The contribution of outside directors to firm performance has been shown to be inconsistent. Korean companies first began in 1998 to introduce outside directors to carry out governance reform. This paper analyses the impact of outside directors on corporate performance during the governance reform movement undertaken in Korea in 1999 as well as the moderating effect of the large shareholder and managerial ownership rate. We hypothesised a positive relationship between outside director effectiveness (outside director participation rate) and firm profitability, a negative moderating effect in terms of large shareholder ownership and managerial ownership, and a positive moderating effect when it comes to blockholder ownership. This moderating relationship is considered in order to investigate the role of large shareholders under the Korean governance structure. Our empirical analysis showed that outside directors had a weak positive impact, and that a large shareholder ownership rate and a block shareholder ownership rate moderated this relationship in a negative fashion. The managerial ownership rate did not show any significant moderating effects. We thus conclude that it is too early to assess the impact of outside directors on corporate performance, and that Korean companies exhibit an "owner-controlled" governance structure; that is, they are governed by large shareholders who have demonstrated a resistance to attempts to bring about governance reform through such means as the introduction of outside directors. Outside shareholders were found to possess insufficient power to monitor large controlling shareholders. This paper seeks to make a contribution to the field by conducting an analysis of governance structure in Korea in the aftermath of the currency crisis, as well as of outside directors in emerging economies, a subject rarely dealt with in governance studies. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.

The effects of strategic order of entry on firms' performance have long been an issue in many areas of study. Past research efforts, however, have been concentrated mostly on first mover or early entrant advantages. To contribute to developing a theory of latecomer strategies, the authors investigate how latecomers compete successfully or even leapfrog early movers. They review previous studies on early mover advantages and disadvantages, and group the sources of such advantages or disadvantages into three areas: the firm, its market, and its competitors. The theoretical focus is how a firm converts the opportunities stemming from entry order into performance. The authors seek to confirm and extend relevant theories by examining how late entrants have caught up with incumbent industry leaders in the global semiconductor industry. On the basis of in-depth case analysis of three Japanese and three Korean semiconductor companies, they identify and categorize successful latecomer strategies into two types: strategies for overcoming latecomer disadvantages and strategies for utilizing latecomer advantages. Focusing, thin margin or loss bearing, and volume building form the essence of strategies for overcoming disadvantages, whereas odd timing, time compression, human-embodied technology transfer, benchmarking, technological leapfrogging, and resource leveraging form the essence of strategies for utilizing advantages. Because many companies in Asia have had to face the reality of being latecomers, the Asian perspectives are particularly useful for studying and explicating latecomer strategies.

SummaryFocusing on the role of emotions in understanding employee behavior, the present study identifies employees' emotional reactions toward innovation as a mediating process that explains the effects of institutional environment on collective innovation use in work units. We further employed the appraisal theory of emotion and affective events theory (AET) to conceptualize the relationships between cognitions and emotions involving innovation. This expanded conceptual model was tested using multi-source data from 1150 employees and managers of 81 branches of a Korean insurance company that were implementing a new practice called Life-Long Learning. Two contextual factors (management involvement and training for innovation) significantly predicted employees' collective cognitive appraisal of the innovation (perceived usefulness and perceived ease of use). Collective cognitive appraisal in turn predicted employees' positive and negative emotions toward the innovation, which completely mediated the effects of contextual factors and cognitive appraisal on implementation effectiveness (consistent and committed use of the innovation in the branch). This study highlights the critical role of emotions in the context of innovation implementation, and shows the need for greater attention to emotional processes in examining organizational innovations.

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