clair015

When a foreign company acquires a domestic firm, it often leads to outcries of indignation, nostalgia (“another of our once great companies in foreign hands”), and calls for legislation to prevent any more foreign poaching. Politicians and union leaders proclaim that the foreign owners may not be dedicated to keep up investment in the subsidiary, and that the take-over threatens national jobs and other economic interests. “Most governments are reluctant to see their corporate treasures fall into foreign hands”, the BBC wrote in an article devoted to the topic . But is all this (slightly xenophobic) fear justified? Well, maybe not; at least not on all dimensions. Because we have increasing evidence that foreign ownership of a firm may actually also benefit firms, specifically in terms of their innovativeness. And this increased innovativeness may clearly benefit the host country. Professor Annique Un , from Northeastern University in Boston, for example, did a pointy study. She collecte...

"In terms of power and influence, you can forget the church, forget politics. There is no more powerful institution in society than business” the equally famous as illustrious CEO and founder of the BodyShop – the late Dame Anita Roddick – said. And of course she was right. The most comprehensive and dominant institution in today’s society is business. Business is more influential than people often realize, simply because it creates – or destroys – wealth. And wealth impacts pretty much anything we care about. Whether you analyze crime rates in a particular country, malnutrition, happiness, or infant mortality; a huge influence is how wealthy the particular society is. And wealth is created by business. As a consequence, for example, the 2008 banking crisis undoubtedly killed people. Infant mortality is closely related to wealth and consequently an economic crisis will among others lead to a surge in infant mortality, somewhere, in some country down the road. It also means that th...

We have seen lots of corporate scandals over the past decade, and in many of these cases the boards of directors were up for some heavy criticism. Whether it was Enron, Tyco, WorldCom, or one of the toppled investment banks, their boards took some flack, since of course they are ultimately responsible for the corporation’s actions. But what happens to such directors? What happens to these people in the business elite when their company, for example, is caught being involved in financial fraud? Well, perhaps not surprisingly – and this may come as a relief – they often get the sack (as research by Professor Arthaud-Day from from Kansas State University and colleagues convincingly showed). Directors associated with financial misrepresentations are often dismissed from the board of their fraudulent company but, interestingly, subsequently they also regularly get the boot at another board. As you may know, outside directors often serve on the boards of multiple companies and a study by Pr...

Most companies do not have a strategy. Ok, I admit it, I do not have any solid statistics (if such a thing were possible) as evidence to back up this statement, but I do see a heck of a lot of companies, strategy directors, and CEOs present their “strategies” and I tell you, I think 9 out of 10 (at least) don’t actually have one. Sure, it depends on the all-evasive question “what is strategy?” but even if you would take the most lenient of definitions, few companies actually have one. Let me not tire you with some real strategy textbook definitions but if I would just put it as “you know what you are doing, and why”, most firms would already fall short on this one. Most companies and CEOs do not have a good rationale of why they are doing the things they are doing, and how this should lead to superior performance. I’d say there are 3 types of CEOs here: 1) CEOs who think they have a strategy; they are the most abundant; 2) CEOs who pretend to think that they have a strategy, but deep d...

The vast majority of companies want to be innovative, coming up with new products, business models and better ways of doing things. However, innovation is not so easy to achieve. A CEO cannot just order it, and so it will be. You have to carefully manage an organisation so that, over time, innovations will emerge. And CEOs often make a number of common mistakes, that hamper rather than induce such processes. Believe the numbers One common mistake is to insist on “seeing the numbers” too much too soon. “What is the size of the market?”, “what is the Net Presen Value calculation?”, “payback time?”, and so on. What they are forgetting is that, for a truly innovative product, for example, it is impossible to reliably produce any numbers. If a CEO insists on hard numbers before the project is even started, it will by sheer definition kill off any truly innovative ones, simply because you cannot compute the size of a market that does not exist yet. One CEO who understood this well was Intel’...

When the famous management professor Henry Mintzberg , in an interview for Dutch television, was asked “what would you recommend for leadership in the 21st century?” he answered, without delay or hesitation: “Less of it”. Henry clearly thought we need less “leadership”, and more people who actually do stuff. And true; it has become a business buzz word and something that everyone puts on his list of career aspirations. However, not everyone can be a leader. Moreover, their effect often seems overestimated. In reality, business leaders make very few decisions that really significantly impact the course of action of their firms. When a large corporation does well, we attribute it to the forceful, brilliant individual at the top (e.g. Jack Welch, Steve Jobs). When the corporation fails, we also hold the individual crook at its helm responsible beyond mercy (e.g. Jeff Skilling, Dick Fuld). Yet, these individuals’ influences might be overestimated, both positively and negatively, because th...

Sucking up really isn’t so easy. You can’t just tell your boss “you’re the greatest” because (although he might believe you) he is likely to grasp that you’re trying to sweet talk him into giving you this job, a raise, or a positive appraisal. As a result, it might all backfire because, as we know from research, people who think you are trying to trick them are less likely to actually give it to you. No, sucking up – or ingratiation behavior, as we euphemistically call it in management research – is easier said than done. But now we have some good evidence – from research by professors Ithai Stern from Northwestern and Jim Westphal from the University of Michigan – how you can make it work, so pay attention: 1. Frame your flattery as advice seeking . For example, asking someone “how were you able to pull off that strategy so successfully” is more likely to hide your underlying motive than “gosh you’re good”. 2. Pre-warn your target that you are going to flatter him or her . For examp...