Bundles of firm corporate governance practices: A fuzzy set analysis

Roberto García-Castro, R. Aguilera Vaqués, Miguel A. Ariño

Research output: Indexed journal article Articlepeer-review

139 Citations (Scopus)

Abstract

Manuscript Type: Empirical Research Question/Issue: We explore how the combinations of firm-level corporate governance (CG) practices embedded in different national governance systems lead to high firm performance. Research Findings/Insights: Using fuzzy set/qualitative comparative analysis, we uncover a variety of findings. First, we show that within each of the stylized national CG models, there are multiple bundles of firm-level governance practices leading to high firm performance (i.e., equifinality). Second, we provide evidence of complementarity as well as functional equivalence between CG practices. Finally, we demonstrate that there can be heterogeneity ("differences in kind") in firm governance practices within each stylized model of CG. Theoretical/Academic Implications: We build on the configurational and complementarity-based approaches to make the following theoretical claims. First, governance practices within firm bundles do not always relate to each other in a monotonic and cumulative fashion as this entails higher costs and possibly over-governance. Second, practices in bundles do not need to be aligned toward the insider or the outsider model ("similar in kind"). We argue that non-aligned practices can also be complementary, creating hybrid governance forms. Third, we predict functional equivalence across bundles of CG practices which grants firms agency on which of the practices to implement in order to achieve high performance. Practitioner/Policy Implications: We contribute to comparative CG research by demonstrating that there are multiple governance paths leading to high firm performance, and that these practices do not always belong to the same national governance tradition. Therefore, our findings alert of the perils of "one size fits all" governance solutions when designing and implementing CG policies.

Original languageEnglish
Pages (from-to)390-407
Number of pages18
JournalCorporate Governance: An International Review
Volume21
Issue number4
DOIs
Publication statusPublished - Jul 2013
Externally publishedYes

Keywords

  • Board of director mechanisms
  • Corporate financial performance
  • Corporate governance
  • Legal control mechanisms
  • Market control mechanisms

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