Benefits and Strategic Outcomes: Are Supplemental Retirement Plans and Safer Driving Related in the U.S. Trucking Industry?

We suggest that a firm's benefits can relate to important organizational outcomes that have strategic implications. We propose a number of mechanisms that could relate benefits to strategic outcomes, including the notion that benefits can help attract and retain the type of employees who are most likely to perform in ways consistent with the firms’ strategies. We illustrate this with the case of supplemental retirement benefits in an actual setting, the long‐haul trucking industry. We report positive organization‐level relationships associated with the management choice of offering these benefits. Our results show that firms offering supplemental retirement plans engage in significantly safer driving practices, as measured by the proxy of driver insurance costs, as hypothesized. These findings show that benefits can be related to outcomes that have strategic implications for the firm. By showing that retirement plans may be of value to organizations, we help to bridge the academic‐practitioner divide and provide motivation and guidance for additional work on this important but underresearched topic. © 2015 Wiley Periodicals, Inc.     

What are the determinants and managerial motivations for employee ownership in retirement pension plans?

Using the pension database obtained from Form 5500 from 2000 to 2014, we provide the first comprehensive analysis of the determinants of employee ownership in retirement pension plans. By investigating various motivations simultaneously using the horse racing method, we find that firms with higher idiosyncratic risk, weak governance, a greater marginal tax rate, and greater union intensity are more likely to offer employee ownership. This study provides valuable insights to investors that they should properly understand the impact of employee ownership on the firm and appropriately evaluate firms with employee ownership by taking into account diverse motives.     

Labour-management partnership in the non-union retail sector

Analysts and policy advocates have argued that a meaningful labour-management partnership can be established in the absence of trade unions. In this paper we have examined employee outcomes of partnership in a medium-sized non-union retail firm, regarded as one of the ‘best practice’ cases of non-union partnership by the Involvement and Participation Association (IPA) of the UK. We have also compared the employee outcomes from our case study firm with those from a representative sample of retail sector workers from unionized and non-union retail firms in the UK. Findings indicate that compared to employees in other retail-sector firms, workers in the ‘best practice’ partnership firm were significantly disadvantaged with respect to their influence over workplace and policy decisions with little evidence of ‘mutual gains’ as claimed by partnership advocates.     

FLEXIBLE RETIREMENT

Flexible retirement – that is, the opportunity to choose one's own personal retirement age – is a hedge against pension risk and provides insurance to workers facing health or productivity shocks. Flexible retirement and flexible pension schemes are in practice closely linked because of imperfect capital markets and institutional restrictions. I discuss three necessary conditions to provide insurance through flexible retirement. First, it should be possible to adjust the pension starting date at limited cost. This condition is gradually being fulfilled, as many countries are moving toward more actuarially neutral pension schemes. Second, individuals should be willing to adjust their labor supply in case of a wealth shock. This condition seems largely fulfilled, although the available empirical evidence suggests that the ‘standard retirement age’ is at least as important as the income effect. Third, the labor market should be able to deal with flexible individual retirement decisions. This condition is gaining importance, but has not yet received much attention in the literature. Institutions often hamper employment past the ‘standard retirement age’. Moreover, the hiring rates of older workers are low and their unemployment duration is high. Institutional reforms facilitating flexible retirement opportunities are desirable from an insurance perspective.     

Preserving knowledge legacies: workforce aging,turnover and human resource issues in the US electric power industry

The aging of the workforce is believed to be a potential threat to productivity of companies both in the US and worldwide. High levels of turnover that may result from workforce aging could cause short-term as well as permanent loss of knowledge critical to firm operations and customer service. While there is a wealth of research regarding the causes of turnover, there is comparatively little research on the actual effects of turnover, particularly involuntary forms of turnover such as retirement. Focusing on the US electric power industry, whose employees have average ages and company tenures among the highest in the world, this paper explores the aging workforce issue both qualitatively and quantitatively. Results from an executive survey encompassing companies representing over 75 per cent of the industry's workers affirm that workforce aging is the electricity industry's dominant human resource (HR) concern but that it is interrelated with many other top HR issues, including skill shortages, leadership, and transition from an ‘entitlement-based’ to a ‘performance-based’ culture. Implications of prior literature on organizational learning, turnover and socio-technical systems theories are discussed, and propositions are offered as a framework for further research on the general effects of potential knowledge loss due to aging-related turnover.     

The impact of psychological ownership on employee retention in mergers and acquisitions

Research has demonstrated that turnover rates among employees and executives in the acquired firm are much higher during an M&A event. Recent empirical and review articles on M&A have also shown that employee retention/turnover can best be understood by looking at psychological attributes and perceptions of M&As, thus drawing significant attention to the psychological and ‘human’ side voids to theoretically exploit and enhance understanding of people-related problems in M&A endeavors. In this article, we develop a moderated mediation model and propose that acquired firm employees' psychological ownership is positively related to acquired firm employees' retention through the direct and mediating effects of employees' commitment and involvement in M&A. We also propose that the effect of acquired firm employees' psychological ownership on employees' commitment and involvement and, ultimately, acquired firm employees' retention is moderated by loss of acquired firm autonomy. We also discuss implications for theory and practice, as well as future research directions of such an employees' psychological ownership perspective on retention effects.     

A Capabilities Perspective on the Evolution of Firm Boundaries: A Comparative Case Example from the Portuguese Moulds Industry*

ABSTRACT The issue of vertical firm boundaries continues to attract interest both for economics and management research. The transaction cost economics approach, emphasizing transaction‐specific assets and opportunism in order to explain discrete ‘make‐or‐buy’ decisions, dominates the literature. Nevertheless, alternative perspectives, developed under the guise of the capabilities, competence or knowledge‐based theories of the firm, have gained attention recently. They focus on the evolutionary dynamics of boundaries in the context of the division of labour among firms in an industry and on what is to be divided and co‐ordinated – i.e. productive knowledge. The conceptual links between this line of research, which some refer to as neo‐Marshallian, and the Industrial Networks approach are explored in this paper. The paper emphasizes both a vision of firms as sets of direct and indirect capabilities, developed and combined in different ways over time, and the connectedness between inter‐firm relationships. The discussion is illustrated with the cases of two firms, which are contrasted in terms of the dynamic evolution of their boundaries. The analysis made supports the argument that firms’ vertical boundaries reflect their relationships with specific counterparts and the way they address through time the division and integration of knowledge through the configuration of direct and indirect, counterpart specific, capabilities.     

The impact of HR configuration on firm performance in Singapore: a resource-based explanation

This study investigates how the characteristics of a firm's human resource practices and processes (HRPPs) are associated with firm performance. The results found that the extent to which HRPPs can be substituted by information technology or codified in employee manuals, made them easy to be imitated and were therefore associated with an attenuation of the firm's financial performance. On the other hand, constant positive investments into a firm's HRPPs were associated with enhanced firm performance. No significant relationships were found between the embeddedness of HRPPs with information technology or the uniqueness of the firm's HRPPs and firm performance. The results are explained in terms of the resource-based view of the firm.     

DETERMINANTS OF PUBLIC PENSION PLAN INVESTMENT RETURN. The role of fund value maximization and public choice theory

Public pension plans are a major type of institutional owner during the new era of investor capitalism, yet little is known about them. Based upon fund value maximization (FVM) and public choice theory (PCT), we develop hypotheses on the determinants of plan performance as measured by plan annual investment return. FVM espouses that the plan's fund or investment portfolio will be invested to maximize return for a given level of risk, while PCT holds that agency costs are significant in the public sector, and will have a negative effect on plan return. Using biennial pension plan data for 1992–96 for several hundred plans, we found that fund value maximization has a much greater influence on plan performance, but that plan performance is also subject to agency costs associated with public choice theory.     

SAVINGS IN TIMES OF DEMOGRAPHIC CHANGE: LESSONS FROM THE GERMAN EXPERIENCE

Pension reforms in many developed countries make individuals shoulder a bigger share of longevity and income risks. The desired response is that individuals accumulate private assets for retirement. Whether this actually takes place, is of paramount relevance for scientists and policy makers. We take Germany as an example: Twenty years of pension reform have transformed the monolithic German pension system into a multipillar system. Formerly generous public pension benefits are gradually being reduced, whereas substantial incentives are granted to occupational and private saving schemes. Has this transition worked out? We survey the reform steps and households’ reactions: How did individuals adjust their labor market behavior? How did private and occupational pension plans take off? How do behavioral adjustments vary in the population? Most Germans adapted to the new situation. Both actual and expected retirement decisions changed and the share of households without supplementary pensions decreased from 73% to 39% in little more than a decade. This is a remarkable success. Nonetheless, households with low education, low income and less financial education did neither adjust their retirement behavior nor pick up supplementary pension plans and are thus likely to face difficulties in bridging the gap arising in future pension income.     

Aligning employees with the organization's strategic objectives: out of ‘line of sight’, out of mind

This research focuses on the strategic alignment of a firm's human resources. Specifically, I investigate employee ‘line of sight’ to an organization's strategic objectives. Line of sight is conceptualized as an employee's understanding of an organization's objectives and how to contribute to those objectives. Line of sight was expected to vary across individual characteristics (e.g. hierarchical level, tenure) and relate to important work outcomes (e.g. work attitudes, turnover). Results of a field study confirmed many of the hypotheses, supporting the importance of this construct to research and practice.     

Impact of Environmental Performance on Firm Value for Sustainable Investment: Evidence from Large US Firms

This research examines the impact of environmental performance on firm value, applying the event study methodology to Newsweek’s ‘Green Rankings’ announcement of 2012 for large US firms. Specifically, it analyzes the impact of the absolute green score and green rank of firms on their performance in the stock market. We found that investors perceive the announcement as positive news, leading to significant positive standardized cumulative abnormal returns (SCARs). After controlling for industry‐ and firm‐specific effects, we observed that firms with repeated green rankings for enhancing environmental performance showed significantly higher SCARs than those with either reduced or unchanged environmental performance. In addition, the environmental impact score measuring environmental damage from a firm's operational activities was found to be the most influential factor in improving the firm's value. Our findings are beneficial to managers in allocating resources to different types of environmental initiative, and provide valuable insight for sustainable environmental investment. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Neighborhood effect on stock price comovement

We investigate how the geographic distance between firms’ headquarters affects their stock price comovement. Our results show that a firm's stock return has stronger comovement with the returns of nearby firms than with those of distant firms. Being in the same state and/or in the same industry strengthens the return comovement, but does not substitute for the negative effect of geographic distance on price comovement. Firms of similar share price and size also show stronger return comovement, but these factors do not mitigate the negative distance impact. Consistent with investor home bias and neighborhood effect literature, our results suggest that investors’ preference for local stocks and their interactions lead to correlated trading in local stocks and therefore stronger local price comovement.     

Crisis spillover of corporate environmental misconducts: The roles of perceived similarity,familiarity, and corporate environmental responsibility in determining the impact on oppositional behavioral intention

Negative impact of a firm's environmental misconduct can spread to other firms under the same category due to stakeholders' categorization. Such problem implies a sociocognitive process that has yet to be explored. Therefore, this study extends the current literature by exploring how interfirm similarity affects the spillover effects through stakeholders' engagement. We propose that interfirm similarity can be perceived by stakeholders as a categorization standard, which can lead to their opposition to other firms. Spillover of misconduct is caused by the decreasing stakeholders' trust, wherein the negative effect is contingent upon stakeholders' perceptions. A questionnaire study is conducted to investigate how people resist an innocent firm in China when a chemistry firm experienced an explosion accident. Our findings confirm that interfirm similarity increases stakeholders' opposition to the innocent firm by decreasing their trust. However, the negative effect is alleviated when the innocent firm is perceived as highly environmentally responsible. Our work contributes to the crisis spillover literature and carries important implications for the management of innocent firms that may lose from an industry peer's misconduct.     

Firm Productivity Moderated Link Between Human Capital and Compensation: The Significance of Task‐Specific Human Capital

The human capital of a firm as manifested by employee knowledge and experience represents a key resource of a firm's capabilities. Prior empirical studies have found that firms composed of high levels of human capital experience superior firm performance. Human capital theory proposes that an individual's general or firm‐specific human capital is positively related to compensation. However, empirical studies examining firm‐specific human capital's association with higher employee compensation have been inconclusive. The current study proposes that firm‐specific human capital be categorized as task‐specific and non‐task‐specific. Employees accumulate task‐specific human capital through duties conducted in their current position. Non‐task‐specific human capital represents experiences gained in prior positions to an employee's current job within the firm. Utilizing human capital data from 38,390 employees representing 76 firms in the IT sector, this study examines the association between forms of human capital and employee compensation at different levels of firm productivity. Results show that task‐specific human capital is associated with higher employee compensation. In addition, firm productivity moderates this association.     

Enhancing firm performance through internal market orientation and employee organizational commitment

Considering the importance of retaining key staff and managing the negative impact of high labor turnover on firm performance, this study investigates the notion of internal market orientation (IMO) as an employee management tool for helping companies retain employees and leverage performance via their organizational commitment. Drawing on data from three different managerial respondents in 275 companies based in China, the findings demonstrate the precedential effect of IMO on corporate performance through employees’ organizational commitment and retention. Interdepartmental relationship and interdepartmental communication, together with ownership types are identified as potential moderating variables, which may vary IMO’s effectiveness in the framework. This study provides scholars and practitioners with empirical evidence of IMO’s contribution to different industries and markets. Building on a western perspective, this study extends the literature in an emerging market context and specifically has implications for managing Chinese employees.     

Expanding the concept of fit in strategic human resource management: An examination of the relationship between human resource practices and charismatic leadership on organizational outcomes

We investigate the relationship between high‐commitment human resources (HCHR) practices and chief executive officer (CEO) charismatic leadership on voluntary employee turnover and relative performance to peers in a sample of 281 small firms. In this study, we expand upon prior conceptualizations of fit within the literature on strategic human resources (HR) to include the fit of HCHR with other aspects of the people management system. Specifically, we hypothesize a variety of relationships that may occur (e.g., positive synergistic, deadly combination, or substitution) and find that when a firm uses a system of HCHR practices and has a charismatic leader, performance is highest and turnover lowest. Conversely, when a firm does not invest in either, performance is lowest and turnover highest. We also found some support for a substitution effect as our data showed that when there is a mismatch between a firm's HR system and the leadership characteristics of the CEO, turnover is higher and performance lower than the high‐investment people management system (high HCHR and high‐charismatic leadership), but turnover is lower and performance higher than the low‐investment (low HCHR and low‐charismatic leadership) people management system.     

Strategic compensation in South Korea's publicly traded firms

This strategic compensation model based on contingency theory of organizations proposes that a fit between the organization's business environment and compensation system will affect the firm's performance (Rockmore, 1991; Rockmore and Scarpello, 1994). This proposition was tested with a set of Korean sample data of seventy-five publicly traded companies within thirty-four three-digit Standard Industrial Classification codes.

The cluster analysis applied to the 7-item task environment uncertainty components resulted in two group classifications that face relatively ‘more certain’ and ‘more uncertain’ environments. Principal component factor analysis of the 8-item compensation system components resulted in three compensation system factors and subsequent cluster analysis classified firm pay plans into two clusters, which we labelled ‘more traditional’ and ‘more innovative’. Discriminant analysis confirmed the resulting classifications of both task environment and compensation system types. With both ROA and EPS measures, significantly more ‘fits’ (firms in stable environment that use traditional compensation system or firms in uncertain environment that use innovative compensation system) showed financial gains compared with ‘nonfits’. This financial impact of the contingency was more salient for those firms that face uncertain environment. The same results were obtained when ANOVA was performed.     

Income Level and the Value of Non-Wage Employee Benefits

With continuing increases in the cost of medical insurance and other “fringe” benefits, payroll cost for monetary and non-monetary aspects of compensation is a significant factor for most organizations. While this is not a new phenomenon, relatively few studies in the empirical literature have examined the role of fringe benefits in employee compensation plans. Especially in under researched areas, it is imperative that researchers utilize ideas and theories from other disciplines to further our knowledge. Accordingly, this paper borrows the concept of elasticity from the economic literature to help explain and understand employee perceptions of two of the most common, costly, and important benefits—medical insurance and retirement plans. Specifically, the relationship between the current income of employees is analyzed in relation to employee perceptions of the value and importance of benefits. Results suggest that employees do not value medical insurance and retirement plans in the same manner. This result is interpreted in terms of the change in the marginal utility of the specific benefit.     

Who should be the respondent? Comparing predictive powers between managers' and employees' responses in measuring high-performance work systems practices

This study first examines the association between the effectiveness of high-performance work systems (HPWS) and two types of firm performance (the financial performance and productivity of a firm) in Korea and then compares the relative predictive power between employee responses and manager responses. The results indicate that the effectiveness of HPWS has a statistically significant positive effect on firm performance and that employee perception of the effectiveness of human resource (HR) practices explains more variance in the financial performance and productivity of firms than does managers' corresponding perception. This study highlights the importance of a firm's employees as a source of HR information.