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Article
Publication date: 5 May 2020

Virgo Süsi and Krista Jaakson

This paper aims to explore why private equity (PE) cares about corporate social responsibility (CSR) of its investees given their relatively short investment time-horizon and how…

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Abstract

Purpose

This paper aims to explore why private equity (PE) cares about corporate social responsibility (CSR) of its investees given their relatively short investment time-horizon and how it designs corporate governance (CG) bundle to achieve both financial and CSR goals of the private firms it invests in.

Design/methodology/approach

Case study design is applied to get deeper insights on the why and how questions posed. Analysis is based on triangulation of secondary data and in-depth interviews with both PE and their investee firms.

Findings

The authors find that long-term sustainability supported by CSR increases firm value. They also outline specific CG bundle that the PE uses to achieve both its financial and CSR goals. CG mechanisms appeared to reflect agency theory, but even more resource dependence theory.

Practical implications

The outlined CG bundle could be used as a template for all types of private firm owners to improve both financial and CSR performance of the firm.

Originality/value

The paper adds to fragmented area of CG and CSR interface. The authors specifically focus on several under-researched contexts of this interface: private small and medium size firms (SMEs), emerging markets and PE investors.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 4
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 4 February 2019

Virgo Süsi and Oliver Lukason

The purpose of this study is to find out how corporate governance is interconnected with failure risk in case of small- and medium-sized enterprises (SMEs).

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Abstract

Purpose

The purpose of this study is to find out how corporate governance is interconnected with failure risk in case of small- and medium-sized enterprises (SMEs).

Design/methodology/approach

The study is based on Estonian whole population of SMEs, in total 67,058 observations, and data are obtained from Estonian Business Register. Failure risk (FR) is portrayed with a well-known Altman et al. (2017) model, while seven variables reflecting corporate governance (CG) based on previous studies have been selected. As the method, logistic regression (LR) is applied with FR in the binary form as a dependent variable and seven CG variables as independent. The effect of firm size and age is studied with two separate LR models.

Findings

The results indicate that with the growth in manager’s age and the presence of managerial ownership, failure risk reduces. In turn, the presence of larger boards and managers having directorships in other firms leads to higher failure risk. Gender heterogeneity in the board, board tenure length and ownership concentration by means of having a majority owner are not associated with failure risk. The obtained results vary with firm size and age.

Originality/value

Unlike this study, research published on this topic earlier has used a much narrower definition of failure, mostly focused on large and listed companies, been sample based and information about corporate governance variables has often been obtained through questionnaires. All these limitations are relaxed in this population level study.

Details

Management Research Review, vol. 42 no. 6
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 12 May 2020

Virgo Süsi and Oliver Lukason

The purpose of this paper is to explore the linkages between the appointment of a new management board member and the following strategic change (SC) in the product-market scope…

222

Abstract

Purpose

The purpose of this paper is to explore the linkages between the appointment of a new management board member and the following strategic change (SC) in the product-market scope of the firm.

Design/methodology/approach

The study is based on the whole population of Estonian firms, in total 16,941 observations and the data are retrieved from Estonian Business Register. First, the authors focus on the association between the appointment of a new board member and the likelihood of different types of SC. Second, the authors focus on the association between the new board member’s previous export experience and export-related SC. Logistic regressions are applied for all models.

Findings

The results indicate that there is a significant association between the appointment of a new board member and the subsequent start of exports and also continuing it, entrance into a new industry and making an SC in more broad terms, though the significance levels vary across the composed models. No significant relationship was found with the entrance into the additional geographic market(s) for already exporting firms. There was also a significant association between the previous export experience of a new board member and the subsequent start of exporting.

Originality/value

The authors look at SC in the product-market domain holistically by applying the same data on both geographic and product portfolio expansion options. The authors also introduce the scale and stability contexts of SCs. These aspects are usually neglected from similar studies.

Details

Review of International Business and Strategy, vol. 30 no. 3
Type: Research Article
ISSN: 2059-6014

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