The grounding of the “flying bank”

Abstract

Purpose -The purpose of this paper is to demonstrate the importance of effective, knowledgeable and accountable management and board structures in business organisations. Using the case of Swissair, the paper aims to demonstrate the importance of competent industry knowledgeable executive boards, with regard not only to company profits and sustainability but also to stability and socially responsible decision making. Design/methodology/approach -An explanatory and descriptive case study approach was undertaken utilising historical data and literature-based information and research on Swissair. The analysis of the case is guided by the use of the Resource Dependence and Group Conformity theories. Findings -The findings suggest that the alliance and acquisition strategy pursued by Swissair's management and the lack of leadership and accountability by the CEO and Chairman of the board were the main contributing factors to the company's collapse. Practical implications -The implications include impacts on the way in which European organisations are governed and the composition of the management teams and Board of Directors. Additional implications include changes to the legislation in Europe, more specifically Switzerland and the European Free Trade Alliance, aimed at the prevention of similar future collapses. Originality/value -The paper's originality stems from the application of decision making and group theory, coupled with corporate governance ideas applied in a practical sense to the contemporary case of Swissair in a manner previously not considered, to demonstrate the importance of effective, knowledgeable and accountable management and board structures in organisations. Value is demonstrated with the recent issues experienced by Austrian Airlines and its subsequent acquisition by Lufthansa, indicating a need to address the corporate governance requirements in the European airline industry.

The role of the board chair—A literature review and suggestions for future research

“…However, CEOs who assume role duality by dint of their successful early career records might end up misusing their powers, leading to CEO entrenchment (Graham, Kim, & Leary, 2020). Nevertheless, scholars agree that, given the dynamic and complex nature of board tasks and relationships with different stakeholders, boards must be led by chairs who hold notable industry experience, an absence of which can lead to detrimental results, such as higher board member turnover and lower board member qualifications (Garg, John Li, & Shaw, 2019; Hermann & Rammal, 2010). Board chairs can play a decisive role in moderating the human capital heterogeneity of corporate boards, which can enable board members to become more effective in sharing different leadership tasks in line with their most relevant competencies (Vandewaerde, Voordeckers, Lambrechts, & Bammens, 2011).…”

“…Nevertheless, scholars agree that, given the dynamic and complex nature of board tasks and relationships with different stakeholders, boards must be led by chairs who hold notable industry experience, an absence of which can lead to detrimental results, such as higher board member turnover and lower board member qualifications (Garg, John Li, & Shaw, 2019;Hermann & Rammal, 2010 (Bliss & Gul, 2012); eventually, there might be some negative implications to share prices (Skaife & Werner, 2019). However, García-Ramos and García-Olalla (2011) argued that such effects could be contingent on whether the dual CEO-chair is the founder or the descendent of the company.…”

Conformity of responses among graduate students in an online environment

“…This experience may cause distress to the individual as well as mislead learning. To date, this phenomenon has received widespread attention in business (Chapman, 2006), aviation (Hermann & Rammal, 2010), space exploration (Esser & Linoerfer, 1989), military (Badie, 2010), law (Breger, 2010), and most recently medical education (Beran, Kaba, Caird & McLaughlin, 2014). It would seem reasonable to conclude that conformity would additionally exert influence within online learning events, particularly given the increased emphasis placed on the social aspects of the online learning environment (e.g., Garrison & Arbaugh, 2007;McKenna, Green & Gleason, 2002).…”

Partisan Confidence Model for Group Polarization

“…2. Remarkable consequential examples of the groupthink phenomenon and victims of groupthink include the Bay of Pigs; the Pearl Harbor attack; the North Korean escalation; the Vietnam escalation [43]; the grounding of Swissair, the flying bank [44], and more recently, to some degree, the failures at each stage of Brexit [45].…”