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The Impact of Corporate Governance on Firms’ International Strategies  

Gabriele Galli and Antonio Majocchi

The structure and characteristics of firms’ corporate governance influence the internationalization choices of companies, impacting different and heterogeneous features. The international business literature focuses on two fundamental characteristics of corporate governance: ownership and board of directors. The features of different shareholders and the level of ownership shares result in different global strategies and objectives for multinational companies. Considering the executive level, the characteristics of the different directors involved in the governance may influence investment choices and relations with different stakeholders in different countries. Corporate governance is therefore a fundamental dimension to be taken into account in international business research, with special reference to two particular types of companies: family- and state-owned firms. Ownership and the board of directors of these companies present specific corporate governance features and dynamics that expand the classical theory of internationalization. The focus on these two types of firms helps to understand and describe the current global context and the set of decisions and different policies that influence the different choices related to firms’ internationalization strategies.

Article

The Swiss Watch Industry  

Pierre-Yves Donzé

The Swiss watch industry has enjoyed uncontested domination of the global market for more than two decades. Despite high costs and high wages, Switzerland is the home of most of the largest companies in this industry. Scholars in business history, economics, management studies, and other social sciences focused on four major issues to explain such success. The first is product innovation, which has been viewed as one of the key determinants of competitiveness in the watch industry. Considerable attention has been focused on the development of electronic watches during the 1970s, as well as the emergence of new players in Japan and Hong Kong. Yet the rebirth of mechanical watches during the early 1990s as luxury accessories also can be characterized as a product innovation (in this case, linked to marketing strategy rather than pure technological innovation). Second, brand management has been a key instrument in changing the identity of Swiss watches, repositioning them as a luxury business. Various strategies have been adopted since the early 1990s to add value to brands by using culture as a marketing resource. Third, the evolution of the industry’s structure emphasizes a deep transformation during the 1980s, characterized by a shift from classical industrial districts to multinational enterprises. Concentration in Switzerland, as well as the relocation abroad of some production units through foreign direct investment (FDI) and independent suppliers, have enabled Swiss watch companies to control manufacturing costs and regain competitiveness against Japanese firms.Fourth, studying the institutional framework of the Swiss watch industry helps to explain why this activity was not fully relocated abroad, unlike most sectors in low-tech industries. The cartel that was in force from the 1920s to the early 1960s, and then the Swiss Made law of 1971, are two major institutions that shaped the watch industry.