Environmentally and socially sustainable practices can often improve the reputation of a company, which can increase customer support, contribute to improved staff productivity through loyalty, create a competitive advantage through differentiation and lower shareholder's legal risk due to otherwise possible regulatory infringements.
Other benefits include preferential government contracts. The South African Government through its Broad Based Black Economic Empowerment policy, of which corporate social responsibility is one of the seven pillars, offers preferential contracts to companies that score well in these areas.
” In addition, I deconstruct business unit effects to examine the impact of business strategy on business unit performance.
Finally, I consider business unit strategy to be an exogenous factor.
Contrary to past research, I have theorized business-unit-level strategy to be endogenous to corporate strategy.
I have also developed the controls construct and have measured it for each business unit studied in order to test my theoretical model.
This dissertation has drawn on the literature from agency theory, information processing theory, and upper echelons theory, as well as the economic logic that underlies value creation in corporations.
Through this dissertation, I deconstruct the notion of corporate effects to theoretically redefine the role of controls as the mediator between corporate strategy and business unit strategy to respond to the research question, “How does corporate strategy influence business unit performance?
Milton Friedman (1970), the 1976 Nobel Prize winner in economics, argued in an essay published in the New York Times (1970) that business cannot have responsibilities, only business executives can and those are to provide shareholders with the best possible return for their investment within the rules of law and ethical standards.
I also find support for the moderating effect of certain aspects and characteristics at corporate level such as size of corporate headquarters, number of subsidiaries managed by the corporation, and corporate CEO’s background in the relationship between Corporate Strategy and Controls.
The findings of this thesis re-establish the role of Corporate Strategy in our understanding of subsidiary level strategy and performance.
The aim of this thesis is to re-examine the relationship between corporate strategy and business unit strategy.
Past research has often failed to deconstruct the notion of corporate effects to properly assess the role of corporate strategy in the behaviour and performance of business units.