Due in part to the COVID-19 pandemic, enhancements in technology, as well as shifts in the macroeconomic and socioeconomic dynamics of globalization, Digital Transformation (DT) has become an enterprise-wide imperative for most multinational companies (MNCs). As such, legal departments are being challenged to embrace enterprise DT and start their own department’s DT journeys. Despite these trends, there is little scholarship and research about how MNC legal departments attempt to meet the DT challenge: What are GCs doing to support enterprise level DT, and how are they digitally transforming their own departments? And importantly, is what they are doing effective and value-accretive? How should they approach their DT journeys?Based on interviews of 23 General Counsels and Chief Digital Officers of S&P 500 MNCs along with the authors’ professional experience, we investigate in-house legal departments’ response and approach to DT and recommend a new model approach. Standard depictions of MNC legal departments suggest that they are viewed as cost centers. And much of the literature focuses on how GCs can add value by improving efficiency and lowering cost. The literature also appears to assume law firms provide more creative, strategic, value-additive advice than in-house legal departments. Contrary to such depictions, we contend that DT can enable legal departments to add value that external providers cannot, and that goes far beyond efficiency generation, cost reduction, and increased speed-to-market. We identify a Legal DT Maturity Framework that maps corporate legal departments’ DT trajectory into three common phases. We argue that the current three-phased approach to DT that many GCs utilize generates some added value but does not enable the full potential of DT to be harnessed. Drawing upon lessons from our interviewees’ experiences and our own, we articulate a best-practices model for how legal departments should approach DT to generate new forms of value and shift from being a cost center to a revenue generator and value creator. Our model demonstrates that the GC, as internal to the MNC, has an advantage (as compared to external providers) in understanding the MNC’s strategic priorities and risk preferences and, therefore, is better at identifying the right and best opportunities to leverage and exploit to the MNC’s advantage.In addition to filling some of the gaps in the literature, this article provides a vision that has broad applicability beyond the MNC legal department context and can be used as a model for law firms and other legal services providers to harness DT in their own contexts, so as to stay at pace with—and better serve—clients with the never-ending DT challenges emerging on their horizons.
{"title":"Digital Transformation and the Legal Profession: How Corporate Legal Departments Should Digitally Transform to Create New Forms of Value","authors":"M. DeStefano, Bjarne P. Tellmann, Daniel Wu","doi":"10.2139/ssrn.3905328","DOIUrl":"https://doi.org/10.2139/ssrn.3905328","url":null,"abstract":"Due in part to the COVID-19 pandemic, enhancements in technology, as well as shifts in the macroeconomic and socioeconomic dynamics of globalization, Digital Transformation (DT) has become an enterprise-wide imperative for most multinational companies (MNCs). As such, legal departments are being challenged to embrace enterprise DT and start their own department’s DT journeys. Despite these trends, there is little scholarship and research about how MNC legal departments attempt to meet the DT challenge: What are GCs doing to support enterprise level DT, and how are they digitally transforming their own departments? And importantly, is what they are doing effective and value-accretive? How should they approach their DT journeys?Based on interviews of 23 General Counsels and Chief Digital Officers of S&P 500 MNCs along with the authors’ professional experience, we investigate in-house legal departments’ response and approach to DT and recommend a new model approach. Standard depictions of MNC legal departments suggest that they are viewed as cost centers. And much of the literature focuses on how GCs can add value by improving efficiency and lowering cost. The literature also appears to assume law firms provide more creative, strategic, value-additive advice than in-house legal departments. Contrary to such depictions, we contend that DT can enable legal departments to add value that external providers cannot, and that goes far beyond efficiency generation, cost reduction, and increased speed-to-market. We identify a Legal DT Maturity Framework that maps corporate legal departments’ DT trajectory into three common phases. We argue that the current three-phased approach to DT that many GCs utilize generates some added value but does not enable the full potential of DT to be harnessed. Drawing upon lessons from our interviewees’ experiences and our own, we articulate a best-practices model for how legal departments should approach DT to generate new forms of value and shift from being a cost center to a revenue generator and value creator. Our model demonstrates that the GC, as internal to the MNC, has an advantage (as compared to external providers) in understanding the MNC’s strategic priorities and risk preferences and, therefore, is better at identifying the right and best opportunities to leverage and exploit to the MNC’s advantage.In addition to filling some of the gaps in the literature, this article provides a vision that has broad applicability beyond the MNC legal department context and can be used as a model for law firms and other legal services providers to harness DT in their own contexts, so as to stay at pace with—and better serve—clients with the never-ending DT challenges emerging on their horizons.","PeriodicalId":447199,"journal":{"name":"Other Corporate Governance eJournal","volume":"68 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128726363","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-04-15DOI: 10.1108/jaar-09-2018-0147
Bakr Al‐Gamrh, Redhwan Al-Dhamari, A. Jalan, Asghar Afshar Jahanshahi
This study examines the impact of two different types of foreign ownership—by Arab and non-Arab investors on firms' financial and social performance. It then goes on to investigate how the degree of board independence affects the aforementioned relationship between these two types of foreign investors on firm performance.,The sample for the study is a panel of all listed firms in the Dubai Financial Market (DFM) and the Abu Dhabi Securities exchange (ADX) from 2008 to 2012.,Results indicate that while Arab foreign ownership affects firms' financial and social performance negatively, non-Arab foreign ownership does so, positively. Further tests indicate that board independence weakens the negative relationship between firm financial and social performance with foreign Arab ownership and deteriorate the relationship between firm financial and social performance and non-Arab foreign ownership.,Future studies may extend the coverage of the study by including other countries in the region and other identities of the foreign investors.,This study may help policy makers in the UAE to improve the implementation and enforcement of existing regulations concerning corporate social responsibility (CSR) and board independence. It also highlights the need to look into the monitoring role of independent board members.,This is the first study to examine the role of board independence on the relationship between foreign ownership and firm's financial and social performance. To the best of our knowledge, this is the first paper that attempts to enrich the understanding of foreign ownership by classifying it into Arab versus non-Arab.
{"title":"The Impact of Board Independence and Foreign Ownership on Financial and Social Performance of Firms: Evidence from the UAE","authors":"Bakr Al‐Gamrh, Redhwan Al-Dhamari, A. Jalan, Asghar Afshar Jahanshahi","doi":"10.1108/jaar-09-2018-0147","DOIUrl":"https://doi.org/10.1108/jaar-09-2018-0147","url":null,"abstract":"This study examines the impact of two different types of foreign ownership—by Arab and non-Arab investors on firms' financial and social performance. It then goes on to investigate how the degree of board independence affects the aforementioned relationship between these two types of foreign investors on firm performance.,The sample for the study is a panel of all listed firms in the Dubai Financial Market (DFM) and the Abu Dhabi Securities exchange (ADX) from 2008 to 2012.,Results indicate that while Arab foreign ownership affects firms' financial and social performance negatively, non-Arab foreign ownership does so, positively. Further tests indicate that board independence weakens the negative relationship between firm financial and social performance with foreign Arab ownership and deteriorate the relationship between firm financial and social performance and non-Arab foreign ownership.,Future studies may extend the coverage of the study by including other countries in the region and other identities of the foreign investors.,This study may help policy makers in the UAE to improve the implementation and enforcement of existing regulations concerning corporate social responsibility (CSR) and board independence. It also highlights the need to look into the monitoring role of independent board members.,This is the first study to examine the role of board independence on the relationship between foreign ownership and firm's financial and social performance. To the best of our knowledge, this is the first paper that attempts to enrich the understanding of foreign ownership by classifying it into Arab versus non-Arab.","PeriodicalId":447199,"journal":{"name":"Other Corporate Governance eJournal","volume":"174 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123147142","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Tobin’s Q can be affected by both the internal and external factors. Tobin’s Q is a company’s performances indicator, so it is important for an organization to manage its effectively. This study aims to investigate the impact of Tobin’s Q in relation with firm-specific factors and macroeconomics factors towards the performance of the selected company which is Huawei Technologies Co., Ltd. Multiple regression analysis of financial ratios of the company is conducted for the year from 2011 to 2015. The findings and analysis indicate that firm-specific factor (Return on equity, ROE) have a greater influence on Tobin’s Q of the company as compared to macroeconomic factors. This study is also suggested that the company should improve the ROE, the company is advised to increase its debt with a suitable amount. By having the cash flows in, the company can purchase new assets to generate profit. Even through the macroeconomics factors have a little impact in Tobin’s Q, the company still requires in sustaining its growth along the economy conditions by somehow.
{"title":"Tobin's Q and its Determinants: A Study on Huawei Technologies Co., Ltd.","authors":"Yvonne P'ng Yik Fen","doi":"10.2139/ssrn.3387880","DOIUrl":"https://doi.org/10.2139/ssrn.3387880","url":null,"abstract":"Tobin’s Q can be affected by both the internal and external factors. Tobin’s Q is a company’s performances indicator, so it is important for an organization to manage its effectively. This study aims to investigate the impact of Tobin’s Q in relation with firm-specific factors and macroeconomics factors towards the performance of the selected company which is Huawei Technologies Co., Ltd. Multiple regression analysis of financial ratios of the company is conducted for the year from 2011 to 2015. The findings and analysis indicate that firm-specific factor (Return on equity, ROE) have a greater influence on Tobin’s Q of the company as compared to macroeconomic factors. This study is also suggested that the company should improve the ROE, the company is advised to increase its debt with a suitable amount. By having the cash flows in, the company can purchase new assets to generate profit. Even through the macroeconomics factors have a little impact in Tobin’s Q, the company still requires in sustaining its growth along the economy conditions by somehow.","PeriodicalId":447199,"journal":{"name":"Other Corporate Governance eJournal","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132057198","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This case study examines the governance role played by the Interogo Foundation as the owner of the Inter IKEA Group (the owner and franchisor of the Ikea concept) and its other subsidiaries. The IKEA businesses are the largest home furnishing operation in the world. In total, the various companies have around 200.000 employees and annual revenues exceeding €38.3 billion. The IKEA businesses have exhibited impressive self-financed growth since their inception in 1943. During the 1980s, the original IKEA business was divided into three independent holding companies owned respectively by two independent foundations and the third part owned by the founding Kamprad Family. In addition, the IKEA franchise businesses also include a number of other franchisees owned by listed companies or private owners.
{"title":"Foundation Ownership at IKEA","authors":"Steen Thomsen","doi":"10.2139/ssrn.3243347","DOIUrl":"https://doi.org/10.2139/ssrn.3243347","url":null,"abstract":"This case study examines the governance role played by the Interogo Foundation as the owner of the Inter IKEA Group (the owner and franchisor of the Ikea concept) and its other subsidiaries. The IKEA businesses are the largest home furnishing operation in the world. In total, the various companies have around 200.000 employees and annual revenues exceeding €38.3 billion. The IKEA businesses have exhibited impressive self-financed growth since their inception in 1943. During the 1980s, the original IKEA business was divided into three independent holding companies owned respectively by two independent foundations and the third part owned by the founding Kamprad Family. In addition, the IKEA franchise businesses also include a number of other franchisees owned by listed companies or private owners.","PeriodicalId":447199,"journal":{"name":"Other Corporate Governance eJournal","volume":"68 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132648821","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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