How Much Do Country‐Level or Firm‐Level Variables Matter in Corporate Governance Studies?

• Author: Alessandro Zattoni,Praveen Kumar
• Date: 01 May 2013
• DOI: http://doi.org/10.1111/corg.12025
• Published date: 01 May 2013

Editorial

How Much Do Country-Level or Firm-

Level Variables Matter in Corporate

Governance Studies?

Praveen Kumar and Alessandro Zattoni

The ambition of Corporate Governance: An International

Review (CGIR) is to publish articles aimed at increasing

our rigorous understanding of relevant corporate gover-

nance phenomena in an international context.One of the key

questions implicit in this objective is to understand how

much country-level and f‌irm-level variables matter for the

development of a global theory of corporate governance.

Trying to simplify a complex debate,we can say that there

are two different views on this question. The f‌irst one

emphasizes the role of national-level variablesat the expense

of f‌irm-level variables, while the second one takes the oppo-

site view (e.g., Aguilera & Jackson, 2003; Lubatkin, 2007).

According to the f‌irst view, any country has developed,

unique, informal, and formal institutions that have a strong

impact on corporate governance mechanisms. Comparative

studies developed in this tradition tend to adopt an over-

contextualized view of corporate governance, found their

theoretical framework on institutional theory, and explore

the antecedents and the consequences of corporate gover-

nance mechanisms in different national contexts. In other

words, according to this view, the organizational context is

less important than the national (formal and informal) insti-

tutions in affecting the effectiveness of the corporate gover-

nance mechanisms.

According to the second view, corporate governance

phenomena should be explored by analyzing f‌irm-level

variables, while the characteristics of national formal and

informal institutions can be neglected. Studies developed in

this tradition tend to adopt an under-contextualized view of

corporate governance, found their theoretical framework on

agency theory, and explore the antecedents and the conse-

quences of corporate governance mechanisms without

paying enough attention to the national environment. This

view is also supported by the idea that market forces and

legal reforms are moving national economies toward the

Anglo-American model (Hansmann & Kraakman, 2004).

According to this idea, national formal and informal institu-

tions are becoming increasingly similar to the US model,

characterized by high investor protection, high information

transparency, eff‌icient capital markets, an active market of

corporate control, and so on.

We believe that both views have some justif‌icationand are

helpful approaches in exploring governance phenomena.

CGIR welcomes the submission of articles based on each of

these two views as each can help us develop a more rigorous

and relevant theory of corporate governance. Of course, in

practice, f‌irm-level agency conf‌licts are strongly inf‌luenced

by national governance attributes (e.g., Aslan & Kumar,

2012) and, from a policy perspective, f‌irm-level corporate

governance performance affects the development of national

governance institutions (e.g., the Sarbanes-Oxley Act in the

US that was passed after the corporate governance scandals

of the early 2000s).

We, therefore, encourage governance scholars to analyze

both theoretically and empirically the context of their study

both in terms of country- and f‌irm-level variables, i.e., we

invite scholars to submit studies that try to bridge the gap

between under- and over-socialized views of corporate gov-

ernance (e.g., Bamberger, 2008; Dalton & Dalton, 2011;

Minichilli, Zattoni, Nielsen, & Huse, 2012). To accomplish

this purpose, studies exploring corporate governance phe-

nomena in international samples should carefully consider if

and how f‌irm-level variables differ across countries, and if

their differences can play a role in affecting the dependent

variables. On the other hand, studies exploring corporate

governance phenomena within a national economy should

carefully consider if and how formal and informal institu-

tions developed at the national level can play a role in their

story, and understand in which national economies their

results can be generalizable.

In addition, CGIR invites governance scholars to explore

also intermediate views between these two extremes. In par-

ticular, we think that studies that takeinto account the inter-

action between f‌irm-level variables and national-level

variables can provide a signif‌icant contribution to the

debate. These studies explore, at the same time, both the

199

Corporate Governance: An International Review, 2013, 21(3): 199–200

© 2013 Blackwell Publishing Ltd

doi:10.1111/corg.12025