Aggressiveness of Managers in the Market with Network Effects: The Case of Biased Managers as Strategic Commitment

This paper analyzes a model wherein firms' owners hire biased managers in a differentiated goods duopoly with network effects. We show that whether firms hire an aggressive manager or not depends on both the degree of product differentiation and the strength of network effects in price competition whereas it does not depend on the degree of product differentiation or the strength of network effects in quantity competition. Thus, the attitudes of firms' managers depend on the type of competition and the relative magnitude of the strength of network effects to the degree of product differentiation. Copyright © 2015 John Wiley & Sons, Ltd.     

Delegation and strategic incentives for managers in contests

Owners usually want their managers to maximize profits. As the literature on strategic delegation has shown it may be beneficial to owners to put a positive weight on sales in the optimal linear incentive scheme for managers to make them behave more aggressively in the market. This paper shows that if the competition between the managers can be characterized as a contest, owners may induce their managers to maximize sales. Moreover, there is a first‐mover advantage for owners when choosing their incentive schemes. If delegation is endogenous the type of contest will determine whether all owners delegate their decisions to managers or not. Copyright © 2002 John Wiley & Sons, Ltd.     

Managerial optimism and investment choice

This paper analyzes whether it might be desirable for a firm to hire an overoptimistic manager to commit to a certain R&D strategy. I consider a Cournot model with an ex‐ante R&D stage where firms can invest in cost reduction before product market competition takes place. I show that firms want to hire overoptimistic managers and argue that a manager's type may serve as a substitute for strategic delegation via contracts. Copyright © 2010 John Wiley & Sons, Ltd.     

Managerial style and the strategic choice of executive incentives

This paper analyzes a two-stage duopoly model where owners provide incentives to managers who then select output levels. Unlike the previous Cournot models on the strategic use of incentives (e.g. Fershtman and Judd, 1987; Sklivas, 1987), managers hold different beliefs about their rivals. Managers and executives are classified by ‘management style’ based on the aggressiveness of their beliefs. It is shown that many of the standard results of the strategic managerial incentive literature no longer hold when executives have differing managerial styles. For example, owners may ‘penalize’ their managers for sales, or they may optimally instruct their managers to maximize profits, in contrast to the standard Cournot findings. Indeed, the model yields a necessary and sufficient condition for compensation contracts to specify pure profit-maximizing behavior when managers have differing managerial styles. Thus, the analysis suggests that when ownership and control are separated, owners must carefully assess the belief structure (management style) of their executives before designing the compensation package.     

Should managerial delegation contracts be made before or after union wage setting? A game‐theoretic analysis

This paper analyzes a multiple‐stage game in which, at the final stage, two (managerial) firms compete over quantities in the product market. Prior to this stage, firm‐specific unions set the workers' wages, while the owners of both firms hire managers and provide them with incentive contracts. Owners can freely decide to arrange the managerial contract before or after the (non‐managerial) wage determination stage. Hence, the endogenous choice of the incentive contract stage is derived. The possibility of multiple equilibria arises, where both owners choose managerial contracts before or after unions' wage setting, crucially depending on unions' preferences. Such results also prove to be true for a remarkable degree of asymmetry in preferences over wages vis‐à‐vis employment across unions.     

Relative performance as a strategic commitment mechanism

Can managers' personality traits be of use to profit maximizing firm owners? We investigate the case where managers have a variety of attitudes toward relative performance that are indexed by their type. We consider two stage games where profit maximizing owners select managers in the first stage, and these managers, knowing each other's types, compete in a duopoly game in the second stage. The equilibria of various types of competition are derived and comparisons are made to the standard case where managers are profit maximizers. We show that managers' types can be used as a strategic commitment device that can increase firm profits in certain environments. Copyright © 2002 John Wiley & Sons, Ltd.     

Strategic management under duopoly

The purpose of this paper is to present a general conjectural variation model to provide an integrative treatment of strategic management under duopoly. It is shown that the nature of the desired distortion of managers' incentives depends critically on the magnitudes of the managers' conjectural variations with respect to outputs as well as the owners' conjectural variations with respect to incentives. In particular, it has been demonstrated that when the owners' conjectural variations with respect to incentives are zero, the owners will motivate their managers to maximize profits and provide no incentives for sales under consistent conjectures. However, the owners make their managers behave more (less) aggressively and produce more (less) than profit-maximizers if the managers' conjectural variations with respect to outputs are larger (smaller) than the actual response.     

Hired to be Fired: The Publicity Value of Managers

Sports teams frequently fire and hire managers when they experience losing. However, determining managerial responsibility for player performance is difficult to measure. This study examines how major‐league baseball players perform under different managers and estimates that managers have little effect on performance. The study further investigates whether or not replacing managers serves as a signal to fans that the team is improving, which boosts attendance. The results indicate that new managers were associated with increased attendance in the 2000s; however, such effects were not present in the 1980s and 1990s. Copyright © 2016 John Wiley & Sons, Ltd.     

The determinants of hiring older workers: UK evidence

This is the first research using UK establishment data to examine the relationship between back loading of compensation, training and the hiring of older workers. Recognizing that many firms employ older workers but do not hire older workers, we argue this may reflect strategic deferred compensation or the role of specific human capital. Using the combined establishment and employee data of the 1998 WERS, we identify that firms which defer compensation hire a smaller share of older workers and present somewhat weaker evidence that firms which require greater specific human capital also hire a smaller share of older workers.     

Employment and wage practices of Japanese firms in the Philippines: convergence with Filipino-Chinese and Western-owned firms

In foreign-owned Philippine firms, human resource approaches and practices tend to converge. Japanese-owned firms localize their human resource practices by emphasizing local standards and practices in compensation, hiring, recruitment, job assignments and the like. On the other hand, Western-owned firms tend to adopt well-known Japanese style practices. Filipino-Chinese-owned firms tend to be traditional, emphasizing both informal and hierarchical control mechanisms which put a premium upon loyalty and trust, through familistic, informal but hierarchical control mechanisms. As the owners of these firms pass on control to the next generation, they tend to hire professional managers. These managers include younger generation Filipino-Chinese educated abroad. They are torn between the rational, and traditional norms and practices insisted upon by their Confucian-oriented elders, and the demands of a competitive and ever-changing technology and economy.

It is quite meaningless to attach adjectives like ‘Japanese’, ‘Filipino-Chinese’ or ‘Western’ to universal concepts like industrial relations and human resource approaches - the search for the best approach in work relations is beyond the issue of convergence or divergence.     

Commitment in R&D tournaments via strategic delegation to overoptimistic managers

This paper shows that it is profitable for a firm to hire an overoptimistic manager to commit to a certain investment strategy in an R&D tournament situation. In the unique symmetric equilibrium, all firms delegate to overoptimistic managers, where the optimal degree of overoptimism depends on the riskiness of the tournament. In these situations a manager's type may serve as a substitute for delegation via contracts. By delegating to overoptimistic managers, firms can escape the rat race nature of R&D tournaments. Copyright © 2010 John Wiley & Sons, Ltd.     

The impact of the presence of biased managers as strategic commitment on endogenous market structures

We consider the endogenous selection of strategic contracts in an asymmetric duopoly with substitutable goods. The market includes a biased manager, in terms of the market size the manager expects, in a managerial duopoly with separation between ownership and management. In particular, we focus on how the types of managers selected by owners affect the equilibrium market structures. Furthermore, by considering that each manager's expectation of market size depends on their own type and the type of the rival manager, we examine a situation in which the owner is less certain of the type of manager.     

A firm's external environment and the hiring of a non‐standard workforce: implications for organisations

This article empirically investigates organisations' strategic decision to hire non‐standard employees. Using US firm‐level data and a matched pair design, the study shows that firms operating in a more competitive environment and a less uncertain environment have a higher proportion of non‐standard workers. Further, firms with a greater proportion of non‐standard workers show higher financial growth. And finally, in a highly competitive environment, those firms that hire more non‐standard workers achieve significantly higher financial growth. Similar growth is experienced by those firms in the low uncertainty environment hiring more non‐standard workers. These results are all consistent with the research hypotheses.     

Competition for Managers and Product Market Efficiency

We investigate whether competition between two firms to hire managers with different abilities might affect efficiency in the product market, when a manager's effort is his/her private information. We conclude that competition for managers might lead to an improvement in efficiency in the market of the firm that attracts the most efficient manager. Competition for managers might even eliminate the productive efficiency loss due to the asymmetry of information in the firm-manager relationship.     

PMP® certification as a core competency: Necessary but not sufficient

This research seeks to investigate the relationship between project management certification and established project management core competencies in the IT industry. This study was conducted in two phases, the objective being to first identify those characteristics most common to the successful hire of project managers, from the perspective of IT recruiters. Once identified, the study sought to determine preference for these characteristics from the point of view of corporate IT executives. Two hypotheses were tested in an effort to determine the valuation of Project Management Professional (PMP®) certification as a core competency and as an indicator of project success. Both hypotheses were rejected, as results indicated that PMP® certification was the least valued of 15 core competencies and that there was no difference in project success rates between PMP®‐certified project managers and uncertified project managers. In addition, recruiters' and IT executives' suggestions for improvement in the delivery of the project management body of knowledge are discussed.     

Perceptions of the value of the HR function

This article explores the added value of the HR function as it is perceived by three groups of managers: top managers, HR managers and line managers. Despite the fact that literature about strategic HRM focuses almost exclusively on the value of the HR function as a strategic partner, it was assumed that its perceived value for the business would not be restricted to the area of strategy formulation and implementation. Several 'result domains' can be distinguished in which the HR function can deliver value to the business. Based on our review of the literature, the degree of strategic involvement of the function was used as a second perspective to investigate its perceived added value. To examine our propositions, a qualitative study was carried out in which 97 HR managers, 38 top managers and 178 line managers participated. The results confirm our thesis that the perceived value of the HR function contains more than just the fulfilment of its role as a strategic partner. Based on our results, an integrated model for the perceived value of the function has been developed.     

Discriminatory input pricing and strategic delegation

This paper examines how discriminatory input pricing by an upstream monopolist affects the incentives that owners of downstream duopolists offer their managers. Regardless of the mode of competition (quantity or price), owners of downstream firms induce their managers to be more profit‐oriented and to behave less aggressively when the monopolist is allowed to price‐discriminate than when he charges a uniform price. If the monopolist price‐discriminates, managerial downstream firms always earn more than owner‐managed profit‐maximizing firms. However, if the monopolist charges a uniform price, managerial downstream firms earn more than profit‐maximizing counterparts under price competition and earn less under quantity competition. Copyright © 2009 John Wiley & Sons, Ltd.     

Middle Management’s Strategic Influence and Organizational Performance

This study investigated relationships between middle managers’ formal position, their strategic influence and organizational performance. Among the 259 middle managers represented in the study, managers with formal positions in boundary–spanning sub–units reported higher levels of strategic influence activity than others. At the organizational level of analysis, the study found that firm performance was associated with more uniform levels of downward strategic influence, and more varied levels of upward influence among middle management cohorts. The findings suggest that middle managers’ strategic influence arises from their ability to mediate between internal and external selection environments. In addition, positive effects on organizational performance appear to depend on: (1) whether the overall pattern of upward influence is conducive to shifts in the network centrality of individual managers; and (2) whether the pattern of downward influence is consistent with an appropriate balance between the organization’s need for control and flexibility.     

Contributions of Managerial Levels: Comparing MLB and NFL

Sports differ according to the number of players, interdependencies among them, complexity of strategy, and other dimensions. For example, baseball has been described as ‘an individual game in which a team score is kept’. These differences suggest differences in the relative importance of managerial inputs: owners, general managers, and managers (or head coaches). Using panels over 1970–2011, I estimate performance production regressions for Major League Baseball and the National Football League that permit the relative importance of these managerial inputs to be assessed within and across sports while taking explicit account of the hierarchical structure of management levels. In addition, with predicted individual effects, I present rankings of best and worst managers, general managers, and owners. Copyright © 2013 John Wiley & Sons, Ltd.     

AN EXAMINATION OF THE INFLUENCE OF MIDDLE-LEVEL MANAGERS IN FORMULATING AND IMPLEMENTING STRATEGIC DECISIONS

The upward influence of middle-level managers (MLMs) on strategic planning and decision-making is examined. It was found that: (1) upward influence activity was more prevalent in low risk/return types of strategic decisions than in high risk/return decisions; (2) upward influence activity was more prevalent during the implementation of strategic decisions than during the formulation of such decisions; (3) managers most often used rational arguments in their influence attempts; (4) managers were more likely to be successful than unsuccessful in influencing their superiors in strategic decisions; (5) managers most often attributed their success in influencing their superiors to internal causes and their failures to external causes; (6) managers from private sector organizations exerted influence in both high risk and low risk strategic decisions more frequently than did managers from public sector organizations; and (7) the number of years working with the superior was the best predictor of successful interactions and of risky decisions. Some insight into the development of widespread strategic thinking in an organization is provided.