Corporate Governance and the Timeliness of Change: Reorientation in 100 American Firms

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Greenwood Publishing Group, 1998 - Business & Economics - 156 pages

The ability to implement change quickly is crucial to an organizations's success--not only in traditionally sedate industries, but also in today's fast-moving hi-tech ones. Sherman and Chaganti, from their study of 100 American corporations, half in stable industries, half in volatile ones, find that a firm's structure of governance bears heavily on the speed with which the firm can reorient itself. What are the characteristics of firms that change quickly? What inhibits others? And what, precisely, is the impact of a firm's stockholders, board and top management on its ability to adapt? Sherman and Chaganti provide answers to these and other questions, in the first book yet to focus entirely on the determinants of time in corporate reorientations.

In order for a firm to develop or sustain a competitive advantage, it must not only adapt correctly to environmental change, but also adapt quickly. This study examines the factors associated with the time a firm takes to initiate reorientation. The results of the research indicate that even in relatively large organizations, reorientations are not rare and occur routinely. Further, deterioration of a firm's financial condition tends to hasten its initiation of reorientation. However, the determinants of time taken to initiate reorientation differ in firms with relatively high prior performance and firms with relatively low prior performance.


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Page 133 - Boeker, W., & Goodstein, J. 1993. Performance and successor choice: The moderating effects of governance and ownership.
Page 138 - D. Miller and P. Friesen, Organizations: A Quantum View (Englewood Cliffs, NJ: Prentice-Hall, 1984). 8. B. Blumenthal and P. Haspeslagh, "Toward a Definition of Corporate Transformation," Sloan Management Review35 (1994): 101-07. 9. Tushman, Newman, and Romanelli, "Managing the Unsteady Pace"; L. Greiner, "Evolution and Revolution as Organizations Grow...

About the author (1998)

HUGH SHERMAN is Assistant Professor in the College of Business, Ohio University, where he specializes in strategic management, international business, and entrepreneurship. He has just completed a national study for the U.S. Department of Commerce investigating the impact of business incubators on local communities. Sherman has extensive executive experience in the United State and Europe and is a noted lecturer in executive development programs in Southeast Asia.

RAJESWARARAO CHAGANTI is Professor and Chair of the General and Strategic Management Department, School of Business and Management, Temple University. Executive Director of Temple's Institute of Global Management Studies, Chaganti teaches in the areas of strategic management and entrepreneurship and publishes widely in the journals of his fields. He is coauthor of High Performance Management Strategies for Entrpreneurial Companies: Research Findings from Over 500 Firms (Quorum, 1991).

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