From social ties to embedded competencies: the case of business groups

Our current views of economic competition are still rooted in the imagery of the isolated firm that transacts with its buyers, suppliers, and competitors via largely anonymous factor and product markets. Yet this view is fundamentally at odds with the growing importance of business groups in the global economy. We thus need a reconceptualized version of our idea of economic competition, which is capable of explaining competitive advantage at the group-versus-group rather than firm-versus-firm level of analysis. In the present paper we build on insights derived from organizational sociology and organizational economics to develop a business group-level theory of competition and competitive advantage based on embedded competencies.

Empowerment as a success factor in start-up companies

In this paper, we develop a theoretical model of employee empowerment in start-ups by integrating different management-oriented approaches in the literature. To test this model, we use recent survey data from start-up companies in high-growth industries based in Germany. In particular, we examine the degree to which employee empowerment as a modern concept of delegative leadership contributes to a higher organizational effectiveness within the firm and eventually to higher growth.

Not just hot air: normative codes of conduct induce cooperative behavior

The shirking incentives arising within team production are in general counteracted by monitoring and sanctioning. However, these mechanisms are usually associated with high monitoring costs and cannot be applied to all parts of the production process. In a laboratory experiment we analyze the impact of less costly elements of organizational structure, such as normative codes of conduct and screening tests, on team production efficiency. We find that more allusions to a firm context lead to higher contributions. In particular, codes of conduct significantly increase cooperation and at the same time reduce free-riding behavior. Our study provides empirical evidence that normative codes of conduct are an effective means of increasing team production efficiency.

The influence of executive age,career horizon and incentives on pre-turnover earnings management

In this paper we hypothesize that CEOs will be motivated to manage earnings prior to a turnover decision. This motivation comes from the horizon problem for CEOs nearing retirement age and for CEOs whose profit-based bonus is a large portion of their total compensation. We find that firms in which CEOs are nearing retirement age have large discretionary accruals in the year prior to turnover. Although we find firms with a larger proportion of profit-based bonus pay have larger discretionary accruals, this result is not robust with the inclusion of control variables in the regressions.

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Organizational Justice and Job Satisfaction in Coaching

This study explored organizational climate perceptions within high school athletic departments from the point of view of coaches. Five key facets of job satisfaction and satisfaction with the job in general were assessed as well as the relationship between each facet and three distinctive dimensions of organizational justice. High school coaches (N = 392) indicated that their athletic departments maintained a fair operating climate and were satisfied with each of the five facets and their jobs in general. Also, a linear relationship (p ≤ 0.05) was found between each of the three fairness dimensions and each of the job satisfaction facets as well as the job itself.

The Organization of Factions: Interest Mobilization and the Group Theory of Politics

Theories of interest group mobilization are central to political science but current research on interest organizations has not proven useful for scholars in related fields. I argue that, by adapting organizational theory to account for the particular function of interest organizations, scholars can build a widely applied theoretical framework. The key step is an analysis of the role that organizations play in the mobilization of influence: they are intermediaries, reliant on their constituents and their lobbying targets. Reviewing research on ethnic politics and political economy, I demonstrate that this intermediary view of interest organizations encourages theoretical ideas to travel between subfields.

There is more to contracts than incompleteness: a review and assessment of empirical research on inter-firm contract design

This paper aims at achieving a greater understanding of how contracts operate in practice through a review of recent empirical literature on inter-firm contract design. Our focus on the structure of contractual agreements differentiates this review from others that dedicated ample coverage also to the antecedents of the decision to contract and of the choice of contracting versus integration. Our framework develops Stinchcombe’s (Organization Theory and Project Management, 1985) hypothesis that contracts are an organizational phenomenon. This allows us to uncover considerable but unevenly distributed evidence on a number of organizational processes formalized in relational contracts, which partially overlap with the processes that are observed in integrated organizations. It also enables us to describe contracts in terms of a larger number of dimensions than is commonly appreciated. The paper summarizes the evidence by proposing a general and tentative framework to guide the design of relational contracts, discusses a number of lingering issues, and outlines directions for further research on contracts as an organizational phenomenon.

Managing Integrity: The Regulation of Post Public Employment in Britain and Hong Kong

In this article, we examine the regulatory mechanisms governing post public employment in Britain and Hong Kong in the context of changing views on how integrity should be managed in their civil services. In both places, new public management practices have increased the possibility of ‘soft’ conflicts of interest which in turn has resulted in debates over the necessary degree of regulation, the organizational form that this should take, and the extent to which ethical concerns should be more focused on the communication and inculcation of core values in civil servants. We argue that the difficulty of regulating ‘soft’ conflicts of interests is driving moves toward the greater centralisation of ethical regulation in both Britain and Hong Kong and that there appears to be a return to more traditional ways of managing integrity.

Substitution, availability and preferences in earnings management: empirical evidence from China

Our study analyzes financial reporting data on earnings management from a rapidly changing economy—the PRC. Some Chinese regulatory reforms allow for an easy identification of incentives to engage in both accounting and real earnings management activities. In addition, straightforward economic reasoning suggests that firms incur different costs for pursuing these strategies, which leads to the possibility of a hierarchy or ranking of different earnings management practices. Our results show that accounting and real earnings management activities were significantly higher for firms in danger of missing a regulation imposed performance threshold. After controlling for the availability of the different instruments, our results provide weak evidence for a ranking of different earnings management activities.

Public Organizations in the Age of Globalization and Technology

Both globalization and information and communications technologies (ICT) have been shown to be important factors in defining organizational environment. However, the cumulative effects of these two factors together on decision-making and the exercise of power within large organizations are currently not well explored. This paper attempts to fill that gap by conceptually analyzing the combined effect on globalization and communications technology. ICT has had the cumulative effect of shrinking an organization’s effective size. Globalization contributes to this effect of removing geographic boundaries by centralizing control over certain functions. In other words, globalization and ICT, in conjunction with each other, have considerably heightened the concentration of power and decision-making authority within the organization.

Measuring tax distortions with neutrality-based effective tax rates

In public economics, effective tax rates (ETRs) are often used to measure the combined effects of tax rates, tax bases, and the time effect of taxation. Until now, the modelling of comparable figures for revealing tax effects and tax-induced distortions is not solved satisfactorily. This paper derives an ETR approach based on neutral tax systems. In contrast to traditional measures of ETRs, the neutrality-based ETR discloses preferential or discriminatory taxation of investments regardless of their pre-tax rate of return. Moreover, comparing different ETRs exposes the degree of tax-induced investment distortions.

The Effect of Female Strategic Managers on Organizational Performance

Little empirical work explores the impact of female managers on organizational performance. This paper uses Miles and Snow’s management strategies to empirically determine if female and male managers use different strategies and what influence these strategies have on organizational performance. Using data and superintendent survey responses from Texas school districts from the years 2000 through 2005, differences between male and female managers are discovered. Female managers and the strategies they use have a positive influence on performance. These results are discussed in the context of the gender and management literature and in the general field of public management.

Conflict Management of Cooperative Organizations in Contemporary Iran: A Review Analysis

Emergence of conflicts-of-interests and of disputes in organizations, especially within and among work team systems, is inevitable. Cooperatives are self-governing organizations with democratic characters aimed at meeting the members’ needs and promoting social equity. Yet, internal organizational conflicts arise as conflicts-of-interests develop. Such conflicts can cause serious damages to the parties involved as well as harm the reputation of cooperatives as social and economic entities that tend to pursue social justice and fair distribution of income in society. This paper addresses conflict management in contemporary cooperative organizations. It is based on a preliminary research performed on factors causing conflicts in various types of cooperatives in Iran by analyzing 253 complaints made in 224 housing, consumer, transportation, producer procurement, and credit cooperatives within the central province of Tehran. It also offers some suggestions to improve conflict management within cooperative organizations.

FEMA and the Witt Revolution: Testing the Hypothesis of “Bureaucratic Autonomy”

In the wake of widespread criticism for its poor performance in Hurricane Andrew in 1992, FEMA became a more effective organization under the leadership of James Witt (1993–2001). One answer to the question of how and why FEMA improved so rapidly and significantly during this period is Carpenter’s (2001) theory of “bureaucratic autonomy.” This paper defines the minimum conditions Carpenter considers necessary for the term, evaluates their applicability to FEMA during this period, and briefly examines alternative explanations for FEMA’s organizational transformation. It concludes that the innovation and entrepreneurship FEMA demonstrated during this period do indeed meet the criteria for “bureaucratic autonomy.”

The impact of minimum taxation by an imputable wealth tax on capital budgeting and business strategy of German companies

An alternative minimum tax (AMT) that guarantees a minimum tax payment even in case of losses is often regarded desirable. We analyze the influence of a wealth tax designed as AMT on marginal investment decisions and provide an analytical approach and numerical analyses identifying distortive effects. We present a wealth tax AMT paradox under loss offset restrictions. Modelling enterprises of different structure, industry, size and legal status we show that companies in the financial services sector are more frequently subjected to this AMT than capital intensive industries. This result runs counter to well-known effects of a common wealth tax. We resume that whenever income is taxed correctly, AMT is dispensable.

Regulatory treatment of the double default effect under the New Basel Accord: how conservative is it?

Within the internal ratings-based approach of the New Basel Accord, banks have the possibility to consider the so-called double default effect of guaranteed exposures. However, the correlation assumptions inherent in the regulatory recognition of the double default effect appear to be quite conservative. To evaluate the degree of conservatism, on one hand, the regulatory correlation assumptions are compared with the results of a broad range of empirical studies. On the other hand, additional simulation experiments are carried out. While the comparison with the empirical results indeed suggests that the correlation parameters assumed by the regulatory authorities are much too large, the simulation experiments show that the assumed values are not unrealistic for capturing the intended effects.

Governance strategy: a property right approach turning governance into action

Corporate governance (CG) needs to acknowledge the intentional part of governance, where an actor of governance uses the set of corporate governance mechanisms in order to influence the agent to create a performance that will satisfy the interest of the principal. This paper offers a conception of this activity through the concept of governance strategy. The concept is based on a property right approach and derived within the context of agency theory, stressing the interest and the capacity of the principal. It is applied to two empirical organisations seldom investigated in CG research: the organisation of multinational corporations in a business group and the organisation of a riding school in a democratic not-for-profit association, thereby extending the relevance of the concept from corporate governance to organizational governance. The empirical analysis indicates the relevance of the conception and suggests further extension through hypotheses of governance strategy related to environmental influence, accessibility of governance mechanisms and momentum of mechanisms.

The role of risk preferences and flexibility for risk management: lessons from a custom manufacturing environment

In this paper, we study the management of financial risks of a custom manufacturer in the specialty chemicals industry arising from increased volatility of profits caused by market uncertainty and growing competitive pressure due to globalization. We argue that such risk management can be established either by creating and utilizing flexibility or by adjusting the risk preferences. Using a model-based approach, we operationalize flexibility and risk preferences to show their effects on the profit/risk and the decision making of a firm through a stylized example motivated by the specialty chemicals business.

Do synergies exist in related acquisitions? A meta-analysis of acquisition studies

Mergers and acquisitions (M&A) aim to increase the wealth of shareholders of the acquiring company, in particular by creating synergies. It is often assumed that relatedness is a source of synergies. Our study distinguishes between business, cultural, technological, and size relatedness. It discusses the reasons why these different forms of relatedness can lead to an acquisition success and we conduct a meta-analysis of 67 prior M&A studies. Results indicate that positive effects can be expected under specific conditions only and have a limited overall impact on acquisition success. A moderator analysis finds that synergies stemming from relatedness depend on industry-, country-, and investor-characteristics.