Impact of Cronyism in Mexican Multinationals

Journal of Business Ethics - J BUS ETHICS, 2002

This paper looks broadly at the theme of corporate governance in Mexico. It begins with a brief analysis of the historical corporate governance model in Mexico, including the governance structures, the banking and financial systems, ownership and control patterns, industrial policy, and industrial relations. The paper then examines how and why these various aspects of corporate governance have been changing with processes of economic liberalization currently under way. Finally, it analyzes the consequences of changes in the model of corporate governance for the country's development (e.g. increased consumer goods for middle class consumers, increased disclosure by domestic corporations, less support for corporate social programs, etc.).

The main objective of this paper is to describe the essential features of large Mexican firms. The observed structure fits with the stylized facts of the business groups found in many developing countries. In particular, there is a high concentration of control rights, not only because of the fact that family members own large holdings of stock in these firms, but also because it is a common practice to use pyramids and to issue "non-voting" shares. It is argued that the lack of counterbalances and the excessive control rights in the hands of few large shareholders produce a rent extraction problem. Hence those stakeholders that potentially experience opportunistic behavior are reluctant to establish long-term relationships, with the corresponding negative consequences on the productivity of the firm.

Visión de Futuro, 2021

This article aimed to identify the different concepts of corporate governance, in this sense, the first section presents a review of the literature based on the Methodi Ordinatio in relation to the concept of corporate governance (CG), followed by the revision of the theories from which it is studied: Theory of the agency; the shareholder or stockholder theory; the resource dependency theory; Stakeholder theory; the theory of Stewardship or Management Theory, the approach based on knowledge and corporate governance and the performance of the company, finally, the conclusion of the study in which it stands out that the objective of CG theories is not to study how managers govern - that would lead us to confuse the term governance with administration - but rather how it is

Forum empresarial, 2009

This paper examines the link between corporate governance structures and the potential for expropriation of minority shareholders' rights. Analysis of 97 firms from Brazil, Chile and Mexico that traded ADR shares in the United States between 2000 and 2002, indicates that increasing the size of the board by inclusion of additional independent outside directors lowers the potential for expropriation of minority shareholders' rights. Also, increases in the tenure of independent outside directors, decreases in CEOs' shareholdings and more interlocking directors on a board all serve to lower the potential for expropriation of minority shareholders' rights.

2008

Abstract: Since Vernon's seminal work (Vernon 1966; Vernon 1971), international firm expansion has been predominantly portrayed as a phenomenon led by firms located in economically and technologically developed countries in search for new markets, natural resources, knowledge leverage, and/or risk diversification.

This article discusses the basic assumptions of an individualist vision on corruption. A different argument based on "social density" of the phenomenon is proposed instead: the process of normalization of corruption. Under this umbrella, corruption is a political concept that looks to impose a particular vision on what are "right" behaviors based on a sharp and unrealistic separation of the public and private sphere. A review of the organizational literature on corruption is developed, with the aim of understanding how organizational processes of socialization triggers behaviors that make corrupt acts to appear as "normal" under the organizational logic. Persons find themselves in a "slippery slope", generating agreements and social dynamics that are able to produce corrupt logics under the normal life of an organization. A plea for discussing the social processes needed to "un-normalize" corruption is defended a conceptualization that goes beyond an individualist and moralist vision of the phenomenon.

This chapter reports on an empirical study that compares the management processes of 58 foreign multinational corporations (MNCs) competing in Latin America with the same dimensions of 40 local companies that have gone abroad and expanded operations within the region. These new or "emerging" multinationals from the region are named "Multilatinas" (MLs) in this chapter.

The assembly industry for export in Latin-American countries such as Mexico (called 'maquiladoras' or 'in-bond industry') is in the biggest crossroad in its history. On one hand, it is observed a great competitiveness of the auto parts and electronics plants and the diffusion of more complexity, technology, organization and skills (companies of second and third generation) and even of new aspects of centralized coordination that they represent qualitative changes. But on the other hand the maquiladoras are in the most serious crisis in their history that has negative impacted to the employment, to the regional activity where they are located and to the reduction of foreign direct investment. Even though maquiladora manufacturing is once again picking up - largely due to economic recovery in the United States - there is a growing concern among strategic local actors, that two year's crisis could be the beginning of a long term decline in manufacturing along the border due to Mexico's relatively high cost of labor when compared to that of countries like China. In this context the analysis of different types of companies according with their productive, organizational and labor complexity (generations) it is a good analytical instrument since the companies are being affected in a different way by the economic recession and particularly by the new competitors. This article is structured in five sections. Section one an two presents the importance of maquiladora in the case of Mexico and its current international debate. Section three shows a description of the three generations. Section fourth is a critical discussion of generation of companies. Finally, the section five presents the proposal of a new forth generation of companies, based on centralized coordination of different activities. The research results are based on a case study at Delphi Corporation located in Juarez-Mexico

When financial markets are not well developed and when shareholders are not well protected, the role of the board of directors becomes more important as the only available control mechanism for management opportunism. Venezuela is an ideal case study to test this proposition because both of these issues are particularly severe. The specific question that we want to answer is: Does corporate the governance mechanism work in Venezuela? That is, is there evidence that board remove executives after a period of bad performance? If the answer to this fundamental question is positive, two other issues arise: first, what are the determinants of board structure in Venezuela?

Sumario: 1. Introducción -- 2. ¿Qué es dirigir organizaciones? Organización, estrategia y comportamiento -- 3. Teorías estructurales de la organización: Weber, Taylor, Fayol -- 4. Teorías de la organización orientadas al comportamiento -- 5. Teorías de la organización situacionales: sistemas y contingencia -- 6. Instrumentos para describir las organizaciones -- 7. Tecnología y organización -- 8. Diseño organizativo -- 9. Estrategia, cultura y cambio organizativo Premio EADA 1988