More Accountable, More Ethical, Yet Less Trusted: Misplaced Corporate Governance in the Era of Big Data

Abstract

In this paper, we investigate the corporate governance and ethical practices of firms in emerging technologies. We argue that because they have unique characteristics and face unique institutional challenges and legitimacy controversies, compared to their nonemerging technology counterparts, these firms tend to over-conform with respect to their corporate governance and ethical practices. Drawing on corporate governance deviance theory and legitimacy theory, we develop a number of hypotheses, which we test using data from 68 matched pairs based in the USA for the period 2009-2017. Our findings indicate that emerging technology firms over-conform regarding both corporate governance and ethical practices, yet, despite such over-conformity, they have lower legitimacy levels compared to their non-emerging technology counterparts.

Challenges for corporate governance at the national and firm levels

“…Fourth, while this issue offers a wealth of research on national‐level governance standards (Bhagat & Hubbard, 2022), there is less evidence on compliance with these standards. More work could be done to understand the degree of compliance with corporate governance and ethical practices in different institutional settings (Fotaki et al, 2021). It could also examine whether compliance or overcompliance has different implications for more innovative new technology firms in various countries.…”

Corporate Governance in Extreme Institutional Environments

“…The authors argue that since MNC top executives are frequently 'ill prepared' for tackling ethical, ecological, political and social issues, appropriate CG arrangements -such as restructuring boards' composition and decision-making processes -need to be put in place to counter these limitations, in order for the firm to be able to meet its 'triple bottom line' objectives. In this special issue, Fotaki et al (2021) discuss the behaviour of emerging technology (ET) firms in terms of CG and business ethics. They argue that in the present era of Big Data, ET firms face particular legitimacy challenges compared to firms operating in a more traditional environment.…”

“…In this special issue, Fotaki et al . (2021) discuss the behaviour of emerging technology (ET) firms in terms of CG and business ethics. They argue that in the present era of Big Data, ET firms face particular legitimacy challenges compared to firms operating in a more traditional environment.…”

“…Second, on the one hand, stewardship codes encourage the integration of wider economic and societal concerns into corporate finance in extreme environments (Klettner, 2021), but on the other hand, in some extreme contexts the presence of governance rules does not necessarily mean that there will be compliance (Shaw, He and Cordeiro, 2021). Third, there is much evidence that trust and social capital is a strong substitute for extreme weak regulatory institutions, including: corporate culture has an exacerbated impact on innovation (Wang, Farag and Ahmad, 2021); trust and social capital have an exacerbated role in internationalization (Puthusserry et al, 2021); and emerging technology firms over-comply with governance and ethical standards relative to firms from traditional environments (Fotaki et al, 2021). Fourth, in the presence of stronger regulatory institutions such as the European banking setting, extreme events still happen, such as the GFC; but in these contexts, public institutions matter -post-crisis regulatory reforms in banking positively influence banks to Corporate Governance in Extreme Institutional Environments 921 change business models and thereby improve stability and cost efficiency (Ayadi et al, 2021).…”

“…In total, 10 papers were accepted for this special issue. These papers fall within three main, albeit inter‐related, categories by research subject: corporate governance in an international context (Fotaki et al ., 2021; Herdhayinta, Lau and Shen, 2021; Klettner, 2021); banking and other papers on corporate governance that have implications for various areas including, but not limited to, banking (Ayadi et al ., 2021; Bedendo and Siming, 2021; Gaganis et al ., 2021); and governance in entrepreneurship and innovation (Johan and Valenzuela, 2021; Puthusserry et al ., 2021; Shaw, He and Cordeiro, 2021; Wang, Farag and Ahmad, 2021). One of the more interesting things about the papers in this special issue is that we see evidence that in extreme institutional environments, there are exacerbated CG consequences that imply nonlinearities and even reversals in the relations between institutional contexts and governance.…”