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1 – 10 of 557
Article
Publication date: 1 July 2005

Bartolomé Dey´‐Tortella, Luis R. Gomez‐Mejía, Julio O. de Castro and Robert M. Wiseman

Agency theoretic models have been used in the past to justify the use of stock options as an effective incentive alignment mechanism to create a common fate between principals and…

956

Abstract

Agency theoretic models have been used in the past to justify the use of stock options as an effective incentive alignment mechanism to create a common fate between principals and agents. In this paper, we use behavioral theory to reach the opposite conclusion – namely, that the design characteristics of the typical stock option plan foster perverse incentives for loss‐averse agents, leading to decisions with detrimental consequences for principals. We also consider alternative stock option designs and other equity‐based executive compensation plans and argue that they may suffer from the same problems as traditional stock option plans – namely, that loss‐averse executives will try to protect the endowed value of that equity through self‐serving decisions that do not enhance shareholder wealth.

Details

Management Research: Journal of the Iberoamerican Academy of Management, vol. 3 no. 2
Type: Research Article
ISSN: 1536-5433

Keywords

Open Access
Article
Publication date: 12 September 2018

Gro Holst Volden

The purpose of this paper is to explore the adverse incentives at the front end of government-funded projects with concentrated benefits and no liabilities for the privileged…

5382

Abstract

Purpose

The purpose of this paper is to explore the adverse incentives at the front end of government-funded projects with concentrated benefits and no liabilities for the privileged groups. In particular, the author discusses the risk of perverse incentives of the types typically found in the development aid sector that results in counterproductive outcomes.

Design/methodology/approach

The paper uses a simple conceptual framework based on agency theory. A qualitative, case-based approach with purposive sampling was chosen for the empirical part of the study. Eight Norwegian projects were selected because incentive problems were to be expected, and one development aid project served as a reference case.

Findings

The paper finds that low strategic project success corresponded well with the terms of financing. There were clear indications of agency problems, in three cases to the extent that the incentives turned perverse. The paper concludes with a discussion of relevant measures to prevent the emergence of perverse incentives.

Originality/value

The paper contributes to an improved understanding of the incentives related to public project initiation and selection, which is an under-researched topic and generally not included in formal project governance schemes. The research should therefore be useful to scholars as well as practitioners within the field of project governance.

Details

International Journal of Managing Projects in Business, vol. 12 no. 2
Type: Research Article
ISSN: 1753-8378

Keywords

Article
Publication date: 1 March 1983

R.S. Mason

General economic theories of consumer demand work well in describing market behaviour with respect to most purchases and the explanation of consumer choice between competing…

1200

Abstract

General economic theories of consumer demand work well in describing market behaviour with respect to most purchases and the explanation of consumer choice between competing commodities is clearly acceptable for the great majority of scarce goods. However, these theories do not easily accommodate the many non‐economic factors associated with preference formation and with the shaping of consumer attitudes and values. They also pay little or no attention to the dynamic process of choice, purchasing and consumption; in effect, they treat purchasing, consumption and satisfaction as synonyms.

Details

International Journal of Social Economics, vol. 10 no. 3
Type: Research Article
ISSN: 0306-8293

Article
Publication date: 1 March 1984

Roger Mason

States that status and prestige considerations play a significant part in shopping preferences for products, which, although they appear to have a direct utility, serve only as a…

9330

Abstract

States that status and prestige considerations play a significant part in shopping preferences for products, which, although they appear to have a direct utility, serve only as a means of displaying wealth and purchasing power. Examines the literature on the subject, looking at the conspicuous customer, for whom the cost of a purchase is only of real significance and not the product. Suggests, from the literature, that consumer behaviour and demand for status goods and services needs further investigation.

Details

European Journal of Marketing, vol. 18 no. 3
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 26 November 2020

Graham Bowpitt

With the temporary housing of rough sleepers in response to the Covid-19 emergency, some commentators have been tempted to believe that the rising population of rough sleepers in…

Abstract

Purpose

With the temporary housing of rough sleepers in response to the Covid-19 emergency, some commentators have been tempted to believe that the rising population of rough sleepers in the UK has finally been reversed. This paper aims to examine the choices made by persistent rough sleepers and how far they are influenced by the perverse incentives of social policies, in order to challenge the view that they sleep rough out of choice.

Design/methodology/approach

Evidence for this paper is derived from two teams of frontline service providers with routine familiarity with the rough sleeping population: a street outreach team and a team of support workers working with adults with multiple and complex needs. Primary data from focus groups were combined with the secondary analysis of both numerical and narrative accounts routinely recorded by both teams.

Findings

The exercise of agency by persistent rough sleepers is constrained by a mixed baggage of complex needs, past negative risk assessments, limited resources and regulatory deterrents to generate choices to reject help that appear irrational. These need to be understood if recent policy initiatives to end rough sleeping are to be effective.

Originality/value

The paper draws on the experience and comprehensive records of practitioners with intimate knowledge of the rough sleeping population. It extends narrative accounts of causes by focusing on key choices to show how the perverse incentives of policy combine with personal factors to incline rough sleeping to persist.

Details

Housing, Care and Support, vol. 23 no. 3/4
Type: Research Article
ISSN: 1460-8790

Keywords

Article
Publication date: 1 March 1984

David George

There has been no shortage of challenges to that most fundamental of all neo‐classical assumptions according to which people always act so as to maximise their utility. The most…

179

Abstract

There has been no shortage of challenges to that most fundamental of all neo‐classical assumptions according to which people always act so as to maximise their utility. The most frequently heard objection has centred on the observation that acts of altruism are all around us. This incontestable fact has not led to a rejection of the self‐interest assumption but has instead resulted in the incorporation of altruistic actions into the standard utility function. While there may be legitimate doubts about the process of converting a positive statement into a tautology, this tautological sense of utility maximisation will be retained throughout this essay. Following Houthakker, in all that ensues it will be assumed that “preference is related to choice as the possible to the actual. A person prefers a to b if, when confronted with a choice between a and b, he chooses a”(l).

Details

International Journal of Social Economics, vol. 11 no. 3/4
Type: Research Article
ISSN: 0306-8293

Article
Publication date: 8 June 2010

Marc Bendick, Mary Lou Egan and Louis Lanier

The typical “business case” for workforce diversity management in the USA implies that matching the demographic characteristics of sellers to buyers increases firms' productivity…

5085

Abstract

Purpose

The typical “business case” for workforce diversity management in the USA implies that matching the demographic characteristics of sellers to buyers increases firms' productivity and profitability. This paper aims to explore the consequences for both employers and employees of following that guidance.

Design/methodology/approach

The paper statistically analyzes employment data on African Americans from one large US retailer and from the US advertising industry.

Findings

In both cases analyzed, a badly conceived business case for diversity perversely translated into discriminatory employment practices, starting with stereotype‐based segregation in work assignments and spreading to consequent inequality in other employment outcomes such as earnings and promotions. Such patterns illegally limit employment opportunities for women and race/ethnic minorities. Simultaneously, they fail to promote customer relationships and sales.

Practical implications

To avoid negative effects on both business and societal objectives, employers need to be guided by a business case promoting workplace inclusion, not “diversity without inclusion”, which buyer‐seller matching represents.

Originality/value

The business case for diversity is often considered unimportant “boilerplate”. This paper alerts employers to the importance of articulating, and then following, a correct business case.

Details

Personnel Review, vol. 39 no. 4
Type: Research Article
ISSN: 0048-3486

Keywords

Article
Publication date: 8 August 2023

Puren Aktas, Jonathan Hammond and Liz Richardson

New Public Management-informed pay-for-performance policies are common in public sectors internationally but can be controversial with delivery agents. More attention is needed on…

Abstract

Purpose

New Public Management-informed pay-for-performance policies are common in public sectors internationally but can be controversial with delivery agents. More attention is needed on contingent forms of bottom-up implementation of challenging policies, in emerging market economies, for professionals who face tensions between policies and their codes of practice. Street-level bureaucrats (SLBs) mediate policy implementation through discretionary practices; health professionals have enhanced space for discretion based on autonomy derived from professional status. The authors explore policy implementation, adaptation and resistance by physicians, focusing on payments for health workers in Turkey.

Design/methodology/approach

The researchers conducted semi-structured qualitative interviews with 12 physicians in Turkish hospitals and thematic analysis of interview transcripts, using a blended (deductive and inductive) approach.

Findings

The policy fostered discretionary behaviours such as cherry-picking (high volume, low risk procedures) and pro-social rule-breaking (e.g. “upcoding”), highlighting clinical autonomy to navigate within policy restrictions. Respondents described damage to relationships with patients and colleagues, and dissonance between professional practice and perverse policy incentives, sometimes leading to disengagement from clinical work. Policymakers were perceived to be detached from the realities experienced by SLBs. Tensions between the policy and professional values risked alienating physicians.

Research limitations/implications

This study utilises participant self-reported perceptions of discretionary behaviours. Further work may adopt alternative methods to explore the relationship between self-reporting and observed practice.

Originality/value

The authors contribute to research on differentiated, contingent roles of groups with high scope for discretion in bottom-up implementation, pointing to the potential for policy-professional role conflicts between top-down P4P policies, and the values and codes of practice of professional SLBs.

Details

International Journal of Public Sector Management, vol. 36 no. 6/7
Type: Research Article
ISSN: 0951-3558

Keywords

Article
Publication date: 11 December 2018

Alasdair Marshall, Udechukwu Ojiako and Maxwell Chipulu

Risk appetite is widely accepted as a guiding metaphor for strategic risk management, yet metaphors for complex practice are hard to critique. This paper aims to apply an…

Abstract

Purpose

Risk appetite is widely accepted as a guiding metaphor for strategic risk management, yet metaphors for complex practice are hard to critique. This paper aims to apply an analytical framework comprising three categories of flaw – futility, perversity and jeopardy – to critically explore the risk appetite metaphor. Taking stock of management literature emphasising the need for metaphor to give ideation to complex management challenges and activities and recognising the need for high-level metaphor within strategic risk management in particular, the authors propose a means to scrutinise the risk appetite metaphor and thereby illustrate its use for further management metaphors.

Design/methodology/approach

The authors apply a structured analytical perspective designed to scrutinise conceivably any purportedly progressive social measure. The three flaw categories are used to warn that organisational risk appetite specifications can be: futile vis-a-vis their goals, productive of perverse outcomes with respect to these goals and so misleading about the true potential for risk management as to jeopardise superior alternative use of risk management resource. These flaw categories are used to structure a critical review of the risk appetite metaphor, which moves towards identifying its most fundamental flaws.

Findings

Two closely interrelated antecedents to flaws discussed within the three flaw categories are proposed: first, false confidence in organisational risk assessment and, second, organisational blindness towards contributions of behavioural risk-taking to true organisational risk exposure. A theory of high (over-optimistic, excessive or inappropriate) risk-taking organisations explores flaws within the three flaw categories with reference to these antecedents under organisational-cultural circumstances where the risk appetite metaphor is most needed and yet most problematic.

Originality/value

The paper is highly original in its representation of risk management as an organisational practice reliant on metaphor and in proposing a structured means to challenge it as a dominant guiding metaphor where it has gained widespread uncritical acceptance. The discussion is also innovative in its representation of high risk-taking organisations as likely to harbour strong managerial motives, aptitudes and capacities for covert and illicit forms of risk-taking which, being subversive and sometimes reactionary towards risk appetite specifications, may cause particularly serious futility, perversity and jeopardy problems. To conclude, the theory and its implications are summarised for practitioner and educational use.

Details

International Journal of Organizational Analysis, vol. 27 no. 1
Type: Research Article
ISSN: 1934-8835

Keywords

Article
Publication date: 1 January 1980

Michael Turner

Many people regard nutritionists as mean‐minded spoilsports who get a perverse pleasure from telling people what not to do. If it's pleasurable, it's sinful, is another often…

Abstract

Many people regard nutritionists as mean‐minded spoilsports who get a perverse pleasure from telling people what not to do. If it's pleasurable, it's sinful, is another often quoted view. But in truth, nutritionists are neither bores, nor spoilsports and they are not necessarily against sin, if this means deriving pleasure from eating.

Details

Nutrition & Food Science, vol. 80 no. 1
Type: Research Article
ISSN: 0034-6659

1 – 10 of 557