During the last decade we have been observers of corporate scandals that changed our views about the market. Enron's and WorldCom's collapse, financial scandals that lead to the recent recession are just an example. Policymakers and executives re-discovered Corporate Governance (CG) as tool to protect the shareholders and the stakeholders of the companies. OECD provides the following definition : "Corporate governance is the system by which business corporation are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the boards, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and means of attaining those objectives and monitoring performance."
Except how to direct and how to control their corporations, executives saw the potentials of corporate philanthropy to improve their image after the scandals. Corporate philanthropy became a mainstream strategy now-called Corporate Social Responsibility (CSR), a notion that is not so narrow as philanthropy. CSR is "the business commitment and contribution to the quality of life of employees, their families, the local community and the society overall to support sustainable economic development." (Holme, 2000). Of course not all the companies that are adopting CSR are doing it just to improve their image. Many of those have spotted the rest of the benefits of "giving back" to the society, such as good employees relations and sustainability.
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My purpose is to conduct a research on Corporate Governance and Corporate Social Responsibility in big family-owned firms in Greece.
Greece is a European Country, member of the European Union and the Monetary Union of Euro. It is also, despite of the recent financial problems, still one of the Top 30 Largest Economies of the World. A characteristic of the Greek economy is that family firms are the most common form of business (Spanos et al.2005). Generally families control 43.9 per cent of Western European Firms (Facio and Lang. 2001). In Greece more than 60% are family owned (La Porta et al. 1999). Spanos et al.(2005) states that "a common future among most family firms is the fact that the ownership is closely tied to a group of people - the family. The family usually involves in the direct management of the firm.". Also Carney (2005) notes that "Family governance is distinguished not by the separation but by the unification of ownership and control. The degree and nature of ownership required to establish effective control will depend upon the institutional context in which a firm is located. In some contexts, effective control may require an absolute majority of voting stock to be concentrated in the hands of the family." In countries where a firm is mainly controlled by a family and typically the family has an active role in management, the agency problem of corporate governance is to protect the minority shareholders from the strong block-holders (Becht, 1997) and the stakeholders of the company.
The purpose of my dissertation is to found out how big family-owned corporations in Greece perceive Corporate Governance and Corporate Social Responsibility. This is very important for Greece since, as mentioned above, family business is the typical model, even for multinationals. A sector in Greece that is typically, and almost in total, owned by families is the shipping sector. Greek interests, according to Lloyds, control around 8% of the world's total number of vessels in service and on order and 14.9% of the world fleet deadweight, or 13% of the world fleet expressed in gross tons. These companies have shareholders and stakeholders around the world and their activities influent millions of people. This is the sector that I chose to focus and conduct a case study.
My purpose is to examine how these family firms adopting corporate governance and corporate social responsibility strategies. I will try to find out their motives of using them, or if not why. It is almost impossible for a company not to have any activities that can be characterized as Corporate Responsibility (even if they don't "label" them as such), or not to have a corporate governance structure. By trying to spot the differences from the multi-shareholder corporations I will also focus on exploring any "personal" motives and ethical values that are behind the family's actions. Finally I will explore the relations between family members and managers or no-family board members and to investigate how these are affected by personal and organizational values.
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I aim to conduct a research that will present some views on corporate control of this special sector and ownership category. Also my research aims to illustrate some issues of corporate responsibility and the motives that drives those entrepreneurs to contribute to the society.
The paradigm that I am willing to follow is towards Interpretivism. I will try to understand the phenomenon of using Corporate Governance and Corporate Social Responsibility as tools for social contribution. In Interpretivism the researcher interacts with that being researched because it is impossible to separate what exists in the social world from what it is in the researcher's mind (Smith, 1983). As I will base my research on interviews, I am expecting to receive different opinions and different realities from each one of the participants. As a intepretivist researcher I am biased toward the answers since my research is driven first of all form my personal values. This is why I will conduct the interviews cautious to avoid manipulation of the interviewee.
I have chosen the intepretivist paradigm because I believe that is serving my purposes for a qualitative research best. There are some quantitative academics at the field of Corporate Governance that are conducting researches in Greece like Spanos L. and Xanthakis M. But there is almost no conducted research from a qualitative point of view that will explore the reasons of adopting Corporate Governance. This is one of the reasons that I chosen to conduct a qualitative research. An interpretive study may lack of reliability since it is based on people's views that can easily change, but it is high in validity since the data are coming straight from the source (the people of the organization). Also the findings accurately reflect the phenomena under study. "Interpretivism focuses on capturing the essence of the phenomena and extracting data that provide rich, detailed explanations." (Collins and Hussey, 1997). "Reliability under an interpretive paradigm is of little importance or may be interpreted in a different way (Collins and Hussey, 1997).
By following a positivist's paradigm and by conducting a quantitative research I would not be able to explore in depth the values and the conditions that are leading to specific behaviours - as adopting Corporate Social Responsibility strategies. I could though be able to present some facts that could give the means for generalizations beyond my study. A positivist's research would be adequate if there was a hypothesis that I could test. The problem is that we do not have sufficient literature concerning Greece or in general family-firm driven markets. The Anglo-Saxon model that is the dominant in the western economies is mainly driven by multiple shareholders (La Porta et al., 1999). Collins and Hussey (1997) note "Under an interpretive paradigm, you may not wish to be restricted by existing theories or there may be no existing theory. Therefore, you may carry out your investigation to describe different patterns that you perceive in the data or to conduct a new theory to explain the phenomenon. If the research was an exploratory study, the findings could be used to develop hypotheses that are tested in a subsequent main study." It would be interesting if this research would be used for theory building that later could be tested by quantitative means. Finally for the purpose and the means of this project to use large samples for a reliable and rigours research it's impossible. The need for a big population that would be proper for generalization is high and my time limits are sort for that kind of research. Also the results of such investigation would not explain the reasons behind the phenomena but only the size and maybe some general views of the people engaged. A numeric result could be useful if we already had some data from in depth researches that would form a theory that we could validate.
My chosen methodology is a typical one for interpretivist research, a case study. Case studies are used to explore a single phenomenon in a natural setting using variety of methods to obtain in-depth knowledge (Collins and Hussey, 1997). For Yin (2003) the characteristics of a case study are: 1) the research aims to explore certain phenomena and also to understand them within a particular context 2) the research does not starts with limits within which it will take place 3)the research uses multiple methods for collecting data, both qualitative and quantitative. Stake's (1995) definition for case study is "Case study is the study of the particularity and complexity of a single case, coming to understand its activity within important circumstances".
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For the purpose of this research case study is the chosen method since I will try to study in-depth behaviours and actions of the people leading a specific firm. The procedures of a firm are not always typical or described in manuals. Especially in a family-owned firm, where the most decisions are taken by the family members that are engaged with the management of the company, the procedures and the reasons of each action are not always made for the best interest of the firm. As Randoy and Jenssen (2003) note family owners could favour family interests over the firm's interests, because of loyalty toward the family. In this context it is important to conduct a in-depth research that will reveal the interior motives of each member of the managing team and the "rules" or "principals" that drives them. This can be supported by Hartley (2005) that states "Case study is also a useful technique where exploration is being made of organizational behaviour which is informal, unusual, secret or even illict. Case study also be used to understand everyday practices and their meaning to those involved, which would not be revealed in brief contact.".
The type of my case study is a combination of two of the categories that Scapens (1990) illustrates: descriptive, since I will try to describe the current practises of a particular firm and illustrative, since I will try to illustrate the new and possible innovative practises that are adopted by this family firm. The fact that the family firms are acting differently in their decision making process than the "normal" firms indicates that is possible to act different or innovative in their Corporate Governance and Corporate Responsible strategies.
To be able to conduct my research I decided that my case should meet the following conditions:
Must be family controlled firm, which means that more than 50% should be owned by a single family.
Must have its headquarters in Greece. The operational offices must be based in Greece, not the legal address.
Must be a big company as the EU defines, that means to employ more than 250 employees.
Must not be listed in the stock market. The most Greek companies are not listed (only about 280 companies are listed). Also there are rules for Corporate Governance initiatives that are regulating the listed companies as also Codes of Conduct are introduced by the Hellenic Capital Market Commission and the Federation of Greek Industries.
Must be accessible for research.
Especially the last condition was important because the time limits are tight and the accessibility to that kind of information is difficult for the outsiders. As Yin (1994) noted, cases are chosen because of they are unusually revelatory, extreme exemplars, or opportunities for unusual research access. Similarly Otley and Berry (1994) note that opportunist case studies are where the opportunity to examine a phenomenon arises because the researcher has access to a particular business, person or other case. To choose a case having to put criteria is also supported by Eisenhardt (1989)"While the case may be chosen randomly, random selection is neither necessary, nor even preferable.".
I decided to make a single case study, opposing to Yin's (1994) suggestion for multiple case studies. Yin (1994) argues that multiple case studies are providing stronger base for theory building and theoretical generalization. On the other hand Myers (2009) argues that using a sampling logic to judge the validity of the case method is a common mistake of researchers. He adds that "case study research does not use sampling logic. Sampling logic and statistical theory are what are used when you conduct survey". Both Yin (2003) and Myers (2009) point out that case studies cannot generalize to the population (even the multiple cases) but only to the theory. For me since there is no obvious reason, neither available resource I decided to conduct a single study. It would be interesting if there were case studies with similar criteria but from different financial sectors.
My case study will be conducted to a family firm that is engaged in the shipping sector, a typical and important Greek industry as mentioned above. The shipping sector is ruled by family firms, and the most of them are multinationals. In the particular firm the decisions are made by two members of the family from two different generations. Also at the process of decision making are involved some executives of the company. During the first contact with them, when I asked and finally received permission to conduct my research, I was informed that the whole shipping industry has a different way of governance. In the centre of the decisions is the family and some high-level executives are just advisors. In general, boards are non-functional.
That last clue is affecting the method of data gathering. My plan is to conduct interviews with the members of the board and some high level managers. Since no board is acting, I will focus my interest to the executive members of the family and their advisor team that has an opinion in the decision making process. Also since I am trying to exam the motives and the values for Corporate Governance and Corporate Responsibility, is vital to have the views of the family members and especially from the senior generation that was the founding one. Since the firm is build on a person's values, my interviews will concentrate to extract these values from the members of the managing team.
Open interviews are commonly used as a data collection method in qualitative case studies. Eisenhardt and Graebner (2007) note "Interviews are a highly efficient way to gather rich, empirical data, especially when the phenomenon of interest is highly episodic and infrequent.". Kvale (1983) also notes "qualitative research interview is an interview, whose purpose is to gather descriptions of the life-world of the interviewee with respect to interpretation of the meaning of the described phenomena".
Scholars arguing that the analysing of qualitative data has challenges. Robson (1993, p.370) states "no clear and accepted set of conventions for analysis corresponding to those observed with qualitative data". Morse (1994, p.23) notes "despite the proliferation of qualitative methodology texts derailing techniques for conducting a qualitative project, the actual process of data analysis, remains poorly described".
For the analysis of my data I will follow the instructions by Collis and Hussesy (1997) that are describing a well organized process of data analysis.
I will begin by reducing the data collected from the interviews. For the conduction of the interviews I will use digital recorder to record all the interviews in digital format. That requires a lot of time for transcription but during the interview there is no need for detailed note taking. Another advantage is that during the transcription I would be able to spot any "verbal signs" that state sarcasm or other special ways of speaking.
After the transcription I will be able to narrow my data to those really needed. The quantity of data is connected with the planning of the research. As Morse (1994) argues the researcher should be familiar with the literature so he will be able to spot the interesting parts for his research and not create a plan that will seek irrelevant information.
Coding of data is also important especially since I will have to separate the opinions of each interviewee according to his position. Family members will have opinions that maybe will not be the same as those of the management team. These different values and opinions should be coded to be easy accessible. Also opinion in different subjects should be coded so there will be no confusion during the analysis.
I will also summarise the findings of each interview in a way that I can compare them and spot any patterns between the views of the interviewees. These summaries will be useful when I will have to refer to the theory and draw conclusions and construct generalizations from the findings.
The studies that had to be conducted to people have always ethical implications. After agreement with the firm I decide that no names will be referred neither the name of the firm. Also every participant will be provided with a description of the research and his rights as a participant.
Since the purpose of this research is not to illustrate any special behaviours but to find out some "typical" behaviours, the status of "anonymity" will not affect the results and it will protect the reader from biases from his personal experience/ relations with the firm or prior knowledge.
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