How regulatory changes are driven by a need for control in reputational scandals: a case study in the German insurance industry

Purpose This paper aims to contribute to the understanding of the mechanisms that evolve during reputational scandals and lead to changes in industry regulation. It explores the processes by which a demand for external industry regulation evolves, also addressing the consequences of firms’ competitive behaviors which lead to substantial misbehavior and the destruction of reputational capital. The authors are interested in whether and how regulatory activities – in the case analyzed here, changes in insurance regulation regarding sales commissions for insurance brokers – are used as a costly, external behavioral control mechanism (third-loop learning) to terminate a reputational scandal that cannot be stopped by internal controls at a firm level (first-loop and second-loop learning) anymore. Design/methodology/approach The paper explores a real-life case in the German insurance industry that peaked in 2012 and has been well documented by broad media coverage, complemented by interviews with leading industry representatives. Using causal process tracing as a methodology, the authors study the factors in the case that led to an industry scandal. The authors further analyze why the insurance firms involved were not able to limit the scandal’s impact by internally controlling their behaviors, but had to call for external regulation, thus imposing costly restrictions on sales and contract processes. To identify the mechanisms underlying this result, theories from the fields of economics (game theory) and sociology (vicious cycle of bureaucracies), as well as organizational learning theory, are used. Findings The authors find that individual rationality does not suffice to prevent insurance firms from scandalous business practices, e.g. via implementing appropriate internal behavioral control measures within their organizations. If, as a result, misbehavior leads to reputational scandals, and the destruction of reputational capital spills over to the whole industry, a vicious cycle is set in motion which can be terminated by regulation as an externally enforced control mechanism. Research limitations/implications This study is limited to the analysis of a single case study, combining published materials, e.g. broad media coverage, with interviews from representatives of the insurance industry. Nevertheless, the underlying mechanisms that have been identified can be used in other case studies as well. Practical implications The paper shows that if firms want to avoid increasing regulation, they must implement strong reputational risk management (RRM) to counteract short-term profit pressure and to avoid restrictive regulation imposed on the industry as a whole. Furthermore, it sheds light on the relevance of spillover effects for RRM, as not only employee behavior within an organization might lead to the destruction of reputational capital but also that from other firms, e.g. from elsewhere within an industry. Originality/value The paper contributes by emphasizing a direct causal link between corporate scandals, loss of reputation and regulatory change within the insurance industry. Furthermore, the paper contributes by combining economic theories with organizational theories to understand real-life phenomena.

PENGARUH SOCIAL CAPITAL DAN HUMAN CAPITAL TERHADAP BUSINESS GROWTH PENGUSAHA PEREMPUAN DI JAKARTA DAN TANGERANG [EFFECT OF SOCIAL CAPITAL AND HUMAN CAPITAL ON BUSINESS GROWTH OF WOMEN ENTREPRENEURS IN JAKARTA AND TANGERANG]

<p>The aim of this study is to examine the positive effect of social capital, human capital, reputational capital on business growth on women entrepreneurs in Jakarta dan Tangerang. Intangible assets are widely regarded as a key success factor for business growth in various countries. The growth of women's businesses in developing countries is still rare to find, but in recent years women have been seen to be more active in terms of entrepreneurship and business with women's ownership continues to grow to this day. This study uses a quantitative approach. The data collection technique in this study used an electronic questionnaire via Google Form, consisting of 31 indicators and the number of respondents was 201 respondents who are women and currently have businesses. The analytical method used in this research is SmartPLS 3.0, and in distributing the questionnaire, this study uses judgment sampling technique. The results of this study conclude that social capital has a positive effect on business growth, human capital has a positive effect on business growth, individual reputation capital has a negative effect on business growth, and organization reputational capital has a positive effect on business growth.</p>

Certifications in the Academic Process Oriented to the Reputational Capital of Brands of Brazilian HEIs

Considering the analysis of the academic process oriented to the reputational capital of the HEI brands, it arrive three main certifiable objects with impact on the reputation of universities: 'individual teaching advice' - applied to perform the main tasks of the process, the ' self-efficacy '- present in the evaluation of the work plan that guides the student's actions in the process and' disclosure '- which brings academia closer to society and generates a positive internal culture. The objective of this work is to identify how to carry out the certification of these objects. As a research methodology, three quasi-systematic reviews were applied, with successive refinements of articles collected on the CAPES Portal and the results were compiled. It was possible to identify that training followed or monitored by evaluations, and practical tests, also called challenges, are the forms of certification prevalent in this scope. The skills developed from the certifications considered were also listed, with the most mentioned being highlighted, such as the development of social skills, strengthening the commitment to the career and participation in the community of continuous learning; being observed that these favor the reputational capital of university brands.

Complex Systems, Competition/Antitrust, and Legal Problems in the Global Credit Rating Agency Industry

This chapter explains how the tie-breaker effect reduces social welfare and distorts equilibria. This chapter introduces new definitions of “equilibrium” in the CRA ratings processes. (This has been one of the major missing elements in the existing literature on the credit ratings industry) It explains why “reputational capital” (of CRAs) is a sub-set of “influence” (which can have more impact on bond-issuers' decisions and investors' decisions than traditional “influence”) and critiques the games theorems in Virag and other important papers.

Academic Process Oriented to the Reputational Capital of Brazilian HEI Brands

The reputation of a university must be positive, whether it is private or public, given the competitiveness of its environment. Reputation is an indicator of organizational success and can be monitored by the brand's reputational capital, which corresponds to the harmony between the characteristics established by the managers - brand identity, and the perception defined by its stakeholders - brand image. In a complementary way, business processes are useful tools for optimizing the roles and outcome of organizations. The objective of this work was to model an academic business process, to increase the efficacy of higher education training, guided by the reputational capital of the brands of universities in Brazil. A quasi-systematic review was carried out to investigate academic business processes - identity; bibliographic review to understand reputation and competitiveness – image; and was elaborated a diagram of the academic business process model with UML resources, SIPOC approach, relating identity and image through guidelines: elaboration and evaluation of student work individual plan, student self-efficacy stimulus, individual teaching advice, positive university culture, interaction with society and co-creation of brands by students from Brazilian HEIs - reputational capital.

Intangible resources and the growth of women businesses

Purpose Intangible assets are widely considered as key success factors for the growth of businesses in various economies. While the relationship between intangible assets or resources and business growth or performance have been extensively researched in advanced economies, there is limited understanding of the complexity of the phenomenon in developing/emerging markets. In Ghana specifically, there is a dearth of research on the impact of intangible assets on the growth of women businesses. Consequently, this paper aims to investigate how intangible assets available to women entrepreneurs contribute to the performance of their businesses. Design/methodology/approach Using an exploratory sequential research design (a type of mixed methods design), the data collection was organized into two main phases. The first phase was the qualitative phase where nine respondents were interviewed, and the responses were analysed using thematic analysis. The second phase was the quantitative phase where some 264 questionnaires were collected and analysed using multiple regression analysis. Findings Specifically, the findings focused on three intangible resources: social capital, human capital and reputational capital. The study found that, social, human and reputational capital all significantly contributed to the growth of women businesses. The study also showed a positive and significant effect of social capital, reputational capital and human capital on business growth. Practical implications These findings have implications for women entrepreneurs in Ghana. If they must grow their businesses, then using intangible assets alone may not be able to deliver growth in the required proportions. Serious consideration must be given to the significant impact of intra and extra industry networking and the social competency skills of the entrepreneur. The rationality of this assertion hinges on the findings made from this study that social competence can be effectively used to further enhance the effects of the value of one’s intangible assets. Originality/value Policymakers in Sub-Saharan Africa and specifically Ghana have accorded high priority to private sector entrepreneurship towards reduction in the dependence of the citizenry on government for jobs. Perhaps, this paper adds to the growing body of knowledge on female entrepreneurship in Ghana to understand how intangible assets available to women entrepreneurs contribute to the performance of their businesses.

ECONOMIC ACTIVITY OF AUDITING FIRMS AS A SUBJECT OF INDEPENDENT CONTROL

The article proves that the determining component of the study of economic activity of audit firms as an object of economic analysis is the formation of the properties of its components. It is analyzed that the economic activity of audit firms differs significantly from other activities in the field of consulting, because it is the audit firm that acts in two manifestations: as a subject of independent financial control and as a subject of economic activity. It is characterized that in this context the issues of formation of resources for auditing activities are actualized; efficient use of resources in the context of managing the economic potential of the audit firm; dependence of the efficiency of economic activity of the audit firm on the client and reputational capital; the process of implementation of audit and related services by the audit firm and the effectiveness of audit firms. It is proved that the economic activity of an audit firm as well as any enterprise of another branch of the national economy, including consulting, requires the involvement of appropriate economic resources. It is outlined that the formation of these resources occurs both from own sources – equity and profits aimed at increasing the components of equity, and from borrowed sources long-term and short-term liabilities of audit firms. It is proved that depending on the combination of components of economic resources of audit firms and sources of their formation determine the main directions of economic analysis, namely the economic potential, the components of which are: financial potential, human resources, material potential. It is outlined that such types of capital as client and reputational capital depend on the efficiency of using the resource potentials of the audit firm. The place of resources of the audit company in the general classification of economic resources of the enterprise is defined.