Using a systematic literature review approach, we survey 192 cross-national comparative studies published in 23 scholarly journals in the fields of accounting, economics, finance, and management for the period 2003 to 2014. The purpose is to synthesize and appraise the extant empirical research on the interplay between country- and firm-level governance mechanisms and the effects on firm outcomes. Particular focus is placed on studies that examine firm economic performance.
We identify and distinguish between two groups of cross-national governance studies. The first type compares macro, country-level outcomes and the second compares three different firm-level outcomes: economic performance, governance mechanisms, and strategic decisions. We compare the theoretical frameworks used and further analyze the country-level factors and firm-level governance attributes that have been combined to investigate their interplay and the effects on firm outcomes. We find substantial variation in the use and measurement of country-level factors as well as a variety of causal forms used to explain the combined effects of country- and firm-level governance mechanisms. This wide variability precludes comparison, and consequently prevents identifying consistent patterns of influence between country-level governance factors and firm-level governance mechanisms and/or performance. We identify research gaps and provide fruitful directions for future research on this topic.
The cross-national governance research has been guided mainly by an economic perspective focusing on international differences in the effectiveness of specific governance mechanisms. Few comparative studies have integrated an institutional perspective or examined the external forces that drive the diffusion and use of specific governance mechanisms. Such integrative framework would improve the understanding of cross-national differences in the salient dimensions of country-level governance factors and how they mediate the effectiveness of firm-level governance mechanisms.
Our results reveal that firm- and country-level governance mechanisms have been interacted and combined, either to address various agency problems or to compensate for a weak national environment. This calls for regulators and investors to consider national governance factors when assessing firm-level governance practices.
Co-authored with Eduardo Schiehll.