DOCSLIB.ORG

Commitment and Entrenchment in Corporate Governance

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Commitment and Entrenchment in Corporate Governance 110-4 CREMERS-MASCONALE-SEPE MASTER COPY II (CLEAN).DOCX (DO NOT DELETE) 6/24/2016 2:41 PM Copyright 2016 by K.J. Martijn Cremers, Saura Masconale & Simone M. Sepe Printed in U.S.A. Vol. 110, No. 4 Articles COMMITMENT AND ENTRENCHMENT IN CORPORATE GOVERNANCE K.J. Martijn Cremers, Saura Masconale & Simone M. Sepe ABSTRACT—Over the past twenty years, a growing number of empirical studies have provided evidence that governance arrangements protecting incumbents from removal promote managerial entrenchment, reducing firm value. As a result of these studies, “good” corporate governance is widely understood today as being about stronger shareholder rights. This Article rebuts this view, presenting new empirical evidence that challenges the results of prior studies and developing a novel theoretical account of what really matters in corporate governance. Employing a unique dataset that spans from 1978 to 2008, we document that protective arrangements that require shareholder approval—such as staggered boards and supermajority requirements to modify the charter—are associated with increased firm value. Conversely, protective arrangements that do not require shareholder approval—such as poison pills and golden parachutes—are associated with decreased firm value. This evidence suggests that limiting shareholder rights serves a constructive governance function as long as the limits are the result of mutual agreement between the board and shareholders. This function commits shareholders to preserve a board’s authority to exploit competitive private information and pursue long-term wealth maximization strategies. By documenting that committing shareholders to the longer term matters as much as, if not more than, reducing entrenchment for good corporate governance, our analysis sheds much needed light on the allocation of power between boards and shareholders, managerial accountability, and stakeholder interests. We conclude by outlining the implications of our analysis concerning the direction corporate governance policies ought to take. AUTHORS—K.J. Martijn Cremers, Professor of Finance and Law, Mendoza College of Business, University of Notre Dame. Saura Masconale, Assistant Professor, The University of Arizona School of Government and Public Policy. Simone M. Sepe, Professor of Law and Finance, James E. Rogers College of Law, University of Arizona; and 727 110-4 CREMERS-MASCONALE-SEPE MASTER COPY II (CLEAN).DOCX (DO NOT DELETE) 6/24/2016 2:41 PM N O R T H W E S T E R N U N I V E R S I T Y L A W R E V I E W Institute for Advanced Study in Toulouse–Fondation Jean-Jacques Laffont– Toulouse School of Economics. Corresponding author. Email address: [email protected]. Mary Adkins, Andrea Attar, Stephan Bechtold, Jacques Crémer, Luca Enriques, Ron Gilson, Henry Hansmann, Gerard Hertig, Robert Jackson, Augustine Landier, Robert Merges, Geoffrey Miller, Bob Mundheim, Sébastien Pouget, Alan Schwartz, Paul Seabright, Jean Tirole, and seminar participants at the ETH-Zurich Series in Law and Economics, the Institute for Advanced Study in Toulouse, and the Toulouse School of Economics provided helpful comments. 728 110-4 CREMERS-MASCONALE-SEPE MASTER COPY II (CLEAN).DOCX (DO NOT DELETE) 6/24/2016 2:41 PM 110:727 (2016) Commitment and Entrenchment in Corporate Governance INTRODUCTION ............................................................................................................. 729 I. CORPORATE GOVERNANCE: WHERE DO WE STAND? ............................................... 736 A. Organizations, Markets, and American Corporate Law ................................ 736 B. The Rise of Governance Indices .................................................................... 741 C. The End of History for Corporate Governance ............................................. 744 D. The End of “The End of History”? ............................................................... 747 II. CORPORATE GOVERNANCE REVISITED ..................................................................... 751 A. Research Objectives and Empirical Methodology ......................................... 751 B. E-Index Provisions and Data Description ..................................................... 755 C. Incidence of the E-Index Provisions .............................................................. 758 D. Corporate Governance and Firm Value ........................................................ 761 III. THE VALUE OF COMMITMENT .................................................................................. 771 A. The Commitment Index and the Incumbent Index .......................................... 772 B. The Dynamics of Incumbent Protection ......................................................... 774 C. Managerial and Stakeholder Engagement..................................................... 777 IV. BOARD AUTHORITY, MANAGERIAL ACCOUNTABILITY, AND STAKEHOLDER INTERESTS ............................................................................................................ 788 A. Soft and Hard Budget Constraints ................................................................. 789 B. Demystifying the Stakeholder Interests Problem ........................................... 792 V. POLICY CONSIDERATIONS ........................................................................................ 795 A. Are Commercial Indices Reliable? ................................................................ 796 B. The Shareholder Direction of Federal Regulation ........................................ 799 CONCLUSION ................................................................................................................ 803 APPENDIX ..................................................................................................................... 805 INTRODUCTION Corporate governance matters. The complex framework of institutions and processes by which corporations are organized and managed1 affects 1 Corporate governance comprises both external and internal mechanisms. The board of directors, shareholder rights, and compensation schemes are often described as primary examples of internal governance mechanisms. External governance, instead, refers to the role of market forces in constraining corporate behavior, including the capital, labor, and product markets. Existing studies, however, have largely focused on internal governance. See, e.g., JONATHAN R. MACEY, CORPORATE GOVERNANCE 10 (2008). Although two of us have explained elsewhere why a thorough approach to corporate governance should not leave aside the interactions between internal and external mechanisms, see K.J. Martijn Cremers & Vinay B. Nair, Governance Mechanisms and Equity Prices, 60 J. FIN. 2859 (2005) (investigating the value impact of the interactions between external and internal governance); 729 110-4 CREMERS-MASCONALE-SEPE MASTER COPY II (CLEAN).DOCX (DO NOT DELETE) 6/24/2016 2:41 PM N O R T H W E S T E R N U N I V E R S I T Y L A W R E V I E W corporate performance and thus the aggregate welfare of society. This explains why the question of what draws the line between “good” (i.e., value-increasing) and “bad” (i.e., value-decreasing) corporate governance has long been central to corporate legal theory.2 Attempts to answer that question took a step forward in the 1980s, when empirical analysis to investigate governance models first became available.3 Discussions over the merits of such models no longer relied on theory only. Rather, empirical predictions about desirable governance arrangements could be tested against the actual data, through statistical analysis. Studies employing corporate governance indices, which first made their appearance in the late 1990s,4 proved especially useful. By benchmarking a firm’s governance quality against several governance provisions, governance indices provided a research design well suited to evaluate the various dimensions of a governance model.5 The rise of corporate governance indices has made winners and losers in the corporate governance debate. Providing empirical evidence that incumbent protection from removal by shareholders—“entrenchment”—is detrimental to firm value, governance indices have offered strong support for a shareholder-centric governance model.6 Economically, the case for this model rests on the proposition that shareholders, as the corporation’s residual claimants, have the greatest incentives to provide value-enhancing governance inputs.7 As a corollary, so-called shareholder advocates view any restrictions on shareholder power as inefficiently insulating managers from shareholder discipline.8 Conversely, since the emergence of governance indices, advocates of the traditional board-centric model of the Simone M. Sepe, Regulating Risk and Governance in Banks: A Contractarian Perspective, 62 EMORY L.J. 327 (2012) (examining the implications of the causal relationship between external and internal governance mechanisms in the banking sector), in this Article we primarily focus on internal governance in order to facilitate comparative assessments with prior studies. 2 See infra note 26. 3 See infra text accompanying notes 63–64. 4 See infra Section I.B. 5 See infra Section I.B. 6 See infra text accompanying notes 54–59. 7 The standard economic reference for the basic assumptions underpinning the shareholder empowerment case is Michael Jensen and William Meckling’s agency theory of the corporation. See Michael C. Jensen & William H. Meckling, Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, 3
Load more

Recommended publications
  • Reconceptualizing Corporate Boards M
    University of Chicago Law School Chicago Unbound Coase-Sandor Working Paper Series in Law and Coase-Sandor Institute for Law and Economics Economics 2013 Boards-R-Us: Reconceptualizing Corporate Boards M. Todd Henderson Stephen Bainbridge Follow this and additional works at: https://chicagounbound.uchicago.edu/law_and_economics Part of the Law Commons Recommended Citation M. Todd Henderson & Stephen Bainbridge, "Boards-R-Us: Reconceptualizing Corporate Boards" (Coase-Sandor Institute for Law & Economics Working Paper No. 646, 2013). This Working Paper is brought to you for free and open access by the Coase-Sandor Institute for Law and Economics at Chicago Unbound. It has been accepted for inclusion in Coase-Sandor Working Paper Series in Law and Economics by an authorized administrator of Chicago Unbound. For more information, please contact [email protected]. CHICAGO COASE-SANDOR INSTITUTE FOR LAW AND ECONOMICS WORKING PAPER NO. 646 (2D SERIES) Boards-R-Us: Reconceptualizing Corporate Boards Stephen M. Bainbridge and M. Todd Henderson THE LAW SCHOOL THE UNIVERSITY OF CHICAGO July 2013 This paper can be downloaded without charge at: The University of Chicago, Institute for Law and Economics Working Paper Series Index: http://www.law.uchicago.edu/Lawecon/index.html and at the Social Science Research Network Electronic Paper Collection. BOARDS-R-US: RECONCEPTUALIZING CORPORATE BOARDS Stephen M. Bainbridge and M. Todd Henderson* Abstract State corporate law requires director services be provided by “natural persons.” This Article puts this obligation to scrutiny, and concludes that there are significant gains that could be realized by permitting firms (be they partnerships, corporations, or other business entities) to provide board services.
    [Show full text]
  • Investment-Less Growth: an Empirical Investigation
    NBER WORKING PAPER SERIES INVESTMENT-LESS GROWTH: AN EMPIRICAL INVESTIGATION Germán Gutiérrez Thomas Philippon Working Paper 22897 http://www.nber.org/papers/w22897 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 December 2016 We are grateful to Janice Eberly, Olivier Blanchard, Toni Whited, René Stulz, Martin Schmalz, Boyan Jovanovic, Tano Santos, Charles Calomiris, Glenn Hubbard, Holger Mueller, Alexis Savov, Philipp Schnabl, Ralph Koijen, Ricardo Caballero, Emmanuel Farhi, Viral Acharya, and seminar participants at Columbia University and New York University for stimulating discussions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2016 by Germán Gutiérrez and Thomas Philippon. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Investment-less Growth: An Empirical Investigation Germán Gutiérrez and Thomas Philippon NBER Working Paper No. 22897 December 2016, Revised January 2016 JEL No. E22,G3 ABSTRACT We analyze private fixed investment in the U.S. over the past 30 years. We show that investment is weak relative to measures of profitability and valuation – particularly Tobin’s Q, and that this weakness starts in the early 2000’s. There are two broad categories of explanations: theories that predict low investment because of low Q, and theories that predict low investment despite high Q.
    [Show full text]
  • Towards a Stakeholder-Shareholder Theory of Corporate Governance: a Comparative Analysis Katharine V
    Hastings Business Law Journal Volume 7 Article 4 Number 2 Summer 2011 Summer 1-1-2011 Towards a Stakeholder-Shareholder Theory of Corporate Governance: A Comparative Analysis Katharine V. Jackson Follow this and additional works at: https://repository.uchastings.edu/ hastings_business_law_journal Part of the Business Organizations Law Commons Recommended Citation Katharine V. Jackson, Towards a Stakeholder-Shareholder Theory of Corporate Governance: A Comparative Analysis, 7 Hastings Bus. L.J. 309 (2011). Available at: https://repository.uchastings.edu/hastings_business_law_journal/vol7/iss2/4 This Article is brought to you for free and open access by the Law Journals at UC Hastings Scholarship Repository. It has been accepted for inclusion in Hastings Business Law Journal by an authorized editor of UC Hastings Scholarship Repository. For more information, please contact [email protected]. TOWARDS A STAKEHOLDER- SHAREHOLDER THEORY OF CORPORATE GOVERNANCE: A COMPARATIVE ANALYSIS Katharine V. Jackson* Most of the groups and individuals affected by the behavior of American public corporations do not have a voice in their governance. Just as governments retreat from regulating these entities, whether by political choice or as a result of globalization and regulatory arbitrage,1 stakeholders' 2 ability to shape corporate behavior themselves remains weak. Government empowers only one corporate stakeholder group- employees-to bargain with corporations for terms in their own interest. 1. See Eugene D. Genovese, Secularism in the General Crisis of Capitalism, 42 AM. J. JURIS. 195, 202 (1997) (multinational corporations are coming to control the "world economy, over which.,.. centralized national governments have less and less control."); Larry CatA Backer, Multinational Corporations, TransnationalLaw: The United Nations ' Norms on the Responsibilities of Transnational Corporations as a Harbinger of Corporate Social Responsibility in International Law, 37 CoLUM.
    [Show full text]
  • Forms of Government (World General Knowledge)
    Forms of Government (World General Knowledge) Anarchism A system that advocates self-governed societies based on voluntary institutions. These are often described as stateless societies, although several authors have defined them more specifically as institutions based on non-hierarchical or free associations. Anarchism holds the state to be undesirable, unnecessary, and/or harmful. Anarchy A society without a publicly enforced government or political authority. Sometimes said to be non-governance; it is a structure which strives for non-hierarchical, voluntary associations among agents. Anarchy is a situation where there is no state. Autocracy Autocracy is a system of government in which supreme power (social and political) is concentrated in the hands of one person or polity, whose decisions are subject to neither external legal restraints nor regularized mechanisms of popular control Aristocracy Rule by the nobility; a system of governance where political power is in the hands of a small class of privileged individuals who claim a higher birth than the rest of society. Anocracy A regime type where power is not vested in public institutions (as in a normal democracy) but spread amongst elite groups who are constantly competing with each other for power. Adhocracy Rule by a government based on relatively disorganised principles and institutions as compared to a bureaucracy, its exact opposite. Absolute monarchy A traditional and historical system where the monarch exercises ultimate governing Downloaded from www.csstimes.pk | 1 Forms of Government (World General Knowledge) authority as head of state and head of government. Many nations of Europe during the Middle Ages were absolute monarchies.
    [Show full text]
  • Illiberalism in Europe © CAPX / the ATLAS NETWORK 2019
    Illiberalism in Europe © CAPX / THE ATLAS NETWORK 2019 CapX is a politics website,that brings you the best writing on economics, ideas, policy and technology. It is owned and produced by the Centre for Policy Studies. capx.co 2 Illiberalism in Europe CONTENTS Foreword 04 Beware the false clash between ‘liberalism’ and ‘illiberalism’ 06 - Hans Kundnani The CAP doesn’t fit – why the EU’s farm subsidies are ripe for reform 10 - Kai Weiss Ukraine’s government promises a fresh start – or another false dawn 15 - John Ashmore Driving in the wrong direction: the folly of Germany’s green car agenda 21 - Oliver Luksic Woke authoritarianism stems from a worldview based on lies 26 - Konstantin Kisin Emmanuel Macron – France’s failed liberal saviour 30 - Anne-Elisabeth Moutet Viktor Orbán and the corruption of conservatism 34 - Dalibor Rohac Illiberal and economically illiterate – Germany’s new housing policy 39 - Rainer Zitelmann Europe’s politicians fiddle as liberalism burns 44 - John C. Hulsman Sweden’s great tax hoax – a story of fiscal illusions 49 - Nima Sanandaji For liberalism to survive, we must renounce technocracy 54 - Helen Dale Communism is gone, but there is still a burning desire for change in Eastern Europe 59 - Eszter Szucs capx.co 3 Illiberalism in Europe FOREWORD At a time when hard-won progress can seem under threat CapX is proud to present this groundbreaking collection of essays on the theme of Illiberalism in Europe. This book explores the different challenges to liberal economies and societies across the continent, from populism to protectionism, threats to free speech and the scourge of corruption.
    [Show full text]
  • The IEA Has Used Covid-19 As Another Opportunity to Brief Against The
    VIEWS AND REVIEWS Berkshire ACUTE PERSPECTIVE BMJ: first published as 10.1136/bmj.n697 on 17 March 2021. Downloaded from [email protected] Follow David on Twitter @mancunianmedic Cite this as: BMJ 2021;372:n697 David Oliver: The IEA has used covid-19 as another opportunity to http://dx.doi.org/10.1136/bmj.n697 Published: 17 March 2021 brief against the NHS David Oliver consultant in geriatrics and acute general medicine On 9 February, with many patients still in hospital Secondly, Japan and South Korea also had similarly with covid-19 and hundreds of people dying daily, successful pandemic responses regarding death rates the Institute of Economic Affairs (IEA), a free market and economic fallout, as did Australia, Canada, and think tank, posted a report by its head of political New Zealand.6 The US did not—and yet it has a highly economy, Kristian Niemietz.1 He argued that public marketised health system. Its state intervention was respect and gratitude for the NHS’s pandemic chaotic, poorly coordinated, and hampered by an response was irrational and unjustified and that its ideological focus on personal liberty and economic performance both during and before the pandemic concerns.7 had been “nothing special.” Japan’s public spending as a percentage of GDP is Niemietz criticised three common narratives: firstly, low by western European standards. But Australia, that austerity policies have left public services such Canada, and New Zealand approach UK levels. High as health and social care unable to cope; secondly, performing European countries such as Denmark, that the NHS has been the star performer in the Finland, and Norway are also high state spenders.
    [Show full text]
  • Anti-Primacy: Sharing Power in American Corporations
    Georgetown University Law Center Scholarship @ GEORGETOWN LAW 2015 Anti-Primacy: Sharing Power in American Corporations Robert B. Thompson Georgetown University Law Center, [email protected] This paper can be downloaded free of charge from: https://scholarship.law.georgetown.edu/facpub/1527 http://ssrn.com/abstract=2687218 This open-access article is brought to you by the Georgetown Law Library. Posted with permission of the author. Follow this and additional works at: https://scholarship.law.georgetown.edu/facpub Part of the Business Organizations Law Commons Anti-Primacy: Sharing Power in American Corporations Robert B. Thompson Abstract: Prominent theories of corporate governance frequently adopt primacy as an organizing theme. Shareholder primacy is the oldest and most used of this genre. Director primacy has grown dramatically, presenting in at least two distinct versions. A variety of alternatives have followed—primacy for CEOs, employees, creditors. All of these theories can’t be right. This article asserts that none of them are. The alternative developed here is one of shared power among the three actors named in corporations statutes with judges tasked to keep all players in the game. The debunking part of the article demonstrates how the suggested parties lack legal or economic characteristics necessary for primacy. The prescriptive part of the article suggests that we can better understand the multiple uses of primacy if we recognize that law is not prescribing first principles for governance of firms, but rather providing a structure that works given the economic and business environment in place for modern corporations where there is separation of function and efficiencies of managers as a starting point.
    [Show full text]
  • Corporate Citizens and Democratic Practice
    IUScholarWorks at Indiana University South Bend Corporate Citizens and Democratic Practice Gerencser, Steven. A. To cite this article: Gerencser, Steven. "Corporate Citizens and Democratic Practice.” Indiana Journal of Political Science, vol. 15, June 2019, pp. 1–15. This document has been made available through IUScholarWorks repository, a service of the Indiana University Libraries. Copyrights on documents in IUScholarWorks are held by their respective rights holder(s). Contact [email protected] for more information. Corporate Citizens and Democratic Practice Steven Gerencser ([email protected]) ■ Indiana University South Bend INTRODUCTION • Corporation X “views good governance and strong internal management of our issues as integral to our corporate social responsibility (CSR). Maintaining strong relationships with our various stakeholder groups is also essential.” • Corporation X “strives to contribute positively to our communities—locally and globally—through various forms of giving and volunteerism. We also have a strong commitment to meeting the needs of our customers.” • Corporation X “has a deep sense of responsibility to environmental stewardship and to ongoing evaluation of what this means in the context of our growing and increasingly more complex business.”1 What (or who) is Corporation X? It would be difficult to discern from these uplifting if anodyne statements. These sorts of statements and commitments could have been cut and pasted directly from almost any textbook on Corporate Social Responsibility and Corporate Citizenship practitioner literature; the tenor of these statements characterize ways in which many business firms (national and multinational), whether GE or ExxonMobil, Target or IKEA, express their way of engaging with their communities and stakeholders. Of course we usually think of corporations like these as profit generators, and no doubt they claim that for themselves.
    [Show full text]
  • Britain's No-Deal Debacle?
    Britain’s No-Deal Debacle? The Costs at Home and Likely Setbacks Abroad John Ryan STRATEGIC UPDATE OCTOBER 2020 LSE IDEAS is LSE’s foreign policy think tank. Ranked #1 university affiliated think tank in the world in the 2019 Global Go To Think Tank Index. We connect academic knowledge of diplomacy and strategy with the people who use it. CONTENTS Brexit—Endgame of the Reluctant European?— 4 The Phase of Scepticism 1945-2016 No-Deal Brexit Consequences for Ireland 7 The 2020 Irish Republic Election Result 11 Has Recast Ireland’s Political Dynamics A Joe Biden Presidency and Congress May 14 Block US-UK Post-Brexit Trade Deal Conclusion 18 References 20 ‘‘ Britain’s No-Deal Debacle? The Costs at Home and Likely Setbacks Abroad | John Ryan 3 he UK left the EU on 31 January 2020 after 47 years of membership. If a No-Deal Brexit Tbecomes a reality, it may not only be a sore The historic awakening for Boris Johnson and his government, but ‘‘commitment by the also for the United Kingdom as a whole. In this paper, US government to I will examine UK scepticism over Europe as a long- the peace process established phenomenon as well as the failure over the withdrawal agreement and the problems with the in Northern Ireland poorly executed UK strategy for Brexit negotiations. is a factor, but in I will then look at how a No-Deal Brexit scenario will addition the Irish complicate the economic and political consequences American vote ‘‘ for Ireland, and the associated repercussions for trade matters in US negotiations for the UK with the United States.
    [Show full text]
  • Evidence from My Hometown
    University of Pennsylvania Carey Law School Penn Law: Legal Scholarship Repository Faculty Scholarship at Penn Law 12-9-2016 Corporate Power is Corporate Purpose I: Evidence from My Hometown Leo E. Strine Jr. University of Pennsylvania Follow this and additional works at: https://scholarship.law.upenn.edu/faculty_scholarship Part of the Business Law, Public Responsibility, and Ethics Commons, Business Organizations Law Commons, Law and Economics Commons, Law and Society Commons, and the Other Business Commons Repository Citation Strine, Leo E. Jr., "Corporate Power is Corporate Purpose I: Evidence from My Hometown" (2016). Faculty Scholarship at Penn Law. 1722. https://scholarship.law.upenn.edu/faculty_scholarship/1722 This Article is brought to you for free and open access by Penn Law: Legal Scholarship Repository. It has been accepted for inclusion in Faculty Scholarship at Penn Law by an authorized administrator of Penn Law: Legal Scholarship Repository. For more information, please contact [email protected]. Corporate Power is Corporate Purpose I: Evidence From My Hometown By Leo E. Strine, Jr.* † The Oxford Review of Economic Policy Seminar on Responsible Business Draft of December 9, 2016 Please do not cite * Chief Justice, Delaware Supreme Court; Adjunct Professor of Law, University of Pennsylvania Law School; Austin Wakeman Scott Lecturer in Law, Harvard Law School; Senior Fellow, Harvard Program on Corporate Governance; and Henry Crown Fellow, Aspen Institute. † The author is grateful to Christine Balaguer, Jacob Fedechko, Peter Fritz, Alexandra Joyce, Fay Krewer, and Peggy Pfeiffer for their help. The author also thanks Stephen Bainbridge, Lawrence Hamermesh, David Katz, Marty Lipton, Andy Lubin, Sarah Lubin, and the two anonymous referees for excellent feedback and incisive comments on the draft.
    [Show full text]
  • THE MEMBERSHIP JOURNEY: Understanding and Boosting Membership Today Dr Katharine Dommett and Dr Sam Power the Membership Journey
    The Crick Centre Understanding Politics Report THE MEMBERSHIP JOURNEY: Understanding and boosting membership today Dr Katharine Dommett and Dr Sam Power The Membership Journey EXECUTIVE SUMMARY • Membership is an important part of the working of a healthy democratic system. Yet in a world where individual and sporadic engagement is becoming the norm, membership of political organisations is increasingly unusual. • Membership organisations now regularly confront challenges in recruiting, activating and retaining members. • Membership can be usefully understood as a journey, not a series of disconnected stages. This journey is underpinned by three factors: 1) MOTIVATION 2) PROCESS 3) TRIGGER • By understanding these factors, organisations can better recruit, activate and retain members. • Organisations wishing to address membership challenges can take the following actions: * Understanding motivation: collect and communicate members’ reasons for joining; feedback members on the outcomes of their campaigning activity; target specific events around specific motivations; thank members for engaging and volunteering time * Understanding process: conduct mystery shopper exercises to see how easy it is to join and get involved with your organisation; install a direct debit system by default; share best practice in recruitment, retention and activation; offer lifetime membership; highlight motivations for joining and remaining in the party online * Understanding triggers: identify existing events, activities and catalysts for joining or taking action in an organisation, piggyback on external events and campaigns that might drive people to your organisation; orchestrate events that might cultivate engagement and boost membership; mainstream membership recruitment and engagement as a part of ongoing activities; ensure that triggers are the only cause of membership loss 2 Understanding and Boosting Membership Today THE CHALLENGE OF MEMBERSHIP Membership has historically been a key part of the democratic system.
    [Show full text]
  • The 2014 Margaret Thatcher Conference on Liberty
    Draft, as of 19 May 2014 THE 2014 MARGARET THATCHER CONFERENCE ON LIBERTY The Guildhall, Wednesday 18 June 2014 (note: speakers with an asterisk are not confirmed) 8.30am to 9.00am: Registration etc 9am to 9.05: GREAT HALL – Ipad induction 9.05 to 9.10: GREAT HALL – Welcome from the City of London and Lord Saatchi 9.10: GREAT HALL – Introductory speech from V S Naipaul 9.20 to 10.15: GREAT HALL – Has the West gone soft? 25 years on from the fall of the Berlin Wall Chair: John O’Sullivan. Niall Ferguson, Professor Deepak Lal, Radek Sikorski and Charles Powell. 10.15 to 10.30: GREAT HALL – The launch of CapX by Tim Knox, Susan Walton, Iain Martin and David Benigson (Signal Ltd) 10.30am to 11.00: THE CRYPT – REFRESHMENTS 11.00 to 12.00: GREAT HALL – Big Government, Big Corporations: what chance for small business and innovation? Chair: Dr Pippa Malmgren. Dr Art Laffer, Professor Deirdre McCloskey, John Micklethwait Professor Luigi Zingales 12.00 to 12.20pm: GREAT HALL – The Road from Serfdom: Lord Saatchi 12.20 to 12.30: GREAT HALL – Competition in the UK banking industry by Vernon Hill 12.30 to 13.30: BREAK OUT 1 EITHER GREAT HALL – The EU and the Big Corporations: are they ganging up against liberty and its protector, the nation state? Charles Moore, Daniel Hannan, Professor Richard Epstein, John Micklethwait, Professor Michael Wohlgemuth OR THE LIVERY HALL – He who pays the piper (1): State Science and Liberty Baroness Greenfield, Terence Kealey, Pat Michaels, and Professor Jonathan Haskel Draft, as of 19 May 2014 13.30 to 14.40: Buffet Lunch – THE CRYPT 14.30 to 15.15 GREAT HALL – BBC HARDTALK.
    [Show full text]