consolidate sustainable food systems. These process could be able to remove traditional markets from marginalise, promoting not only their survival, but their growth and consolidation as a source of decent work, healthy food and new sustainable rural-urban relationships.

Market transition theory has specified general mechanisms to explain change in the balance of power between political and economic actors in transition economies. These mechanisms drive the endogenous construction of informal institutions of a market society; moreover, it is within the context of an ongoing change in relative power that the formal institutions of the emerging market economy arise. The theory makes clear predictions on the declining value of political capital as a consequence of progressive marketization, which incrementally results in transformative change in the direction of more relative autonomy between the political and economic spheres, not dissimilar from established market economies (Kornai, 1995; Evans, 1995; Nee, 2000; Lindenberg, 2000; Ricketts, 2000). In sum, the predicted change in relative power between redistributors and producers explains not only bottom-up entrepreneurial activity, but also the emergence of a market economy in departures from state socialism.

Critics increasingly highlight the dark sides of the sharing economy resulting from the insufficient regulation of competition, labor, or taxes in its for-profit sector. In this chapter, the authors argue that regulatory solutions for the sharing economy hinge on the understanding of the ways in which the sharing economy is organized. Here, digitalization undermines established regulation through underlying organizational shifts pertaining to places, labor inputs and output responsibilities. Mapping out the field of actors that are or could be involved in regulating the sharing economy, the authors highlight a particular role played not only by digital platforms as market organizers, but also of a variety of other public and private actors such as standard setting organizations, social movements, trade unions, organized buyers and sellers, incumbents, or policy makers. The authors suggest that an understanding of sharing economy markets as fields can not only capture the highly organized nature of the sharing economy, but also serve to untangle the contestations and power dynamics unfolding among various actors engaged in different regulatory issues associated with the sharing economy. Seeing “Uberization” as a next development stage away from the modern corporation after global supply chains, the authors highlight regulatory challenges associated with the even more individualized and dispersed way in which sharing economy markets are organized and also discuss new opportunities for regulation provided by digital technology.