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How do organizations respond to negative feedback regarding their innovation activities? In this chapter, the authors reconcile contradictory predictions stemming from behavioral learning and from the escalation of commitment (EoC) perspectives regarding persistence under negative performance feedback. The authors core argument suggests that the seemingly contradictory psychological processes indicated by these two perspectives occur simultaneously in decision makers but that the design of organizational roles and reward systems affects their prevalence in decision-making tasks. Specifically, the authors argue that for decision makers responsible for an individual project, responses given to negative performance feedback regarding a project are dominated by self-justification and loss-avoidance mechanisms predicted by the EoC literature, while for decision makers responsible for a portfolio of projects, responses to negative performance regarding a project are dominated by an under-sampling of poorly performing alternatives that behavioral learning theory predicts. In addition to assigning decision-making authority to different organizational roles, organizational designers shape the strength of these mechanisms through the design of reward systems and specifically by setting more or less ambiguous goals, aspiration levels, time horizons of incentives provided, and levels of failure tolerance.

One of the main issues which has been of concern to corporate managers, both before the crisis and much more so during it, is that of corporate governance (Aras, 2008). Indeed for the last 25 years corporate governance has attracted a great deal of attention. Early impetus was provided by Anglo-American codes of good corporate governance.¹ Stimulated by institutional investors, other countries in the developed as well as the emerging markets have established a code normally based on these established codes for their own companies. Supra-national authorities like the OECD and the World Bank did not remain passive and developed their own set of standard principles and recommendations. This type of self-regulation was chosen above a set of legal standards (Van den Berghe, 2001) and, after some big corporate scandals, corporate governance has become central to most companies. It is understandable that investors' protection has become a much more important issue for all financial markets after a number of very visible and significant failures and scandals. Investors are demanding that companies implement rigorous corporate governance principles to achieve better returns on their investment and to reduce agency costs. Most of the times investors are ready to pay more for companies to have good governance standards. Similarly a company's corporate governance report is one of the main tools for investor' decisions. Because of these reason companies can not ignore the pressure for good governance from shareholders, potential investors and other markets actors.

This article looks at why BMW rewards employee mistakes.

This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.

The strategy really aims to bring about big cultural change, challenging accepted practice in the name of improving business within today's highly competitive marketplace.

This paper gives executives and researchers a brief example of rewarding employee mistakes.

Fighting wrongdoing through whistleblowing is on the horizon. This year a whistleblower protection bill was introduced in Parliament, the media have prominently featured incidents where failure of whistleblowing has occurred, and prominent UK scholars and leaders have endorsed it. The USA was at this same juncture 10–15 years ago, when many felt the large institutions in US society were beyond effective control. Whistleblowers were seen as a vanguard which could directly correct wrong‐doing and indirectly facilitate organisational ‘right‐doing’. Early reporting of wrongdoing by organisation insiders who had good evidence would lead to more expedient and less expensive correction of the problem. Encouraging whistle‐blowing would also indirectly deter wrongdoing because those considering wrongdoing would know fellow employees were watching and willing to talk. The resulting state legislation, enacted by three‐quarters of the states, is similar to the proposed UK legislation in many important respects.

The purpose of this paper is to explore the extent to which organizational learning is recognized through performance management systems as contributing to organizational effectiveness and competitive advantage.

It reviews several pieces of research, employing a wide range of methods, including: content analysis of managers’ reflections; questionnaires completed by managers and mentors; a large-scale survey involving ethnography, interviews and questionnaires; and analysis of documents from professional bodies and management delivery centres.

Genuine integration of individual and organizational goals or transfer of learning from the individual to the organization is not evident. Few qualitative measures of organizational performance are employed. The impact of metrics such as IIP or EFQM on organizational effectiveness is nor discernible. Management learning and development is rarely measured even when it is encouraged by the organization. There is a clear divide between research, teaching and learning and workplace practice. Performance management systems create perceptions of unreliability and inequity.

Espousing the value of learning and learning to learn, measuring them accurately and rewarding them with meaningful changes to working life can only improve organizational effectiveness. Research into the few organizations that have successfully embraced triple loop learning in their development of managers may offer a template for transformational learning to sustain competitive advantage.

Management development processes have been successful in developing individuals but less successful in achieving organizational development. This paper offers new insights into that gap and the omissions in the metrics by which performance is measured.

In complex environments, the use of technology to enhance the capability of people is commonplace. In rapidly changing and often unpredictable environments, it is not enough that these human-automated “teams” perform well when events go as expected. Instead, the human operators and automated aids must be flexible, capable of responding to rare or unanticipated events. The purpose of this chapter is to discuss the Framework of Automation Use (Dzindolet, Beck, Pierce, & Dawe, 2001) as it relates to adaptive automation. Specifically, our objectives are to: (1) examine a number of factors that determine how people can effectively integrate their activities with their machine partners in fluid environments and (2) consider the implications of these findings for future research.

The present paper aims to question the rationale of paying a high remuneration to executives who are presiding over loss-making companies. The neoclassical wage model asserts that the remuneration of executive directors is positively related to their company’s financial performance. However, evidence suggests that executives can obtain a higher level of personal compensation regardless of how the company performs.

The relationship between executive remuneration and performance for viable but loss-making Bombay Stock Exchange (BSE)-listed companies has been studied for 2009-2011. The paper examines the determinants of the level of executive remuneration as well as discerns the strength of the remuneration–performance relationship, both at the overall and across various board hierarchical levels, using the JM sensitivity and HL elasticity models.

Results for univariate and multivariate analyses highlight that both the remuneration–performance sensitivity and elasticity are weak. Further, factors such as ownership structure, risk and industry class moderate the remuneration–performance elasticity. It seems that it is only the lower rung of executive directors whose cash remuneration gets adversely affected with the performance of the company.

The paper offers valuable insight into the complexities relating to the remuneration performance relationship by putting forth a multi-theoretical perspective. The fact that executives are drawing a whopping remuneration while their companies continue to report disappointing results suggests that a catalytic role has to be played by the government so as to ensure that executive remuneration policies and practices are consistent with the company’s long-term objectives and control environment.

Creativity and innovation have been buzzwords of managerial discourse over the last few decades as they contribute to the long-term survival and competitiveness of firms. Given the non-linear, causally ambiguous, and intangible nature of all innovation-related phenomena, management scholars have been trying to uncover factors that contribute to creativity and innovation from multiple lenses ranging from organizational behavior at the micro-level to strategic management at the macro-level. Along with important and insightful developments in these research streams that evolved independently from one another, human resource management (HRM) research – especially from a strategic perspective – has only recently started to contribute to a better understanding of both creativity and innovation. The goal of this chapter is to review the contributions of strategic HRM research to an improved understanding of creativity at the individual-level and innovation at the firm-level. In organizing this review, the authors rely on the open innovation funnel as a metaphor to review research on both HRM practices and HRM systems that contribute to creativity and innovation. In the last section, the authors focus on more recent developments in HRM research that focus on ambidexterity – as a way for HRM to simultaneously facilitate exploration and exploitation. This chapter concludes with a discussion of future research directions.

Based on the institutional background of mandatory requirement of performance-based executive equity incentives, this paper aims to investigate the impacts of executive equity incentives, vesting periods and vesting performance conditions on corporate innovation.

The empirical analysis is based on the detailed data of equity incentives in China’s listed companies from 2006 to 2014, the Tobit method is implemented to estimate the regression coefficients, and the instrumental variable (IV) approach, Heckman two stage regression, propensity score matching and difference-in-difference models are adopted to solve the problem of endogeneity in several robust tests.

This paper documents that equity incentives and vesting periods are significantly and positively related to corporate innovation measured by R&D investment and patent applications, yet requirements on vesting performance impede corporate innovative activities. Specifically, compared with non-equity incentive companies, the R&D investment and the number of patent applications of equity incentive companies are 40 and 46.2 per cent higher, respectively. A one year increase in equity incentive duration can correspondingly increase the R&D investment by 15 per cent and the patent applications by 18.3 per cent. However, a one standard deviation increase in industry-adjusted ROE target reduces corporate R&D investment by 5 per cent and the patent applications by 8.39 per cent. The main empirical findings still hold after several robust tests.

This paper confirms that the impact of performance-based compensation system on corporate innovation depends on its structure. Specifically, the empirical findings suggest that equity incentive plans being correctly designed can enhance corporate innovative activities, but myopic managers will damage the corporate innovation.

This paper investigates the influence of equity incentive structure on equity incentive effect based on the institutional background of mandatory requirement of performance-based executive equity incentives. It provides an opportunity to understand the mystery of equity incentives, which helps to enrich the structure of equity incentive theoretically. The empirical evidence confirms the importance of tolerating short-term failure and extending the horizon of managerial decision-making on promoting innovation. Overall, the research indicates that only well-designed equity incentive plans can promote innovation, which contributes to regulators and practitioners to form a rational understanding of the premise of equity incentives in promoting innovation and provides a reference for their decision-making.

This paper aims to explore the role corporate personality has played in the battle between executive remuneration and fairness, which is linked to rewarding performance. This paper also aims to explore some of the policy measures taken by the UK Government to curb excessive remuneration especially in the banking sector.

This paper employs an analytical approach. An analytical approach relies on the collection of new information upon which to base any conclusions. The research supports the arguments being made in the paper.

The paper shows how the ruling in Salomon, over a century ago, that cemented corporate personality and limited liability in the UK, is hampering many of the measures aimed at rewarding performance and promoting fairness in relation to executive remuneration.

Limited research has been done on executive remuneration. Since executive pay has recently hit the media agenda, this paper purports to tackle a current and ongoing issue.