Sutarti, Akhmad Syakhroza, Vera Diyanty and Setio Anggoro Dewo
This study aims to investigate the direct effect of directors’ age diversity, and its interaction effect with the effectiveness of TMT meetings on bank performance.
Abstract
Purpose
This study aims to investigate the direct effect of directors’ age diversity, and its interaction effect with the effectiveness of TMT meetings on bank performance.
Design/methodology/approach
Quantitative data were extracted from the bank’s annual reports for the six years 2011–2016. Age diversity was calculated using the coefficient of variation, and the bank’s performance was measured as return on assets and return on equity. The frequency of directors’ meetings was used as a proxy for the effectiveness of TMT meetings.
Findings
Based on the hierarchical regression analysis, the results do not support the hypothesis that there is a negative influence between age diversity on performance. However, the results support the hypothesis that age diversity has a positive effect on performance because of the high effectiveness of TMT meetings.
Research limitations/implications
The limitations of the study include the use of only samples of the banks registered with Bank Indonesia. The subsequent research could use cross-country bank samples. In addition, the research uses age-related diversity variables only. Therefore, further research could consider other types of diversity such as education, functional or tenure. Furthermore, this study is limited to the effectiveness of the director (TMT) meetings as the only moderating variable. Further research could improve on this by including other moderating variables.
Practical implications
The findings of this study indicate that the existence of age diversity in TMT will aid bank governance if it is accompanied by effective meetings among groups of directors of varying ages. This age composition of directors will make meetings more effective as rich information for strategic decisions will be generated from different points of view because of the wide spectrum of age categories, and hence, there will be a positive impact on bank performance.
Social implications
This study indicates that effective meetings of TMT groups of different ages will minimize the rise of “self-esteem”. Therefore, they will benefit the creation of a better quality relationship among TMT individuals. Accordingly, TMT within a company will have more opportunities to discuss in providing bright ideas for the company on how to innovate and create a new strategy to improve its performance.
Originality/value
This study, being the first to explore the effectiveness of TMT meetings to bank performance in the contexts of directors’ age diversity, contributes to the literature in this area, and especially to the body of knowledge about companies implementing a two-tier governance system.
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Pipin Kurnia and Ardianto
This study aims to determine the effect of board gender diversity on cyber security disclosure (CSD) in the banking sector of Indonesia as a developing country that adheres to a…
Abstract
Purpose
This study aims to determine the effect of board gender diversity on cyber security disclosure (CSD) in the banking sector of Indonesia as a developing country that adheres to a two-tier system.
Design/methodology/approach
This study uses a panel data of 47 banks listed on the Indonesia Stock Exchange from 2014 to 2021. The board gender diversity is measured by three proxies, the proportion of women on the board, BLAU Index value and the critical mass of women. The authors used generalized method of moments estimation to eliminate the simultaneous equation bias.
Findings
The results show that the women board of commissioners increases CSD, and the women of board of directors/top management team were significantly negative for CSD.
Research limitations/implications
First, this research was only conducted in the banking sector. The results cannot be generalized to non-financial companies. Second, there is no measurement of the quality of the board from the level of education, experience, expertise and other characteristics of diversity such as age, nationality and religion.
Practical implications
The study has revealed the need for the government’s role in providing oversight of the presence of women on the board so that banks fully comply with Indonesia Financial Services Authority regulations. Banks should also actively launch policies regarding the presence of women on the board to give a positive effect to stakeholders that women play an important role in decision making. Banks must also adjust the composition of female commissioners with a threshold of two people to maximize their function as supervisors.
Originality/value
This is the first research conducted on the banking sector in Indonesia as a developing country that adheres to a two-tier system. The results of this study provide evidence that patriarchal culture is still dominant in Indonesia.
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Lisseth Vasquez-Peñaloza, Maria Jesus Sánchez-Expósito and Laura Gomez-Ruiz
This study aims to explore the influence of management control on the performance of teams with surface levels of social diversity.
Abstract
Purpose
This study aims to explore the influence of management control on the performance of teams with surface levels of social diversity.
Design/methodology/approach
Under the categorization-elaboration model perspective, an integrative literature review was conducted. Selecting articles published in the Scopus and Web of Science databases until 2023 and with the terms about gender diversity, age diversity, racial diversity and team performance, obtaining 122 documents. Results were analyzed in a matrix under the criteria of social diversity as a principal variable and examined the effects on team performance. Subsequently, it is synthesized according to the social diversity dimension and then integrated into an analysis with conceptual perspectives from management control systems.
Findings
The main negative effects of surface-level social diversity on team performance arise from stereotypical perceptions and social biases about differences in gender, age and race, affecting team members’ interactions. This scenario is related to the causes of the need for management control in the absence of direction, motivation problems and personal limitations, so control systems associated with possible solutions to improve group performance are proposed.
Originality/value
To the authors’ knowledge, this work opens the discussion on the influence of management control on the performance of teams with social diversity. Demographic changes require new perspectives for team management, from management control providing a way to guide socially diverse team behaviors to desired team performance.
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Johann Valentowitsch, Michael Kindig and Wolfgang Burr
The effects of board composition on performance have long been discussed in management research using fractionalization measures. In this study, we propose an alternative…
Abstract
Purpose
The effects of board composition on performance have long been discussed in management research using fractionalization measures. In this study, we propose an alternative measurement approach based on board polarization.
Design/methodology/approach
Using an exploratory analysis and applying the polarization measure to German Deutscher Aktienindex (DAX)-, Midcap-DAX (MDAX)- and Small Cap-Index (SDAX)-listed companies, this paper applies the polarization index to examine the relationship between board diversity and performance.
Findings
The results show that the polarization concept is well suited to measure principal-agent problems between the members of the management and supervisory boards. We reveal that board polarization is negatively associated with firm performance, as measured by return on investment (ROI).
Originality/value
This exploratory study shows that the measurement of board polarization can be linked to performance differences between companies, which offers promising starting points for further research.
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Dian Agustia, Iman Harymawan, Mohammad Nasih and John Nowland
Joint board management meetings bring boards of directors and top management teams together to share information and discuss company matters. The authors investigate whether these…
Abstract
Purpose
Joint board management meetings bring boards of directors and top management teams together to share information and discuss company matters. The authors investigate whether these joint meetings are associated with higher agency costs or information sharing benefits in the context of firm earnings management.
Design/methodology/approach
Using publicly disclosed data on the frequency of joint board management meetings in Indonesian firms, the authors examine the relationship between joint board management meetings and earnings management during 2010–2017.
Findings
The authors find that more joint board management meetings are associated with lower earnings management. This is consistent with joint board management meetings providing net information sharing benefits. Additional testing indicates that the results are the strongest when firms hold more joint board management meetings than regular board meetings.
Originality/value
The findings suggest that in addition to holding regular board and audit committee meetings, formal meetings between boards of directors and top management teams are beneficial to shareholders by restricting opportunistic accounting choices by firm management.
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Bohuslav Pernica, Donatas Palavenis and Jaroslav Dvorak
The study aims to assess military procurement strategy in NATO countries labelled as emerging markets (Czechia, Slovakia and Lithuania) and capitalist Norway, which vary in…
Abstract
Purpose
The study aims to assess military procurement strategy in NATO countries labelled as emerging markets (Czechia, Slovakia and Lithuania) and capitalist Norway, which vary in national culture as indicated by the Hofstede Culture Compass.
Design/methodology/approach
This comparative case study analyses the procurement of a simple, mass-produced, off-the-shelf military product (FN Herstal MINIMI gun) in four small but very economically free countries from 2008 to 2023. The study answers the research question of how the unit price of MINIMI guns varies across post-communist and historical NATO countries distinguished by the variables operationalising national culture.
Findings
The general disability of the government to control corruption deviates the strategy of military procurement in post-communist defence institutions from an effective strategy of liberal capitalism, minimising the unit price and risks (Norway), to an odd strategy maximising the unit price and risks by preferring middlemen as agent of hidden agenda (Czechia).
Research limitations/implications
Some defence institutions in post-communist countries may be burdened by legislature capture, and detailed research is needed to determine this.
Practical implications
The authors argue that national culture may contribute to significant goal displacement in the procurement strategy adopted by the government in an economically liberal state.
Social implications
Without perfecting the control of corruption in post-communist defence institutions, the NATO burden-sharing debate on 2% of GDP will remain controversial.
Originality/value
With variables characterising national culture and the government’s ability to control corruption, the study elucidates a slow pace of convergence of post-communist countries to NATÓs values and procedures.
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Piotr Łasak and Marta Gancarczyk
The aim of this paper is to develop a theoretical framework of the transformation of the bank's scope driven by fintechs.
Abstract
Purpose
The aim of this paper is to develop a theoretical framework of the transformation of the bank's scope driven by fintechs.
Design/methodology/approach
The conceptual foundations for a comprehensive transformation of the bank governance through financial technologies (fintechs) are underexplored. In order to develop such foundations, the authors adopt transaction cost economics (TCE), the concepts of external enablers and a modular organizational design, as well as a systematic literature review.
Findings
The results point to three scenarios of the banks' scope, depending on the adopted technological mechanisms and related effects that change the characteristics of organizational activities, justifying new bank boundaries. The most advanced application of fintechs results in a modularized network scenario leading to the emergence of financial ecosystems.
Research limitations/implications
The proposed micro-perspective of decisional rules in an individual organization is unique in the current literature that predominantly focuses on the banking sector at large. The identified scenarios are valuable for solid theoretical and empirical grounding and can be further exploited in decision simulations and empirical studies.
Practical implications
The proposed theoretical framework points to the rationales and consequences of adopted technologies for the boundaries of a bank organization.
Originality/value
This paper provides three contributions to the literature on technology-driven transformations of organizations with a focus on banks. First, the authors elaborate a theoretical framework for establishing the bank's boundaries in response to the expansion of financial technologies. Second, the authors add to the knowledge accumulation in the area of organizational transformations based on the ICT adoption, in particular, to the literature on the modular organizational design. Third, the authors contribute to the decision-maker practice by proposing the alternative options of banks' scope transformed through fintechs.