Search results

The purpose of this paper is to argue for the need to reconcile managerial and economic approaches of the firm. Strategic management seems to be the perfect playground for this.

The paper shows many divergences between the economic and managerial approach of the firm but also highlights many topics where both approaches come in handy.

The authors underline the topics and theories in strategic management with the greatest benefits of mixing economics and management can be expected and they echo the papers in this special issue.

The paper comes as a warning for those using only managerial perspective without listening to the caveats and ideas put forward by the economic approach of the firm.

The paper offers an agenda of how economics and management could be reunited, and shows the relevance of doing so to both theory and practice.

Examines the implications for the economics of the firm of the development of total quality control and just‐in‐time management which are becoming increasingly important for intrafirm resource allocation. Shows the Alchian and Demsetz and transaction cost perspectives on the firm and work organization to be theories of a particular management style rather than a general economics of the firm. Develops an alternative and more general framework on the basis of the firm as a strategic framework, defined in terms of the knowledge base of an organization, rather than a single strategic orientation. This framework constrains and directs organizationally lower level proactive activity. Emphasis is placed on the importance of participative management, in core firms, and an economic rather than legal definition of the firm.

This paper aims to investigate the curvilinear effects of firms’ market learning on radical innovation and the moderation effects of the focal firms’ horizontal ties and vertical ties.

This study uses regression analysis with the survey data from 303 Chinese firms.

Explorative/exploitative market learning has an inverted U-shaped/U-shaped effect on radical innovation. The effects of explorative market learning on radical innovation increase when firms have strong horizontal ties, but decrease when firms have strong vertical ties. The opposite is true for the effects of exploitative market learning.

This study uses unilateral data to examine the moderation effects of the focal firms’ vertical and horizontal ties on the market learning-radical innovation links. Future research that conducted in the dyadic-paradigm would be preferable to test the generalizability of this research and address the potential changes.

The value of the current study centers on its integrated framework that incorporates organizational learning theory and the social network perspective to account for radical innovation. The integrative view helps us to interpret the curvilinear effects of market learning on radical innovation and outlines the moderation mechanisms of horizontal ties and vertical ties.

The purpose of this paper is to demonstrate how to incorporate knowledge concepts into analytical models of strategy formulation and the strategic theory of the firm.

The paper examines four different perspectives of the elusive concept of “knowledge”, namely, “knowledge as assets”, “knowledge through innovation”, “knowledge embedded in routines” and “knowledge through learning”. The study attempts to specify and interrelate the concepts of a knowledge‐based strategic theory of the firm.

The “knowledge web” is seen as a partial framework, capturing from a strategic perspective how both specific and organisational knowledge build the competences necessary for the value‐creating activities of the firm.

The paper provides frameworks for understanding how knowledge can reinforce the strategic core competences of the firm.

The paper addresses knowledge as a key element in the development of an enhanced strategic theory of the firm, incorporating the knowledge‐based viewpoint.

This paper aims to analyse the organizational and geographical (by nation-states) boundaries of the firm and their impact on labour and to develop a theoretical framework in which firms’ boundaries are analysed from the point of view of labour as a main stakeholder in the firm.

The paper considers the boundaries in terms of: perspectives (legal/proprietary, responsibility and control); stakeholders (shareholders and managers as well as labour, governments and suppliers) and dimensions (organization of production, geographical/by nation-state and sectoral). The paper analyses various organizational forms of production in terms of control (over labour process and brand), responsibility for labour employed across the value chain and labour bargaining power. The firm is seen in the context of labour as main stakeholder and of strategic control versus the property rights view of the firm. The paper contains references to some real-life cases which support the arguments developed at the theoretical level.

In terms of organizational boundaries, the paper analyses hybrid forms of firm organization and their implications for the position of labour. In the context of geographical boundaries, conclusions are drawn on the impact of transnational corporations (TNCs)’ direct activities on labour. Changes in organizational and geographical boundaries are seen as strategic moves that lead to the fragmentation of labour and to the weakening of its bargaining position. There is an analysis of the role of nation-state regulatory regimes in creating opportunities for TNCs’ advantages towards labour. The basic pillars of this theoretical approach are emphasis on labour as a main stakeholder as well as one of the main actors towards whom firms develop strategies and who, in turn, develops countervailing strategies; and the assignation of responsibility for labour over that part of the value chain – which could be the whole of it – over which the firm exercises strategic control.

More case study work would further support the arguments in the paper and lead to refinements of the theory.

For labour, cross-country strategies are developed, and it is argued that the principal firm should take responsibility for the labour force on the basis of the “control” perspective rather than the “legal/proprietary” one. At the macro level, it could be argued for policies that lead to more homogeneous regulatory regimes across countries and in particular within the EU. There are implications for the strategies of trade unions within and across countries. There is also a call for overcoming academic disciplinary boundaries in research specifically those between economics, business strategy and sociology of labour and industrial relations.

The work puts labour at the forefront of analysis in the boundaries of the firm. It develops a theoretical framework for this analysis and for its policy implications including policies by trade unions.

This paper explores whether workers share innovation returns and how the size of innovation returns is affected by market conditions. Using a panel data of Spanish manufacturing firms during the period from 1990 to 1993, we answer affirmatively to both questions. Product and process innovations both generate returns, but such returns are higher for process innovations. The size of innovation returns seems to be affected positively by demand growth, by product standardization, and by low product market concentration. The three empirical results are in agreement with the theoretical predictions, such as Schmoockler’s (1966) theory of demand‐pool innovation, the price‐elasticity of demand effects postulated by Kamien & Schwartz (1970), and the replacement effect suggested by Arrow (1962). At the time of generating returns, process innovations are more affected by market conditions than are other innovations.

The purpose of the paper is to offer some advancing in the understanding of the market-to-book value (MBV) gap (or ratio) as the symptom and the metrics for intellectual capital (IC) value, and to discuss the major criticisms against it. The original contribution of the paper lies in developing the analysis of the meaning of the MBV from a theory-of-the-firm perspective. Such an approach is employed to shed light on the two sides of MBV: book and market values.

The paper reviews research on MBV and the theory of the firm, employing a deductive approach that explores criticisms and advantages of the use of the MBV gap as the symptom and the metrics of IC according to a specific theory of the firm.

The paper finds that the presumption that an “accounting fallacy” exists, which refers to the gap between market and book values, must be revised depending on the chosen theory of the firm. In fact, depending on the theory of the firm to which IC scholars refer, book value could not necessarily equate to market value, even if the latter was unbiased. Again, market value could not be able to express the value of IC.

Implications of the paper are mainly for improving consistency in research, but they also support practice for consciousness and awareness. Limitations are the following. First, the paper offers an analysis of just three selected theories of the firm. Second, the analysis is based on a deductive reasoning that can be criticised for results even if not for the aim. Third, one could feel that an IC-centred theory of the firm does not yet exist at all.

Once reasons for abandoning the misbelief that accounting standards should be set in order to close the gap are highlighted, research on IC can move towards more appropriate goals. On the basis of the criticism presented in the paper, empirical research, which makes use of market and book data, could be carried out in a much more consistent way in relation to theoretical background. The paper highlights how the use of the MBV approach can lead to mistakes without a clear reference to the theory of the firm.

The paper focuses on the meaning of the MBV from a theory-of-the-firm perspective, assisting the researcher in avoiding potential mistakes and inconsistencies in their work, and also suggesting some consequences on the practice of IC.

We develop theoretical arguments from the efficiency wage model (Shapiro & Stiglitz, 1984) to provide better understanding of Fama’s (1980) seminal notion that executive labor markets contribute to the alignment of executive and shareholder interests. We show how the efficiency wage model can be integrated with several other theories of executive turnover. Furthermore, the model allows for predictions that have received very little analysis to date, such as the effect of firm risk and executive salaries on turnover. We test predictions from the model on a sample of executives from 280 manufacturing firms observed annually from 1986 to 1992. Our sample includes data on over 12,000 observations and nearly 1,700 employment terminations. The results are consistent with the main predictions of the efficiency wage model. Holding performance constant, boards of directors are less patient with (more likely to dismiss) executives who have lower salaries and those in higher risk firms.

The purpose of this paper is to investigate the job satisfaction in relation to managerial attitudes towards employees and firm size using the linked employer-employee survey results in Britain.

The authors first investigate the management-employee relationships and the firm size using maximum likelihood probit estimation. Next various measures of job satisfaction are related to the management-employee relations via maximum likelihood ordered probit estimates. Four measures of job satisfaction that have not been used often are considered. They are satisfaction with influence over job; satisfaction with amount of pay; satisfaction with sense of achievement and satisfaction with respect from supervisors.

Main findings indicate that management-employee relationships are less satisfactory in the large firms than in the small firms. Job satisfaction levels are lower in large firms. Less satisfactory management-employee relationships in the large firms may be a major source of the observed lower level of job satisfaction in them.

These results have important policy implications from the point of view of the firm management while achieving the aims of their organizations in particular in the large firms in the area of management-employee relationships. Improving the management-employee relations in large firms will increase employee satisfaction in many respects as well as increase productivity and reduce turnover.

The nature of the management-employee relations with firm size and job satisfaction has not been investigated before.

The purpose of this paper is to examine the determinants of CEO compensation for sample of the US firms. It emphasizes the presence of executive compensation persistence and the importance of CEO power besides performance while setting CEO pay.

The empirical analysis is conducted on a large sample of US firms during the period 2006–2016. It is based on the generalized method of moments (GMM) models to assess the impact of numerous factors on CEO compensation.

The main findings reveal that firm performance proxied by accounting-based proxies, as well as market-based proxies, plays a significant role in explaining variations in levels of executive compensation. Moreover, there is a significant persistence in executive compensation among the US sample firms. The authors also document that poor governance conditions (managerial power hypothesis) lead to high compensation levels offered to CEO.

At the end, without a doubt, the analysis has some limitations that prompt the authors to consider future research directions. One future research avenue that can help better explain the effect of firm performance on the CEO compensation is to study this issue using an international sample to determine whether country-level characteristics (e.g. creditor rights, shareholder rights and the enforcement climate) can influence this relationship. Furthermore, it can be worthwhile to deepen the analysis of CEO power and its impact on CEO compensation. It will be interesting to emphasize how the CEO power interacts with the other governance characteristics and some CEO attributes as CEO gender.

The paper's findings have implications for practitioners, policymakers and regulatory authorities. First, the findings inform regulators that performance is not the only determinant of CEO pay level. This may warrant increased firm disclosure of the details of the pay structure. Second, the study offers insights to policymakers and members of boards of directors interested in enhancing the design of executive compensation and internal corporate governance, to better align managerial incentives to shareholder interests. Firms should strengthen the board independence and properly constitute the board committees (compensation, risk, nomination…).

This paper presents a comprehensive overview of the CEO compensation determinants. It supplements the classic pay-for-performance sensitivity predictions with insights gained from the dynamics of wage setting theory and managerial power theory. The authors develop a composite index to measure the CEO power in order to test the impact of CEO attributes on CEO pay. Additionally, it verifies whether the determinants of CEO pay depend on firm age and size.