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The purpose of this paper is to identify the specific steps organizations can take to create value-added appraisal systems.

The authors synthesize 30 years of their research, including countless focus groups and surveys with managers at all levels, to identify the specific steps organizations can take to create value-added appraisal systems.

The paper explains ten key lessons for improving any organization’s performance appraisal system.

The authors believe that the lessons described in this paper can be applied in all organizations, and not to apply these lessons invites ineffective and potentially destructive appraisal practices.

The paper provides a unique set of lessons that organizations can use to design or re-design their performance appraisal systems and practices.

Currently, most research studies focus on ownership reforms and governance reforms, while only a few research studies focus on management system innovations. Based on an evolution of state-owned enterprises’ (SOEs) performance appraisal systems, this paper investigates the influence of performance appraisal system on earnings management.

Using a natural experiment that central government-owned enterprises (CGOEs) carried out economic value-added performance appraisal (EVA-PA) in 2010, the authors adapt difference-in-difference method to analyze the relationship between EVA-PA and earnings management choice. Furthermore, the authors consider the situation which contained financial status, separation between decision-making rights and decision-control rights, separation between ownership and control and industrial characteristics.

The research finds that after carrying out EVA-PA, CGOEs prefer accrual-based earnings management to real earnings management, and there is substitution effect between the two types of earnings management. Moreover, further research studies reveal that enterprises suffering losses in the previous year and featuring higher separation between decision-making rights and decision-control rights and higher separation between ownership and control have stronger earnings management motive under EVA-PA. In contrast, enterprises achieving satisfactory financial performance in the previous year and engaging in businesses within protective industry have weaker earnings management motive under EVA-PA. After the implementation of EVA-PA, accrual-based earnings management and real earnings management both impair operating performances of CGOEs.

Theoretically, this paper enriches research studies on earnings management from the perspective of incentive mechanism and expands research studies on economic consequences of EVA-PA. In addition, it validates the relationship between the two types of earnings management. As an important mechanism of corporate management and control, performance appraisal system is an important part for establishing ownership management system and improving internal management system of SOEs.

The purpose of the paper is to present a proactive quality costs measurement methodology, which describes the value of quality improvements and the implication of this value on customers' perception regarding the value of the product.

By describing the perceived customer value in a dynamic term, it becomes possible to derive an analytical model that recognizes the implication of a company's efforts to improve design quality and conformance quality on product value as perceived by the customers. Quality costs as a performance indicator of improved design quality and conformance quality (as the results of prevention and appraisal activities) can be expressed in terms of value (i.e. a trade‐off between benefits and sacrifices), where the benefits of the improvement include higher product quality and reduction of failure costs. The sacrifices include the costs to perform improvement activities (i.e. prevention and appraisal costs). Expressing quality costs in this way thus establishes a link between a producer's efforts to improve quality and the way customers perceive the value of the product. The developed methodology of proactive quality cost measurement has been applied for collecting, measuring, and reporting quality costs in a Swedish wood‐flooring manufacturing company.

Transforming quality cost measurements into value provides a better explanation regarding the effect of prevention and appraisal activities on the quality improvement indicators. Thus, the value of quality improvements is a measure of return on quality improvements (ROQI), which indicates whether the quality improvement efforts gave higher, fair, or lower return.

This paper develops and discusses a model of customer value by accommodating its relative nature, and presents a proactive way of measuring quality costs (i.e. value‐oriented and customer‐oriented).

Quality cost systems have evolved from a purely manufacturing defect related cost reporting system that reflected the limited quality thinking of the 1940s to a poor‐quality cost system that reflects the total process quality orientation of the 1990s. The new poor‐quality cost system includes both the direct and indirect quality cost. It addresses key concepts like customer encore cost, lost opportunity cost and non‐value added cost. The focus of the poor‐quality cost system has drifted away from the manufacturing process and now focuses on the total business systems that represent today’s biggest opportunity for improvement. Poor‐quality cost in functions like marketing and sales can exceed 100 percent of the organization’s total budget. This paper explains how quality costs hav evolved to keep up with the quality systems’ evolution over the past 50 years.

Past studies have shown that investment strategy using two popular metrics, the earnings‐price ratio (EP) and book‐to‐market ratio (BM) enable investors to reap abnormal returns. More recent development of another ratio, economic value‐added‐to‐market value (EVAM) can be seen as a hybrid of EP and BM ratios. The purpose of this study is to examine whether portfolios created by utilizing the EVAM ratio will generate higher returns than portfolios formed with EP or BM ratios.

Utilizing the EVA data obtained from Stern Stewart & Co. and financial data from COMPUSTAT and center for research in security prices (CRSP), portfolios are created following the Fama and French portfolio formation methodology. The authors form separate portfolios using EP, BM or EVAM ratios where firms are ranked by a ratio in year t, then split into deciles. Then portfolios are constructed in year t + 1 for each decile and equally weighted portfolio returns are calculated. The cumulative ten‐year returns are compared between portfolios formed with EP, BM and EVAM ratios.

There are three interesting findings. One, the EP portfolios depict results that have long been documented. That is, value stock (low price‐to‐earnings ratio firms) and growth stocks (high price‐to‐earnings ratio) exhibit the highest returns. Two, the ten BM portfolio performances are not statistically different. Three, the EVAM ratios indicate that the negative EVAM (lowest decile) portfolio exhibit the highest return and the second highest return is generated by the highest EVAM portfolio. The general results of the thirty portfolios show that the highest EVAM ratio (EVAM10) performs the best. However, the pairwise mean differences between EP, BM and EVAM portfolios do not show statistical differences over the 1995–2004 period.

Although investment strategies using EP ratio and BM ratio have been thoroughly studied, investment strategy using EVAM ratio has not. Given that it has been documented that EVA is a better conceptual measure of value, portfolio managers or investors would be interested to know whether utilizing EVA for investment strategy would earn a higher return than strategies that use EP or BM ratios.

This study examines the association between the use of strategic management accounting (SMA) practices and competitive advantage and the moderating role of four aspects of organisational culture – teamwork orientation, outcome orientation, innovation orientation and attention to detail orientation – on this association. Online survey data were collected from 408 accountants in Australian business organisations, and structural equation modelling (SEM) was used to analyse the data. The results indicate a positive association between the use of SMA practices and competitive advantage with such an association positively moderated by one cultural dimension, teamwork orientation. Specifically, the findings indicate that the positive effect of SMA practices on competitive advantage is dependent upon the fit between the use of SMA practices and teamwork orientation with more (less) teamwork-oriented organisations exhibiting a stronger (weaker) association between the use of SMA practices and competitive advantage.

A review is made of corporate practices in reporting performance so as to extract elements for constructing a productivity calculus for reflecting corporate performance. A communications strategy reflecting critical value‐added productivity changes is then explained. We propose multi‐directionality embedded in corporate value‐added performance changes be communicated through symbolism of “bread” or “wooden rice box”. The Internet is now streamlined as part of standard office systems. It is therefore timely to enable the e‐versions of annual reports with manipulative controls for in‐depth strategic analyses of directional changes in corporate value‐added performances.

The purpose of this paper is to present an integrated cost of quality ‐ activity‐based costing (COQ‐ABC) framework for measuring quality costs under ABC. The main deficiencies of most COQ systems are: (1) no consensus method to allocate overhead costs to COQ elements, (2) the failure to trace quality costs to their sources, and (3) the lack of information about how indirect workers spend their time on various activities. These deficiencies can be easily overcome under ABC together with work sampling. The cost and nonfinancial information achieved from the integrated COQ‐ABC system can be used to identify the magnitude of the quality improvement opportunities, to identify where the quality improvement opportunities exist, and to continuously plan the quality improvement programs and control quality costs. The ultimate goal of the integrated COQ‐ABC system will be to continuously improve processes/activities/quality so that no defects at all are produced and quality cost measurement ultimately becomes unnecessary.

The purpose of this paper is to understand the antecedents of small and medium-sized enterprises (SME) internationalization for a small set of Mexican ICT entrepreneurial firms, connected with subsectoral positions in a smile-shaped curve. Such antecedents constitute exploratory patterns related to simplified internationalization characteristics in terms of market choice, founder background and aspatial affiliations, providing a complementary technique to identify elements that shape SME internationalization in Latin America.

A value-added “smiling” curve is sketched according to North American Industry Classification System (NAICS) industry classification, mapping a non-probabilistic purposive sample of Mexican SMEs. The csQCA has been applied to the sample based on secondary data. Mexico’s ICT export behavior is also analyzed.

Internationalized SMEs in the sample tend to group in patterns that approach higher value-added positions in the “smiling” curve, exemplifying a type of non-geographic clustering. Particular groups seem to precede market selection (North America vs Latin America). The founder’s background does not determine internationalization choices. The sample included counterexamples (new entrants, limited cases involving research and development activities), which when analyzed suggest relevant literature validations.

This research contextualizes sectoral SME internationalization from a Latin American perspective, identifying simple patterns around particular ICT subsectors. It focuses on a type of international entrepreneurship that becomes exceptional in developing regions: technology-oriented. csQCA is presented as a preliminary (exploratory) technique to draw alternative theoretical frameworks for SME internationalization, specifically, market selection and aspatial cluster behavior around value-added chains, leading to new theoretical perspectives in SME internationalization.

Esta investigación persigue un entendimiento de los antecedentes en la internacionalización de la PyME para un pequeño conjunto de negocios mexicanos de TIC emprendedores, en conexión con posiciones subsectoriales en una curva con forma de sonrisa. Dichos antecedentes constituyen patrones exploratorios relacionados con características de internacionalización simplificadas, en función de la selección del mercado, los antecedentes del fundador, y las afiliaciones no espaciales, ofreciendo una técnica complementaria para la identificación de elementos que moldean la internacionalización de la PyME en América Latina.

Una curva de valor añadido en forma de “sonrisa” es delineada de acuerdo con la clasificación industrial SCIAN, mapeando una muestra deliberada no probabilística de PyMEs mexicanas. csQCA ha sido aplicado a la muestra con base en datos secundarios. El comportamiento exportador de México en TIC es analizado también.

Las PyMEs internacionalizadas en la muestra tienden a agruparse en patrones que se aproximan a las posiciones de mayor valor añadido dentro de la curva de la “sonrisa,” ejemplificando un tipo de conglomerado no geográfico. Ciertos agrupamientos parecen prevalecer respecto a la selección del mercado (América del norte vs. Latinoamérica). Los antecedentes del fundador no determinan las opciones de internacionalización. La muestra incluyó contraejemplos (nuevos participantes, casos limitados que involucran actividades de I+D), los cuales sugieren validaciones relevantes de la literatura una vez analizados.

Esta investigación contextualiza la internacionalización sectorial de la PyME desde una perspectiva latinoamericana, identificando patrones simples alrededor de subsectores particulares de TIC. Se enfoca en un tipo de emprendimiento internacional que llega a ser excepcional en regiones en desarrollo: orientado a la tecnología. csQCA se presenta como una técnica preliminar (exploratoria) para delinear marcos teóricos alternativos para la internacionalización de la PyME, específicamente, selección del mercado y comportamiento de conglomerados no espaciales alrededor de cadenas de valor añadido, llevando a nuevas perspectivas teóricas en la internacionalización de la PyME.

The current search for operational criteria and tests of firm performance is largely focused on the Economic Value Added (EVA) framework. While reasserting the essential soundness of this approach the paper seeks to improve its application by proposing a version of EVA which anchors the opportunity cost of equity capital on market rather than book values. The case for this is argued on general grounds and the resulting model is convenient for examining the possible effects of the gearing factor. The practicability of the model is illustrated by applying the proposed ‘EVA’ formula to a mixed set of accounting and stock market data from a sample of UK companies.