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How Institutional Change and Fixed Term
Uncertainty Affect Managerial Perception: A case
study of Brexit
Max Winterton
Student Number: 120344619
International Business and Management Dual Award
Newcastle University
University of Groningen
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Abstract
Brexit is the first occurrence of a major partner voting to leave and economic bloc and regardless of opinion presents academics and business people a wholly unique puzzle to solve. The nature of Brexit also creates a peculiar businesses environment within the UK. Even though the vote became legally binding on the 24th of June 2016 the UK remains inside the bloc and will do so until the 29th of
March 2018. This purgatorial state without any agreement on future trading arrangements has created a bubble of uncertainty over the UK markets. This paper sets out to analyse what effect this uncertainty, drawn from institutional change, has had on UK CEOs and public facing management and how has this impacted isomorphic pressure. This primary research question was: “How does limited term uncertainty affect isomorphic pressure?”
To do this quotes, interviews and letters published in the Financial Times, The Economist, The Times and The Guardian where subjected to a text-analysis, which allowed the generation of themes that have run through the discussion. Performed over the period of the 1st of January 2016 until the 23rd of June 2017,
split into three time periods, these quotes were taken from source and coded in line with Strauss and Corbin’s (1998) grounded theory, using Gioia et al’s (2013) open coding system.
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Acknowledgements
I’d like to thank my supervisors for their insight and support, my parents for
believing in me and all the bors back in the bird and repping the set worldwide. I’d also like to thank Alex Curry for his invaluable work as my personal assistant but above all else I’d like to thank my friend Josh Marren-Cooper, who’s
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Table of Contents
1. Introduction p.5
2. Literature Review p.6
2.1 General Economic Predictions p.6 2.2 Industry Predictions p.9 2.3 Theoretical Implications p.11 2.4 Strategic Problems p.12 3. Methodology p.17 4. Findings p.23 4.1 Overall Results p.30 5. Discussion p.31
5.1 Measurement of Isomorphic Pressure using Strategic Change p.33 5.2 Managerial Perception p.36
5.3 Global Mindset p.38
5.4 The Effect of Uncertainty p.43 5.5 Areas of Further Study p.45
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1. Introduction
Ever since the 23rd of June 2016 the world has wondered how the decision to leave
the EU will affect the economy of both the UK and Europe. What was not taken into account is that there are a variety of ‘Brexit’ styles and that these could have just as importance permutations on business function and long-term strategy as the initial decision will. As politicians argue about soft Brexit, hard Brexit, red white and blue Brexit the real impact and opinions of the business world still remain to be seen and are certainly an interesting topic of study.
To study the impact that Britain’s exit from the European Union will have it is first essential to understand the exact effect and changes that are going to be made. The simplest explanation of what has happened is that the UK has triggered, the now infamous, article 50 of the Lisbon treaty, which permits any EU member nation to leave the union (Lisbon Treaty 2007). The true ramifications are yet to be fully realised, hence the need for business to explore any necessary strategy changes or alterations location. What is guaranteed is the removal of access to the ‘free market’, logic would hold that this means taxes on both imports and exports. Alongside this there will no longer be free movement of people (Chapman 2017). Of the UK’s total exports, £510bn, £220bn currently go to the EU (National office of statistics 2017) and so the loss of access to the single European market has the potential to have a drastic effect.
There are also a range of secondary effects that could be influenced by the decision to leave. Some scholars have argued that by simply leaving the free market there will be a significant reduction in the amount of foreign direct investment the UK receives, however the counter argument to this is that the reduction in the amount of money sent to the EU would outweigh this (Ebell and Warren 2016).
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has created a new style of uncertainty and attempted to test existing literature’s solutions against how management are choosing to act.
As Brexit is a novel occurrence there is an unusual range of potential literature to review. There is very little existing literature of purely based in Brexit, this study can be added to the nominal number of papers currently published. In order to grasp both the problem management are facing and its theoretical implications, the review of literature focuses on the economic predictions made, including which sectors will be affected before moving onto theoretical elements surrounding isomorphic pressures and solutions to uncertainty.
This novel occurrence has thus created a new area of institutional theory to study. While there is an abundance of academic works surrounding DiMaggio and Powell’s (1983) institutional theory and the affects of isomorphic pressure this paper can be theoretically significant in mapping out and institutional change that is counter to the norm, of relationship economies introducing formal institutions. (Gaffney et al 2014)
2. Literature Review
2.1 General Economic Predictions
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have a profound effect on the UK and Europe, with ripple effects been seen in all the major economies around the world (Cumming and Zahra 2016).
Since the vote happened there has been a buzz around the academic world, and the media alike, with predictions of how the economic profile will change within the United Kingdom. It has been predicted that GDP will fall between 1.5% and 3.7%, by 2030, compared to should the UK have decided to remain. This is coupled with a drop in real wages of between 2.2% and 6.3% leading to a drop in consumption overall of between 2.4% and 5.4% (Ebell and Warren 2016). However, these predictions were made just before the vote, statistical analysis of the fiscal situation at the start of the 2017 paints a more nuanced picture. While GDP increased by 0.6% the rate of consumer inflation rose to 1.6% and so the predictions are proving to be neither 100% true or 100% false (Kirby et al 2017).
The requirement for the UK is to now secure its own trade deals around the globe and as the deals struck through the EU fall to the wayside the influence of US business will become dramatically important. The US will continue to foster good relations with the EU due to the highly advanced technological skill and highly educated labour force (Baldwin and Lopez-Gonzalez 2015) and given the smaller market size there are strong concerns that the UK will not be able to achieve a deal that offers similar prosperity. The effect on businesses already in the UK should be of the greatest concern, with trade links the United States considered to be traditionally some of the most important and valued leading to both nations having world leaders in both managerial practises and technological innovation (Cumming and Zahra 2016; Bloom and Van Reenen 2010).
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relationship has opened up. Canada would be another potential commonwealth nation that could strike a deal with the UK, however the UK only represents 2.5% of total trade volume and Canada has recently struck a lucrative trade deal with the EU, so it is unlikely that they will be aggressive in terms of pursuing a deal with the UK (Cumming and Zahra 2016; Dempsey 2016).
The Bank of England director, Mark Carney, announced at the start of 2017 that it was the European Union that has more to lose in the wake of Brexit than the UK, but only if the Brexit was ‘hard’ (Swinford and Yorke 2017). As a statement this is a bold stance, but there is support in the form of a study conducted in the wake of the vote that found European banks had short fall run drops in stock prices greater than in the wake of the 2008 banking collapse when the voting results came in (Schiereck, Kiesel, and Kolaric 2016). This would obviously be a positive sign for UK businesses, especially with thoughts focusing on the kinds of concessions the European Union would be willing to make when negotiating a trade deal.
On the other hand, not all studies have suggested that the UK has such a strong position. Schiereck and Tielmann (2016) conducted a study on logistic companies based both on the continent and in the United Kingdom, measuring the value changes. While both sets of companies lost value, which is not uncommon in times of political ‘turmoil’, the average value lost in the UK was 10% while EU companies only lost 1%. This could be a signal to the international world that the UK is not the wisest investment post Brexit, especially given that the UK is the G7 nation most dependant on foreign direct investment (Lowendahl 2016).
While the nature of the beast is yet to be revealed academics and the media alike have long speculated about what ‘style’ the new trade deal will take. One of the possibilities is the system in place for Norway, touted by the labour party as one of the potential ‘of the rack’ possibilities (Wright 2017). This system involves membership to the European Economic Area, which gives free movement of people, labour, goods and capital as well as tariff free access to the single market. Alongside this there is inclusion in counter terrorism discussion and the ability to differ from the EU standard VAT rate. It is often described at
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This would be considered a ‘soft Brexit’ and would be likely to face a tough time in the commons as there is the requirement to accept all EU legislation and competition rules in relation to the single market, with acceptation given to agriculture and fisheries. Furthermore, there is no access to the customs union, which several MPs have been marketing for (Wright 2017) and no benefits from third party trade deals the EU makes. While this option is being advocated for it is believed that Theresa May has ruled it out due to how it’s a watered-down
version of the current arrangement (The Economist 2017).
In her impassioned, albeit content light, speech in Florence on the 22nd of
September 2017, Mrs May set out some more concrete points for managers to consider including a ‘transitional period’ to allow businesses and managers ‘welcome certainty’ in the short term. The overall message of her speech is the desire to find a ‘creative solution’ to the new challenges ahead and to implement a ‘new framework’ with regards to UK and EU relations. A bespoke deal is what the UK government seem to be gunning for. This could be possible, while not highlighted by the British government, due to the fact that the EU is under external pressure to make a deal with the UK and has shown reasonable flexibility in the past when making the bespoke deals that both Switzerland and Turkey have.
These deals are not a golden goose however, both were offered as part of the joining process to achieve entry into the EU, Switzerland voted to not join and retain this deal and Turkey’s political situation has led too little to no further progress. The EU’s position has long remained the same and there has been no hint of a transitional deal (Wright 2017). Further scepticism, about the likelihood of this being the path taken, will be shown from the ‘Hard Brexit’ supporters. As this would require the minutia of every sector being discussed and agreed upon there will have to be so many concessions from the UK that there would be little change from the current position.
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There is an interesting dynamic developing within the UK around how best to weather this storm. This is due to the drastically different affects that Brexit could have on different sectors. This will almost certainly feed into the strategy that has to be adopted in this new era for the economy. The knowledge based sector has long been a cornerstone of the UK economy and one which has excelled on a global level, in recent years considered to be essential to UK growth (Aldrick 2011). This is one of the sectors considered to be most at risk by the curb in immigration that is almost inevitable post-Brexit (Lowendahl 2016). There is clear literary evidence that curbing immigration negatively effects both foreign investment and entrepreneurial activity (Fairlie and Lofstrom 2015; Iriyama, Li and Madhavan 2010). It has been discussed previously about the negative effect in reduction of foreign investment, however there is the potential that lowered entrepreneurship could help already established companies and so could ease the pressure on companies who operate solely within the UK.
The knowledge based sector may be facing crippling issues effecting how the business functions and recruits new staff but there is hope in other sectors that Brexit will be a positive move. The industrial sector in the UK has long been in decline and it became a prominent issue during the Brexit discussions, there is a belief by some that leaving the EU will remove the restrictions that EU law places on industrial activity, in the form of restrictions on how much ‘state aid’ can be given to the industrial sector. In 2014 the UK spent 0.33% of GDP on this state aid (Crafts 2017). The strategy adopted by the industrial sector could go in two different directions due to the differing policies adopted. The UK could either use the industrial regulations as a negotiating issue, and agree to remain under current EEA guidelines, or adopt a world trade organisation system which would free up the restrictions on state aid (Crafts 2017).
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100 recipients received more than the bottom 55,000 (Greenpeace 2016) and so the new policy adopted post Brexit could drastically change that. This would allow farmers to adopt more aggressive production and expansion strategies creating competition in the market.
Interestingly there are rumblings that the affects could be of the same magnitude but negative in the wake of Brexit. After the referendum migrant labour fell by 30%, assumed to be due to the perception of hostility and compounded by the weakening of the sterling against the euro. If the new agricultural policy does not make provisions for this the strategy that would have to be adopted could be one of tightening and reduced production due to lack of labour force (Monbiot 2017). At this point it may seem that the impact predictions above shed no light on how Brexit will turn out and that you are being punished for reading a paper about Brexit. This is emblematic of the situation being discussed in boardrooms across the country. As time passes and the set date for the UK leaving the EU draws ever closer management are still in the dark as to what the new business environment will look like. This is generating untold uncertainty within the marketplace as CEOs do not know if they have built their house on the sand or the cliff. This uncertainty, however, can offer some new and unique theoretical insights for academia.
2.3 Theoretical Insight
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act, known as the ‘rules of the game’ forcing memetic, coercive and normative adoption of ‘best practise’ in the pursuit of legitimisation. (Deephouse 1996; Oliver 1991).
These forces are not measurable constructs, but their effects will allow for a measure of and isomorphic pressure changes. For example, movement towards homogeneity would indicate that isomorphic pressure has increased while an increased separation would suggest that the forces weaken. The theory of isomorphic pressures is a key tenant of new institutionalism which is a three-stranded area of study into the study of institutions (Hall and Taylor 1996) These three strands all dictate different theories around whether structure is the
influence on agency or whether the actions of organisations shape structure (Hay and Wincott 1998). The debate will continue to rage between sociological; in which that institutions shape organisations, rational choice; where organisations all reach the same conclusions, and this creates in institutions or historical which blends to the two (Hall and Taylor 1996; Scharpf 1997). This study cannot
measure changes cause due to Brexit because the future environment cannot be seen.
As shown above, there are a huge range of possibilities as to how Brexit will turn out and this study is unfortunate to be taking place before any concrete plans have been made, however there is another phenomenon that has been seldom seen in history, let alone in the modern era.
Brexit is an unusual instance of institutional change because of how the process is designed, the vote happened and so the UK decided to leave but this did not throw the UK out bright and early on the morning of the 24th, there is a regulatory
purgatory that the nation must wait in. The decision on its own created
uncertainty about the future trading conditions, but in the meantime created a wholly unique circumstance of massive uncertainty in anticipation of institutional change. It is a finite period of uncertainty, which makes it a unicorn in terms of studying uncertain markets. There is no literature on the subject and so the research team have dubbed this “Fixed Term Uncertainty”.
These conditions are likely to never be repeated, making this an area of
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through adoption of best practise or passing bills through the commons and lords, meaning that the changes in isomorphic pressure are slow gradual pushes over time and uncertainty is limited. In this recent era there has been a surge of uncertainty, the likes of which are unprecedented without an economic collapse and thus there is no literature on how isomorphic pressures will react. This is the principle area of study for this paper and so research question one is:
R.1= “How does fixed term uncertainty affect isomorphic pressure?”
2.4 Strategic Problems
In the short term, however, prior to any agreement being reached Brexit will still be affecting the behaviour and strategy of managers. Maitland and Sammartino’s (2015) study into the effect of personal heuristics on managerial perceptions of the same problem showed how personal perceptions can vary greatly. They studied the perception of risk surrounding FDI into a potentially hazardous nation, singling out how the sovereign state is the largest producer of uncertainty for MNEs. This uncertainty comes from the identification and assessment of any politically hazardous environments and drawing conclusions without necessarily having all the required information (Alvarez and Barney 2005).
Roger Cartwright, in his text ‘mastering the business environment’ (2001) lists the main concern of politicians in the UK as; The minimum wage, Trade Union
Reforms, Health and Safety at work, consumer protection, environmental protection, transport and distribution and employment legislation. When viewed through the lens of Brexit it was announced the week of the 10th of September
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With the mixed debate on how best to deal with uncertainty, the orientation of businesses will come under scrutiny in the immediate future. Chin, Hambrick and Trevino (2013) have shown how the heuristics of individual managers translates into the orientation of the company and thus potential shifts could be triggered following Brexit. Business orientation, if correctly aligned with comprehensive strategy and the business environment can be a source of competitive advantage (Miles and Russell 1995). Universally businesses are required to understand and prepare for pressures that their business environment could apply. This could be in the form of economic turbulence or fluctuations in competition but anticipation and preparation from a key part of long term strategy (Haperberg 2001; Matanda and Mavondo 2001). One of globalisation’s key outcomes has been the splitting of the supply chain all around the world, making this a huge area of vulnerability when it comes to long term planning for post Brexit and a key area of uncertainty (Christopher 2005).
Conventionally use of heuristics has been viewed in the past as a limitation of managerial decision making and perception (Camerer and Lovallo, 1999;
Levinthal and March, 1993). Maitland and Sammartino (2015) argue that in times of uncertainty heuristics allow managers to focus on specific cues and apply their knowledge and experience for a positive outcome. This in turn allows the
reduction of the issue into a ‘small world representation’ (SWRs) of the issues, akin to the micro- macro style of deal assessment defined by Mahama and Chua (2016). This process allows the manager to create a view of the new environment in their own ‘mind’s eye’ (Gavetti and Levinthal 2000). The theory then holds that managers more in tune with their past experiences or received wisdoms will be able to construct much deeper SWRs and thus perceive and position the company best for a wider range of issues (Maitland and Sammartino 2016). The issue of how best to approach uncertainty in the business environment has led down many paths of research. Maitland and Sammartino’s theory of small world representations aims to show how conventions and experience can still be applied to the irrational or uncertain but there are other scholarly lines of thinking suggesting that criticisms of heuristics remain true. Dinur’s (2011) study, in essence, redesigned the old adage “desperate times call for desperate
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uncommon ways of thinking. This could be especially true in the case of Brexit, in which common sense has offered no insight into what the future holds for the UK. Dinur states that the lasting effect of globalism has been a push towards
increasing task ambiguity in the work place and an increased reliance on the speed and adaptability of managers. This has resulted in less success being found in common sense approaches. This theory would then extend to Brexit, as no one can be certain of how the business landscape will develop. Alongside this the delay in triggering article 50 and the uncertainty in the negotiating stance, stemming from the general election, have only fed into the perceived uncertainty in the British economy (Begg 2017). Dinur (2011) would argue that those
managers who rely on instinct, intuition and creativity will be positioned best to create a competitive advantage when the new business landscape presents itself.
Uncertainty, by its very nature, is hard to define academically as it is completely subjective. Durbach and Stewart (2012) grouped it into two broad categories, defining uncertainty as either internal or external. Internal is about the accuracy of the weight given to factors in the decision-making process while external is the uncertainty of the predicted outcome, when scored against a specific criterion. In terms of Brexit both groups will be factors. The external uncertainty will be a long process that will mostly play out after the deals with Europe have been made, however internal uncertainty is an interesting topic of research as many high-level managers will have already decided what areas the economy is likely to
strengthen or weaken post-Brexit. Whether this internal uncertainty has pointed the majority of managers into one stream of similar thought or the uncommon sense theory is taking hold would be a further area of interest. While not showing any changes taking place it would be a prime example of isomorphism at work. Literature points to a wide range of possible strategic solutions to institutional uncertainty and this study will not be able to prove which is the ‘best’ route to take. There is a plethora of options available and thus this research question will be multi-tiered:
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R.2.1=” How accurate is managerial perception in the wake of Brexit?” R.2.2= “Should managerial heuristics be trusted in uncertain environments?” Above is a mind map of all the potential constructs that will be affected in the new post-Brexit trade agreement and thus areas of business that will create the most uncertainty for managers with regards to long term planning and business orientation. These constructs were drawn from the literature review above but will not be used to inform the coding process as order to fit in line with Gioia et al’s (2013) style of grounded coding mentioned below. As the most discussed topics of literature it is expected that these will be the common themes of discussion for management and thus it will be possible to gauge the parity between academic perception of business priorities and which areas are the most important in the real world.
To assist in the coding process NVivo 11 was used to allow for easy
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3. Methodology
When researching how best to conduct this study the seminal research methods text ‘Business Research Methods’ (Cooper and Schindler 2014) to establish how best to undertake this investigation. This research would be considered interpretivist, under the Monette et al (2005) theory, due to the nature of managerial perception not being a constant among businesses and so the key to establishing theory from this research will be to understand the nuances between businesses and between industries (Newman 1998).
Furthermore, the inductive nature of this research is shown from the literature offering general posturing on perceptions and actions under uncertainty and seeing how this plays out in the real world, moving from specific theories to the generalities offered by the businesses (Bryman and Bell 2011). In order to gather the largest data, set available a text analysis of interviews in a selection of the largest media sources will be conducted to garner qualitative interview data with a reputable sample size.
Within this the data collected will be qualitative, due to the constraints of not being able to canvas large numbers of businesses and receive any applicable data. The data would not be applicable because the intricacies of strategy and understanding therein cannot be translated to a canvas style collection with later data analysis. Furthermore, the concepts of institutional theory and isomorphic pressures are not topics directly discussed in the media by management and are concepts that are measurable using the whole data set to establish themes and theme changes. Alongside this any correlation in strategy change, or reasons behind said changes, would offer a greater insight into developing a theory around how Brexit is affecting the decision making of UK CEOs (Flick 2011).
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to clearly denote reporting of facts from their editorials and so articles from both contain very little bias. In order to gather as much data as possible the Time and the Guardian were included, in a UK government poll these two publications were seen as the most left and right leaning, reputable publications (YouGov 2017). For this same reason but with the inverse reputation the so called ‘red tops’ and The Daily Mail were left out of this study in order to maintain as reputable source material as possible (Dochartiagh 2007).
In line with Dochartiagh’s (2007) assessment, only sources where there are direct quotes were considered, to avoid misconstruction. Alongside this the quotes for the Financial Times and the Economist were sourced directly from the website, using the search feature. The Guardian and the Times were sourced using lexis library as their search features did not include the ability to specify time frame. To maintain consistency, all 4 searches were conducted using the terms “Brexit” and “referendum”.
There were also further exclusions in the study from sources featured in the four media outlets selected. A decision was taken to exclude the opinion of small businesses featured in several publications under, usually under a special billing such as the guardians ‘small business focus’. There were excluded for a similar reason to that title, they have a limited focus and limited impact on the business environment. This is not to say they aren’t important, as every U.S. politician will tell you “small business is the backbone our out economy”. There were excluded because they are too small to be truly affected by isomorphic pressure change with a drastic measurability, but also because the focus was on their opinion pre-Brexit, with very little follow up afterwards.
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As this study consists of a text-analysis, rigorous and transparent data collection is vital to the overall validity of the results (Bansal & Corley 2011). As this data has been collected from publications and not directly from the horse’s mouth, there is less stress on the protection of secretive or personal statements. There are other risks that this style of data collection could raise. As almost all the statements and quotes are loaded with opinion:
“At the moment I’m not saying I need to put more capital into the UK relative to anywhere else” – John Stanton CEO Weir Group (Pooler 2016)
“We’re using lower prices to stimulate stronger demand than we would’ve seen this time last year in terms of volumes and we expect that to continue to be the
case,” – Michael O’Leary CEO Ryanair (Wright 2016)
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Coding, as a process of qualitative data analysis, has long been a stalwart of the social science sector but there has been much debate, internally within the community, about the validity and standards applied by researchers during the coding process. Glazer and Strauss (1967) introduced the world to the idea of axial coding, analysis that looks at the content of interviews and quotes and analyses both the underlying sentiment and more theoretically the underlying themes of documents. Strauss and Corbin (1998) then solidified the concept of the grounded theory and many of key tenants of this theory were used in this study. The grounded theory starts with the conceptualizing of different sections of the data, and labelling them in ‘codes’. The names of these codes can be
researcher designed or done ‘in vivo’ which draws the labels from the data themselves (Glazer and Strauss 1967).
It is this in-vivo coding that also prevents confirmation bias, in the process of data collection each publication had all potential quotes identified and placed into an external document, this created twelve initial documents, with a document per time period. After this a final document was compiled for each time period. This process also allowed for careful compilation of results, making sure to avoid repetition that would influence the results. A further step was then taken to increase the rigor of this study. During 1st order coding, an effort was made to
create an element on anonymity in the later stages. This can be seen in the results with quotes referenced to time codes. This was done to prevent
confirmation based around what an individual “would have meant”. This prevents both individual reputation and company reputation from being factored into the analysis. All source documents have been retained in case of use of this data set for further study or any discrepancies are identified.
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overall message of this passage?” which allows for the creeping influence of confirmation bias, so this study was conducted using line by line or smaller codes. This is because large proportions of the quotes covered differing topics, timelines, or current plans as exampled below.
Ms Gadhia CEO of Virgin Money "We would think much harder about additional recruitment and probably slow down new recruitment because we're really focused on
building the business we've got today rather than developing new product lines,"
In this example is can be seen that Ms Gadhia references the current focus of Virgin money post Brexit and speculates about future plans within one quote. Alongside Strauss and Corbin’s approach the coding in this study was informed from the works of Gioia in both 1996 with Thomas and 2013 with Corely and Hamilton. The key departure from the Strauss methods is the introduction of a data structure. In the 1st phase of coding the participants, in this case being CEO,
management and public relation statements, are treated as knowledgeable agents. In practise this means the research team considers that “people in organizations know what they are trying to do and can explain their thoughts, intentions, and actions.” (Gioia et al 2013). From this the decision was taken to draw the 1st order codes from ‘informant terms’ aka in vivo terms mentioned
above. This process does not include any style of grouping, so the large number of initial codes was to be expected.
Next these first order codes are grouped by similarity, leaving the research team with a more concise overview of the topics discusses in the data. The
categorisation is done through comparing each node against itself but then also against the rest of the data (Strauss and Corbin 1998)
Coding is the analytical instrument of choice for interviews but has been co-opted for this study because the quotes have been drawn from interviews and press releases. In the grounded theory Strauss and Corbin (1998) and Gioia et al
(2013;1999) both note that a hundred 1st order codes is not unusual, however the
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Overall time period one, 1st of January 2016 until the 24th of June 2016 created
414 individual codes, time period two, 25th of June 2016 to the 31st of December
2016 produced 667 and the final time period 1st of January 2017 to the 24th of
June 2017 produced 333 initial codes. This time period was chosen to study the uncertainty mentioned in the literature review. By starting 6 months before the vote and continuing round until a year after the vote, this analysis covered what could be dubbed ‘Peak Brexit’, this time in which CEOs and businesspeople were discussing the realities and logistics of Brexit the most.
The establishment of 1st order codes will allow for an axial coding of these into a
set of distinct 2nd order codes that will cover the groups of data discussed. From
here the overall themes of discussion can be assessed. (Glazer and Strauss 1967) These themes are the traditional end goal of grounded theory, but this data set covers a vast array of topics and so while the overall themes are certainly interesting, there are other elements within the second order themes that shed some light on how management are dealing with uncertainty.
Given the time period covered here, in order to analyse whether there has been any institutional change or and subsequent changes in isomorphic pressure, the frequency of discussion points and how that changes will be the initial phase of analysis. This requires that the topics be converted from pure numbers, seen the table below, into percentages. These percentages will then be cross referenced with the other time periods in order to establish changes in discussion theme. As Brexit was a media darling, in the second time period (P.2) there was a significantly higher number of business interviews and business statements than in time periods one and three (P.1 and P.3). Accounting for this not only will overall frequency be analysed there is also ground for looking at patterns and disparity between groups.
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follow the steps above to find all the sources this study is not about the individuals behind the quotes and so focus is moved into the patterns of discussion (Eysenbach and Till 2001).
4. Findings
After conducting the 1st order coding 38 different codes were identified, see T.1.
This number is in-line with Gioia’s (1998) assessment of the standard range in data coding (30-50). The number of sets is high due to the vast amount of material gathered for this research, with a final total of 1341relevant codes. Some code groups featured in the 1st order phase but were discarded, due to
lack of relevance to the subject. T.1 below shows all the initial first order codes, with the frequency across all three time periods.
T.1 1st Order Codes P.1 P.2 P.3 Example Quote
Company Opinion Against Brexit 27 4 1
“On balance we think it would be best for our customers and clients for the UK to stay in the EU” – P.1 Company opinion neutral 12 18 9 “We respect the decision of the British people” - P.2 Company Opinion for Brexit 1 0 0 “Believe that JCB can prosper just as much outside of Europe”- P.1 Confidence, negative, consumer 2 8 3 “The EU referendum outcome has led to further consumer uncertainty” P.2 Confidence, Negative, business 5 0 2 “Global headwinds are finally hitting business confidence” P.1
Current economic impact negative 9 18 20
“Most still see Brexit having an adverse effect on the business environment” P.3
Current economic impact neutral 3 31 22 “The UK economy seems remarkably resilient” P.3
Current economic impact positive 0 5 16
“A much-needed, short term boost for our economy, particularly our manufacturers” P.3
Current personal impact negative 1 22 6
“We did experience weaker demand in the run up to and immediately after the referendum” P.2
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EU membership general distain 4 2 0 “The EU, that has so little regard for Britain’s interests” – P.1 EU membership general support 19 2 4 “We believe the case for Europe has never been stronger” – P.1 EU membership Negatives 7 3 1 “The world outside of Europe is expanding fast than Europe” P.3
EU reform 10 0 0
“Britain’s membership is not sustainable without significant change” – p.1
Job Hiring slowdown 11 2 4
“Job creation has slowed, and employers are becoming more cautious” P.3
Job Increases 2 4 2
“Look at the number of lawyers that will be needed. Cyber security is a growth area and jobs in media and communications have come as a result of Brexit” P.2
Job Losses (missed or creation) 3 8 2 “Thousands of jobs that would have been created will be lost” P.2 Jobs move to EU 5 9 9 “More resources on the ground in Luxembourg” P.2
Jobs stay UK 0 5 3
“We will maintain a large presence in London, Bournemouth and Scotland” P.2
Leadership 3 5 3 “It’s a risk for any business leader to back Brexit” P.1
London Future decline 5 0 3
“Would severely undermine the prospects of the city if London were to lose” P.1
London Future improvement 3 0 1 “The opportunity for London to be a global centre of excellence” P.3 London Future same 2 3 4 “But none of these financial centres will be able to challenge London” P.3
Other Concerns 2 6 2
“The violent events in the US, France and Turkey add to those
uncertainties” P.2
Personal Against Brexit 8 19 2 “I don’t welcome Brexit” P.2 Personal for Brexit 11 7 2 “We should embrace this wholeheartedly” P.2
Personal Neutral 3 9 3 “I don’t see any major crisis” – P.2 Political Recommendations 6 20 21 “We need a situation no less favourable than now” P.2
Political Predictions 9 16 7
“Negotiations around the UK’s new relationship with Europe will be driven more by politics than economics” – P.2
Predicted Economic Impact Negative 38 50 26 “Trade with the EU would be harder than it is today” – P.1 Predicted Economic Impact Neutral 23 28 6 “nominal GDP could well be little changed” P.2 Predicted Economic Impact Positive 5 19 9 “British businesses are surprisingly confident about the short term” P.3
Predicted personal impact negative 14 13 0
“Companies like ours could find ourselves in a regulatory vacuum” – P.1
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of the global multinationals that happen to be listed in the UK” P.3 Predicted personal impact positive 1 6 1 “In the short term there will be some opportunistic deals to be done” – P.2 Statement Reasoning 5 0 0 “I think business has a responsibility to speak up on economic matters” P.1 Strategic Change adaptability 7 43 22 “Kering is confident in its ability to adapt to this new environment” P.2 Strategic Change to Conservatism 8 29 14 “Adopt a conservative outlook for the rest of the year” P.2 Strategy Change Generic 5 17 6 “We may need to make adjustments to our legal structure” P.3 Strategy to Change post deal 2 15 18 “Our decision in the long term will be based on the negotiations” p.2
Strategy unchanged 7 42 3
“We are confident our long term strategic focus will continue to deliver strong returns for our shareholders” P.2
Trade Deal Logistical problems 5 12 10 “Securing a good outcome, hard in every sense” P.3
UK Government Support 0 0 2
“We are getting tremendous levels of support from the UK government” P.3
UK Government Scepticism 6 9 11
“The people negotiating the deal don’t have a clue what they’re doing” P.2
UK Negatives 4 4 5
“In terms of attractiveness, in terms of political stability the UK goes down” P.3
UK positives 7 18 8 “On balance we still have great infrastructure” P.2 Uncertainty Causes Negative effect 9 19 9 “Heightened uncertainty weighs on business investment and hiring” P.3
Uncertainty causes positive effect 1 3 0
“The unwelcome uncertainty and the impact on the pound has some pretty immediate fringe benefits for the oil and gas sector” P.2
Uncertainty has caused negative effect 20 8 3 “Uncertainty from Brexit has put a lot of these decisions on hold” P.1 Uncertainty is negative 13 32 10 “The longer the uncertainty goes on the worse it is for business” P.2 Uncertainty is positive 2 1 0 “Insecurity is fantastic” P.1 Uncertainty med-long 4 3 1 “The long-term outlook is very uncertain” P.2
Uncertainty short-med 6 6 2
“There remains a degree of uncertainty through the end of the year” P.2
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first order code leadership was discarded from any further study, as it was sparsely discussed and offers little to no insight.
The first, and most crucial theme is Strategic Change. All the mentions of strategy were grouped together so that the change in managerial opinion could be measured to allow for the vicarious measurement of changes in isometric pressure when uncertainty is introduced into the business environment. This study is set over the preceding and subsequent months of the Brexit vote, how this environmental impact will and has affected strategy is impossible to predict because of the nature of
uncertainty. The measure of open discussion about strategic change does not offer full insight into the true nature of discussions in corporations situated in the UK but one could suppose that outward discussion of changes in strategy would indicate that the issue has moved through the discussion stage and is being at least seriously contemplated.
Managerial Market analysis is the next theme, built around the concept of the impression that management and CEOs gave of their own perception of the current market as a whole but also as to how it is affecting their own company. Further categories that cover the analysis of the current market were added to offer a rounded view of how managers interpretation is altered when the market becomes uncertain and offer insight into whether this perception should be trusted to be a navigating force through uncertain seas.
Strategic Change to
Strategic Change adaptability Strategy to Change post deal
Strategy Change Generic
Strategy unchanged
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Confidence, negative,
Confidence, Negative, business Current economic impact Current economic impact
Current economic impact Current personal impact
Current Personal Impact
Current Personal Impact UK Negatives
UK positives
Job Hiring slowdown
Managerial Market Analysis
Predicted Economic Impact
Predicted Economic Impact Neutral
Predicted Economic Impact Positive
Predicted Personal Impact Negative
Predicted personal Impact Neutral Predicted personal Impact positive
Predicted Economic Impact
Jobs move to EU Jobs stay UK
London Future improvement
Job Increases
Job Losses (missed or creation)
London Future decline London Future same
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The next group is in a similar vein but based in the future tense. By incorporating all 1st order codes into two tense based groups it allows the research team to
analyse the prerogatives of management in uncertain conditions and insight into how these prerogatives change over time, which shows how the continuation of uncertain conditions and potential light at the end of the tunnel shapes the managerial mindset.
The effect of uncertainty is a hotly debated issue within academia and one of the 2nd order codes for this study. The discussion, in the public eye, about uncertainty
is an interesting one and comparison of elements of this category against the future and current perceptions of the market above will further hone in on the accuracy of CEO perception. The predictions of the duration of uncertainty can also be cross referenced with future predictions of prosperity and the current realities of the market.
The disparity between the perception of the individual and the company will allow for conclusive support or refutation of Chin et al’s theory of managerial heuristics’ influence over the company and also add to the debate surround Maitland and
Uncertainty Causes Negative effect Uncertainty causes positive effect Uncertainty has caused negative
Uncertainty is negative Effect of Uncertainty Uncertainty short-med Uncertainty med-long Uncertainty is positive
Company Opinion Against
Company opinion neutral Company Opinion for Brexit
Personal Against Brexit
Personal for Brexit Personal Neutral Individual v Company
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Sammartino’s (2015). Theory would hold that there should be parity across the categories for the theory to have a general applicability. Alongside this, if any relative accuracy can be drawn between the current and future market analysis, the influence of managerial heuristics on “SMR”s would prove to vital in fixed term uncertainty.
The final two groupings are the political aspects of the conversation surrounding Brexit and its effects. They are not the primary focus of the study but do offer interesting supplementary context. The changes in the conversational relevance of the EU will test how inward facing British managers really are, answering how important does management think the EU really is? How does the importance and workings of the EU, which is still a huge market, change when the country you’re based in decides to leave the bloc?
The relevance and levels of discussion around the UK government should show the impression the government has created over the 18 months in question and also allow us to assess how much businesses crave solidity from the institutions within a country. Brexit was not only an event that created economic shock but political shock as well. The changes in how relevant the UK government is in economic discussions and predictions exemplifies whether management see political stability and support as crucial.
EU membership Benefits EU membership general EU membership general EU membership Negatives EU reform EU Conversational Relevance EU Law Distain
UK Government Conversational Relevance
UK Government Support UK Government
Political
Political Predictions
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4.1 Overall Results
T.2, above, shows just how drastically managerial perception is affected by the introduction of uncertainty into the environment. In the pre-Brexit era of market certainty, that so many managers most certainly yearn for, the primary focus was on how the future market would unfold. This could almost be described as
bracing for impact, CEOs were doing their best to put out into the media how they perceived the Brexit would affect the market, with most of them suggesting that it would be negative on both personal and general economic levels, as
demonstrated in T.5 below.
The drastic changes moving into P.2 show a surprising level of uniformity. The relevance of the EU is obviously reduced to mutterings but that aside the
remaining six categories group into two groups. The first is discussions about the market, both current and future combined with how this will impact strategy, which are the elements of discussion that have a direct and tangible impact on the business. The range between categories reduced massively from 15.44% to 0.94%. Alongside this the remaining groups with sizeable levels of discussion all
7.59% 22.88% 19.63% 11.52% 23.82% 29.60% 26.96% 22.88% 20.25% 14.40% 11.29% 7.79% 16.49% 1.25% 1.56% 6.81% 8.93% 15.89% 16.23% 8.93% 5.30% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% p.1 p.2 p.3
T. 2 Overall Results
Strategic Change Managerial Market Analysis
Future Market Analysis Effect Of Uncertainty
EU Conversational Relevance UK Government Conversational Relevence
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saw uniform reduction in discussion, the range of these groups did increase by 0.27%, the uniformity of the reductions has interesting implications for the change in the strength of isomorphic pressure in uncertain markets.
5. Discussion
The effect of isomorphic force change takes and even more interesting turn when the change between P.2 and P.3 is factored in. While the first transition between time periods shows that isometric forces get stronger, through the consolidation of ideas and topics in the market place, the second transition shows that these pressures continue to get stronger. The three time categories can be labelled in terms of how isomorphic pressure has affected the conversation; P.1 is pre-uncertainty and thus the discussion is spread out unevenly; P.2 shows uniformity as pressure rises in the new uncertain environment, which consolidates which areas management focus on into two groups: Tangible issues and solutions and Intangible ideas and suggestions.
Intangible ideas, in this context, are the relevance of the UK government, opinions of the individual and company and the effect of uncertainty. All three share the property of being completely out of the remit of control of CEOs. Finally, in P.3, the most important areas from both tangible and intangible rise to prominence, Managerial Market Analysis and UK Governmental Relevance. The disparity between the two groups shows a surface level of compartmentalisation; That CEOs focus gets grounded and these supplementary issues, while still discussed to not see the levels of discussion that the areas that impact business directly do. Within the UK Government relevance there is a shift in tone, not universally but from some, about how much support should be coming from the institutions to the people and whether legal entities’ opinions need to be
reaffirmed.
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“It is crucial that the business community steps up and supports the country during these times of economic change” P.2
“The referendum was a political shock not an economic shock” P.2
“Business people do not want politicians to completely and utterly wreck the hard work they’ve done for years and years and that is effectively what’s happened”
P.2
While there is mixed opinion of the government and their capability in steering the ship through this storm, discussion of the government and their impact steadily rose over time to become the prominent issue within this secondary category. This falls in line with institutional theory (DiMaggio and Powell 1983) because as uncertainty has caused the institutional environment to be called into question, management began to slowly demand more and more clarity from the
government “There is no real clarity on what future trade agreements will be reached” – P.2 Trade Deal Logistical Problems “It is imperative that the government gets on with it” P.2 – Political Recommendations.
The tangible issues, made up of strategic change, managerial and future market analysis are all concepts that the CEO or manager can comprehend, plan for and have a direct impact on. These concepts take prominence in P.2, as their reality changes the discussion begins to focus on what exactly is changing, how it will be changing in the future and which strategies would be best suited to this new environment. As the increased isomorphic pressure becomes a lasting reality, there is further gravitational pull towards purely being able to understand how the market has changed.
The effect discussed above is even more prominent in the more popular of the two groups, while there is a disparity of 2.29% between the lesser groups in the intangible group, only 0.42% split the discussion of strategic change and future market analysis.
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What these overall results reveal is that uncertainty has a grounding effect on the perception of management and that the long these conditions continue the strong this effect gets. For both tangible and intangible concepts the increases
isomorphic pressure forces management to remove their notions of how the market will react to uncertainty and focus on the areas in which they can impose their control or use their will to regain the stability that they so crave.
“As a CEO, what you prefer in situations like this is quick clarity, quick stability so everyone knows the rules, everyone can adapt to the situation on the ground” –
P.2
5.1 Measurement of Isomorphic pressure change via strategic change
The effects described above can also be seen within the tangible concepts group. T.6 (below) maps out more specifically how CEOs suggested their business plans would change moving forward after Brexit. P.1 has a similar pattern of random discussion as P.1 in T.1. Given the low chances management, and large swathes of the public, gave to a vote to leave.
“[We were] Shocked and stunned by the news” – P.2. 0.00%
10.00% 20.00% 30.00%
SC MMA FMA EoU UKGR IvCO
T.3 P.1
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%SC MMA FMA EoU UKGR IvCO
T.4 P.2
0.00% 10.00% 20.00% 30.00% 40.00%SC MMA FMA EoU UKGR IvCO
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P.1 is a prime example of consistent isomorphic pressure and lack of uncertainty in the macroenvironment, with 1.57% difference between the largest and smallest groups. P.2 starts bright and early on the morning after a leave victory, T.6 shows how that single event, added uncertainty and, increased the Isomorphic pressure in the UK. In the vague U shape that can be seen for P.2 businesses began to cling together like penguins sheltering from a storm, as more business either declared that their strategy would be unaffected “We’re holding our nerve on this strategy as it is the right one for M&S” -P.2 or that this would be a time of
changing the footprint and style of the company “Kering is confident in its ability to adapt to this new environment” P.2as more and more CEOs began to choose between these paths, the rest of the market began follow suit.
In P.3 the effect shown in the general discussion again bleeds through into how strategic change. Unsurprisingly, the levels of conservatism stay the same as that group of management prepare to batten down the hatches and continue
“adopting a prudent strategy to protect their strong financial position”-P.2. What we do see is an explosion in the idea that strategy will have to change once the trade deal reveals itself. This is not necessarily the adoption of adaptation as a plan, but the notion that change will have to occur shows on the surface that the new environment may have to be adapted too but underneath the current of isomorphic pressure. As established this pressure has only got stronger and so management have moved away from the idea that they will be fine even if other change. Whether it be conscious or subconscious, it could be said that
management are aware of the increase in mimetic forces and so are delaying 1.83% 6.74% 6.85% 2.09% 4.55% 4.36% 1.31% 2.66% 1.87% 0.52% 2.35% 5.61% 1.83% 6.58% 0.93% 0.00% 2.00% 4.00% 6.00% 8.00% P.1 P.2 P.3
T.6 Strategic Change
Strategic Change adaptability Strategic Change to Conservatism
Strategy Change Generic Strategy to Change post deal
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decision making until the clouding effects of uncertainty are removed from the market, in the form of a concrete trade deal with the EU.
The review of literature offered up a handful of solutions for the introduction of uncertainty into the business environment, this study has not only shown which are the most popular of these methods in the UK market place. These findings support Dinur’s (2011) theory of adaptation under uncertain conditions being the optimum method for success. The results are even more emphatic in supporting this theory if one views the concept, mentioned above, of changing in the new environment as a style of adaptation. This does not mean that Maitland and Sammartino’s (2015) “SMR” view is not still considered another approach and only time will tell which strategy was the wisest move, however theory dictates that the success, or failure, of these strategy changes will be adopted by both this generation and the next generation of management. This information will then be used as source material influencing decision making during the next period uncertainty rears its head.
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5.2 Managerial Perception
In this case study there were two dimensions upon which managerial perception was assessed. Firstly Chin, Hambrick and Trevino’s (date) theory of managerial
heuristics affecting a company’s actions and secondly Maitland and Sammartino’s (date) SWR method of navigating uncertainty. When combined these can be viewed as a two-stage test of managerial perception, initially measuring whether opinion of Brexit factored into Company opinion of Brexit. Subsequently it can be perception can be viewed in terms of accuracy, overall a combination of 2nd order themes can
offer answers to R.2, R.2.1 and R.2.2.
It is plain to see in T.7 that there is not even a slight correlation
between the stances taken on and individual and company level. There are several factors that come into the
stances that companies take when it comes to political issues, even by the admission of one CEO “It’s a risk for any business leader to
back Brexit” P.1 and so this study cannot
completely discredit Chin et al’s (date) theory. Even so, while it cannot be said that all the factors have been measured,
conversely there is no evidence that managerial opinion of Brexit factored into company opinion.
0.00% 2.00% 4.00% 6.00% 8.00% Company Opinion Against Brexit Company opinion neutral Company Opinion For Brexit Personal Against Brexit Personal Neutral Personal for Brexit
T.7 Indiviual v Company Opinion
P.1 P.2 P.3 2.36% 2.82% 6.23% 0.79% 4.86% 6.85% 0.00% 0.78% 4.98% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% P1. P2. P3.
T.8 Managerial Market Analysis
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Given that managerial opinion is not factoring in, accuracy of managerial perception comes to the foreground, as in R.2.1. and R.2.2. T.8 and 9 are stripped down versions of the overall 2nd order codes that they’re named after. By stripping away
the extraneous data sets of speculation about the movement of jobs and business confidence the remaining categories are the contrasting predictions and assessment
of the economy as a whole.
In T.2 it was shown how isomorphic pressures increased, as an
unexpected side effect of institution shaking
uncertainty, across both time periods, leading to the isolation of the two main issues within the categories of tangible, influenceable outcomes and the more abstract intangible ideas.
These tables are diagonally applicable e.g. P.1 in Future market analysis (FMA) is a prediction of the market in managerial market analysis (MMA) p.2 and 3 and offer insight into the accuracy of managerial perception when influenced by uncertainty. Interestingly P.2 in FMA and P.3 in MMA show elements of the uniformity effect seen in the transition from P.1 to P.2 in the overall results, although there is not response similar to that seen in T.2.
What these tables show is at least a partial answer to research questions 2.1 and 2.2. From this data it appears that managerial perception of the environment is not accurate enough to be relied upon. This, consequently, undermines the key principle of Maitland and Sammartino’s (date) theory, in that while management might use their heuristics to inform their decisions their perception is not accurate enough to allow for an accurate creation of a SWR.
While this table does show the lack of accuracy in managerial perception, there is a glimmer of hope that can be drawn from this, in that, despite overwhelmingly
9.95% 7.84% 8.10% 6.02% 4.39% 1.87% 1.31% 2.98% 2.80% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% P.1 P.2 P.3
T.9 Future Market Analysis
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negative predictions there was not a market collapse and, so it could be proffered that managerial perception is negative as a precaution despite lack of immediate evidence of negative impact.
“It hasn’t collapsed because you haven’t left the EU yet” – Michael O’Leary P.2
5.3 Global Mindset
As mentioned in the findings, these results indicate that there is a grounding effect of lasting increased isomorphic pressure drawn from uncertainty in the institution. Institutional theory dictates that the actions of companies are mimicked as a product of this pressure, what this study shows is that it also affects the thought process and speech patterns or CEO and upper
management. Most CEOs like to market themselves as trail blazers, forward thinkers, leaders in the field but the evidence on display in this study is that that pressure seeps into the mindset of management and causes a kind of hive mind effect, producing and shaping similar thoughts that influence decision making. Prior to this study the literature around institutional theory generally focuses on how the institutions and professions form the formal and informal rules of the game within a market and this creates isomorphic pressure. (Hall and Taylor 1996) This normative standard means that memetic practises are adopted, much like Darwin’s theory of evolution, when a certain strategy, practise or business plan is well received in the market it is adopted by other companies and thus a new standard is created.
What this study adds to that field is that not only do isomorphic pressures create similarity in business practise; they actually affect the thought process and discussion points of CEOs and management. Over time it seeps into the mind of upper management, it acts like an indoctrination. That is not to say that
isomorphism has this prominent an effect constantly, but when the institution is rocked with an uncertainty earthquake the increases pressures force a
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“We love the rule of law in England, our folks love working in London. You have all the infrastructure - the pipes the plumbing, it’s all there” – P.2
This cult-like hive mind can be seen (T.10 left) in the
comparison of whether
management think the UK is a positive or negative place to do business. Despite the doom and gloom of Tables 8 and 9 in which future predictions of negativity were abundant this negativity did not trickle down into opinion. While there is correlation, causation cannot be asserted because there are a variety of possible influences. There can even be an element of economic Stockholm Syndrome, not wanting to insult the market because you’re trying to make the best of it.
“The UK has been, is, and will continue to be a good market for investors” – P.2 This general state of mind supports what this study proposes, that isomorphic pressures affect every part of business, including the cognition of CEOs. Due to the Gioia (1999) style of in-vivo coding that was adopted for this study, this is an organic conclusion that literature would not have been able to predict. There are, however, studies based around how institutional change can be a precursor to the ‘global mindset’ outlook being adopted by an institution and thus being adopted as a new business practise.
Gaffney et al (2014) developed a theory around this ‘global mindset’ that they observed in Emerging market economies, deriving from Peng’s (2003) study into how the shift from the relationship based economies into more formal institutions creates a shift that impacts companies, through the inclusion of law into the marketplace which in turn creates regulated competition, removing some of the advantage to simply knowing the right people. As well as this there is a significant impact for the individual within this system, who is now subject to a whole range of new isomorphic pressures as business norms and what is considered
‘legitimate’ vastly changes (Alhstrom & Brunton, 2010; Brunton et al 2010).
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The theory of the global mindset is supposedly that there is a mindset one adopts, either as firm or as an individual, where the focus becomes on being a ‘global’ company, looking at opportunities on this scale and seeking out ‘global independence in order to become the proverbial “Multinational enterprise” (MNE) that is the darling of business textbooks worldwide. (Kedia & Mukherjj: 1999; Jennet 2000). The framework offered by Gaffney et al (2014) supposes that “institutional change and shifts in the underlying culture of emerging markets promotes and reinforces global orientation at the individual and organizational level.”
The idea of ‘going global’ was a cornerstone of the arguments that the UK should leave the European bloc and seek out independent international success. As mentioned in the literature review increased trade with India, Canada and the rest of the commonwealth were thought to be simple ways for the UK to prosper outside of the EU and these theories were commonplace in the media and management before the results came in on June 25th, 2016 (Mohan 2016).
“Britain should be doing so much more and everything possible to improve its relationship with India” – P.1
What we have found is that where theory would suggest that British managers should be turning to face the world, having ‘thrown off the shackles’ of the EU and decided to be ambitious, viewing the whole world as the new potential market the exact inverse has happened. T.10 (above) shows how overall, they view the UK as a good and prosperous place to do business and sentiment towards the EU as a market to export to still remained buoyed through P.2 and 3, despite the decision to leave.
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T.11(left) is the breakdown of the 2nd order code of
the same name. This shows what was already alluded to in T10. An interesting dynamic of this table is EU reform. Prior to the vote it was one of the most discussed issues about the EU, with management on both sides of the vote admitting that they felt the EU was a flawed system. Even so there was discussion of how the UK benefitted from membership of this flawed bloc.
“I’d be hoping we stayed in and try to change it from the inside”- P.1. “Being part of the EU helps to underpin rather than undermine our global
presence and trade ambitions” – P.1
Despite CEOs stressing that there will still be trade with the bloc all discussion of it fell to below 2% of the total conversation the moment the UK left.
This sudden lack of concern does not fit with how a group of firms should, in theory respond to a change in institutions that should allow them to trade with the world with greater ease. These codes were established in-vivo, so there is not a presence of any of these quotes in the data set to justify having even a first order code, within this research talk of the outside world becomes seemingly non-existent the moment the UK votes to leave.
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difficult this new trade deal was going to be and in general about their competence.
“We need an ambitious Brexit deal that maintains strong EU and UK economies” – P.3
“Something has got to give, and the government must start showing its support” – P.3
There are a few possible motives for this, there is the potential for the idea of a transitional period being taken in as a government policy after being demanded by businesses leading to a barrage of other request, akin to giving one child a sweet in front of a whole class. While motives can only be supposed what is
unavoidable is that there is a clear inward focus from management in the wake of the Brexit vote. This inward facing attitude can be seen in the overall results, with the focus slowly but surely becoming the current state of the UK market.
Adding to this fledgling area of literature, this study puts forth the idea that while Gaffney’s (2010) theory applies to emerging economies the inverse is true for established economies. All mention of expansion from companies is either with reference to moving currently domiciled employees back into the EU “It looks like there will be more job movement than we’d hoped for” -P.3 or that FDI in the form of expansions would now be switched to a country within the EU in order to gain access.
This section of discussion has been developed from the in-vivo codes but still offers a partial answer to the sub questions suggested in the methodology; is there a connection between the type of identity a CEO uses and their
identification of the new business environment? The coding method used 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%
UK Government Support UK Government Scepticism Political Recommendations Poltical Predictions Trade Deal Logistical problems
