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Book part
Publication date: 10 February 2010

Hemantha S.B. Herath, Wayne G. Bremser and Jacob G. Birnberg

The balanced scorecard (BSC) allows firms to place importance on both financial and nonfinancial performance measures in four perspectives for developing and implementing…

Abstract

The balanced scorecard (BSC) allows firms to place importance on both financial and nonfinancial performance measures in four perspectives for developing and implementing corporate strategy and performance evaluation. The BSC literature however provides minimal insight on how to set targets, how to weigh measures when evaluating managers and the firm, and how to resolve conflicts that arise in the BSC process. Researchers have attempted to fill these gaps using two contending approaches. In particular, Datar et al. (2001) uses an agency model to select the optimal set of weights and more recently Herath et al. (2009) develop a mathematical programming–based collaborative decision model to find the optimal (or approximately optimal) set of target and weights considering inputs from two parties. In this article, we apply the Herath et al. (2009) model to a detailed BSC example. We demonstrate how the collaborative BSC model can be implemented in Microsoft Excel by practitioners to minimize BSC conflicts. Finally, we discuss how the model facilitates alignment and a culture of open reporting (information sharing) around the BSC that is necessary for its effective implementation.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-84950-755-4

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Book part
Publication date: 9 December 2013

Christopher Mackin

Political institutions and contemporary workplaces operate according to different rules. The seeming contradiction between these two spheres, one democratic and the other…

Abstract

Purpose

Political institutions and contemporary workplaces operate according to different rules. The seeming contradiction between these two spheres, one democratic and the other something else, presents an opportunity for productive speculation about the possibilities for reconciliation. The purpose of this paper is to provide a guide for future research investigation of this perennial topic.

Design/methodology/approach

The discussion of whether the workplace can catch up with the democratic achievements of political life requires an understanding of the status quo, the prevailing frames or metaphors that govern our understanding of organizational life. Four metaphors are put forward to describe the prevailing spectrum of thought. In addition to metaphors, analogies are introduced as an interpretive tool to help guide the imaginative transition between political and workplace domains.

Practical implications

Democratic political cultures are supported by structures and institutions which encourage the expression of individual and collective voice. Workplaces, comprised of the same citizens who participate in the governance of communities, do not, with some important exceptions, offer the same opportunities for democratic participation. If a general analogy between political and workplace sphere is found persuasive, it should be possible to import and adapt democratic traditions from the former to the latter.

Originality/value

Discussions of workplace democracy often suffer from a certain naiveté, a bias against structure and toward informal consensus. Insofar as democratic workplaces are by definition smaller scale than political communities, this bias is defensible. This paper concludes however by asserting certain minimal “acid test” challenges to those who would promote the goal of workplace democracy.

Details

Sharing Ownership, Profits, and Decision-Making in the 21st Century
Type: Book
ISBN: 978-1-78190-750-4

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Book part
Publication date: 21 November 2014

Takao Kato

This chapter is aimed at filling two important gaps in the large literature on high-involvement work system (HIWS). First, the existing literature tends to focus on North…

Abstract

This chapter is aimed at filling two important gaps in the large literature on high-involvement work system (HIWS). First, the existing literature tends to focus on North America and Western Europe, and detailed information on HIWS outside of the two regions (especially Asia) is still limited. Second, while there is a large body of quantitative evidence, the literature is relatively scant on detailed account of exactly how specific HIWS practices are implemented in the real workplace. This chapter draws on our extensive field research at firms in Japan, the United States, and Korea, and presents real-world examples of HIWS of firms in Japan, Korea, and the United States. Our detailed account of the implementation of HIWS in the three countries points to an intriguing process of transnational diffusion of HIWS. Japanese firms as early experimenters of HIWS posed a challenge to U.S. firms in the global marketplace, resulting in the trans-pacific diffusion of HIWS which is modified to the U.S. corporate culture. Due to its geographical proximity and historical connections to Japan, Korean firms were initially heavily influenced by Japanese HIWS. However, with the rising link to the United States and Europe, Japanese influence appears to have been waning, and interest in U.S. style HIWS and European-style state-mandated works council has risen, suggesting that a hybrid model may be emerging in Korea.

Open Access
Article
Publication date: 7 April 2021

Canh Minh Nguyen

The purpose of this study is to investigate the moral licensing effect of other in-group members' organizational citizenship behavior (OCB) on focal employees'…

Abstract

Purpose

The purpose of this study is to investigate the moral licensing effect of other in-group members' organizational citizenship behavior (OCB) on focal employees' organizational deviance through moral self-concept. This paper also examines the moderating role of in-group identification in the mediated relationship.

Design/methodology/approach

The multilevel path analysis and bootstrapping technique are employed to analyze the findings of a sample of 340 employees in 56 workgroups in Vietnam.

Findings

The results demonstrate that moral self-concept mediates the positive relationship between other in-group members' OCB and focal employees' organizational deviance. Furthermore, the findings indicate that in-group identification strengthens the indirect effect of other in-group members' OCB on focal employees' organizational deviance via moral self-concept.

Practical implications

The findings suggest that managers should be aware of the potential negative consequences of OCB and the drawbacks of in-group identification in group contexts. In addition, practitioners should proactively prevent other in-group members' OCB from resulting in employees' organizational deviance.

Originality/value

This is the first study to examine the moral licensing effect of OCB on organizational deviance through the moral self-concept mechanism and the moderating role of in-group identification in this mediated relationship.

Details

Journal of Asian Business and Economic Studies, vol. 28 no. 3
Type: Research Article
ISSN: 2515-964X

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Article
Publication date: 18 June 2020

Ryan Flugum, Joel Harper and Li Sun

This paper aims to examine the effect employee performance has on subsequent corporate cash holdings.

Abstract

Purpose

This paper aims to examine the effect employee performance has on subsequent corporate cash holdings.

Design/methodology/approach

The authors utilize panel data estimation, including an instrumental variable approach, to identify the relation between employee performance and subsequent corporate cash holdings. These panel data consist of 11,087 firm-year observations over the period 1992 to 2015.

Findings

The authors document a positive and statistically significant relation between firm employee performance and subsequent cash balances. A one standard deviation increase in employee performance is associated with an increase in cash holdings ranging from 1 to 2 percent. The findings support the view that firms seek to accommodate the preferences of better performing employees, thereby requiring greater levels of cash. This positive relation is most evident among firms with low bond ratings and firms with low managerial ability – characteristics that are indicative of a firm's ability to access capital markets.

Originality/value

Better corporate governance of the firm is commonly associated with lower levels of cash. The findings of this paper, however, suggest that holding greater levels of cash may be a consequence of corporate efforts to accommodate the needs of their employees. The predictive content of employee performance is orthogonal to existing determinants of corporate cash holdings shown in the literature. Furthermore, this paper shows the potential for firm cash balances to be an alternative and transparent measure that signals better employee performance and more socially responsible firm behavior.

Details

International Journal of Managerial Finance, vol. 17 no. 1
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 19 July 2018

Takao Kato and Antti Kauhanen

The purpose of this paper is to provide novel and rigorous evidence on the productivity effect of varying attributes of performance-related pay (PRP) and shows that the…

Abstract

Purpose

The purpose of this paper is to provide novel and rigorous evidence on the productivity effect of varying attributes of performance-related pay (PRP) and shows that the details of PRP indeed matter.

Design/methodology/approach

In doing so, the authors exploit the panel nature of the Finnish Linked Employer–Employee Data on the details of PRP.

Findings

The authors first establish that the omitted variable bias is serious, which makes the cross-sectional estimates on the productivity effect of the details of PRP biased upward substantially. Relying on the fixed effect estimates that account for such bias, the authors find: (first, group incentive PRP is more potent in boosting enterprise productivity than individual incentive PRP; second, group incentive PRP with profitability as a performance measure is especially powerful in raising firm productivity; third, when a narrow measure (such as cost reduction) is already used, adding another narrow measure (such as quality improvement) yields no additional productivity gain; and fourth, PRP with greater power of incentives (the share of PRP in total compensation) results in greater productivity gains, and returns to power of incentives diminishes very slowly.

Originality/value

Much of the empirical literature on PRP focuses on a question of whether the firm can increase firm performance in general and enterprise productivity in particular by introducing PRP and if so, how much. However, not all PRP programs are created equal and PRP programs vary significantly in a variety of attributes. This paper provides novel and rigorous evidence on the productivity effect of varying attributes of PRP and shows that the details of PRP indeed matter.

Details

Journal of Participation and Employee Ownership, vol. 1 no. 1
Type: Research Article
ISSN: 2514-7641

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Book part
Publication date: 7 December 2021

John T. Addison and Paulino Teixeira

Using data from the 2013 European Company Survey, this chapter operationalizes the representation gap as the desire for greater employee involvement in decision-making…

Abstract

Using data from the 2013 European Company Survey, this chapter operationalizes the representation gap as the desire for greater employee involvement in decision-making expressed by the representative of the leading employee representative body at the workplace. According to this measure, there is evidence of a substantial shortfall in employee involvement in the European Union, not dissimilar to that reported for the United States. The chapter proceeds to investigate how the size of this representation gap varies by type of representative structure, information provided by management, the resource base available to the representatives, and the status of trust between the parties. Perceived deficits are found to be smaller where workplace representation is via works councils rather than union bodies. Furthermore, the desire for greater involvement is reduced where information provided the employee representative on a range of establishment issues is judged satisfactory. A higher frequency of meetings with management also appears to mitigate the expressed desire for greater involvement. Each of these results is robust to estimation over different country clusters. However, unlike the other arguments, the conclusion that shortfalls in employee involvement representation are smaller under works councils than union bodies is nullified where trust in management is lacking.

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Book part
Publication date: 7 December 2021

Guido Friebel, Matthias Heinz, Ingo Weller and Nick Zubanov

Using data from a retail chain of 193 bakery shops that underwent downsizing, we study the effects of two types of downsizing announcements – closure or sale to another…

Abstract

Using data from a retail chain of 193 bakery shops that underwent downsizing, we study the effects of two types of downsizing announcements – closure or sale to another operator – on sales in the affected shops, and how these effects are moderated by job security perceptions. On average, sales in the affected shops go down by 26% after a closure announcement and by 7% after a sale announcement. Sales decline more sharply in shops where employees had higher job security perceptions before the announcement. Our findings are consistent with psychological contract theory: a breach of an implicit contract promising job security in exchange for work effort results in a reciprocal effort withdrawal. We rule out several alternative explanations to our findings.

Details

Workplace Productivity and Management Practices
Type: Book
ISBN: 978-1-80117-675-0

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Article
Publication date: 29 April 2021

Dongnyoung Kim, Inchoel Kim, Thomas M. Krueger and Omer Unsal

This article aims to examine the influence of chief executive officer (CEO) internal political beliefs on labor relations. Prior research has paid little attention to…

Abstract

Purpose

This article aims to examine the influence of chief executive officer (CEO) internal political beliefs on labor relations. Prior research has paid little attention to channels through which the internal personal value system of managers enhances or deteriorates firm value. The authors provide evidence consistent with CEOs adopting labor policies impacting incumbent management–labor relationships based upon their political ideologies.

Design/methodology/approach

The research design tests the impact of CEO political ideology on labor relation using an individual CEO’s personal information and firm affiliation, employee lawsuit information, financial contributions to candidates and committees, and firm financial information. The authors compiled a sample of 4,354 unique CEOs from 2,558 US firms that are covered by ExecuComp and used 18,404 firm-year observations for the study’s analysis. A Heckman two-stage estimation process is used to address a potential sample selection bias and match the requirements of exclusion and relevance criteria.

Findings

Findings indicate that firms led by Republican-leaning CEOs are more likely to be sued by their employees, especially for violating union rights. Moreover, the findings of the study uncovered that Republican-leaning CEOs have fewer cases dismissed or withdrawn compared to Democrat-leaning CEOs and are also less likely to settle court cases prior to trial. Results indicate that Republican-leaning CEOs are associated with more substantial decreases in firm value compared to Democrat-leaning CEOs when facing labor allegations. The authors further show that firm value is lower for all firms facing litigation, with the magnitude of the decrease being more pronounced for firms with Republican CEOs.

Research limitations/implications

Firm affiliations are identified using ExecuComp, employee lawsuit information from the National Labor Relations Board (NLRB), financial contributions to candidates and committees from the Federal Election Committee (FEC) website, and financial information from Compustat. To the extent that these websites are inaccurate, such as financial contributions being underreported, the findings reported here may understate the relationships reported in this article.

Practical implications

The authors capture CEO political ideology using political contributions. There may be other means, such as physical space and personal effort, by which one could also estimate the party and intensity of CEO political ideology. This information is unavailable.

Social implications

While presidential politics has four-year cycles, managerial finance is a daily activity. While political affiliation is most clearly measurable through monetary contributions, one can see implications of manager political leaning through their relationship with labor throughout the election cycle.

Originality/value

The analyses of this study indicate that labor unions are more likely to sponsor lawsuits and stronger allegations in firms with Republican CEOs and show that withdrawal, settlement or dismissal rates are lower when firms are managed by Republican managers, resulting in higher subsequent legal costs and potentially damaged employee morale. Also, this paper investigates whether lawsuits have a greater negative consequence on firm value when the firm is run by a Republican CEO. The authors find that lawsuits significantly lower Tobin's Q for Republican-led firms compared to companies with Democratic and apolitical CEOs. The authors further show that firm value is lower for all firms facing litigation, with the magnitude of the decrease being more pronounced for firms with Republican CEOs.

Details

Managerial Finance, vol. 47 no. 9
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 18 February 2021

Beibei Yan, Özgür Arslan-Ayaydin, James Thewissen and Wouter Torsin

Prior research shows that managers with lower ability release less accurate management earnings forecasts and have more earnings restatements, lower earnings persistence…

Abstract

Purpose

Prior research shows that managers with lower ability release less accurate management earnings forecasts and have more earnings restatements, lower earnings persistence and lower quality accruals estimations. Yet, whether the impact of managerial ability (MA) on financial reporting can be extended to the narrative section of firms' financial disclosures needs to be theoretically and empirically examined. The authors theorize in this paper that managers with low ability opportunistically inflate the tone to increase outsiders' perceptions of their ability. The authors also examine the relation between MA and the informativeness of tone to predict future firm performance and explain investors' reaction at earnings announcement.

Design/methodology/approach

The authors collect 24,000 earnings press releases of 1,149 distinct firms between 2004 and 2013. Content analysis is used to proxy the tone of the disclosures. The authors use the score developed by Demerjian et al. (2012) to measure MA. The authors then employ panel data regressions to examine the impact of MA on disclosure tone.

Findings

The authors find that low-ability managers inflate the disclosure tone to positively influence labor market's perceptions about their ability. This effect is magnified for younger and shorter-tenured managers, for firms with more intense monitoring and during bear markets. The authors also find that the tone of earnings press releases of low-ability managers results in a lower stock price reaction. Supplementary analyses show that the results do not only hold for the tone, but also can be extended to other linguistic features such as the numerical intensity and the readability of earnings press releases. The results are robust to alternative library specifications and other corporate disclosures such as CEO letters to shareholders or 10-K filings.

Research limitations/implications

The paper shows that managers worry about how firm performance influences the labor market assessment of their ability. In particular, the authors find that managers of low ability are willing to opportunistically manipulate the content of corporate disclosures to improve this perception and build their reputation.

Originality/value

The authors contribute by providing theoretical and empirical evidence on how managers attempt to steer assessments of their ability by manipulating corporate disclosures. Consistent with prior business research suggesting that one's ability is a key feature that affects managers' propensity to engage in ethical practices, such as tax avoidance or manipulation of financial information, this study shows that less able managers tend to inflate the tone of the earnings announcements and that this ability-driven bias is likely to be magnified by career concerns.

Details

Asian Review of Accounting, vol. 29 no. 2
Type: Research Article
ISSN: 1321-7348

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