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The purpose of this paper is to examine how corporate headquarters control business units, the governing of which has emerged as a vital issue as business portfolios have grown increasingly complex due to diversification, globalization, and corporate group expansion via spinoffs and mergers and acquisitions.

This study utilized questionnaire survey data from 251 firms listed on the First Section of the Tokyo Stock Exchange. The authors approached the issue of business unit governance by measuring the degree of decentralization and the intensity of monitoring, and compared the governance of internal business units with that of subsidiaries, and analyzed the impact of corporate governance characteristics on business unit governance.

Comparing in‐house business units and subsidiaries, the authors found a significant difference in their governance. The degree of decentralization toward subsidiaries was higher for strategic and personnel decision‐making. However, the complementarity of decentralization and monitoring was not observed for subsidiaries, whereas it was for in‐house business units. Subsidiary monitoring corresponding to decentralization was inadequate. Examining the relationship between corporate governance and business unit governance, the paper found that firms with reformed boards of directors and under a greater degree of pressure from capital markets monitored their business units more strictly.

The paper shows how the business portfolios and governance arrangements of Japanese firms have changed since the 1990s, and analyzes business unit governance based on valuable data obtained from a questionnaire survey.

Condominium is a dominant form of home ownership in metropolitan areas within Asia. Yet managing and up‐keeping such homes poses a challenge to most condominium owners, with larger condominiums equipped with sophisticated facilities becoming increasingly popular. This paper attempts to develop a model, based on a principal‐agent theoretical perspective, which provides a conceptually vigorous representation of condominium management modes: owner‐management; direct labour and third party agent‐managed modes.

Parallel surveys were conducted in Taipei and Hong Kong to offer empirical evidence of the model.

From the logistic analysis which this paper conducts, it is argued that not only does the choice of management mode reflect the quest for better management service: the mediation effect of agency costs between the lay members of home owner organisations and their leadership, as well as issues between the owners and the professional management agents, is also significant.

Findings in this paper would help to enhance understanding of the practices used in condominium management and the factors that influence the choice of management mode.

A national survey of small manufacturing businesses (fewer than 100 employees) reveals prevailing attitudes about doing business with public agencies. Respondents describe a two tiered, nine variable model as representative of the public sector procurement process. Findings provide government agencies and private sector marketers with operational clues on what may help initiate and sustain procurement relationships with smaller suppliers.

The purpose of this study is to show how the presence of change caused a shift in the roles and responsibilities of the internal audit function (IAF).

The methodological design/approach was constructed by combining specific aspects of widely known management accounting and organizational change frameworks. The theoretical premise was based on the old institutional economics component of institutional theory. As such, this study used the case study method to examine and analyze the impact of this change in eight specific organizations using the new two-tiered organizational change framework.

This new framework analyzes the multidimensional facets of organizational change in the IAF. From the findings, it was observed that the change can be evolutionary, episodic, continuous and/or teleological, and people, organisms and organizations that are subject to it will react or respond to that change in a myriad of ways.

Moreover, the implications of change can be environmental, socioeconomic and political.

This study makes an intellectual contribution by introducing a new two-tiered organizational change framework to explain the IAF’s response to the environmental change factor of regulation.

It is documented that companies and government agencies in the USA invest more in the fourth fiscal quarter without having higher investment opportunities. While previous studies focus on the agency conflicts and information asymmetry within organizations, this study is motivated by Scharfstein and Stein's (2000) two-tiered agency model and aims to examine how firms' external business environment affects the “fourth quarter effect.”

The authors implement this study in a sample of 41 countries and observe similar seasonality in firm investment as documented in the US market.

More importantly, using country characteristics, this study finds that firms from countries with better investor rights and protection, and more developed financial markets show less severe over-investment in the fourth fiscal quarter.

This paper contributes to the literature of law and finance, and the internal capital market, by investigating the quarterly investment patterns of firms from 41 countries. The authors find that similar to the results in earlier studies on the US market, firms in the global market increase their capital expenditure in the fourth fiscal quarter, indicating that the internal agency conflicts between the headquarters and divisional managers are widespread across the world. The authors also find that firms that operate in countries with higher investor rights and protection, and more developed financial markets, tend to show less severe “fourth quarter effect”.

The chapter aims to clarify the relationship between corporate governance structure and corporate subscription to Global Compact standards. Part one of the chapter looks at the relationship between different models of board governance and active Global Compact participation by publicly listed companies. Part two of the chapter examines a number of external mechanisms aimed at bringing corporate behavior in line with Global Compact principles, and argues that there is a mutually reinforcing relationship between internal governance structures and external provisions aimed at influencing corporate behavior.

Part one of the chapter uses an independent T-test to compare the average (mean) proportion of publicly listed companies from unitary board countries with an active Global Compact Communication on Progress status with the average proportion of publicly listed companies from two-tier/hybrid corporate governance systems listed as active Global Compact participants. Part two of the chapter uses primary and secondary sources to examine external mechanisms operating across national borders aimed at influencing corporate behavior.

The chapter finds that a higher proportion of public companies from countries with two-tier/hybrid corporate governance structures have become active Global Compact participants compared to public companies from legal systems with unitary board corporate governance structures. Part two of the chapter examines the potentially mutually reinforcing relationship between internal governance structures and external mechanisms for modifying corporate behavior.

While external codes and standards such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises appear to be influencing corporate behavior worldwide, quantitative data confirming and recording the extent and nature of this influence (if any) remains limited.

The chapter provides useful insights for policy makers and corporate leaders into the relationship between internal corporate governance structures and external codes, standards and guidelines aimed at influencing corporate behavior.

This chapter provides original insights into whether and how internal governance structures can complement and reinforce social standards regarding global corporate citizenship, and the legal guidelines reflecting those standards.

One of the lessons learned from the recent financial-sector crisis is that institutions may sometimes sow the seeds of their own destruction. We offer a two-tiered analysis of how the diffusion of innovative practices – in this case, issuing and securitizing subprime mortgages – can lead to an unanticipated breakdown of established institutions. At the institutional level, we demonstrate that the lack of effective external regulatory presence, the emergence of new norms through the introduction of a new institutional logic, and intense mimetic and competitive pressures may lead organizational actors to exploit a suboptimal innovation. At the organizational level, we argue that over-embeddedness of central actors within relatively closed networks and superstitious learning processes can exacerbate the biases to which decision makers are susceptible, leading to the institutionalization of a suboptimal organizational practice. These two parallel sets of processes led to severe consequences at the institutional level, which we label “terminal isomorphism.” We end by discussing consequences for institutional theory, future research directions, and recommendations for policy makers.

This study aims to investigate the differences in the credit profiles of Islamic and conventional banks in the Gulf Cooperation Council (GCC) region and attempts to identify the factors responsible for those differences.

Financial data sourced from the Bankscope database for a sample of 25 Islamic and 56 conventional banks headquartered in the GCC region between 1987 and 2014 are used. The credit risk of Islamic versus conventional banks is compared using a variety of univariate (mean difference test and correlation analysis) and multivariate tests (pooled ordinary least squares (OLS) regressions with robust standard errors and year fixed effects, regressions with interaction variables and logistic regressions).

Pooled OLS regressions find that Islamic banks have lower credit risk than conventional banks. Robustness checks using logistic functions and interaction variables confirm this result. Using multiple econometric specifications, we also find that higher capitalization, greater liquidity and cost inefficiency contribute to the lower risk profile of Islamic banks.

The study is unable to disaggregate data for banks offering both Islamic and conventional banking services and hence does not include conventional banks with Islamic windows. In addition, there are differences across countries even within the GCC region as to what is considered Sharia’h-compliant and what is not.

The results are of potential interest to not only researchers, but also market participants, regulators and legislators. The methods used in this study could be extended to other two-tiered banking systems and, in the case of Islamic and conventional banking, to other markets.

The authors use a unique sample of banks headquartered in the GCC countries, whose banking markets are similar, if not homogeneous, thus excluding operations of multinational banks. By focusing on the Gulf region, differences in the credit profiles of Islamic and conventional banks can be examined without the confounding effects of unobserved factors like culture, accounting regime or regulatory environment.

Individual employability has become a crucial element in ensuring labor security in flexibilizing labor markets. The importance of agency-side factors as antecedents of employability has been emphasized in the relevant literature, spurring the criticism that some worker groups may be more restricted than others by contextual factors in respect to their employment prospects. The purpose of this paper is to examine empirically how labor market groups differ in what shapes their employability.

The authors used a representative sample of 1,055 employees to detect differences in the impact of career self-directedness (agency-side) and several contextual factors (structure-side) on employability, comparing workers with and without higher education and workers in and outside managerial positions. Confirmatory factor analysis with subsequent tests of invariance was used.

Results confirm that employability is affected both by contextual factors and by self-directedness. No significant differences were observed between the compared groups in the extent to which self-directedness and the contextual factors influence employability. An important finding is that self-directedness itself is affected by preceding career history (career mobility and previous unemployment), which may suggest a vicious-circle relationship between past and future career precariousness.

The findings support the view prevailing in policy circles that fostering agency-side factors such as self-directedness is instrumental toward achieving higher employment security. At the same time, individual agency cannot replace traditional policy measures in tackling structural labor market inequalities.

This study uses robust methodology and a representative respondent sample to statistically disentangle the effects of agency and context on employability. Its key contribution pertains to the explicit comparison of different worker groups, with separate contrasts on each model parameter.

Rarely acknowledged, particularly in business and communications, is that animals have interests in decisions that affect them. This chapter raises questions about how stakeholding is defined and explains why the circle of ethical consideration has been limited to human beings but should be expanded when so much of what we do impacts animals – animals who often labor for our benefit, not theirs, whose bodies are used as food, whose skins are used for fashion and furniture, and who are experimented upon, all without their consent, nor representation of their interests beyond essential physical needs. Animals as laborers/workers for our interests is an important expansion to business and public relations (PR) ethics. While labor is deeply raced and gendered, it also is species dependent. Many practices allowed with animal workers would never be permitted or certainly regarded with concern, if among human beings. Freeman's (1984) two-tiered sense of stakeholders is applied and the argument made that animals should be included in the array of stakeholders, the argument being they are not only silent but also silenced as have been marginalized human groups. This chapter offers a textual analysis of the cover of the December 09, 2013 issue of Time magazine and a response article which serve as a case study for considering animals as stakeholders integral to PR–corporate social responsibility–diversity, equity, and inclusion intersection. I examine deer in the urban landscape and ask whether their perspectives are included in decisions about population, habitat, and health. If communications are to be ethical, inclusive, and socially responsible, animals must be affirmed as part of DEI commitments. Action steps/recommendations for doing so are included.