Management attitudes toward currency hedging in a dynamic environment

Worasinchai (Bangkok University, Thailand) investigated the relationship between management attitudes and hedging risks in foreign exchange transactions. She analysed data gathered from semi-structured interviews, and presented an interesting theoretical model created to inform best practice to assist firms, trading partners and central government trading with Thai firms.

Worasinchai concluded—for large Thai firms and firms trading with Thai firms at least—that management attitude has an important impact on the strategic choices that a firm makes when considering currency hedging. She found that more conservative attitudes seem to be associated with a longer-term planning horizon. When asked about risk and subsequent performance, Worasinchai acknowledged this work is yet to be undertaken. If progress can be made in this area, and relationships and correlations between hedging, risk and subsequent company performance identified, then the prospect for a more stable global trading environment may well await.

Intellectual Capital and knowledge sourcing in a governance context

Ingley and Mowbray (AUT, New Zealand) described research conducted to understand how the collective and individual ability of directors add value to organisational performance occurs. They reported that performance was enhanced when the Board and management worked together, and that effective knowledge sharing and intellectual capital appeared to be important contributing factors. They introduced the notion of a “third team”, whereby the Board and management (who normally work separately) work together in some way on particular matters. The work of the third team is defined by something Ingley and Mowbray termed “behavioural governance”. They asserted that new insights will come from an increased understanding of a complex mix of (primarily behaviourial) governance characteristics, rather than continued pursuit of individual characteristics.

Aspects of this study are consistent with prior literature that suggests behavioural characteristics are more important than structural characteristics. The study provided a useful basis for future research into the import of behaviourial and knowledge sharing factors, particularly of larger samples of company data. However, a working model or theoretical framework of the so-called third team may continue to be problematic, given the complex and dynamic nature of governance, and the (often) transient balance of power and divisions of labour that are often present in governance environments. Notwithstanding this, the research and addressed raised some very good possibilities for future research.

The keynote address was delivered by Richard Hames, a corporate philosopher. Notes and observations from Hames' address:

Leadership is changing and needing to change—in response to a major transition occurring in the world. We are moving from industrial economism (which has sustained the world for the last 300 years) and a new world order. Population growth is putting huge pressure on “life critical” systems, systems initially created to sustain order in our society. These included the economy, trade, production and distribution of food, cleaning drinking water, education, and the law.

The occidental lens, through which most world systems have been developed, is no longer valid. Systems are beginning to fail. Extreme events (weather, for example) are fundamentally changing life on the planet. The pressures being exerted and the emergent failures are now creating opportunities for change, particularly in the leadership arena.

The emergent change is that we are starting to exit the CEO (competitive business achiever) meme, and to enter a “community” meme, where shared purpose (collaboration) will begin to prevail over the accumulation mindset. Hames said the vehicle to lead through this transition are the “the five literacies of leadership”.

Hames’ talk was interesting, and the five literacies coherent. However, the talk seemed to assume that the CEO meme is inherently flawed (ie: selfish and subject to corrupt practice) and must be replaced. This troubles me. Cannot CEO and community memes co-exist? 

Later this week—on Thu 7 and Fri 8 February—I will be speaking at the International Conference on Management, Leadership and Governance in Bangkok, Thailand. I'm looking forward to the challenge of speaking to a learned international audience, and to learning from other speakers and researchers throughout the two days.

I plan to share session summaries, observations and insights here during the conference, so check back if you'd like to hear about current developments in the fields of management, leadership and governance.

For decades now, researchers have been searching for the link between governance and performance that supposedly exists. Most of the research has investigated isolated attributes of governance—things like Board size, gender diversity, the inside/outside director balance, and CEO/Chair duality. The results have been mixed. Some researchers have suggested correlations. Others have disagreed. Despite considerable effort—over an extended period—researchers seem to have reached an impasse.

I was thinking about this while watching a motor racing programme on television yesterday, and concluded we've been looking at the wrong things.

Do cars go faster because they have a male driver or red paint, (for example)? Of course not. Rather, they go faster because of the way they are prepared and what happens on the race track. Racing drivers win because of what they do (techniques, decision-making), not who or what they are (gender, fitness levels, red car). 

We have much to learn from this analogy. If a link between governance and company performance exists (as several well-regarded scholars have postulated), it will, in all likelihood, be due to the activities of the Board as a whole—what they talk about, the decisions they make, the way they monitor performance. If progress towards exposing the elusive link between governance and performance is to be made, the research agenda needs to change—from attributes to activities. Does this sound plausible to you?