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Research Statement
Ruth V. Aguilera
 

My research interests lie at the intersection of economic sociology and international business and focus on understanding national economic organization as a configuration of actors—the state, corporate elites, labor, and capital. My main area of research is comparative corporate governance. My overarching research questions are: (a) what factors determine the relationships among stakeholders across countries?, and (b) what organizational and managerial outcomes are generated by corporate governance relationships? In most of my work, I rely on comparative research methods to conduct systematic analyses of economic organization across countries, and I pay particular attention to the role that the nation state plays in influencing economic organization directly and/or in shaping the relationships between different actors indirectly. My main scholarly contribution is the development of a theory of comparative corporate governance and the empirical applications and extensions of this framework.

In the next sections, I explain how my research has progressed and contributed to the comparative economic sociology and international business literatures. First, I discuss my work on comparative corporate governance at the country level, as well as my research examining corporate governance stakeholders. Second, I summarize the key findings of my investigations that draw on the comparative corporate governance framework that Gregory Jackson and I developed [12] to explain different national systems of corporate governance and to predict three managerial outcomes: firm internationalization, mergers and acquisitions, and firm engagement in corporate social responsibility. I conclude with a synopsis of my future research projects.

I. COMPARATIVE CORPORATE GOVERNANCE

Corporate governance is the study of the distribution of rights and responsibilities among different participants in the corporation, such as managers, shareholders, the board of directors, and other stakeholders (e.g., employees, suppliers, and consumers). This area of inquiry is at the heart of economic sociology as it explores the social relations between organizational actors and institutions that often have conflicting interests. My research trajectory started with the study of intercorporate relations (e.g., boards of directors), moved into the broader relationships among the different stakeholders in the firm (managers, owners, and employees), and then expanded to incorporate the role of employees within corporate governance systems across countries.

Boards of Directors
I first examined intercorporate relations that are generated from directorship interlocks and sought to understand why different national patterns of relationships emerge. This required manually collecting detailed archival data on 700 boards of directors of the largest Italian and Spanish firms. I see intercorporate relations as a lens through which to understand why corporations evolve differently in different countries (e.g., Spanish banks became internationally competitive in the 1990s but Italian banks did not). This research is unusual in that it integrates comparative-historical sociology with social network analyses. In Aguilera (1998) [13], I find that the structure of intercorporate relations in Spain had changed dramatically over twenty years due to the transformation of the Spanish state and its influence on firm ownership and on corporate financing regulation. In a follow-up study, Aguilera (2005) [15], I conducted a systematic historical comparison of the national cases of Italy and Spain to examine how states have a critical influence on national economic organization and how those systems of organization change over time. I employed network methods to categorize the inter-organizational relationships of these two “most-similar” national cases. In these two papers, I show empirically that, despite the institutional similarities of these two late-comers to industrialization, Spain and Italy have significantly different intercorporate relations due to the role of the state in influencing financial regulation, state intervention practices, and foreign investment policy. These two papers make a notable contribution to the literature on interlocking directorates.

These country-specific findings on interlocking directorates led me to examine what factors determine the national development of codes of good governance as well as their world-wide spread across countries. These codes provide specific guidelines on how boards of directors should operate. With Alvaro Cuervo-Cazurra, I explore when and how countries are more likely to develop codes of good governance [3], [10]. We find that the weaker the country’s corporate law is in regulating board structure and behaviour, the higher the likelihood that a given country will develop a code of good governance, although this effect decreases when we control for degree of foreign investment. This finding has important implications for the literature on how governance practices diffuse and/or reach legitimation across countries. Finally, I have analyzed the accountability role of the board of directors, and particularly independent directors, across seven countries in light of institutional contingencies such as the market for corporate control and recent best practice governance guidelines such as the United Kingdom’s Higgs Review and the United States’ Sarbanes-Oxley Act [7]. I first compare the structural characteristics of boards at the country level, and then I show the difficulties to simultaneously enact a “one-rule-fits-all” policy of board accountability and continue to generate and maintain the needed trust and openness between the board members and the CEO.

Stakeholder Relationships
In my research on boards and codes of good governance, I discovered that business scholars had endorsed a rather narrow view of corporate governance, often neglecting the role of employees in the corporate governance system and adopting an under-socialized view of managers (e.g., agency perspective/shareholder-value view). Hence, Gregory Jackson and I embarked on the development of a theoretical stakeholder model of corporate governance [12], drawing on an actor-centered institutionalist perspective to identify and explain the diversity of corporate governance systems across advanced capitalist economies. This approach stresses the interplay of institutions and firm-level actors and shows how three different actors (managers, owners, and employees) can have a multitude of conflicting relationships depending on with whom they cooperate while competing for the firms’ limited resources. We found that different configurations of institutions resulted in key interactions among stakeholders in corporate governance. For example, if there is an alliance of owners and managers vis-à-vis employees, then class conflict is likely to emerge, whereas if the alliance is between managers and employees vis-à-vis owners, then accountability conflicts will be more salient. This paper made a strong contribution to the comparative corporate governance literature because it accurately maps national diversity, allows for multiple institutions to exert interdependent effects on firm-level outcomes, and engages in the varieties of capitalism debate.

In addition, I have co-edited a book and written two empirical papers that explicitly apply our stakeholder model to different countries. Michal Federowicz and I co-edited a book that has five chapters on Western European countries and six on Eastern European countries, all addressing the issues tackled in the stakeholder model of corporate governance [1]. I also conducted a systematic analysis of the corporate governance systems of five Latin American countries [19] and find that institutional characteristics such as stock market development have a strong effect on the corporate governance system. Further, Gregory Jackson and I employed set-theoretic methods and used extensive data on all OECD countries to test the necessary and sufficient institutional configurations influencing the three stakeholder interactions that we predicted in our theoretical paper [23]. Our key finding is that two similar corporate governance systems can be the result of different initial conditions and a variety of different paths. For example, not all systems with dispersed ownership have weak unions and strong corporate law. This research sheds new light on the traditional corporate governance theories and explains national cases that did not fit into previous models.

Employees
A significant contribution of my research is showing how a country’s employment system has important consequences for corporate governance systems. I have used the theoretical framework that Gregory Jackson and I developed [12] as a tool to explore comparatively different employment systems in three different world regions: Western Europe, Central and Eastern Europe, and Japan. First, I investigated the historical evolution of employment relations in Spain in the context of Western Europe, showing that state policies introduced to increase labor market flexibility shaped the Spanish corporate governance system by creating a dual labor market and detaching employees from managers and owners [2]. Second, Adina Dabu and I have studied the historical transformation of employment relations in Central and Eastern Europe from the period when these countries had a quite homogenous employment relations system as planned economies to the unique employment systems that each country developed as it transitioned into a market economy [9]. We find that whether these countries relied on internal resources (privatizations) or external resources (foreign investment) to undergo the transition shaped their future employment systems, and the system of corporate governance in each country. Third, Dan Jeong and I conducted a rigorous historical analysis with primary sources that demonstrates how enterprise unionism in Japan emerged not so much as a result of cultural or internal labor market explanations, as current theories suggest, but as a result of socio-political factors—chiefly employee interaction with management and the Japanese interventionist state [22]. These three empirical studies shed considerable light on how the nature of the employment system interacts and shapes the other actors in the corporate governance system, and co-evolves with them.

II. MANAGERIAL APPLICATIONS OF MY CORPORATE GOVERNANCE MODEL

The second part of my research stream applies my insights from comparative corporate governance to managerial decisions and firm outcomes in three domains: global strategy, mergers and acquisitions, and corporate social responsibility.

Global Strategy
Multinational companies increasingly seek to pursue global strategies, yet they still face country-specific constraints on their ability to pursue these strategies. Much of the international business literature focuses on either external constraints (e.g., the role of trade and investment barriers imposed by national governments) or internal constraints (e.g., the difficulty of overcoming autonomy of national units and managers) on firms. In a series of three papers [4], [17], and [20], George Yip and I develop a conceptual model proposing an additional constraint to internationalization that has both external and internal dimensions: national systems of corporate governance. In so doing, we combined two previously separate literatures, those of corporate governance and global strategy. Specifically, we explain why differences in national corporate governance systems constrain multinational corporations in their pursuit of a global strategy. Our model is particularly useful when we compare advanced industrialized countries and issues regarding outsourcing. Our research has been discussed in the Financial Times.

Mergers and Acquisitions (M & A)
Corporate governance practices have major implications for all sorts of firm strategic decisions, including global corporate mergers. In [11], John Dencker and I explore how merging firms from different countries need to integrate the differences in national corporate governance and human resource management systems depending on the type of merger that they are pursuing. There is a consensus in the M&A literature that acquisitions are most likely to fail during the integration phase. I co-authored three papers that explicitly explore this M & A integration phase (post-acquisition) by analyzing how an acquisition will influence the corporate governance practices of management [8] and boards of directors [18], looking in particular at turnover outcomes. Dencker, Yalabik and I also develop a conceptual model to identify the different institutional pillars that managers in the newly merged firm should use to effectively socialize employees in the acquired firm during the integration phase [21].

In line with my interest in inter-corporate relations and corporate governance, John Dencker, Xavier Escandell, and I analyze data on the world’s largest merger and acquisition announcements in the 1990s to explore the relational factors that determine their completion or withdrawal [14]. Existing research on this little understood phenomenon in the M&A process typically focuses on the characteristics and actions of acquirer firms to understand financial and strategic M&A elements. We offer a new perspective by focusing on the dyadic relationship between acquirer and target firms’ governance teams. Controlling for strategic and financial factors, we find that the completion of an announced M&A is more likely to the extent that the relational capabilities stemming from country-level, industry-level and organizational-level factors generate a cooperative and trustworthy relationship.

Corporate Social Responsibility (CSR)
I recently began working with Cynthia Williams, a law professor, and Deborah Rupp, an organizational psychologist, to pursue inter-disciplinary insights into corporate governance practices. Our first paper involves the development of a multi-level theoretical framework of CSR to identify stakeholders’ motivations to engage in CSR practices [6]. We show that decision-making stakeholders (owners, managers, boards, and employees) will make CSR choices based on their self-interest, group-interest, and altruistic interests. Our main contribution in this conceptual paper is our discussion of the conflicting and complementary interactions between stakeholders and across levels (individual, organizational, country, and supra-national). We also identify the key drivers of current trends towards increased attention to companies’ social obligations and suggest policy and research implications.

The next step in this research stream has been to develop two empirical papers that test our proposed CSR framework. The first one [5] tackles the organizational and supra-national level by identifying substantial differences in CSR practices in two countries historically unified in the corporate governance literature as the “Anglo-American system,” the U.S. and the U.K. We show that while the U.K. government has promulgated new corporate social and environmental disclosure regulations and explicitly embraced a long-term, enlightened shareholder value construct, the U.S. has not embraced a comparable approach. The second empirical paper [16] uses firm-level data collected in the United States and India to confirm one of the propositions in our CSR framework [6], that is, the positive impact of firm commitment to CSR initiatives on employees’ and managers’ perceptions of organizational justice.

III. FUTURE RESEARCH AGENDA

My future research will continue to be interdisciplinary with a focus on international and comparative issues in corporate governance. I have already committed to two inter-related projects on corporate governance in the multinational firm and corporate social responsibility.

Multinational firms are key actors in the business arena, yet little research has been conducted on how these firms organize their corporate governance practices across borders. George Yip and I plan to collect survey and archival data on multinational firms to test the conceptual models that we have developed on the relationship between corporate governance and internationalization issues. Even though it is extremely complex to collect data on international firms, we feel that this empirical analysis will provide credible answers to important questions in the international business literature.

Related to the role of the multinational firm and globalization forces, over the past decade the global business community has been affected by a dramatic shift in social norms about the proper role of business in society. Firms are increasingly facing expectations that they exhibit greater social responsibility in their human resources policies, in their global supply chains and labor policies, and in their environmental policies. We plan to conduct further empirical research by combining multi-method techniques (survey methods, content analysis, and historical analysis) and drawing on our interdisciplinary knowledge, to explore the antecedents, implementation, and consequences of CSR firm engagement across industries and in different national settings.

Taken together, my ongoing projects investigate related issues that should further enhance our understanding of how different institutional forces and stakeholders’ choices influence corporate outcomes that, in turn, will define the society that we live in. I am very excited about the potential for these research projects to advance theoretical understanding, inform empirical knowledge, and influence policy and managerial practices.

REFERENCES

[1] Federowicz, F. and R. V. Aguilera, Eds. (2003) Corporate Governance in a Changing Economic and Political Environment. Trajectories of Institutional Change on the Europe Continent. London: Palgrave Macmillan.
[2] Aguilera, R.V. (2005) "Corporate Governance and Labor Relations: Spain in the European Context." In A. Pendleton and H. Gospel (Eds.), Corporate Governance and Labour Management: An International Perspective, pp.197-225. Oxford: Oxford University Press.
[3] Cuervo-Cazurra, A. and R.V. Aguilera (2004) "The Worldwide Diffusion of Codes of Good Governance." In A. Grandori (Ed.), Corporate Governance and Firm Organization, pp.318-348. Oxford: Oxford University Press.
[4] Aguilera, R.V. and G. Yip (2004) "Corporate Governance and Globalization." In A. Ariño, P. Ghemawat and J. E. Ricart (Eds.), Creating Value through Global Strategy, pp. 55-67. London: Palgrave.
[5] Aguilera, R.V., C. Williams, Conley, J., and D. Rupp. (forthcoming). "A Multi-Level Analysis of Corporate Governance and Corporate Social Responsibility. The Cases of the U.S. and the U.K." Corporate Governance: An International Review.
[6] Aguilera, R.V., D. Rupp, C. Williams, and J. Ganapathi. (forthcoming). "Putting the S Back in CSR: A Multi-level Theory of Social Change in Organizations." Academy of Management Review.
[7] Aguilera, R.V. (2005) "Corporate Governance and Director Accountability: An Institutional Comparative Perspective." British Journal of Management, 16: 1-15.
[8] Krug, J. and Aguilera, R.V. (2005) "Top Management Team Effects in Cross-border Acquisitions: A Literature Review and Discussion of Future Research Directions." Advances in Mergers and Acquisitions, 4: 123-152.
[9] Aguilera, R.V. and Dabu, A. (2005) "The Transformation of Employment Relations in Central and Eastern Europe." Journal of Industrial Relations, 47(1): 16-42.
[10] Aguilera, R.V. and Cuervo-Cazurra, A. (2004) "The Spread of Codes of Good Governance Worldwide: What’s the Trigger?" Organization Studies, 25(3): 415-443.
[11] Aguilera, R.V. and Dencker, J.C. (2004) "The Role of Human Resource Management in Cross-Border Mergers and Acquisitions." International Journal of Human Resource Management, 15(8): 1357-1372.
[12] Aguilera, R.V. and Jackson, G. (2003) "The Cross-National Diversity of Corporate Governance: Dimensions and Determinants." Academy of Management Review, 28(3): 447-465.
[13] Aguilera, R. V. (1998) "Directorship Interlocks in Comparative Perspective: The Case of Spain." European Sociological Review, 14(4): 319-342.
[14] Aguilera, R.V., J. C. Dencker, and X. Escandell. "Left at the Altar? A Relational View of Mergers and Acquisition Announcements in the 1990s," revised and resubmitted at the Administrative Science Quarterly.
[15] Aguilera, R.V. "National State Differences and Patterns of Directorship Interlocks: A Comparative Study of Italy and Spain," revised and resubmitted at the American Sociological Review.
[16] Rupp, D., J. Ganapathi, R.V. Aguilera, and C. Williams. "Employee Reactions to Corporate Social Responsibility: An Organizational Justice Framework," invited to revised and resubmitted at the Journal of Organizational Behavior.
[17] Aguilera, R. V. and G. Yip. "An Institutional Model of Corporate Governance Systems and Multinational Globalization," invited to revise and resubmit at the Journal of International Business Studies.
[18] Aguilera, R. V. and Y. Li. "Who Stays and Who Goes? A Theoretical Model to Explain Director Turnover in Acquired Firms," invited to revise and resubmit at the Journal of Management Inquiry.
[19] Aguilera, R. V. and I. Ermoli. "A Comparative Analysis of Corporate Governance Systems in Latin America," under review at Journal of World Business.
[20] Aguilera, R. V. and G. Yip. "Corporate Governance and Global Strategy," under review at Sloan Management Review.
[21] Aguilera, R. V., J. C. Dencker, and Z. Yalabik "The Complementarities of Institutional Theory and Organizational Socialization Domains: The Human Integration in Post-Acquisitions," under review at the Academy of Management Review.
[22] Jeong, D. Y. and R. V. Aguilera. "The Evolution of Enterprise Unionism in Japan: A Socio-Political Perspective," under review at Industrial and Corporate Change.
[23] Jackson, G. and R. Aguilera. "Some Determinants of Diversity on Cross-National Corporate Ownership: A Fuzzy Sets Approach." RIETI, Tokyo Working Paper.

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