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Corporate governance is the problem with the FogDog case Corporate governance refers to the relationship among the board of directors top management and the shareholders which in turn determine the direction and performance of the corporation The theory that most applies to this case is Stewardship theory which proposes that because of their long tenure with the corporation insiders senior executives tend to identify with the corporation and its success Since there was a lack of experience within the firm there was a lack of identity among insiders Corporate governance is the problem in the FogDog case In the beginning there was a high identity with the firm to raise large amounts of capital gain first mover advantage and win by might muscle and brawn There was a general consensus on this vision with the shareholders board and top management However during April 1999 there was a shift in the board which led to a disconnect between the board and directors These new board members had no tenure with the company Top level management wanted no interference from the board In addition to these issues several new inexperienced board members were eager to contribute however board did not listen to them During April 2000 the chief operating officer had less than two years experience with the company and most senior director Since new board members had little tenure with the company a new business model was adopted too become more aggressive This led to the firm losing its competitive advantage to Global Sports and at the end ultimately the board made up its mind to sell the company The senior management still wanted to keep the company but the lack of stewardship theory ultimately led to the company being sold to its competitor
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