Exercising the Strategic Role of the Board and Management
This chapter describes how a firm’s equity investment in an international strategic alliance may allow privileges such as veto rights and how it enables management influence through representation on the board of directors. A wide range of control strategies are available to an international strategic alliance including the board of directors, an array of contractual agreements concerning the firm’s non-capital investments, the appointment of key managerial personnel and formalized reporting relationships. Foreign firms’ investments may adopt a particular governance strategy in China, such as concentrated ownership in a strategic alliance that enables them to leverage their superior technologies or managerial expertise as well as to protect their proprietary assets. State ownership in a strategic alliance is frequently used as a means to achieve public-policy objectives. The actual equity share of the partner firms may serve as an adequate indicator of the extent of its influence on a strategic alliance’s management and the level of a partner firm’s management involvement.
KeywordsCorporate Governance Host Country Board Member Foreign Firm Strategic Alliance
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