Uncertainty,hiring and firing costs,and the determinants of profit‐sharing rules

We consider a firm run by a manager who acts on behalf of shareholders. The firm produces a commodity whose demand evolves stochastically over time. The firm's employees possess firm‐specific skills and knowledge and thus can bargain over profits with shareholders immediately before the firm hires or fires workers. The firm will distribute more portions of profits to employees when it incurs higher costs to hire or fire workers. In addition, as uncertainty in demand increases, the firm will distribute smaller (larger) portions of profits to employees if the firm does not have the option to fire (hire) workers.     

Corporate sustainability and financial performance: Collective reputation as moderator of the relationship between environmental performance and firm market value

Markets value superior corporate sustainability performance in part because investors use a firm's environmental performance as a signal of desirable but difficult-to-observe attributes, such as the firm's integrity capacity. Yet a signaling conflict can arise when a firm belongs to an organizational form that has a collective reputation for being unethical. In such circumstances, the firm's environmental performance may no longer credibly signal its underlying integrity capacity, leading markets to adjust downward the value they would otherwise place on the firm's environmental performance. Using longitudinal data on South Korean firms, we find that improvements in firm environmental performance lead to smaller increases in market values for firms belonging to a poorly reputed organizational form. However, firms can partially recover lost value by adopting firm features that reduce the signaling conflict, thereby restoring the notion of corporate sustainability performance driving firm market values.     

Sustainability in multi-tier supply chains: Understanding the double agency role of the first-tier supplier

In light of the growing complexity of globally dispersed, multi-tier supply chains, the involvement of first-tier suppliers has become instrumental in the quest for achieving sustainability compliance along the supply chain. We describe this new responsibility as the double agency role. We employ agency and institutional theory arguments to explore the conditions under which first-tier suppliers will act as agents who fulfill the lead firm's sustainability requirements (i.e., the primary agency role) and implement these requirements in their suppliers' operations (i.e., the secondary agency role). The findings from three in-depth case studies embedded in different institutional contexts highlight the importance for lead firms to incentivize each agency role separately and to reduce information asymmetries, particularly at the second-tier level. In addition, our inductive analysis reveals several contingency factors that influence the coupling of the secondary agency role of the first-tier supplier. These factors include resource availability at the first-tier supplier's firm, the lead firm's focus on the triple-bottom-line dimension (i.e., environmental or social), the lead firm's use of power, and the lead firm's internal alignment of the sustainability and purchasing function. We integrate our findings in a conceptual framework that advances the research agenda on multi-tier sustainable supply chains, and we subsequently outline the practical implications of assigning the double agency role to first tier suppliers.     

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.     

Human Resource Systems and Ethical Climates: A Resource‐Based Perspective

We know very little about how ethical climates are built and the potential role of a firm's HR system in facilitating the development of this resource. The resource‐based view (RBV) of the firm suggests that human resource systems directly influence a firm's performance through the development of resources that are deeply woven in a firm's history and culture. How this occurs though has not been thoroughly considered in the research literature. Drawing on the theoretical insights from the resource‐based view of the firm, this article explores how HR systems can foster the development and maintenance of five types of ethical climates. In so doing, this article improves our conceptual understanding of why ethical climates may be seen as having strategic value for firms and how HR systems may influence that value. In addition, it contributes to theory by extending the domain of the resource‐based view of the firm by exploring its integration with the varied types of ethical climates. © 2014 Wiley Periodicals, Inc.     

The role of employee preferences and organizational culture in explaining e-commerce orientations

Culture has always been a cornerstone variable in the study of international business subjects. Several authors have dealt with the concept of culture and its dimensions. Among these Hall's (1981/1976) proposal of high- versus low-context cultures still stands as an important subject matter to be explored. This study is an attempt to explore the significance of high- versus low-context orientation and its implications for communications. Further, strategic orientation of the firm in terms of e-commerce adoption is explored within the framework of high- versus low-context organizational cultures and the internationalization and technological orientation level of the firm. A survey was conducted with 525 employees and managers working in financial services and textile manufacturing firms. Results supported the hypotheses that high- versus low-context values and perceptual and demographic characteristics of employees influence attitudes towards e-communication. Organizational culture regarding high- versus low-context practices, firm's internationalization and technological orientation levels influence the e-commerce adoption at a strategic level.     

Pathways of stakeholder influence in the Canadian forestry industry

We draw on the stakeholder influence literature to propose and empirically test hypotheses regarding the direct and indirect pathways of perceived influence that stakeholders exercise within the domain of corporate sustainability. Our results allow us to examine the interaction between different types of stakeholder pressure and different types of stakeholder influence strategy. We show that stakeholders who do not control resources critical to the focal firm's operations are able to pressure a firm indirectly via other stakeholders on whose resources the firm is dependent. We contribute to the stakeholder perspective by showing how stakeholders who are affected by the focal firm's operations can enhance their salience via stakeholders who can affect the firm. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.     

The revision frequency of earnings forecasts and firm characteristics

This study investigates how the revision frequency of earnings forecasts affects firm characteristics. Previous studies generally focus on the number of analysts following a firm to measure a firm's information environment. The frequency with which news is updated is often defined as an analyst's effort. Analysts provide more information to investors if they update news more frequently. This study examines whether the frequency of information updating for a particular firm affects the firm's performance. We apply three proxies for firm performance: stock liquidity, the cost of equity capital, and firm value. Our findings indicate that the analysts’ effort as measured by the frequency of news updating is effective in providing additional power beyond the number of analysts to represent the information environment of a firm. Therefore, this study suggests that combining both the number of analysts following a firm and the frequency of news updating can be a better proxy for assessing a firm's information environment.     

Competition and innovation: The tango of the market and technology in the competitive landscape

Technology innovation can be a double‐edged sword in helping a firm to address competitive pressures. We explore the relationships among market competition, technology competition, and firms' advancement to a higher generation of production technology. Though market competition drives technology advancement as firms attempt to escape competition and technology competition also drives technology advancement as firms try to stay in the technology race, concurrent high market and technology competition lead a firm to defer advancement. We find supportive evidence with data on global flat panel display makers. Our findings shed light on how competition interacts with a firm's technology advancement decision and, in general, a firm's technology strategy.     

Learning bad habits across generations: How negative imprints affect human resource management in the family firm

Organizational learning can be a key shared value that perpetuates the family's and the family firm's culture across generations. Imprinting theory helps to explain the impact that lessons learned and transmitted can have on the development of human resources in the family firm. However, the results of imprinting may not necessarily be positive, particularly when imprinting manifests itself in negative processes and expectations. Whereas imprinting and organizational learning are often associated with a “positive halo effect,” they have the potential to result in negative behaviors and deleterious firm-level outcomes. Employing imprinting theory as a framework, we highlight the potential dark side of imprinting within the family firm context and how it can damage human resource efforts and threaten company performance and firm survival. Finally, we suggest how bad habits may be broken and replaced with more effective routines so as to ensure the family firm's continuity and success.     

Do institutional investors monitor management? Evidence from the relationship between institutional ownership and capital structure

We examine the dynamic relations between institutional ownership and a firm's capital structure. We find that a firm's leverage decreases when institutional ownership increases. This result implies that a firm reduces its debt level as institutional investors substitute for the monitoring role of debt. More importantly, we find that a firm's suboptimal leverage decreases when the institutional ownership increases, and institutional ownership decreases when a firm's suboptimal leverage increases. This finding shows that institutions not only effectively monitor a firm's capital structure but they also passively sell their shares when dissatisfied with it. In addition, we find that the monitoring evidence on a firm's leverage and suboptimal leverage are more pronounced when the institutional investors are less likely to have business relationships with a firm or the information asymmetry is high in the market.     

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.     

Herding versus Hotelling: Market Entry with Costly Information

Why do businesses such as fast‐food restaurants, coffee shops, and hotels cluster? In the classic analysis of Hotelling, firms cluster to attract consumers who have travel costs. We present an alternative model where firms cluster because one firm is free riding on another firm's information about market demand. One consequence of this free riding is that an informed firm might forego a market that it knows to be profitable. Furthermore, an uninformed firm might earn higher profits when research costs are high, because it can credibly commit to ignorance.     

Do Family Firms Have Better Reputations Than Non‐Family Firms? An Integration of Socioemotional Wealth and Social Identity Theories

We draw from socioemotional wealth and social identity research to develop a theory on reputational differences among family and non‐family firms. We propose that family members identify more strongly with their family firm than non‐family members do with either a family or non‐family firm. Heightened identification motivates family members to pursue a favourable reputation because it allows them to feel good about themselves, thus contributing to their socioemotional wealth. We hypothesize that when the family's name is part of the firm's name, the firm's reputation is higher because family members are particularly motivated for their firm to have a better reputation. Family members also need organizational power to pursue a favourable reputation; thus, we hypothesize that the level of family ownership and family board presence should be associated with more favourable reputations. We find support for our theory in a sample of large firms from eight countries with disparate governance systems and cultures.     

Incentives,Capital Budgeting,and Organizational Structure

Divisional managers compete for financial resources in what is often referred to as an internal capital market. They also have a common interest in maximizing corporate profits, as this determines the resources available to the firm as a whole. Both goals are powerful motivators but can at times conflict: while the amount of resources available to the firm depends on corporate performance, divisional funding depends upon the division's performance relative to the rest. We propose a model in which organizational form is endogenous, divisions compete for corporate resources, and managers have implicit incentives. We show that organizational design can help companies influence their divisional managers' potentially conflicting goals. Our analysis relates the firm's organizational structure to the source of incentives (external vs. internal), the nature of the incentives (competition vs. cooperation), the level of corporate diversification, the development of the capital market, and to industry and firm characteristics.     

Promoting Effective Psychological Contracts Through Leadership: The Missing Link Between HR Strategy and Performance

This article offers line managers and HR professionals an actionable, research‐based framework for developing psychological contracts with employees that suit their organizational and human resource (HR) strategy. Leadership styles supporting the firm's HR strategy are key to making psychological contracts that benefit both the firm and its members. When managers' styles are out of sync with HR strategy, this mismatch can lead to poorer performance through ineffective and unfulfilled psychological contracts with workers.     

Firm-strategic behavior with industry-demand externalities

This paper investigates the effects of industry-demand externalities on the firm's strategic decision making, with an industry-demand externality being defined as a change in industry demand resulting from the efforts of a particular firm to develop, advertise or price a particular product. Profit-maximization models of the firm's strategic behavior that incorporate industry-demand externalities created by a particular firm and the competitive responses of its rivals reveal that the presence of such an externality serves as an incentive for the firm to engage in the form of strategic behavior that generates the externality.     

The competitive determinants of a firm's environmental management activities: Evidence from US manufacturing industries

Environmental management (EM) issues have received substantial attention in operations management. While the link between EM practices and firm performance has been well studied, little is known about the competitive drivers of a firm's EM activities. In this research, a Schumpeterian economics perspective is adopted to investigate competitive interactions among leader and challenger firms in the domain of EM, with a particular focus on operational EM activities. Using econometric methods, the empirical analysis of panel data from a broad cross-section of US manufacturing firms reveals that such rivalry does exist and that the effect of a rival's past EM activity on a focal firm's EM activity is greater for more profitable and smaller firms. In addition, firm characteristics such as market leadership, firm size and firm profitability are found to significantly affect the magnitude of a firm's EM activities. This study presents theoretical and empirical evidence of rivalrous behaviors in the domains of EM and OM and, thus, has interesting implications for operations management research and practice.     

Effectiveness of quality standards regulation considering the behavior of government and firms

We construct an analysis framework consisting of the central government, a local government, a representative firm, and consumers. This study analyzes how the local government's enforcement, the firm's compliance, and their interaction influence the effectiveness of regulation after the central government has established policies regarding quality standards. We construct three scenarios: perfect enforcement, imperfect enforcement, and collusion. We show that when the local government imperfectly enforces the regulation, the firm's utility and the local government's utility are higher, whereas the degree of the firm's compliance, consumers' utility, and the level of social welfare are lower. When there is collusion between the local government and the firm, the firm's utility and the local government's utility are the highest, but the degree of the firm's compliance, consumers' utility, and the level of social welfare are the lowest among the different scenarios. This study proves that the behavior of governments and firms plays a vital role in the effectiveness of quality standards regulation.     

Does organization capital matter? An analysis of the performance implications of CEO power

Chief executive officer (CEO) power reflects the ability of the CEO to influence the firm's decision-making. Whether the CEO of the firm could manage the firm’s investment assets to support maximizing the efficiency of resource allocation is an important issue. As previous studies found, organization capital is a key intangible asset that improves the firm’s production efficiency and affects long-term performance. This study explores how CEO power affects organization capital investments and how it further affects the efficiency of firm resource allocation. We use the following three variables to measure CEO power: CEO founder, CEO-only insider and CEO duality. Our results indicate that the level of CEO power can influence a firm’s value by controlling the organization capital. When the firm’s CEO is also the founder, the CEO will attempt to increase investments in organization capital to create growth opportunities for the firm, which will therefore increase the firm's value. Specifically, when the company is in financial distress, the powerful CEO's increasing in organizational capital investment will expose the company to greater risk of loss of intangible assets. This result may further increase the company's price volatility.