Table of contents(7 chapters)
Purpose – This study focuses on the relationship between local governments and public sector joint ventures (JVs). Public sector JVs are separate administrative entities that undertake public service activities on behalf of local governments. The aim of this study is to examine the vertical management control packages that are used by local governments to control the relationship with their public sector JVs.
Design/methodology/approach – Two case studies have been conducted in two public sector JVs, owned jointly by more than 20 local governments. The analysis of the two cases is informed by an integrated conceptual framework describing how transactional and relational factors influence control, trust, and risk in the context of public sector JVs.
Findings – The case studies provide a nuanced understanding of the interplay between the vertical management control packages, trust between the parents and the public sector JVs, and risks as perceived by the local governments. The case findings not only reveal how local governments struggle with adequate outcome control but also highlight how and why they rely on behavioral control. A related finding is that while the probability of poor business performance does not have a significant impact on the design of the vertical control packages, the social impact of failure has the potential to create a sense of urgency with regard to changes in the design of vertical management control packages.
Originality/value – This study adds to the literature on interorganizational relationships by providing insight into the use of vertical management control packages in the specific, but relevant, setting of public sector JVs.
Purpose – The purpose of this study is to investigate whether a firm’s cost structure (specifically, its cost stickiness) is associated with environmental, social, and governance (ESG) sustainability factors of performance and disclosure.
Methodology/approach – This study uses MCSI Research KLD Stats (KLD) and Bloomberg databases for the 13-year period from 2003 to 2015 in constructing ESG performance and disclosure variables, respectively. The authors adopt the general cost stickiness models from Anderson, Banker, and Janakiraman (2003) and Banker, Basu, Byzalov, and Chen (2016) to perform the analysis.
Findings – The authors find that a firm’s level of cost stickiness is positively associated with certain sticky corporate social responsibility (CSR)/ESG activities (both overall and when separately classified as strengths or concerns) but not with other nonsticky CSR activities. The authors also show that the association between cost stickiness and ESG disclosure is incrementally stronger for firms with CSR activities classified as sticky. Furthermore, the authors provide evidence that ESG disclosure is greater when both cost stickiness and the degree of sticky CSR activities increase. The authors show that when cost stickiness is high and CSR activities are sticky, management has incentives to increase CSR/ESG sustainability disclosure to decrease information asymmetry.
Originality/value – The findings present new evidence to understand how management integrates cost management strategies with various dimensions of sustainability performance decisions and show that not all ESG activities are equally effective when it comes to cost stickiness. The authors also demonstrate that increased sustainability disclosure helps reduce information asymmetry incrementally more when both costs are sticky and CSR activities are sticky.
Purpose – This article examines the operating lease cost stickiness characteristics exhibited by retail firms.
Methodology/approach – Anderson, Banker, and Janakiraman (2003) laid important groundwork for the study of asymmetric cost behavior or cost stickiness. The authors found that a firm’s selling, general, and administrative costs (SG&A) costs increase more with a sales increase than those expenses decrease with an equivalent sales decline. Their findings provided avenues for many studies with differing focal variables; however, extant research has not explored the degree of cost stickiness associated with operating lease expenses. Recognizing the nature and magnitude of operating leases and the competitive and changing environment for retailers, this study adapts Anderson et al.’s (2003) model to provide insights into operating lease stickiness. The study uses archival financial data from 1997 through 2016 for specialty retail firms in testing the lease cost stickiness hypotheses.
Findings – The results of this study supported the hypotheses that operating lease expenses exhibit stickiness behavior and are relatively stickier than future lease commitments for retail firms.
Originality/value – By focusing on retail firms and related lease expenses, this study provides insights into the increasingly competitive retailer environment. This article’s findings will enhance understanding of how specialty retail firms’ managers react to reduced revenues. Finally, given recent authoritative pronouncements affecting accounting for leases and the significance of leasing transactions, research providing insights into cost behavior and managerial actions stands to make an important contribution to literature and practice.
Purpose – Over the last 15 years, research provided insight into several firm- and country-level determinants of asymmetric cost behavior. Their implicit premise builds on rational trade-off decisions between holding costs of idle resources and adjustment costs. The authors build upon these findings and establish an irrational component – sunlight-induced managerial mood.
Methodology/approach – The authors rely on the established cross-sectional model of asymmetric cost behavior to investigate short-term resource adjustment decisions and extend it by an exogenous proxy for managerial mood (i.e., daily sunshine hours per US county-year).
Findings – Beyond rational trade-off and planning decisions, the authors provide large-sample evidence on the influence of irrational mood on cost decisions. In accordance with research in psychology showing that higher serotine levels, attributable to sunlight, contribute to happiness and optimism, the results suggest that sunlight-induced mood increases the level of asymmetric cost behavior. Managers from firms headquartered in counties with a higher level of sunlight less likely react to a decrease in sales by reducing idle resources. Instead, they seem to be more optimistic about future demand conditions and, thus, more inclined to “sit out” downturns in firm activity until sales recover.
Research limitations/implications – Although the mood proxy is truly exogenous in the setting, the authors are unable to establish causality as the actual cost management decisions could not be observed directly. Moreover, the analyses are limited to the county level, whereas weather undoubtedly oftentimes exhibits intra-county variation.
Originality/value – This study is the first to establish an irrational antecedent of managerial resource adjustment decisions, which adds to the cost stickiness literature by demonstrating the important role of deliberate managerial decisions for corporate cost behavior.
Purpose – The authors investigate the interpretations of senior university decision-makers on three questions: (1) What constitutes “relevant” research? (2) In what ways is the relevance of research typically measured? and (3) What alternative ways might be adopted in measuring the relevance of research?
Design/methodology/approach – This exploratory study adopts an inductive approach, informed by data collected from semi-structured interviews with senior research-related university leaders and archival sources in five Australian and eight US universities.
Findings – There is considerable convergence in the conceptualization as well as the operationalization of the notion of relevance between the Australian and US universities participating in this study. The evidence supports a relational rather than currently prevailing transactional approaches in operationalizing the concept of research relevance. This relational approach emphasizes the importance of stakeholders, their needs and expectations, and their engagement in the articulation of measures that demonstrate the relevance of research in both the short and longer terms.
Research limitations/implications – The evidence is primarily based on the views of university senior management drawn from a relatively small number of universities leading to questions about the representativeness and generalizability of the findings. Moreover, the findings have been informed by leaders at the most senior hierarchical levels. Although consistent with the aim of the study, the views of university leaders provide only one view on our research questions.
Originality/value – The authors provide a conceptual view of research relevance from the perspective of one pivotal group – university senior management – that has been largely and surprisingly overlooked in discussions of the relevance of academic research.
Purpose – This study examines how managerial ability relates to employee productivity using a broad and generalized sample of US firms.
Methodology – This study employs a generalized sample of firm-years from all industries between 1980 and 2013.
Findings – By contending that managers differ in their ability to synchronize management processes and human capital in ways that enhance employee productivity, the authors provide evidence showing that more-able managers are associated with higher employee productivity. In addition, the authors find that high-ability managers moderate the negative relation between uncertain environments (high-technology firms) and employee productivity. Furthermore, the authors decompose employee productivity into employee efficiency components and employee cost components. The authors find a significant positive association between managerial ability and the employee efficiency component, but do not see a significant association between managerial ability and the employee cost component.
Value – The results contribute to the understanding of employee productivity by showing the relation between managerial ability and employee productivity.