Methodological Pluralism


  • William Judge

Like many other international business journals, the editors of CGIR do not publicly endorse any specific type of methodology to advance the state of our research. Unlike many other international business journals, we practice what we preach. For example, in this issue, we publish eight articles – two are conceptual studies and six are empirical studies. Within the subset of empirical studies, three are inductive, theory-building research initiatives while the remaining three are deductive, theory-testing research efforts.

Since inductive theory-building studies are relatively rare in the organizational sciences, I will begin my focus with these empirical works. The first inductive study was performed by Talaulicar and von Werder as they sought to better understand why some firms adhere closely to national governance standards and why others do not. These governance researchers examined 671 public companies in Germany. Using archival survey data and cluster analysis, they grouped the companies into eight different clusters using six key variables. These eight clusters were then grouped into four “A” clusters which represented “above average levels of code adherence” and four “B” clusters representing “below average levels of code adherence.” The graphical depiction of the eight clusters is particularly revealing and insightful.

The second inductive study was authored by Bondy, Matten and Moon. These researchers examined the top 50 firms in the UK, Canada, and Germany. Using qualitative content analysis, they explored the relationship between the adoption of corporate governance codes and corporate social responsibility practices. Their findings are interesting, nuanced, and relatively comprehensive for a qualitative study.

Brundin and Nordqvist wrote our third and final inductive article. In this study, a single organization in Sweden was examined over an 18-month period. Data analysis focused on a twenty-page exerpt from the CEO's personal diary as well as two audiotaped and transcribed board meetings – one at the beginning and one at the end of the study period. This study creatively explores the role of emotions in the boardroom, and it breaks new ground for future study.

In addition, three deductive, theory-testing studies are also published in this issue. Perrini, Rovetta and Rossi quantitatively examined the relationship between ownership structure and firm performance. Agency theory has a long stream of theory and research suggesting that ownership reduces agency costs and enhances firm value in publicly-held firms. However, this study refines and extends this theoretical insight by exploring ownership concentration and comparing shareholder and managerial ownership differences. Using a sample of 297 firms in Italy from 2000–2003, they find that shareholder concentration is positively associated, but that management ownership in concentrated firms is negative associated with firm value.

Next, Hu and Izudmida applied agency predictions to panel data for 715 Japanese manufacturing firms from 1980 to 2005. Previous research has reported a systematic u-shaped relation between ownership concentration and firm performance. However, the direction of that causal relation is unknown. Using Granger causality tests and structural equation modeling, this study reveals that the relationship is not bidirectional. Specifically, these governance researchers report that ownership concentration does appear to influence firm performance, but not vice versa.

Finally, Chizema looked at the largest 100 publicly held firms over a four-year period (2002–2005) within Germany to better understand why some firms disclose executive compensation to the public, while others resist this practice. Unlike the Anglo-American governance system, the communitarian governance environment in Germany has a “comply or explain” approach to many governance practices. Disclosure of executive compensation is one of the most controversial practices, so it was examined to test institutional predictions as to why some firms do disclose compensation practices, but others do not. Overall, the results largely support the neo-institutional predictions.

In sum, I am particularly proud of the relatively eclectic and even-handed approach taken by our editors and reviewers. The organizational sciences in general, and the comparative corporate governance streams in particular, benefit from this methodological pluralism. We encourage governance researchers to submit any conceptual or empirical work that moves us closer to a generalizable, parsimonious, and accurate theory of comparative corporate governance – the ultimate goal of our journal.