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Apriliyanti_et_al-2019-Corporate_Governance_An_International_Review

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Apriliyanti_et_al-2019-Corporate_Governance_An_International_Review.pdf - Adobe Acrobat Reader DC X File Edit View Window Help Home Tools The Curious Case o.. Feng et al 2011 wh... siano & wysocki 20... Apriliyanti_et_al-20... x ? Sign In 4 / 20 O + 119% do Share colonial government (Lev, 1985). Historically, a significant portion of Strauss, 2008). This process helps us to determine the size and structure the larger firms had government links, one example being the Dutch of our chosen sample, and later on, we identify and interpret the content Search 'Edit Text' East India Company. and patterns of the data in our sample (Suddaby, 2006). In the late 1950s, Soekarno, the first president of Indonesia, initi- Export PDF a ated an authoritarian political structure by centralizing power under 3.1 | Population and sample his control, in what is known as guided democracy. As stated by King Adobe Export PDF (2000, p. 607), "[In Guided Democracy] parliamentary institutions In May 2016, there were 119 SOEs in Indonesia, of which 20 were publicly Convert PDF Files to Word were suspended, press freedom was limited, and the state intervened listed or privatized, 85 were nonlisted, and 14 were special-purpose or Excel Online massively in the economy." Although the state was also vulnerable to firms. We used a nonrandom sample, as the selection of the case firms pressure from nonstate elite businesspersons and military officers, the is determined by both purposeful selection (Maxwell, 2005) and Select PDF File new political structure provided room for powerful individuals to uti- theoretical sampling (Corbin & Strauss, 2008; Ravasi & Zattoni, 2006). Apriliyanti..!_Review.pdf X lize their connections to influence state policy (King, 2000; Macintyre, Our main focus is on the impact of politics on the decision 1994). Soeharto, the second president of Indonesia, accelerated the outcome. We chose to focus on SOEs because we expected to see Convert to development of the authoritarian system with the backing of the mil- the commonly observed political conflicts and pressures in these firms Microsoft Word (*.docx) v itary, eliminating political participation and restricting power to his to be reflected in the boardroom (Cheffins, 2003; World Bank, 2009). close relatives and ties (Bowie & Unger, 1997; Crouch, 1988). In Obtaining research access to the boardroom is typically difficult Document Language: Socharto's era, government officials were forced to grant special (Daily, Dalton, & Cannella, 2003; Huse, Hoskisson, Zattoni, & Vigano, English (U.S.) Change Convert 170 WILEY APRILIYANTI AND RANDOY Create, edit and sign PDF forms & agreements 2011). Boards have a tendency to be closed groups "bound by telecommunications, banking, finance, construction, agriculture, har- confidentiality, privilege, and custom, with significant access bor operation, hotels, mining, medical services, financial services, and Start Free Trial difficulties and other practical limitations as well" (Leblanc & Schwartz, manufacturing. The SOEs we selected included both privatized and

Apriliyanti_et_al-2019-Corporate_Governance_An_International_Review.pdf - Adobe Acrobat Reader DC X File Edit View Window Help Home Tools The Curious Case o... Feng et al 2011 wh... siano & wysocki 20... Apriliyanti_et_al-20... x ? Sign In 5 / 20 + 119% do Share 2011). Boards have a tendency to be closed groups "bound by telecommunications, banking, finance, construction, agriculture, har- confidentiality, privilege, and custom, with significant access bor operation, hotels, mining, medical services, financial services, and Search 'Edit Text' difficulties and other practical limitations as well" (Leblanc & Schwartz, manufacturing. The SOEs we selected included both privatized and 2007, p. 845). Therefore, our access to board members had to be fully SOEs. According to Law 19/2003, "privatization is the selling of Export PDF a based on industry and university connections, as randomized "cold shares belonging to a state-owned enterprise in a limited liability com- calling" of board members would not have provided access to the pany with at least 51 percent of its shares owned by the Republic of Adobe Export PDF boardroom. Furthermore, to reduce the nonparticipation bias of board Indonesia, and the remaining shares owned partly or wholly by Convert PDF Files to Word members, we offered complete anonymity to the enterprises and the another party." By contrast, a fully SOE is a firm that is wholly owned or Excel Online individual board members interviewed (Bailey & Peck, 2013). by the Indonesian government. In Table 1, we show the age of the Given our theoretical focus on "boards and politics," we chose SOE, industry, ownership status, revenue, size (measured by the num- Select PDF File three selection criteria: SOEs that were well known and SOEs that ber of employees), and supervisory board size. Apriliyanti..|_Review.pdf X had recently made significant corporate changes (anticipating that We also identified the background of all board members, such as these SOEs would have faced challenging decision-making processes). their vocational and political affiliations. We grouped board member Convert to Finally, we chose SOEs that appeared to vary in terms of the distribu- into four affiliations: professional, bureaucrat, military/police officer, Microsoft Word (*.docx) v tion of power amongst board members. To measure the distribution of and politician. A professional refers to a board member whose work power, we followed Eisenhardt and Bourgeois (1988): When one or a experience is in a corporation, university, or research center and Document Language: English (U.S.) Change few board members were the principal decision makers, or greatly who is not a member of a political party or a president's volunteer influenced the decision-making process, then the boardroom had a group. A bureaucrat refers to a board member whose work experience power imbalance. In such cases, these board members shaped the is in the Ministry of State-owned Enterprises or a related ministry. A decision-making process (Bailey & Peck, 2013; Eisenhardt & Zbracki, military or police officer refers to a board member who holds a high- Convert 1992; Hinings et al., 1974; March, 1962; Salancik & Pfeffer, 1974), ranking position in the military or the police. A politician refers to a and the decision outcome reflected their preferences or interests board member who is a member of a political party or a president's Create, edit and sign PDF (Eisenhardt & Zbracki, 1992). volunteer group. We also attempted to identify each board member's forms & agreements The selection process resulted in 22 SOEs (representing 18% of political affiliation. As political affiliation is not observable and often Start Free Trial the total number of Indonesian SOEs) from the following industries: not publicly known, we obtained this information from interviews with

Apriliyanti_et_al-2019-Corporate_Governance_An_International_Review.pdf - Adobe Acrobat Reader DC X File Edit View Window Help Home Tools The Curious Case o.. Feng et al 2011 wh... siano & wysocki 20... Apriliyanti_et_al-20... x ? Sign In T 6 / 20 + 119% Y do Share Note. Firm age: young (1-25 years), middle aged (26-50 years), and old (+50 years). Revenue: small (< 10,000,000 in million rupiah), medium (10,000,000 in million rupiah to 49,000,000 in million rupiah), and large (+50,000,000 in million rupiah). Number of employees: small (<5,000 employees), medium (5,000- 15,000 employees), and large (+15,000 employees). Industry sector: strategic (related to national force) and nonstrategic (industries are not related to Search 'Edit Text' national force). NA:not applicable. Export PDF a Adobe Export PDF APRILIYANTI AND RANDOY -WILEY-171 Convert PDF Files to Word or Excel Online multiple actors (including investigative journalists) and news outlets. role in boardroom decision making, as well as those displaying a will- Select PDF File We classified board members according to whether they had strong ingness to share information (Ravasi & Zattoni, 2006). Following Apriliyanti..!_Review.pdf X or moderate political ties to the ruling elite. Huber and Power (1985) and Dean and Sharfman (1993), "active" is In order to be able to address the differences between political defined as being the most knowledgeable persons or most involved Convert to and rational decision-making approaches, we made sure to include actors in each decision. v board members from different backgrounds (e.g., professionals, politi- By interviewing more than one board member from each com- Microsoft Word (*.docx) cians, and top government officials). However, making such distinct pany, we aimed to gain diverse perspectives in order to both minimize Document Language: tions was sometimes difficult. For example, the ostensibly reason for bias and enhance our ability to combine multiple perspectives on the English (U.S.) Change appointing a professor as a board member may have been based on decision-making process. These interviews also helped us to examine his or her expertise, but the underlying motive may have been politi- the extent of the involvement of board members in the decision- cal. Accordingly, we went beyond the demographic background of making process (Ravasi & Zattoni, 2006). Convert each board member and focused on their observed decision-making The interviews lasted from 60 to 230 min and were audio style (rational vs. political) in the boardroom. recorded and transcribed by a professional service afterwards. The researcher conducting the interview was at liberty to lead, adjust, Create, edit and sign PDF forms & agreements 3.2 | Data collection and advance the discussion into areas considered beneficial for the research, even though structured questions had been developed prior Start Free Trial 3.2.1 -case to the interviews.