Showing papers in "Journal of Managerial Issues in 2007"

Knowledge Type and Communication Media Choice in the Knowledge Transfer Process

Abstract: Many researchers have written that knowledge is the key ingredient in gaining a competitive advantage (e.g., Gnyawali et al., 1997; Kogut and Zander, 1992) and that knowledge is a firm's main inimitable resource (Grant, 1996b). One important implication of this research is that in order for firms to maximize the competitive advantage arising from knowledge, knowledge must be effectively transferred within organizations. What is absent in the literature, however, is information on how organizations accomplish this task (Spender and Grant, 1996). While the importance of research on knowledge sharing has been well documented (e.g., Dodgson, 1993), very little empirical research exists that offers practical guidelines for organizations seeking to manage the knowledge transfer process. Research on knowledge transfer in organizations has been conducted from a variety of theoretical perspectives including individual psychology, strategic management, and organization theory. The psychology literature has focused on individual knowledge transfer processes and outcomes, such as how task experience affects performance on other tasks or the extent and accuracy of recall (Argote et al., 2000). In contrast, the strategy literature has focused on organizational outcomes like firm success and competitive advantage (e.g., Grant, 1996b; Zander and Kogut, 1995). Zander and Kogut (1995) have shown that increasing degrees of knowledge codifiability and teachability speed knowledge transfer. Organization theory researchers have been concerned with organization forms and how they affect the knowledge transfer process (Darr et al., 1995; Argote et al., 2000). What ties these diverse approaches together is the belief that knowledge transfer within organizations is a key component of organizational learning, a topic that is also the focus of considerable attention (Dodgson, 1993). In this research we propose that one way organizations manage the knowledge-sharing process is to select appropriate communication media for the property or type of knowledge to be transferred. Our survey of 287 employees in five hospitals provides support for our hypotheses, and our results were consistent across three administrative levels: hospital administrators, nursing directors, and staff nurses. Communication media classified as having low-media richness were most likely to be chosen to share information or explicit knowledge, whereas media classified as having high-media richness were most likely to be chosen to transfer know-how or tacit knowledge (Daft and Lengel, 1986; Grant, 1996b; Nonaka, 1991). In the next sections we discuss the literature that addresses knowledge and knowledge transfer, and develop our hypotheses by building on the strategic management and organization theory literatures. We then present the methods and results of our empirical analysis, followed by a discussion section that addresses the implications of our study for both researchers and managers. Finally, we conclude with a summary of the overall study, limitations, and directions for future research. THEORETICAL BACKGROUND Knowledge and Knowledge Transfer Throughout the 1990s and early 2000s, both researchers and practitioners (e.g., Desenberg, 2000; Govindarajan and Fisher, 1990; Kogut and Zander, 1992; Narasimha, 2000; Zander and Kogut, 1995) have discussed the importance of knowledge transfer within organizations. The idea that knowledge transfer is necessary to an organization's success has become the focal point of strategy and the strategic planning process (Liebeskind, 1996). Knowledge has emerged as the most strategically significant resource of the firm (Grant, 1996b). Knowledge may be defined as information whose validity has been established through test of proof and can therefore be distinguished from opinion, speculation, beliefs, or other types of unproven information (Liebeskind, 1996). This definition of knowledge consists of two primary classifications: information (explicit knowledge) and know-how (tacit knowledge) (Nonaka, 1991; Simmonds et al. …

An exploratory examination of voice behavior from an impression management perspective.

Abstract: In order to cope with dynamic and competitive environments, organizations are pushing their employees to work harder and to seek out opportunities for constructive change. In fact, initiative is seen by many as a major source of competitive advantage and organizational success (Crant, 2000; Parker, 2000). Voice behavior is the form of proactive behavior that has received the most empirical attention. Van Dyne and LePine define voice behavior as a form of organizational citizenship behavior that involves "constructive change-oriented communication intended to improve the situation" (1998: 326). Voice entails challenging the status quo with constructive suggestions, even when others disagree (Van Dyne and LePine, 1998). Research concerning voice behavior is important for several reasons. First, making constructive suggestions is the essential "first step" in the innovation process (LePine and Van Dyne, 1998; Scott and Bruce, 1994). By drawing attention to opportunities for improvement, voice behavior serves as the "seed corn" for continuous improvement and organizational adaptation (Ashford et al., 1998; Van Dyne and LePine, 1998). Second, unlike organizational exit or neglect (Hirschman, 1970), voice behavior makes it possible for an organization to channel employees' dissatisfaction with the status quo toward correcting mistakes, improving processes, and formulating novel solutions to organizational problems (Zhou and George, 2001). Further, as illustrated by the Challenger incident and Enron's demise, a lack of voice behavior can lead to serious organizational problems. Finally, voice behavior can also result in benefits for the individual worker such as the appearance of competence (Stamper and Van Dyne, 2001) or higher performance evaluations (Thompson, 2003). Thus, research examining the antecedents and consequences of employee voice is extremely relevant to both researchers and practitioners. Unfortunately, LePine and Van Dyne (1998) note that researchers have not been very successful in predicting voice behavior. There are at least three possible explanations for this. First, most studies focus exclusively upon main effects, rather than analyzing interactional models, despite the likelihood that employee voice may be highest when individual differences lead some individuals to respond to favorable situational factors (LePine and Van Dyne, 1998). Second, voice behavior promotes change and challenges the status quo. This makes it a potentially risky behavior for employees. If voice is perceived as complaining or personal criticism, it can upset interpersonal relationships or create negative impressions (LePine and Van Dyne, 1998; Stamper and Van Dyne, 2001). Finally, researchers have not explicitly taken a functional approach to voice behavior (cf. Snyder, 1993). Functional analysis is pervasive in areas of psychology that emphasize purposeful action to obtain desired ends and concerns the "reasons and purposes, the needs and goals, the plans and motives that underlie and generate psychological phenomena" (Snyder, 1993: 253). In the current context, a functional approach focuses upon identifying the purpose served by engaging in or not engaging in voice behavior. Our research is designed to address each of the issues raised in the preceding paragraph. We attempt to gain a greater understanding of voice behavior by exploring the extent to which worker personality (i.e., self-monitoring) interacts with a contextual feature of the workplace (past performance) to predict when some people engage in voice behavior. Our model is based upon a functional approach that suggests that voice may, in some situations, serve impression management purposes. Our model also takes into account the potential risk involved in voice behavior. In addition, we engage in an exploratory examination of how these factors interact to influence worker promotability. VOICE BEHAVIOR AND IMPRESSION MANAGEMENT Impression management is defined as "the process whereby people seek to control or influence the impressions that others form" (Rosenfeld et al. …

Perceived organizational support: Evidence for a mediated association with work performance

Abstract: The Human Relations school of managerial thought (e.g., Roethlisberger and Dickson, 1967), which basically argues that employee performance will improve as the employment relationship improves, has resulted in a wide variety of theories attempting to explain why this change occurs. One of the most prominent of those theories is social exchange theory (e.g., Blau, 1964), which is supplemented by the norm of reciprocity (e.g., Gouldner, 1960). The explanation provided by social exchange argues that the employee may perform at a higher level because s/he perceives an obligation to reciprocate for social "gifts" granted by the employer (e.g., raises, promotions, top project assignments, positive feedback (Organ, 1977)). Social exchange, as studied through research on perceived organizational support (POS), has been used to explain positive impacts on both work attitudes (job satisfaction, e.g., Eisenberger et al., 1997; affective commitment, e.g., Rhoades et al., 2001; Wayne et al., 1997) and behaviors (e.g., attendance, Eisenberger et al., 1986; in-role performance, e.g., Eisenberger et al., 2001; Settoon et al., 1996; extra-role performance, e.g., Shore and Wayne, 1993; turnover intentions, e.g., Wayne et al., 1997; withdrawal behaviors, e.g., Eisenberger et al., 2001). Whereas social exchange theory has certainly been useful in helping identify positive outcomes associated with POS, it does not provide guidance to researchers on how to appropriately model these outcomes in order to understand the complete underlying mechanism of how perceptions of organizational support result in employee behavioral change. Specifically, social exchange does not direct researchers to consider that workplace attitudes and behaviors may be linked to each other, aside from their relationship to POS. Thus, there is the possibility that current research has not investigated the complete picture of the impact POS has on consequences that may be more appropriately modeled as distal outcomes versus those that are actually more proximal. An alternative for how to model the associations between POS and both attitudinal and behavioral outcomes is found in the work of Fishbein and Ajzen (1975), who developed the theory of reasoned action and the subsequent theory of planned behavior (Ajzen, 1991). In this body of work, they argue that individual perceptions, which are thought to be nonaffective belief statements (i.e., I believe my organization is supportive of me), need to be distinguished from attitudes which incorporate emotional, judgmental components (i.e., I like that my organization is supportive of me). It is these emotional attitudes that result in subsequent behavioral intentions and outcomes. They posit that it is the affective reaction toward the attitude object that triggers behavioral change, not the perception of the object. Whereas attitudinal mediation has been supported between POS and other behavioral outcomes (e.g., intent to quit, Wayne et al., 1997), to our knowledge there is only one study that has specifically examined mediation for the POS-performance relationship. Recently, Chen et al. (2005) found evidence that trust and organizational-based self-esteem fully mediated the relationship between POS and in-role (task) performance. Therefore, this study is designed to clarify the POS-performance association. We compare two theoretical models for the outcomes of POS by selecting two work attitudes that have been strongly linked to both POS and performance: job satisfaction and affective commitment. The first model relies on social exchange theory and reflects the results of Rhoades and Eisenberger's (2002) recent meta-analysis. The second model uses the theory of reasoned action to investigate whether work attitudes should be antecedent to work performance, thus mediating the POS-performance relation. A literature review of the POS, performance and work attitudes research is presented first, followed by a description of the method and results of this study. …

An Examination of the Role of Emotional Intelligence in Work and Family Conflict

Abstract: Employers need to recognize the constant challenge many employees face in balancing work and family. Recruiting and retaining top workers is essential to the success of the organization; thus, it behooves employers to understand the variables associated with the effective management of the work-family conflict. One cannot pick up a newspaper or periodical or even turn on the news without being confronted with the issue of balancing work and family. For most, it is a constant struggle to attempt to balance the commitments of work and family life. Some researchers have suggested that work-family balance is an illusive goal and one that is unattainable (Caproni, 1997). The concern is that the more one is committed to work, the more one enjoys the associated benefits, both financial and non-financial, which encourage them to devote even more time and energy to work. Since neither one's time nor energy is limitless, by definition, then, such workers will find themselves far from the balance they originally sought with one of the roles invariably ending up on the losing end. As a result of an increasingly larger share of the workforce occupying many non-work roles in addition to that of paid worker, organizations need to understand the impact of multiple roles on workers' productivity. Attitudes, behaviors and emotions associated with one role may spill over to the other (Edwards and Rothbard, 2000). In fact, many employers fear that engagement in the family role is accomplished only to the detriment to the work role. The work-family literature frames this balance in seemingly diametrically opposed views, namely the depletion and enrichment arguments (Marks, 1977). The former is more deeply rooted in the literature and views these roles as conflicting (Friedman and Greenhaus, 2000). One's energy and time are limited, and, as such, the demand in each role depletes resources at the expense of the other. Yet those scholars that view the work-family research through the lens of the enrichment hypothesis suggest that it is the occupancy of multiple roles and the quality of those roles that yield beneficial effects on one's well-being (Barnett and Hyde, 2001). The benefits to individuals provide a net gain over the costs, leading to a positive emotional response and better well-being, In an effort to explain the competing views in the literature--the depletion or enrichment hypotheses--we propose that the question needs to be examined at the individual level. Specifically, we posit that Emotional Intelligence, a dispositional variable, interacts with work-family conflict to predict one's well-being. Consistent with research conducted by Noor (2003) that resulted in support for the effect of locus of control on the relationship between work-family conflict and well-being, this study expands the link to examine the effect of a broader dispositional measure. Noor (2003) sampled 310 married women with children who were employed full-time in Malaysia. She found that "women with high control beliefs generally were more vulnerable to work-family conflict" and that work-family conflict was positively related to symptoms of psychological distress--women's sense of general well-being" (2003: 658). This study builds on past models of work and family stress that use individual differences as moderators of the effects of work and family experiences on well-being (e.g., Frone et al., 1997a; Greenhaus and Parasuraman, 1986; Higgins et al., 1992; Parasuraman et al., 1996). In addition, the present study answers the call of Greenhaus and Beutell for more research "to determine the impact of specific personal characteristics on role attitude/behaviors that affect the arousal of work-family conflict" (1985: 83), as well as Carlson's (1999) call for additional study of personality variables such as the "Big Five" to provide further insight into the underpinnings of work-family conflict. We posit that it is not necessarily a general all-encompassing trait that distinguishes the "handlers" from the "non-handlers," but rather it is an individual trait which can cross gender, race, ethnicity, and age. …

An Examination of the Antecedents and Consequences of the Use of Family-Friendly Benefits

Abstract: Over the last 30 years, there has been an increase in the number of dual-career couples, single parent families, and workers with eldercare responsibility (Eby et al., 2005). Given these changes have occurred at the same time that the number of hours employees work has increased (Glass and Finley, 2002), it is not surprising that the amount of attention given to work-family issues has increased. As noted by Eby et al., much of this research attention has focused on work-family conflict (i.e., work activities interfering with family matters). Such conflict has been shown to be negatively related to employee attendance, satisfaction, and performance (e.g., Hammer et al., 2003). In contrast to the attention given to work-family conflict, as noted by Boles, Howard, and Donofrio (2001), relatively little attention has been given to family-work conflict (i.e., family responsibilities interfering with work activities), and even less attention has been given to whether the use of family-friendly employment benefits (e.g., flexible work hours) is linked to a reduction of family-work conflict (Boyar et al., 2003). We find this lack of research attention surprising given that it is likely that family responsibilities (e.g., caring for a sick child, taking an elderly parent to the doctor, spending time with a spouse, participating in a school carpool) may have detrimental effects on such important work-related variables as employee attendance, punctuality, dissatisfaction, and turnover, and given that providing family-friendly benefits may help employees cope with family demands (readers interested in a detailed discussion of the causes and consequences of family-work conflict are referred to an excellent review article by Eby et al. (2005)). Not only have there been few studies that have addressed family-work conflict and the influence of offering family-friendly benefits on such conflict, criticisms of the limited research which does exist have been raised (Eby et al., 2005). One criticism involves the heavy reliance of past research on cross-sectional data gathering. A second criticism is that past studies have been somewhat atheoretical in nature. A third criticism is that, rather than looking at the effects of using a specific family-friendly benefit (e.g., on-site child care), researchers generally have measured overall benefit usage (i.e., a composite scale reflecting the use of several benefits was created). The use of such a global benefit usage scale makes it impossible to determine which specific benefits may be particularly helpful for reducing family-work conflict. In this study, we attempt to advance research on family-work issues by addressing concerns that have been raised with previous studies. More specifically, our study tested a theoretical model of both hypothesized antecedents and consequences of the use of family-friendly benefits. In examining these relationships, we did not rely solely on cross-sectional data. Finally, unlike most previous studies that have focused on overall benefit use, we focused both on overall use and on four specific benefits (i.e., telecommuting, the ability to take work home, flextime, and family leave) that have been hypothesized to have important consequences for reducing family-work conflict and for improving employee satisfaction. ANTECEDENTS AND CONSEQUENCES OF FAMILY-FRIENDLY BENEFIT USE Before discussing the specific hypotheses we tested and the logic that underlies them, it may be helpful to provide a theoretical model that presents an overview of our study. Figure I portrays several factors that we hypothesized as being antecedents of the use of family-friendly benefits or consequences of their use. [FIGURE I OMITTED] The first relationship portrayed in Figure I is between an employer providing family-friendly benefits and employees making use of them. Although it may seem obvious that these two variables should be strongly related, past research has not always found this to be the case. …

Enhancing Product Recovery Value in Closed-Loop Supply Chains with RFID

Abstract: The downstream movement of goods from the manufacturer to the retailer for sale to consumers is referred to as a forward supply chain. When consumers return their purchases to the retailer for a refund, a repair or a recall, an upstream movement of goods occurs from the retailer to the manufacturer. This upstream movement of product returns is termed a reverse supply chain (often called reverse logistics) (Tibben-Lembke and Rogers, 2002). Closed-loop supply chains refer to the integration of both forward and reverse supply chain activities (Guide et al., 2003). Closed-loop supply chains are a key component of sustainable business operations and they have begun to receive increased attention from both practitioners and academicians. This interest is driven by legislative environmental regulation for companies that operate in the European Union and by economic factors for companies in the United States. Additionally, companies exporting to Europe will also have to abide by these laws and adjust their business practices to be environmentally friendly (Guide et al., 2003). For U.S. manufacturers, product returns have expanded from a limited volume of high-value goods to a large variety of low-value goods, due to shorter product life cycles and lenient return policies at retailers (Tibben-Lembke and Rogers, 2002; Guide et al., 2003). Rogers and Tibben-Lembke (2001) estimated overall customer returns for general merchandise in the U.S. to be approximately 6% of sales, which in 1999 would have been over $38 billion worth of returned goods. These proliferations of product returns have increased costs for manufacturers since they typically must credit the retailer and then determine the most cost-effective way to dispose the returns (Blackburn et al., 2004). It should be noted that recovered parts and components often can be used to reduce production costs and to provide a cheap source of parts for service repairs (Toffel, 2004). Furthermore, the Supply Chain Council has identified the management of product returns as one of five key supply chain processes (SCOR, 2005). Hence, the development of effective and efficient, strategically managed closed-loop supply chains is becoming more important to practitioners. Chopra and Meindl state "Information is crucial to supply chain performance because it provides the foundation on which supply chain processes execute transactions and managers make decisions" (2004: 482). To be useful in aiding supply chain decisions, information must be accurate, accessible in a timely manner, and be of the right kind (Chopra and Meindl, 2004). A relatively new information-sharing technology being utilized in the supply chain is radio frequency identification (RFID). Radio frequency identification is a data acquisition and storage method, which promises numerous supply chain benefits: improved speed, accuracy, efficiency and security of information sharing across supply chain (Jones et al., 2004). Additional benefits realized are: (1) reduced storage, handling and distribution expenses, (2) increased sales through reduced stock outs, and (3) improved cash flow through increased inventory turns and improved utilization of assets (Karkkainen, 2003). The major drivers behind RFID implementation are retailers such as Wal-Mart and the U.S. Government. In January 2005, Wal-Marts' top 100 suppliers were required to tag all pallets and cases they shipped to Wal-Mart distribution centers. The next top 200 suppliers were to tag all pallets and cases by January, 2006 and all suppliers by the end of 2006 (RFID Journal, 2004). Other early retail adopters of RFID technology include The Gap, Woolworth's, Prada, Benetton, and Marks & Spencer (Wilding and Delgado, 2004c). The U.S. Department of Defense required its 43,000 suppliers to put RFID tags on pallets, cases and on any single item with a cost of more than $5,000 beginning January 1, 2005 (Collins, 2004a). In addition, the U. …

Examining the impact of organizational value dissimilarity in top management teams

Abstract: The chief executive officer (CEO) of an organization is generally held accountable for the firm's performance. However, the actual management of the firm is often shared among the top management team (TMT). The TMT is a small group of influential executives at the apex of the organization and is responsible for setting priorities, analyzing the environment, formulating strategies, and directing implementation (Hambrick, 1995). These tasks often involve decision processes that are unstructured, complex, and ambiguous (Finkelstein and Hambrick, 1996). Research has shown that the outcomes of such decision processes can be affected greatly by the characteristics of the team and its members. According to Hambrick and Mason (1984), top managers make decisions that are consistent with their cognitive base, which is a function of their values and experiences. This cognitive base influences how individuals attend to ambiguous stimuli, how they interpret information, and their preferences for choices in strategic decision making. As a result, much TMT research has focused on composition and demography theory, which suggests that the composition of the TMT, with regard to various demographic characteristics, can explain TMT behavior and outcomes. The underlying premise in this work is that demographic characteristics are reasonable proxies for actual differences in cognitions, perceptions, and values (Carpenter et al., 2004). However, very little research on TMTs has actually examined cognitions, perceptions, and values directly (Barsade et al., 2000). Organizational values are beliefs regarding desired objectives in the running of a business enterprise (Enz, 1988). Top management team members represent powerful subunits in an organization and may not uniformly agree on the importance of specific organizational values. However, consensus on the importance of organizational values among TMT members is deemed critical to organizational functioning. If members place different importance levels on values within the TMT, there may be a lack of shared understanding of priorities throughout the organization (Carpenter et al., 2004). The purpose of this study is to examine the effects of dissimilarity in organizational values for TMT members. More specifically, the effects of two types of dissimilarity in values are investigated: (1) differences between a TMT member and his/her CEO and (2) differences between a TMT member and other members of the TMT. The impact of these two types of dissimilarity in organizational values on team conflict, team members' attitudes, and evaluations of the CEO's leadership effectiveness are explored with a sample of 31 CEOs and 133 TMT members. Figure 1 displays the model of relationships hypothesized in this study. A brief review of the literature on diversity in top management teams is presented in the next section, followed by supporting literature for the hypotheses on proposed effects of organizational value dissimilarity. Next, the research methodology and data analysis results are presented. The article is concluded with a discussion of implications of the results for practice and future research. [FIGURE 1 OMITTED] Theory and Hypotheses Studies on TMT composition have examined differences in demographic characteristics of members to infer differences in personal experiences, motivation, cognitive style, and values (Finkelstein and Hambrick, 1996). There are two seemingly conflicting perspectives about the implications of differences present in a TMT. One perspective suggests that executives that share similar characteristics are likely to operate from similar cognitive bases and values that increase the likelihood of agreement on goals critical to organizational success (Iaquinto and Fredrickson, 1997). The second perspective suggests that diversity in characteristics can lead to enhanced creativity and innovation by generating a wider variety of options in decision making (Cox et al. …

Reciprocating perceived organizational support through citizenship behaviors.

Abstract: Organizational viability in complex, fast-changing, and turbulent economic times requires employees willing to exceed the roles and responsibilities defined by formal job descriptions (Jordan and Sevastos, 2003). Organizational citizenship behaviors (OCB) can improve organizational performance and adaptability in environments demanding complex, ambiguous, and team-oriented work (Organ et al., 2005). Organizational citizenship behaviors (OCB), defined as volitional extrarole behaviors not directly related to a specific task or job description, lead to improved customer and peer relationships, enhanced teamwork, operational flexibility, and competitiveness (Borman, 2004). According to Organ et al. (2005), OCB are discretionary employee behaviors performed for the benefit of the organization or co-workers that exceed nominal job requirements and not formally recognized by the organization. Ryan queried, "why would an employee engage in work that enhances organizational performance, but is not necessarily recognized or rewarded by his or her employer" (2002: 123)? Ryan argued that personality characteristics, such as a Protestant work ethic, conscientiousness, or empathy explained OCB. Kidder and Parks (2001) contended that employee-defined roles and work-identity influenced OCB. However, Coyle-Shapiro, Kessler, and Purcell (2004) found that personality factors such as conscientiousness, positive or negative affectivity, or agreeableness failed to predict OCB. Job breadth explained only an additional 11% of the variation in OCB beyond that explained by perceptions of justice and organizational commitment (Coyle-Shapiro et al., 2004). Instead, the majority of researchers (Cardona et al., 2004; Coyle-Shapiro et al., 2004; Kaufman et al., 2001; Rhoades and Eisenberger, 2002) pose OCB as a form of social exchange for positive treatment received from the organization. This study explores the nature of social exchange by assessing if employees report OCB as an intended method to reciprocate acts of POS and justice. The study adds to the body of research on OCB antecedents by investigating the mediating effects of POS on the relationships between three dimensions of organizational justice (procedural, distributive, and interactive), and employee self-reported intentions to enact OCB directed at the organization or peers. The research question posed: Do employees acknowledge an exchange relationship between organizational attributes, such as perceived organizational support (POS) or justice, and their intentions to enact OCB. This article begins with the purpose and background for the study. The article then overviews the key constructs of organizational citizenship behaviors (OCB), perceived organizational support (POS), and three dimensions of organizational justice. Included is a discussion of issues associated with self-reported intentions to enact OCB. In the methods section, the article describes the sample, data collection procedure, and measurement instrument. Hypothesis testing and a review of results follow. The article closes with key findings, recommendations tot future research, and study limitations. BACKGROUND Social exchange occurs when a person, motivated by the returns those acts are anticipated to bring, voluntarily engages in acts beneficial to another (Blau, 1986). According to the norm of reciprocity, acts of helping are contingent on the expectation that the recipient will reciprocate with an act of helping in the future (Gouldner, 1960). Unlike contractual obligations, which demand repayment, social exchange creates unspecified reciprocal obligations enforced through cultural and normative standards of behaviors (Cropanzano and Mitchell, 2005). According to Organ and Konovsky (1989), employees perform OCB in anticipation that the organization will discharge its accrued obligations through increased employee rewards or other acts favorable to employees. In turn, organizations, with work environments advantageous to employees, create social and normative pressures on employees to reciprocate through behaviors valued by the organization (Eisenberger et al. …

Top Management Team Prestige and Organizational Legitimacy: An Examination of Investor Perceptions (*)

Abstract: The examination of top management teams represents one of the more significant areas of research in strategic management (Buchholtz et al, 2005; Finkelstein and Hambrick, 1996; Hambrick and Mason, 1984) Despite the prominence of this stream of research, a construct that has received relatively little theoretical or empirical attention in the TMT context is prestige According to D'Aveni, prestige represents the "property of having status" (1990: 121) While recent work has investigated prestige in the context of boards of directors (eg, Certo, 2003; Certo et al, 2001), studies of prestige have been notably absent from the TMT literature over the past decade (for a notable exception, see Higgins and Gulati, 2003) The basic premise of D'Aveni's study is that "managerial prestige contributes to the legitimacy of firms" (1990: 121) Organizational legitimacy, which Kostova and Zaheer (1999) define as the acceptance of an organization by its environment, is an important construct in both institutional and resource dependence theories Several authors suggest that acceptance by key environmental members is as an important organizational resource (Pfeffer and Salancik, 1978; Suchman, 1995) One of the most significant shortcomings of research examining TMT prestige and organizational legitimacy is the inattention to the individual investors responsible for constructing perceptions of these constructs (eg, Zuckerman, 1999); we know little about how investors gauge and respond to TMT prestige and organizational legitimacy To address this shortcoming, we use the resource-based view of the firm (Barney, 1991) to examine two broad research questions First, do indicators of a firm's TMT prestige and organizational legitimacy serve as intangible resources that investors take into account when evaluating the firm, its top management, its future financial performance (ie, future earnings potential), and its future financial performance risk (ie, the predictability of future financial performance)? (1) Second, do investor perceptions of TMT prestige directly influence their perceptions of financial performance and financial performance risk, or do investor perceptions of organizational legitimacy mediate these relationships? To examine the link between TMT prestige and organizational legitimacy, it is important to recognize and overcome the methodological difficulties associated with each construct Sociological literature, for example, suggests that individuals subjectively attribute prestige to another's objective characteristics (for a review of prestige studies in sociology, see Wegener (1992)) The same arguments are true for organizational legitimacy As noted by Ashforth and Gibbs, "Legitimacy is conferred upon or attributed to the organization by its constituents like beauty it resides in the eye of the beholder" (1990: 177) As such, we employ a survey to directly measure investor perceptions of TMT prestige and organizational legitimacy and examine how these perceptions influence assessments of future financial performance and future financial performance risk We believe that our work provides insights that may inform both the investment community as well as firms attempting to appeal to the investment community The remainder of our paper proceeds as follows First, we provide our theoretical framework and derive specific hypotheses regarding TMT prestige and organizational legitimacy Second, we describe our research methodology Finally, we present and discuss the implications of our results CONCEPTUAL BACKGROUND AND HYPOTHESES The resource-based view of the firm (Barney, 1991) represents one of the more well-established theoretical frameworks in strategic management Extensions of the resource-based perspective have distinguished between tangible and intangible resources (Hall, 1993) Recent empirical work, in particular, has highlighted the importance of a number of intangible resources …

The Knowledge Strategy Orientation Scale: Individual Perceptions of Firm-Level Phenomena

Abstract: One of the most serious threats to the relatively new field of strategic management research is poor construct measurement (Boyd et al., 2005). Due to the relatively complex nature of strategic management variables, quality of measurement is crucial (Godfrey and Hill, 1995) and strategic management research must place greater emphasis on research design, construct validation, and more sophisticated analytical techniques (Bergh, 2001). Many researchers tend to operationalize latent constructs with the use of proxy variables. For example, Boyd et al. (2005) found that constructs such as available organizational resources, public profile, core rigidity, and ability to initiate competitive action have all been operationalized by single-item archival measures of organizational size. Additionally, organizational size can be measured as number of employees, number of products, number of production facilities, or any of at least a dozen other measures. The reliance on single-item measures to the exclusion of multi-item scales virtually ensures that research is conducted with unreliable measures that attenuate results. More importantly, there is a clear question of validity. Does organizational size truly represent core rigidity, ability to initiate competitive action, or something altogether different? Additionally, Payne et al. (2003) suggest that the use of archival data has several disadvantages. These include the fact that the data may have been originally collected for some other purpose, there may be missing data points, archival data may be susceptible to experimenter bias as some researchers might examine the data before they propose hypotheses, and that archival data may not be readily analyzable. Given that all of the above are distinct problems plaguing strategic management research, the truly important issue is that there is no real valid representation of many key constructs. In fact, Boyd et al. (2005) call for the development of new multi-indicator measures for constructs in strategic management research, especially for more contemporary approaches to strategy. Traditional research in strategic management has used a variety of measures for the Miles and Snow (1978) typology of prospectors, analyzers, defenders, and reactors, and the Porter (1980) typology of low cost, differentiation, and focus. However, these approaches to strategic management have been criticized for a variety of reasons (see Grant, 2005). Today, the school of strategy that is attracting a wide degree of attention is the knowledge-based view of the firm, with its typology of exploration and exploitation knowledge strategies. However, an acceptable multi-indicator measure of these constructs has not been generally accepted in the literature. Thus, the purpose of our study is to examine the factor structure of responses to items designed to measure the knowledge strategy constructs of exploration and exploitation and to provide evidence of external validity using other measures of theoretically-related variables. In keeping with this concern for greater methodological rigor we suggest that the further delineation of these two constructs is appropriate and necessary for future research in this area. In the sections that follow, we give some insight into the theoretical background of our focal constructs, an overview of our analytical methods, the results of our analysis, and a discussion of these results. THEORETICAL BACKGROUND A knowledge strategy can be viewed as a firm's set of strategic choices regarding two knowledge domains: 1) exploration, or the creation or acquisition of new knowledge and 2) exploitation, or the ability to leverage existing knowledge to create new organizational products and processes. A firm's knowledge strategy guides its resource allocation--the degree to which the firm focuses its resources on either generating radically new knowledge or incrementally enhancing the existing knowledge base (March, 1991; Bierly and Chakrabarti, 1996). …

An Empirical Examination of the Role of Social Exchanges in Alliance Performance

Abstract: Strategic alliances have become a major corporate strategy in many high-tech industries such as electronics, telecommunication, pharmaceutical, and machine tools industries (Gulati et al., 2000; Yoshino and Rangan, 1995). Strategic alliances allow firms to develop new competencies quickly, and rapidly expand in geographically disperse locations offering the greatest levels of opportunity and flexibility (Dyer and Singh, 1998; Gulati et al., 2000). While alliances are becoming an attractive option, many strategic alliances have been unstable, ineffective and poorly performing (Arino and Doz, 2000). The potential for conflict and a clash of interest between alliance partners is inherent, because either party can opportunistically use the alliance to learn the other's business or technological secrets (Doz, 1996; Khanna et al., 1998). Previous alliance research has focused on this issue of partner opportunism and has adopted a transaction cost economics view (Pisano, 1989; Williamson, 1991) to argue that high transaction costs resulting from opportunistic behavior can be alleviated through appropriate contractual controls or equity-based ownership controls (Kogut, 1988; Pisano, 1989). These views, however, neglect the fact that the cost of deterring opportunism is very high and excessive controls may increase coordination costs (Ring and Van de Ven, 1994) and intensify power conflicts between alliance partners (Provan and Skinner, 1989; Steensma and Lyles, 2000; Yan and Gray, 1994). The challenges posed by alliances have encouraged scholars to look beyond the issue of partner opportunism and explore the evolutionary collaborative processes (Arino and Doz, 2000) and, specifically, the role of social ties such as trust in enhancing alliance performance (Doz, 1996; Lazaric, 1998; Ring and Van de Ven, 1994). While some researchers have examined the relationship between interfirm trust and alliance performance (Inkpen and Curall, 1998; Luo, 2002; Sako, 2000; Zaheer et al., 1998), others have argued that several factors such as risk and uncertainty, cultural diversity of partners, and resource dependence (Elangovan and Shapiro, 1998; Luo, 2002) affect the relationship between trust and alliance performance. Thus, there is a need for research into the role of other social exchanges such as reciprocal resource commitments and relational influence between partners that will ensure collaboration and alliance success (Das and Teng, 1998; Gundlach et al., 1995; Steensma and Lyles, 2000; Subramani and Venkatraman, 2003). Because reciprocity and mutual influence between partners are tangible norms and manifest as mutual control and power sharing or joint decision making, they can very well supplement trust in collaboration (Das and Teng, 1998; Dekker, 2004; Provan and Gassenheimer, 1994; Steensma and Lyles, 2000). In addition, there is a need to understand why a partner will have a greater or lesser amount of trust for another party. That is, what are the specific attributes of the partners that enhance trust in the alliance? In this study, we conceptualize trust in terms of trustworthiness based on skills, integrity, and benevolent attitudes of the partner as perceived by the focal firm, and examine the managerial perceptions related to all significant ongoing social exchanges between alliance partners. Since most conflicts occur in the routine aspects of the interaction, successful alliance management is essentially a social process. From the focal firms' perspective, we examine the relationships between social exchanges (reciprocity, trust, and mutual influence) and alliance success in terms of perceived alliance performance and partner's propensity to continue the alliance. THEORY AND HYPOTHESES Social Exchanges and Alliance Coordination "Social exchange" is a condition in which the actions of one party provide the rewards and incentives for the actions of another party and vice versa in repeated interactions (Blau, 1964; Homans, 1961). …

Attitude toward the Customer: A Study of Product Returns Episodes

Abstract: Past research in the retailing and services marketing literatures has focused on the importance of creating and maintaining customer satisfaction (Anderson and Mittal, 2000; Berry and Bendapudi, 2003; Fournier and Mick, 1999; Oliver et al., 1997). One particularly important aspect of the customer satisfaction process that has received significant attention recently is service recovery, which is defined as the process by which the firm attempts to rectify a service- or product-related failure (Maxham and Netemeyer, 2002). Retailer responses to failures are shown to reinforce customer relationships when handled properly (Blodgett et al., 1997), and/ or aggravate the negative effects of the failure when mismanaged (Hoffman et al., 1995; Krapfel, 1988). The behaviors and feelings of the retail salesperson are of critical importance during the service recovery process. The retail salesperson frequently represents the final (or only) point of contact between the retail firm and the customer, and the service recovery efforts he/she enacts can have an enormous impact not only on immediate customer satisfaction, but, importantly, on service quality perceptions and future patronage intentions (Pugh, 2001; Bitner et al., 1994, 1990). One type of service recovery that has emerged as particularly salient to retailers is the handling of product returns. Returns transactions provide a critical point of contact between the retail firm and the customer, and return volumes can represent anywhere from 6-40% of sales for a given retailer. Return transactions also represent a prime opportunity for the retailer to recuperate assets and customers that might otherwise be lost (Stock, 1999; Rogers and Tibben-Lembke, 1999; Dunne et al., 2001). In general, most research addressing product returns has assumed that the customer has a legitimate reason for returning a product, and/or the retailer should accept returns with little or no questions asked. However, anecdotal accounts and articles in the business press refute this perceived legitimacy perspective (Krapfel, 1988; Steinauer, 1997; Tomlinson, 2002; Industrial Relations Review & Report, 1994). Retail salespeople who handle returns will readily share stories about outrageous customer behavior. For example, some customers return clothing items that are stretched or ripped at the seams, claiming poor workmanship, when in fact it is clear that the article was simply too small (Dacy, 1994). Other retailers and salespeople cite "boomerang shopping" (c.f., Neuborne, 1996) or "renting" as a major issue; that is, the customer purchases items that are intended from the outset to be used and then returned at a later date. One customer practicing boomerang shopping openly described Wal-Mart as being the "best rent-a-center in the country," as he recalled his purchase of a snow-blower during the autumn months and its subsequent return in the spring after the snow thawed (Neuborne, 1996). These and other types of questionable customer behaviors related to returns, such as receipt fraud, price arbitrage, and the return of stolen merchandise (Speights and Hilinski, 2005), are estimated to cost the retail industry over $13 billion per year (Rogers et al., 2005), placing returns abuse in a similar category with shoplifting and returned checks in terms of lost value to retailers. Unfortunately, the retail salesperson is frequently "caught in the middle," between satisfying customer desires and enforcing store policy. The salesperson may feel pressured to ignore customer malfeasance and provide "service with a smile," even in the face of overt or blatant attempts by the customer to take advantage of policies that are originally enacted with his/her best interests in mind (Tomlinson, 2002). The salesperson may suspect that the customer is blatantly misleading or even providing false information. It stands to reason that illegitimate or devious acts by the customer meant to circumvent store policies could eventually result in a negative emotional reaction by the retail salesperson. …

Human Resource Safety Practices and Employee Injuries

Abstract: Workplace safety continues to be a high operational priority facing many organizations across all types of industries. And, as Ruth (2004) notes, injuries oftentimes result from managerial issues, rather than more notable safety issues. Thus, identifying potential steps employers can take in their managerial practices is critical to managing organizational costs, improving effectiveness of public policy and, most important, protecting employees. A recent trend in human resources (HR) research may provide some clarity to the safety research. A number of studies have established the effectiveness of HR practices (Huselid, 1995; McEvoy and Cascio, 1985), establishing an overall consensus that certain "good" HR practices lead to positive organizational outcomes (Delaney and Huselid, 1996; Becker and Gerhart, 1996). Organizational involvement has also been linked to improved safety outcomes (Oliver et al., 2002), but these have not been broken down into specific practices. Therefore, the purpose of this study is to explore the connection between organizational-level HR practices and employee injuries. Background/Proposed Associations Since this study is taking an exploratory look at how HR practices will impact employee injuries at the organizational-level, the study focuses on the more easily measurable aspects of the four most basic HR practices-selection, training, employee evaluations, and compensation. These are the practices that have been studied most frequently and have consistently been tied by research to other positive organizational outcomes. Selection. Past research has indicated organizations may improve their safety outcomes through two primary selection processes: (1) identifying and eliminating individuals unsuited to certain types of work and (2) by hiring for positions that require a very high degree of skill where the cost of accidents as well as the ratio of applicants to positions open is high. Beyond these processes, selection has not been found to be as useful as once hoped in the safety literature (Hale and Hale, 1972). However, empirical evidence continues to indicate that well-designed selection procedures improve overall organizational performance (Terpstra and Rozell, 1993). Thus, selecting applicants for safety (e.g., hiring employees with increased knowledge of safety, based on their past safety performance; asking questions specifically regarding safety in the interview) should have a positive association with organizational performance tied to safety, such as wearing safety equipment and following safety behaviors. These behaviors, in turn, should reduce the number of employee injuries incurred at the organization. Socialization may also occur in the selection process (Anderson and Ostroff, 1997) by emphasizing the organization's safety values to new employees, in turn reducing employee injuries. Hypothesis 1a: Selecting for safety has a positive association with reduced injuries. Since selecting specifically for safety (e.g., asking direct questions and discussing safety in the interview process) is not highly practiced in organizations, an exploratory look at how other selection practices (e.g., pre-employment testing, screening for past work experience) may be associated with safety is also undertaken. Although numerous pre-employment tests/selection criteria exist, only criteria that tied with past safety research were explored in this study. Prior work experience has been one of the longest used screening tools in the selection process. When screening for work experience, organizations typically seek experience in the industry as well as for a specific type of work. In Hansen's (1989) causal model of accidents, he found job experience was one of only two variables that were significant parameters of accident risk. Experience provides employees with knowledge of both general industrial hazards, as well as familiarity with individual machines and components (Hale and Hale, 1972), providing an expectation that increased work experience should be associated with reduced employee injuries. …

The Link between Communication and Financial Performance in Simulated Organizational Teams

Abstract: Synchronized teamwork, supported by a healthy communication environment, is a primary means by which organizational decisions are made, strategy is developed, and performance is measured (Miller, 2003). However, simply the presence of communication infrastructure and employee programs to foster communication skills will not guarantee successful communication and subsequent organizational success (Luthans and Sommers, 2005). Pettit et al. (1997) have expressly called for research that focuses on the relationships between communication and quantitative organizational outcomes. Surprisingly, given the enormous amount of resources and attention devoted to improving communication aptitude, very little empirical research links communication to organizational-level financial performance measures. Research in the communication field has investigated the link between communication and the outcomes of job performance (Pincus, 1986), organizational commitment (Putti et al., 1990; Varona, 1996), productivity (Clampitt and Downs, 1993), and job satisfaction (Pettit et al., 1997; Pincus, 1986). However, little research links how communication makes organizations more successful in terms of financial performance. This study attempts to fill the gap by providing empirical research on the impact of communication on organizational financial success. In examining organizational-level outcomes, levels of satisfaction must distinguish between interactions at the dyadic versus team level--an issue that confounds current understanding (Hecht, 1978a). Organizational results don't derive from the exchange between a mere two employees, but rather interactive communication of each employee with a group of others. Thus, a relatively new construct of Group Communication Satisfaction captures members' emotional reaction toward his/ her interaction within a work group in terms of the degree to which it has met or failed to meet his/her expectations about communication (adapted from Hecht, 1978a; Kirtley Johnston et al., 2000). Researchers argue that team members' (dis)satisfaction with the nature and content of communication can potentially derail/enhance organizational outcomes (Downs, 1988; Gray and Laidlaw, 2004). Social categorization theory suggests that member's perceptions of group characteristics influence group performance (Abrams and Hogg, 1999; Hogg and Terry, 2000; Tajfel and Turner, 1991). Perceived characteristics of group members may influence the satisfaction with group communication. Empirical studies show that people tend to evaluate information cues from their own group members as being correct (Turner, 1991) and highly relevant (Mackie et al., 1992). People tend to regard members of their own social category as more attractive on dimensions relevant to the group; for instance, accountants tend to think that most accountants are intelligent (Abrams and Hogg, 1999). Seeing others as attractive or adding value could ease the exchange of ideas and opinions and increase degree of Communication Satisfaction. This study examines the characteristics of Group Attractiveness, Heterogeneity, and Group Communication Satisfaction on Profit and explores the following research questions: 1. Do team members' perceptions of satisfactory Group Communication impact group performance? 2. What role do Group Processes play in the relationship between Communication Satisfaction and Profit? 3. What group characteristics influence Group Communication Satisfaction? Group Communication Satisfaction Group Communication Satisfaction refers to satisfaction or dissatisfaction arising from social interaction within a work group (Hecht, 1978a; Kirtley Johnston et al., 2000). When workgroup members' expectations regarding the relational style in which responsibilities and rewards systems are communicated to them, they feel satisfied with the communication environment. Studies suggest that organizational factors can influence the degree to which communication satisfaction is experienced: flexible work arrangements, quality of leader-member exchange, and organizational structure are apparent determinants (Walther, 1988). …

Overreward and the Impostor Phenomenon

Abstract: Overreward in the selection process potentially carries serious implications for organizations. Equity theory (Adams, 1963, 1965) proposes that individuals who feel underrewarded or overrewarded will experience tension (e.g., frustration in the case of underreward or guilt in the case of overreward) and will take steps to rectify the inequity. While much literature has been attributed to the study of underreward (e.g., Gilliland, 1993; Greenberg, 1990) and the multiple outcomes that are associated with this type of distributive justice, relatively little attention has been paid to overreward. This could be due to a generalized belief that overreward is not very common since there is a higher threshold of inequity (Miner, 2002; Adams, 1965). This higher threshold implies that overreward inequity will be tolerated more readily than underreward. While some may question the existence of overreward, research in the area of underreporting billable hours for personal satisfaction or to improve performance evaluations indicates that some individuals do feel a sense of and recognize the idea of overreward (Akers and Eaton, 2003). Although this viewpoint may be true, overreward may still cause problems for the employee and employer in the work environment. Overreward in the selection process occurs when an individual receives an employment offer that exceeds the individual's expectations relative to the perception of his/her qualifications. This distributive injustice in the form of inequity causes feelings of unease within the applicant. Guilt is one potential response to the perceived inequity, and guilt may lead the applicant to reject the employment offer (Mowday, 1996; Miner, 2002; Gilliland, 1993). Alternatively, the offer may be "too good to refuse" and the person may accept the offer even if he/she does not feel it is deserved. If, however, the job is accepted, the individual may experience impostor feelings referred to as the impostor phenomenon (Clance and Imes, 1978). When an employee experiences the impostor phenomenon, he/she feels like an "impostor" or a phony that was mistakenly or accidentally offered the job despite his/ her inadequacies and will eventually be found out. The impostor phenomenon has been defined as "an internal experience of intellectual phoniness in high achievers who are unable to internalize their successful experiences" (Bernard et al., 2002: 321). The impostor phenomenon generally applies to individuals who are successful by external standards but have a self-perception of personal incompetence (Chrisman et al., 1995; Clance and Imes, 1978). It was first applied to high-achieving women, who regarded themselves as impostors in spite of credentials and achievements indicating otherwise (Clance and Imes, 1978). The impostor phenomenon, or feeling of phoniness, plays an important role in shaping the attitudes and behaviors of the individual within the workplace. As Clance and Imes (1978) expressed, there is a fear within the individual that he/she will be "found out" since the job is not deserved. Thus, the employee will experience increased pressure to perform in order to meet expectations. According to Clance and Imes (1978), individuals who suffer from the impostor phenomenon experience generalized anxiety, a lack of self-confidence, depression, and frustration due to a perceived inability to meet high levels of self-imposed standards. Research in psychology has validated the impostor phenomenon as a construct distinct from related constructs such as self-esteem, self-monitoring, and social anxiety (Chrisman et al., 1995; Cozzarelli and Major, 1990; Edwards et al., 1987). The impostor phenomenon, as a construct, encompasses (1) feelings of intellectual phoniness, (2) beliefs that individual success is based on luck or hard work rather than ability, (3) lack of confidence in the ability to replicate past successes, (4) fear of evaluation by others, as well as failure, (5) fear that one's incompetence will be discovered, and (6) an inability to take pleasure in one's achievements (Clance and Imes, 1978; September et al. …

Shareholder Value Ideology, Reciprocity and Decision Making in Moral Dilemmas

Abstract: Recent large-scale corporate scandals have turned business ethics and corporate moral responsibility into a major concern of managers, business schools, and the general public. Companies such as Tyco International, Ltd., Adelphia Communications, MCI (formerly Worldcom) and Enron have experienced significant damage to their reputations due to the malfeasance of high-level corporate executives. Results from the 2004 Harris-Fombrun Reputation Quotient survey listed Enron and MCI as having the worst reputations from the list of the 60 most visible companies rated in America (Reputation Management, 2005). Tyco and Adelphia were also ranked among the ten worst companies. The fraudulent and deceptive practices of these and other corporations, once again, have researchers seeking an answer to the question of "what influences managers' decisions in moral and ethical dilemmas," so that they may offer some insights to the business community on how to prepare future executives and managers to face challenges and the public's increasing expectation of corporate moral responsibility. Unfortunately, empirical research in business ethics and social responsibility has been limited (e.g., Donaldson, 2003). Extant empirical studies in this research area have focused mainly on measuring and comparing the attitudes and ethical beliefs of managers, entrepreneurs, employees at different organizational levels, business students and academic faculty, and the results have been somewhat inconclusive (e.g., Bucar and Hisrich, 2001). Those studies have merits in their own right. However, they may not directly fulfill the need of the business community to understand the driving forces that may influence corporate conduct, especially in the face of moral dilemmas, by managers whose decisions may have broad-scale consequences to multiple stakeholders such as shareholders, suppliers, employees, customers, the business community, society and, potentially, the economy as a whole. To help fill the research gap, this study identifies two potential factors that may play a major role in managers' decision making when they face moral dilemmas. They are the ideology of shareholder value and the norm of reciprocity. The ideology of shareholder value is the belief that managers have a duty to maximize profits and shareholders' wealth, while the norm of reciprocity is the social norm that business should play its part in supporting stakeholders since stakeholders play a major role in supporting business (i.e., reciprocal relationships between business and stakeholders). This study aims to answer the following research question: How do the ideology of shareholder value and the norm of reciprocity influence managerial decision making in stakeholder moral dilemmas with suppliers, customers and employees? BACKGROUND OF THE STUDY Ethical decision making literature has evolved around two major themes: 1) ethical perceptions and attitudes and 2) social responsibilities of business. The research stream in ethical perceptions and attitudes operates at a micro level by attempting to unveil behaviors or actions that individuals in the business community perceive as ethical or unethical. The main thesis of this research stream is that cultural, organizational and individual differences influence individuals' ethical attitudes and perceptions. Prior research has found that the national origin of business students has an impact on their reactions to ethical dilemmas involving employees, supervisors, customers, suppliers, and business rivals (e.g., Nyaw and Ng, 1994), and that cultural dimensions (e.g., power distance, individualism) were significantly related to ethical attitudes toward business practices (e.g., Hood and Logsdon, 2002; Volkema, 2004). Ethical perceptions, values and judgments were also found to significantly differ by organizational functionalities such as marketing and research (Hunt et al., 1989), by hierarchical levels and the length of tenure with the organization (Harris, 1990), by work group characteristics (Jennings et al. …

Intraindustry Executive Succession, Competitive Dynamics, and Firm Performance: Through the Knowledge Transfer Lens

Abstract: A substantial body of research has documented the role of human resource flows in the diffusion of innovation across organizations (Almeida and Kogut, 1999; Baty et al., 1971; Boeker, 1997; Ettlie, 1980, 1985; Pfeffer and Leblebici, 1973; Rogers, 1995; Rosenkopf and Almeida, 2003; Saxonhouse, 1991; Song et al., 2003; Young et al., 2001). To the extent they carry relevant knowledge, employees who move between firms facilitate the adoption of an innovation or technology by a particular organization. Although the primary focus of this research has been on determining why and how innovations are spread across firms, from an organizational perspective, personnel flows can also be construed as an organizational learning mechanism. That is, hiring rivals' employees can potentially serve as a means by which a firm both absorbs new knowledge from its external environment and adapts to changing contexts. With certain exceptions (e.g., Baty et al., 1971; Boeker, 1997; Young et al., 2001), research examining the effect of employee mobility and the diffusion of innovation has focused on the acquisition of technical managers, particularly scientific and engineering talent. There has been little emphasis on the possible effect of changes to the executive ranks of a firm on knowledge flows, rivalry, and competitive strategy. Yet as the following quotation indicates, organizations operating in dynamic, technology-intense environments may be under pressure to hire senior executives from rivals in order to acquire new technologies, or enter new markets rapidly: In [Silicon] Valley and tech in general, employees are bought and sold like commodities. If you have trouble with the competition, simply raid its talent. Just last Fall, German software maker SAP sued Siebel Systems Inc. after more than a dozen executives jumped ship for its Silicon Valley rival (Kerstetter, 2000: 43). Additionally, this phenomenon does not seem to be limited to technical talent. For example, SAP, AG, the world's largest maker of business-application software, has hired a number of executives away from Oracle Corp and other major rivals as competition in the industry intensifies.... The software industry has a tradition of poaching talent from competitors, particularly sales people. What makes the recent hires by SAP noteworthy, however, is the number and that it includes development and marketing executives (Bryan-Low, 2005: B2). Widely regarded as an important organizational adaptation mechanism (Gabarro, 1987; Vancil, 1987), the study of change to a firm's executive ranks, or "executive succession," is perhaps one of the most frequently investigated phenomena in management research (Finkelstein and Hambrick, 1996; Kesner and Sebora, 1994). A rich tradition in executive succession research bifurcates successor-type into insider and outsider categories (Allen et al., 1979; Behn et al., 2006; Boeker and Goodstein, 1993; Cannella and Lubatkin, 1993; Carlson, 1961; Dalton and Kesner, 1985; Grusky, 1964; Ocasio, 1999; Pfeffer, 1972; Pfeffer and Leblebici, 1973; Salancik and Pfeffer, 1980). Formal, well-ordered transition processes and promotion from within (i.e., "inside succession") tend to result in the selection of new leaders that fit well within the organizational context and perpetuate continuity in strategic decision making. Under stable conditions, they will also likely maintain or increase the extent to which an organization fits its external environment. In contrast, outside successors tend to disrupt the status quo and established decision-making patterns. In theory, the successful implementation of change by outside successors will help reverse economic decline by making organizations responsive to discontinuous change in turbulent environments. Investigations of the direct relationship between outside succession and subsequent (i.e., post-succession) firm performance, however, appear somewhat more equivocal. …

Cost-Volume-Profit Analysis Incorporating the Cost of Capital

Abstract: Cost-volume-profit (CVP) analysis is a mathematical representation of the economics of producing a product. The relationships between a product's revenue and cost functions expressed within the CVP model are used to evaluate the financial implications of a wide range of strategic and operational decisions. For example, CVP analysis is employed to assess the financial implications of product mix, pricing, and product and process improvement decisions. Perhaps equally important, CVP analysis facilitates measuring the sensitivity of a product's profitability to variations in one or more of its underlying parameters. Finally, CVP analysis may be used to determine the trade-offs in profitability and risk from alternative product design and production possibilities. In effect, CVP is a quantitative model for developing much of the financial information relevant for evaluating resource allocation decisions. Despite its widespread application, CVP analysis is frequently criticized for its use of simplifying assumptions, such as deterministic and linear cost and revenue functions. Additionally, CVP is disparaged for its focus on a single product and its single-period analysis. However, as noted by Guidry et al.: "Non-linear and stochastic CVP models involving multistage, multi-product, multivariate, or multi-period frameworks are all possible, although a single model embracing all of these extensions would seem a radical departure from the whole point of CVP analysis, its basic simplicity" (1998: 75). Horngren et al. (2000) note that firms across a variety of industries have found the simple CVP model to be helpful in both strategic and long-run planning decisions. Furthermore, a survey of management accounting practices indicates that CVP analysis is one of the most widely used techniques (Garg et al., 2003). However, Horngren et al. (2000) warn that, in situations where revenue and cost are not adequately represented by the simplifying assumption of CVP analysis, managers should consider more sophisticated approaches to financial analysis. An implicit assumption, and one that is frequently overlooked in evaluating the use of CVP analysis, involves its treatment of the cost of capital. CVP analysis, like other managerial accounting techniques and models, uses accounting profitability as the primary decision criterion for evaluating resource allocation decisions. CVP analysis, like other managerial accounting techniques, ignores the cost of capital and treats it as if it were zero. However, the opportunity cost of the funds invested in the assets used to manufacture a product is a cost the same as the cost of operating resources, such as direct material, labor, and overhead. The failure of CVP analysis to incorporate the cost of capital into a product's cost function can lead to underestimating a product's cost, while overstating its profitability. For products that require a significant investment of capital, ignoring the opportunity cost of invested funds may lead to accepting products whose rate of return is less than the firm's cost of capital. In effect, traditional CVP analysis encourages managers to select products that destroy, rather than create, economic value for the firm. Finally, using an accounting measure of profitability creates a bias to employ capital relative to operating resources because the cost of capital is not reflected in a product's cost like those of operational resources. Therefore, product designers and developers may employ investment funds beyond the point where the marginal benefit of the last dollar of capital used is equal to its marginal cost. The purpose of this article is to illustrate how the cost of capital may be incorporated into CVP analysis. It develops the mathematical relationship between a product's discounted operating income after taxes less the cost of capital and the product's price, costs, invested funds, and sales quantity. From this relationship, the sales quantity needed to earn a rate of return equal to the firm's cost of capital may be estimated. …

Integrating Employment Contracts and Comparisons: What One Can Teach Us about the Other

Abstract: filled) (Rousseau, 1989). Despite this cognitive component, studies to date have focused primarily on the outcomes (i.e., behaviors) associated with contract breach (e.g., Conway and Briner, 2002; Lo and Aryee, 2003; Morrison and Robinson, 1997; Robinson, 1996; Robinson and Morrison, 2000; Turnley and Feldman, 1999; Turnley et al, 2003). In this study, we examine the cognitive processes that lead to PC evaluations and behavioral

Mechanisms Linking Nationality and Subjective Well-Being in Managers in China and the United States

Abstract: Subjective well-being (SWB) refers to satisfaction with one's life and experience of more frequent pleasant emotions as compared to unpleasant emotions (Diener et al., 1999). In the workplace, SWB affects the productivity of employees, their ability to make decisions, and attendance (Danna and Griffin, 1999). Because employees spend a substantial part of their lives at work, and are dependent on their job to meet several personal needs, their work and personal lives are intertwined. As a result, stressors may originate from the conflict be tween these roles and that conflict may affect the overall well-being of an employee (Danna and Griffin, 1999). Yet despite the causes and effects of SWB related to the workplace, SWB remains an under-explored subject in the work domain. As Danna and Griffin noted in their review of past research, "Indeed, for a variety of reasons these [health and well-being] issues should occupy a much more prominent niche in mainstream organizational research" (1999: 357; words in brackets added). While cross-cultural studies on SWB have found differences in average SWB scores of respondents across countries and have attributed it to various factors including individualism-collectivism, status of human rights, and wealth (Diener et al., 1995), not much research has been conducted to examine the mechanisms that link nationality to SWB. Accordingly, our study aims to extend past research by identifying the role of two work domain factors--work locus of control and family-work conflict--in explaining cross-cultural differences in SWB. We examine these linkages in the case of managers in the United States and the People's Republic of China. With a population of nearly 1.3 billion and a gross domestic product of nearly $8.86 trillion (Central Intelligence Agency, 2006), the People's Republic of China (referred to as "China" in the subsequent text) has emerged as an important player in the world economy. The international marketplace recognizes significant business opportunities in China: joint ventures, outsourcing partnerships, low-cost suppliers of a wide variety of goods from toys to high-tech electronic products, and significant and largely untapped markets (e.g., Erickson, 2001). Cross-cultural researchers have highlighted the difficulties managers face when seeking to transfer management techniques such as human resource management practices and policies into the Chinese context (Teagarden and Von Glinow, 1990) and have documented the myriad ways that the eastern culture in China differs dramatically from western cultures such as the U.S. In addition to differing economic, legal, political, and educational systems in the U.S. and China-such as the smaller proportion of private sector jobs (Lu et al., 2002) and the intensely competitive educational system (Tang, 1999) in China-research over the past 20 years demonstrates that Chinese and U.S. managers differ considerably on a number of cultural dimensions such as individualism-collectivism, power distance, and long-term orientation (e.g., Chen, 1995; Earley, 1989, 1993; Hofstede, 1991, 1993; Hofstede and Bond, 1988; Ralston et al., 1993; Schwartz, 1994; Shenkar and Ronen, 1987; Smith et al., 1996). Of these dimensions, a greater volume of research has focused on the differences between the U.S. and China related to individualism-collectivism, which refers to the extent to which individuals are connected to their society (Earley and Gibson, 1998). Pursuing individual goals is more important than pursuing group goals in an individualist society. A meta-analysis of individualism-collectivism research (Oyserman et al., 2002) supported Hofstede's (1991) assertion that people in the U.S. were higher in individualism and lower in collectivism compared to the Chinese. Another cultural dimension with significant differences between the two nations is power distance. In high-power distance societies, employees are thought to accept hierarchy and power differences and comply quickly and automatically with the decisions of the powerful (Hofstede, 1980, 1986). …

Employment Capital, Board Control, and the Problem of Misleading Disclosures *

Abstract: Recent years have witnessed unprecedented levels of accounting irregularities and scandals, leading to a thorough re-examination of governance practices and the institutionalization of mandated governance and accounting standards such as those incorporated in the Sarbanes-Oxley Act. Left unanswered by all of the publicity and legislation is the question whether the phenomenon has been fully and properly understood. Although agency theory (Fama and Jensen, 1983; Jensen and Meckling, 1976) speaks to the issue of monitoring and control of executive discretion, do we know enough about how governance structures operate in different contexts to be confident that we can reduce the incidence of problems such as misleading disclosures? We seek to contribute to our understanding of the dynamics of the disclosure process and effective governance design by examining the response of CEOs to threats to their employment capital and the relationship between the board and the CEO. To date, the majority of published research on misleading disclosures has appeared in the accounting literature and focuses rather narrowly on audit and litigation issues (e.g., St. Pierre and Anderson, 1984; Stice, 1991). More recently, work investigating misleading disclosures has started appearing in the management literature (e.g., Dunn, 2004; Latham and Jacobs, 2000; Reed et al., 2004). Like this emergent research, our work is grounded in management thought rather than accounting theory and practice. We draw primarily on agency theory (e.g., Fama, 1980; Jensen and Meckling, 1976) to focus on the tension between managerial motivations and the ability to control managerial decision making. In short, this research adopts more of a governance perspective than a broad behavioral approach. Although we apply prospect theory (e.g., Kahneman and Tversky, 1979)--a behavioral framework--we do so within the context of the agency relationship. Understanding the framework presented here also necessitates a brief recapitulation of agency theory, particularly as it relates to the problem of misleading disclosures. In the modern corporation, the separation of ownership from management results in an efficient division of labor and differential risk-bearing in which shareholders, as risk-bearing specialists, can reduce their exposure by diversifying their portfolio of securities, while managers, who have skills in formulating and implementing strategy, seek to maximize returns within individual companies (Berle and Means, 1932). This separation of roles implies that the interests and motives of owners and managers can diverge, thereby giving rise to an agency problem (Fama and Jensen, 1983; Jensen and Meckling, 1976). Because they cannot diversify their employment capital (Fama, 1980), managers may have positive incentives to pursue strategies and make decisions that are suboptimal for shareholders (Eisenhardt, 1989; Lee and O'Neill, 2003). The inability of managers to diversify employment capital leads to two critical considerations relevant to the disclosure process. First, any impairment of employment capital necessarily will be borne directly by the managers concerned. Thus, the value of their employment capital will fluctuate with reported results, and disappointing or below-target outcomes will decrease its value. Second, given this relationship between performance and employment capital value, board oversight of the disclosure process is crucial. Indeed, theorists generally advocate strengthening the role and power of the board of directors in order to mitigate the agency problem (e.g., Deutsch, 2005; Fama and Jensen, 1983; Walsh and Seward, 1990; Zahra et al., 2005). In the context of misleading disclosures, the board's proximity to management, and its ability to review strategy and performance on an ongoing basis, gives the board the greatest likelihood of discovering and correcting any misbehavior. (Shareholders, even large ones, are external to the disclosure process and may not be able to uncover problems. …

From Dot Bomb Implosion to the Printing Industry: My Personal and Professional Journey

Abstract: EXECUTIVE OVERVIEW Since its founding in 1974, Printing Control Graphics (PCG), a recent acquisition of Houston-based Consolidated Graphics (NYSE: CGX), has been known as a high-end, boutique, commercial printer, producing annual reports, presentation folders, catalogs, brochures, and direct mail. Before 2000, PCG was a successful medium-sized printing company with nearly $13 million in annual revenues. However, after the dot.com bubble burst in 2000-01, the slide in earnings began with back-to-back years of successive losses. But that was before Richard Lancaster joined the ranks of this rapidly sinking ship in June 2003 as Vice President of Business Development. When Mr. Lancaster joined the company, revenues had fallen to $7.5 million and the company had an operating loss of more than -10%. At that time PCG was owned by a failed consolidator called Kelmscott Corporation, which in turn was owned by J. P. Morgan Chase and GE Capital, and managed through the JPM workout banking group. The goal on joining the company for Lancaster was to affect a turnaround and transition as quickly as possible and to help the Kelmscott group's effort to earn its way out from bank ownership. Lancaster, at the age of 43, has lead PCG on a steady march back to profitability. Revenues in 2004 jumped to $10 million from $7.5 million in 2003 when he came onboard. However, the company's bottom line still showed some red, with losses of $716,000 in 2003 and $100,000 in 2004. Then in April 2005, after the closing of the merger with CGX, Lancaster was promoted to President of the company, and ever since the company has been profitable each month. July 2005 operating income came in at 18.5%, while the industry standard is around 5%. While the turnaround and transition is not complete, Lancaster feels the company is well on its way to becoming an industry leader in terms of operating income. The organization-wide restructuring resulted in a: * 20% reduction in the workforce. * 19% replacement in the remaining workforce. * Crossed-training 60% of the staff. * Increased sales revenues due to new customers. * 10% increase in cross-selling additional value-added services to existing customers. * Investment in new, state-of-the-art digital printing technology. * Reduction in operating costs through various process efficiency improvements. Lancaster noted in a presentation to executives at his new parent holding company that he set out six core ideas in leading PCG's transition, but pointed out that these principles were not all that different from using persistent, consistent, good management principles anywhere: * Sales Focus--"nothing happens until somebody sells something!" * Program Selling--sell value-added programs, not tactical printing jobs. * Cost Consciousness--embed this in everyone for everything we do and make results clearly visible. * Quality-Centric--customers know us as a high-end boutique printer, thus we must deliver a quality product to differentiate ourselves in the marketplace. * People Focus--respect employee's longevity and knowledge. If people truly feel valued, this is infectious in their interactions with customers and with each other. Have fun (e.g., BBQ's for the staff and horse races for customers). * Insist upon integrity in all that we do--always take the high ground on any issue where "circumstantial ethics" can creep into decision making. What is particularly amazing about Lancaster is that he had no prior experience whatsoever in the printing industry I a traditionally "good-oldboys" industry. Born in England into a British military family, Lancaster spent his youth traveling the world with his parents and attending Britain's equivalent of The Citadel military boarding school, followed by a small liberal arts college in Nottingham, England. …