The value of virtue in the upper echelons: A multisource examination of executive character strengths and performance

Previous research on upper echelon (i.e., top-level) executives has focused on how character flaws or lapses in ethical judgment lead to detrimental outcomes. Research is lacking that specifically examines whether character strengths that are reflected in the behaviors of top-level executives are related to positive outcomes. Therefore, this study examined behavioral manifestations of the character strengths of integrity, bravery, perspective, and social intelligence as influences on executive performance in the context of top-level executive leadership of for-profit and not-for profit organizations. Using matched-report data from 191 top-level, U.S. executives' direct reports and bosses and board members, this study found positive relationships between direct reports' ratings of executive integrity, bravery, and social intelligence and bosses' and board members' ratings of executive performance. These character strengths each accounted for variance in executive performance above and beyond direct reports' ratings of executives' developing and empowering behaviors and other control variables. Among the character strengths examined, integrity was found to have the most contribution in explaining variance in executive performance via relative weight analysis. The theoretical and practical implications of these findings are discussed.     

Beneath the mask:: Examining the relationship of self-presentation attributes and impression management to charismatic leadership

We tested several hypotheses derived from Gardner and Avolio's [Acad. Manage. Rev. 23 (1998) 32.] self-presentational theory of charismatic leadership. We collected multisource field data in an information technology (IT) consulting firm and examined linkages among managers' self-system attributes (i.e., desired charismatic identity, self-monitoring), pro-social and self-serving impression management of managers, charismatic leadership of managers, and two measures of performance. Eighty-three managers provided self-reports of self-system attributes. Six months later, 249 subordinates rated the focal managers' impression management and charismatic leadership styles. Superiors of the focal managers provided performance ratings 7 months after collecting the subordinate ratings. Results indicated that complexity of desired charismatic identity was positively related to self-monitoring. Self-monitoring was negatively related to ratings of pro-social impression management and positively related to ratings of self-serving impression management. Pro-social impression management related positively to charismatic leadership, which predicted managerial and unit performance.     

Relative Performance Evaluation and Risk Taking in Delegated Investment Decisions*

Providing proper incentives to firm managers is increasingly important in the current competitive environment. Analytical research has suggested that evaluating a manager's performance relative to that of a peer group, in conjunction with standard-based pay, can induce efficient risk-sharing between firm owners and managers while maintaining the latter's incentives to exert effort. To date, direct empirical tests of this proposition have not been reported. This study uses a laboratory experiment to test the effect of relative performance evaluation on the risk-aversion of delegated investment decisions. Project-specific risk is operationalized using operating leverage, in part because the variability of a project's operating profits generally increases with this variable, and in part because many of the new manufacturing approaches held to be important to competitive advantage require significant capital investments and attendant increases in operating leverage. Across two levels of environmental uncertainty, subjects under a relative (as opposed to absolute) performance standard selected investments with significantly higher project-specific risk. Also, as environmental uncertainty increased, subjects under an absolute standard significantly reduced the riskiness of their investments. In contrast, subjects shielded from environmental uncertainty by a relative standard chose investments of about equal riskiness under both low and high uncertainty conditions. If supported by future research, these findings would suggest that relative performance evaluation may reduce managers' reluctance to adopt risky capital investments, especially in firms operating in high-risk economic or technological environments.     

The role of personal values in the charismatic leadership of corporate managers: A model and preliminary field study

This study used multi-source field data collected in five organizations to examine linkages among managers' personal value system (i.e., intensity of openness to change, traditional, collectivistic work, self-transcendent, and self-enhancement values), charismatic leadership of managers, and three outcome measures. Two-hundred and eighteen managers provided self-reports of their personal values and ratings of their followers' extra effort and organizational citizenship behavior (OCB). Nine-hundred and forty-five subordinates rated the focal managers' charismatic leadership. Superiors of the focal managers provided ratings of managerial performance 2 months after collecting the managers' and subordinates' ratings. Results indicated that traditional, collectivistic work, self-transcendent, and self-enhancement values related positively to charismatic leadership, which predicted managerial performance and followers' extra effort and OCB. Managerial performance moderated the relationships between leaders' values, charismatic leadership, and followers' outcomes.     

The Relationship between Styles of Creativity and Managerial Skills Assessment

This study examined the relationships between creativity style, as measured by the Kirton Adaption Innovation Inventory (KAI) and the self and other ratings on a 360- degree feedback instrument, the Management Skills Profile (MSP) among US managers. Results indicated that self-reports of the use of managerial skills were related to the individual manager's creativity style, but the ratings by others were not. Adaptive managers, as defined by the KAI, were more likely to underrate themselves, while self-ratings of innovative managers tended to concur with the ratings of others. Implications for helping managers understand discrepancies in self and others' ratings as a function of creativity style in a developmental context and directions for future research are discussed.     

Subsidiary managers' initiative pursuit: A behavioral agency model

Subsidiary managers' decisions to pursue initiatives for innovative product introductions in their host markets provide opportunities for rent creation, but also bear risks for the multinational corporation (MNC). However, we lack insights into which factors drive such decisions. Grounded in behavioral agency theory, our study investigates which factors at the individual level, the corporate level, and the subsidiary's implementation context increase subsidiary managers' likelihood of initiative pursuit. We propose that an individual manager's capability and the MNC's entrepreneurial orientation serve as reference points in a specific implementation context. Based on a stated-choice experiment with 799 respondents, results show that subsidiary managers' likelihood to pursue an innovation initiative varies depending on the context, and the choice of implementation mode activates subsidiary managers' gain frames. Our findings advance theory by providing granularity on the situational complexity across multiple methodological levels that instigate subsidiary managers' initiative pursuit.     

Opportunism in Capital Budget Recommendations: The Effects of Past Performance and Its Attributions*

This study uses an experiment to examine the separate and combined effects of managers' loss aversion and their causal attributions about their divisions' performance on tendencies to make goal‐incongruent capital budget recommendations. We find that managers' recommendations are biased by their loss aversion. In particular, managers of high‐performing divisions are more likely than managers of low‐performing divisions to propose investments that maximize their division's short‐term profits at the expense of the firm's long‐term value. We also find that managers' recommendations are biased by their causal attributions. In particular, managers are more likely to propose investments that maximize their division's short‐term profits at the expense of the firm's long‐term value when they attribute their division's performance to external causes (e.g., task difficulty or luck) rather than to internal causes (e.g., managerial ability or effort). Further, the effects of causal attributions are greater for managers of high‐performing divisions than for managers of low‐performing divisions. The study's findings are important because loss aversion and causal attributions are often manifested in firms. Thus, they may bias managers' decisions, which in turn may be detrimental to the firms' long‐term value.     

Should knowledge be distorted? Managers' knowledge distortion strategies and organizational learning in different environments

Organizational learning provides a sustainable competitive advantage for an enterprise facing a highly volatile environment, and managers' knowledge sharing strategies are of vital importance to organizational learning. This study systematically evaluates the effects of managers' knowledge distortion types (i.e., misrepresentation and omission), distortion levels, and distortion preferences in a formal organizational context under various environments. Multi-agent simulation results demonstrate that a slight level of managers' knowledge misrepresentation and a high level of managers' knowledge omission are beneficial in a closed system. With increasing turnover rate, both misrepresentation and omission are detrimental. Moreover, in an open system with environmental turbulence, misrepresentation is valuable to performance, while omission is neutral. In general, misrepresentation plays a leading role in the simultaneous combination of two distortion strategies. Implications for future research and practice are discussed.     

On the dynamic use of project performance and schedule risk information during projecttracking

Project scheduling, risk analysis and project tracking are key parameters to a project's success or failure. Research on the relative sensitivity of project activities during the project scheduling phase as well as research on project performance measurement during project progress have been published throughout the academic literature and the popular press. Obviously, the interest in activity sensitivity information and project performance measurement from both the academics and the practitioners lies in the need to focus a project manager's attention on those activities that influence the performance of the project. When management has knowledge about the current project performance and has a certain feeling of the relative sensitivity of the various project activities on the project objective, a better management focus and a more accurate response during project tracking should positively contribute to the overall performance of the project.     

Managers in the NAFTA countries: A cross-cultural comparison of attitudes toward upward influence strategies

This paper presents a cross-cultural comparison of U.S., Canadian-Anglophone, Canadian-Francophone, and Mexican managers' attitudes toward upward influence strategies. Generally, it was found that all four groups have similar perspectives in terms of the relative acceptability of various influence strategies. However, examination of absolute ratings of influence behaviors suggests that Canadian-Francophones could serve as a cultural “linking-pin” along a continuum anchored by Anglo cultures at one end and the Latin-American culture of Mexico at the other. Implications for cross-cultural interactions within the NAFTA region are discussed.     

Leadership and Six Sigma project success: the role of member cohesiveness and resource management

The primary purpose of this study was to determine whether the effect of leadership on Six Sigma project success (PS) may be mediated by member cohesiveness (MC). The second objective was to examine whether the impact of MC on PS was moderated by resource management. The effects of the project manager's leadership styles and MC on PS were also investigated in this research. To address the primary aims, a survey was used to measure the project manager's leadership styles, MC and the overall success of Six Sigma projects. The analyses suggest that MC may serve as a mediator between leadership and PS. The results also indicate that resource allocation has a moderating effect on the relationship between MC and PS.     

MANAGERIAL HEDGING AND PORTFOLIO MONITORING

Incentive compensation induces correlation between the portfolio of managers and the cash flow of the firms they manage. This correlation exposes managers to risk and hence gives them an incentive to hedge against the poor performance of their firms. We study the agency problem between shareholders and a manager when the manager can hedge his compensation using financial markets and shareholders can monitor the manager's portfolio in order to keep him from hedging, but monitoring is costly. We find that the optimal incentive compensation and governance provisions have the following properties: (i) the manager's portfolio is monitored only when the firm performs poorly, (ii) the manager's compensation is more sensitive to firm performance when the cost of monitoring is higher or when hedging markets are more developed, and (iii) conditional on the firm's performance, the manager's compensation is lower when his portfolio is monitored, even if no hedging is revealed by monitoring. Moreover, the model suggests that the optimal level of portfolio monitoring is higher for managers of firms whose performance canbehedged more easily, such as larger firms and firms in more developed financial markets. (JEL: G30, D82)     

An Application of Expectancy Theory to Explain a Manager's Intention to Use a Decision Support System

A continuing gap exists between the capabilities of sophisticated computer-based information systems and the extent to which these systems are used by individuals. Studies which have examined the relationship between system utilization and various user, system, implementation, and organizational variables have provided few consistent findings. A new approach to this topic is suggested by a recent study by Davis, Bagozzi, and Warshaw [11], which indicates that individuals' intentions to use a system determine subsequent use. A large body of psychology-based research also supports this relationship between behavioral intentions and subsequent behavior. This study employs expectancy theory, which has often been used to examine behavioral intentions, to explain managers' intentions to use a decision support system (DSS). The results imply that the variables of the expectancy force model are determinants of a manager's behavioral intentions to use a DSS, and the variables of the expectancy valence model are determinants of the attractiveness of using a DSS to a manager.     

Toward Computerizing a Causal Modeling Approach to Strategic Problem Framing*

This paper proposes an object-oriented approach to the development of interactive software for the purpose of managerial problem solving. A prototype is being developed using CSM causal mapping to represent each manager's perceptions of the relationships between key variables of a firm's strategic situation. This paper suggests the design of GDSS that would enable a group of managers to discuss, learn from each other, and possibly develop consensus about decisions or their causes. Issues involving future development are discussed.     

Measuring the Performance of Acquisitions: An Empirical Investigation Using Multiple Criteria

The performance of corporate acquisitions is a popular research topic. Researchers have employed various criteria in their attempt to evaluate acquisition performance. This paper replicates and extends a previous study by investigating the comparability of the three most widely used measures of acquisition performance, namely accounting‐based measures, cumulative abnormal returns and managers' subjective assessments, in a non‐Anglo Saxon setting. Empirical testing is based on a sample of 50 domestic acquisitions carried out by Greek firms. Overall, results from the three measures indicate failure rates from 50% to 60%. However, the most impressive finding stems from the comparison (correlation analysis) of the alternative measures. Accounting‐based measures are positively correlated to managers' subjective assessments. Contrarily, cumulative abnormal returns are not correlated to either accounting‐based measures or managers' subjective assessments. This lack of statistically significant relationships between the performance criteria may provide a plausible basis for explaining some of the contradictory results often reported in the mergers and acquisitions literature. In light of these findings, we discuss their implications for both theory and practice and suggest ideas for future research.     

Using activity sensitivity and network topology information to monitor project time performance

The interest in activity sensitivity from both the academics and the practitioners lies in the need to focus a project manager's attention on those activities that influence the performance of the project. When management has a certain feeling of the relative sensitivity of the various parts (activities) on the project objective, a better management's focus and a more accurate response during project tracking should positively contribute to the overall performance of the project.     

IT'S WHAT YOU SAY,NOT WHAT YOU PAY: AN EXPERIMENTAL STUDY OF MANAGER‐EMPLOYEE RELATIONSHIPS IN OVERCOMING COORDINATION FAILURE

We study manager‐employee interactions in experiments set in a corporate environment where payoffs depend on employees coordinating at high effort levels; the underlying game being played repeatedly by employees is a weak‐link game. In the absence of managerial intervention subjects invariably slip into coordination failure. To overcome a history of coordination failure, managers have two instruments at their disposal: increasing employees' financial incentives to coordinate and communication with employees. Synthesizing methods drawn from psychology and economics, we quantify the impact of specific types of communication on workers' effort levels and manager's profits. This methodology allows us to rigorously compare the efficacy of communication and direct incentives in an environment where both are available. We find that communication is a more effective tool than incentive changes for leading organizations out of performance traps. Examining the content of managers' communication, the most effective communication strategy is quite simple: specifically request a high effort, point out the mutual benefits of high effort, and imply that employees are being paid well. (JEL: C92, D23, J31, L23, M52)     

Measuring the Performance of Corporate Acquisitions: An Empirical Comparison of Alternative Metrics*

The choice of performance measure has long been a difficult issue facing researchers. This article investigates the comparability of four common measures of acquisition performance: cumulative abnormal returns, managers' assessments, divestment data and expert informants' assessments. Independently each of these measures indicated a mean acquisition success rate of between 44–56%, within a sample of British cross‐border acquisitions. However, with the exception of a positive relationship between managers' and expert informants' subjective assessments, no significant correlation was found between the performance data generated by the alternative metrics. In particular, ex‐ante capital market reactions to an acquisition announcement exhibited little relation to corporate managers' ex‐post assessment. This is seen to reflect the information asymmetry that can exist between investors and company management, particularly regarding implementation aspects. Overall, the results suggest that future acquisitions studies should consider employing multiple performance measures in order to gain a holistic view of outcome, while in the longer term, opportunities remain to identify and refine improved metrics.     

Preliminary Validation and Training of Supervisory Interactional Skills

Employee job satisfaction and performance are critical to the effectiveness of an organization. Although satisfaction and performance are not determined in total by a supervisor's interactional skills, it appears that interactional skills can significantly influence employee satisfaction and productivity. This research was conducted to further validate the types of interpersonal skills important in supervisory interactions, and then to evaluate the effectiveness of a supervisory training workshop in improving these aspects of managers' repertoires. In the first study social validation and survey procedures were used to identify supervisory behavior that employees judge to either facilitate or inhibit their job satisfaction and performance. Based on these results, the workshop training program was developed and tested in a second study which revealed a significant improvement in the group of supervisors who underwent training versus a no-training control group. This study provided a preliminary demonstration of the efficacy of using a behavioral training program to improve supervisors' interactional skills judged to be related to an organization's level of satisfaction and performance.     

The impact of social class on top managers’ attitudes towards employee downsizing

In this paper, we examine the impact of top managers' social class on their attitude towards employee downsizing. Mobilizing Bourdieu's concepts of social class as a unique social position defined by the combination of economic, cultural, and social capital, we develop hypotheses about the effects of different capital endowments, which we test with unique data on more than 2500 top managers in Germany. We find that both higher economic and higher social capital increase openness towards employee dismissals, while higher cultural capital reduces it. We also find that the overall effect of a top manager's social position is an aggregate of the effects of the individual types of capital: Managers with high cultural, low social and low economic capital are least open to employee dismissals, while those with low cultural, high social and high economic capital are most open – with the other combinations lying somewhere between the two extremes.