Initial compensation of new CEOs hired in turnaround situations

Our paper examines the initial compensation of new CEOs hired in turnaround situations. Building on prior literature on executive job demands, we posit that new CEOs hired in turnaround situations will receive higher pay, particularly higher performance‐based pay, and that the pay premium will incentivize them to undertake retrenchment and restructuring turnaround initiatives. An interaction between pay premium and CEO credentials is shown to have a stronger effect on the extent to which firms engage in such turnaround initiatives. Our empirical results, based on 98 new CEOs hired in 223 turnaround situations, largely support our arguments. We discuss the contribution of our study to the CEO compensation, executive job demands, and corporate turnaround literature. Copyright © 2014 John Wiley & Sons, Ltd.     

'Biological' revolution and strategies for innovation in pharmaceutical companies

Fundamental advances in the life sciences are exerting a profound influence on the structure of the pharmaceutical industry and the strategies of drug companies. The 'biological' revolution makes it possible to apply a scientific method to drug research. This paper argues that pharmaceutical companies can take advantage of the new method only if they encourage 'openness' of their research. We also offer a framework to explain why innovations in this industry increasingly result from networks of agents with complementary skills and resources. Greater use of scientific knowledge implies that important information for innovation can be expressed in relatively general and universal forms. This eases information exchange, and encourages specialisation and division of labour in drug R&D and marketing. Finally, the possibility of a division of labour in innovation opens new opportunities for medium-sized national pharmaceutical firms in Europe. Provided that they found their strategies on high-quality research in specialised niches, they can set up alliances with partners that possess complementary knowledge, and supply resources for clinical development and international marketing.     

The advantage of foreignness in innovation

I argue that subsidiaries of foreign multinational enterprises (MNEs) enjoy an advantage of foreignness in innovation, that is, they are more innovative than domestic firms. To explain this, I present the subsidy and the incentive arguments. The subsidy argument proposes that subsidiaries are subsidized in their innovation effort by the MNE, which results in subsidiaries having more innovations than domestic firms, because they belong to a foreign MNE. The incentive argument posits that subsidiaries are subject to two sets of unique and converging pressures, one at the MNE level in the corporate factor market and another at the host country level in the consumer market. These pressures drive subsidiaries to become more successful at transforming their research and development investments into innovations. Copyright © 2011 John Wiley & Sons, Ltd.     

Information asymmetry and the dismissal of newly appointed CEOs: an empirical investigation

Why are some newly appointed CEOs (i.e., those with tenure of three years or less) dismissed while others are not? Drawing upon previous reseach on information asymmetry and adverse selection in CEO selection, I argue that the board of directors may make a poor selection at the time of CEO succession, and as a result, must dismiss the appointee after succession when better information about him/her is obtained. Therefore, the level of information asymmetry at the time of succession increases the likelihood of dismissal. With data on 204 newly appointed CEOs, the results of this study support this argument. After controlling for alternative explanations of CEO dismissal (e.g., firm performance and political factors), the results show that the likelihood of dismissal of newly appointed CEOs is higher in outside successions and/or if the succession follows the dismissal of the preceding CEO. Further, if at the time of succession, the firm's board has a nominating committee that is independent and/or on which outside directors have few external directorships, the likelihood of dismissal is lower. Contributions to the CEO dismissal/succession literature are discussed. Copyright © 2008 John Wiley & Sons, Ltd.     

How quickly do CEOs become obsolete? Industry dynamism,CEO tenure,and company performance

Scholars have characterized CEO tenures as life cycles in which executives learn rapidly during their initial time in office, but then grow stale as they lose touch with the external environment. We argue, however, that the opportunities for adaptive learning are limited because (1) a CEO assumes office with a relatively fixed paradigm that changes little thereafter; (2) inertia limits the speed at which an organization can align itself with a new CEO's paradigm; and (3) for any within‐paradigm learning to occur, the external environment must be stable enough so that the cause–effect relationships that CEOs glean today remain relevant tomorrow. In a longitudinal study of 98 CEOs in the relatively stable branded foods industry and 228 CEOs in the highly dynamic computer industry, we found results that strongly supported our hypotheses. In the stable food industry, firm‐level performance improved steadily with tenure, with downturns occurring only among the few CEOs who served more than 10–15 years. In contrast, in the dynamic computer industry, CEOs were at their best when they started their jobs, and firm performance declined steadily across their tenures, presumably as their paradigms grew obsolete more quickly than they could learn. Copyright © 2006 John Wiley & Sons, Ltd.     

Cooperation with competitors and product innovation: Moderating effects of technological capability and alliances with universities

The relationship between cooperation with competitors and product innovation performance was investigated along with the moderating effect of the innovating firm's technological capability and its alliances with universities. The hypothesis that cooperation with competitors has an inverted U-shaped relationship with product innovation performance was tested using data on new product introductions from 1499 Chinese firms. The results support the existence of a bell-shaped relationship between co-opetition and product innovation performance. Technological capability and alliances with universities were shown to weaken the relationship. The findings add significantly to the emerging literature on dynamic co-opetition.     

Co-production and its effects on service innovation

This study explores the influence of business-to-business (i.e., upstream) co-production on service innovation in the information technology (IT) industry, and examines the antecedents of co-production, based on a survey of sales managers, the seller side of the co-producers, from 157 IT businesses in Taiwan. The findings indicate that co-production positively influences service innovation to a degree that depends on the collaborative partner's compatibility and history of business relations, affective commitment, and expertise. Moreover, the business' innovation orientation enhances (moderates) the relationship between co-production and service innovation. These results have several managerial implications. Businesses should choose co-production partners that are compatible and can contribute toward advancing the relationship. Furthermore, investments in building their innovation orientation will strengthen their efforts in service innovation through co-production.     

Know-how and asset complementarity and dynamic capability accumulation: the case of r&d

Dynamic capabilities enable firms to create new products and processes and respond to changing market conditions. This empirical investigation of dynamic R&D capabilities deals with the role of complementary know-how and other assets in the context of changing conditions in the U.S. petroleum industry during the 1970s and early 1980s. The analysis suggests that, in response to rising oil prices, firms with larger amounts of complementary technological knowledge and physical assets also undertook larger amounts of R&D on coal conversion (a synthetic fuels process). © 1997 by John Wiley & Sons, Ltd.     

The effect of compensation program and structure on sbu competitive strategy: A study of technology-intensive firms

In this paper we examine the impact various compensation programs have upon business-level strategy for technology-intensive firms. Similarly, we examine the effect of centralization of R&D and non-R&D decision-making, formality of procedures, and SBU size on competitive strategy. Analysis of data from 79 SBUs suggest that there is a resource trade-off between marketing-oriented strategies and R&D-oriented strategies, and that managers who operate under certain types of compensation programs will tend to favor R&D/innovation strategies and capital investment over other alternatives. Structure and competitive position also appear to play a significant role in determining technology and investment strategy.     

The differing effects of agent and founder CEOs on the firm's market expansion

This paper builds and tests the thesis that CEO influence evolves differently for founders and agents. We theorize that at the beginning of their tenures, founder CEOs can pursue market expansion more aggressively than agent CEOs, because they take office with the combination of motivation, power, and requisite knowledge that agent CEOs build over time. Subsequently, however, founder CEOs have less access to the administrative infrastructure necessary to sustain a growing firm, making them less able than agent CEOs to continue market expansion mid‐tenure and more severely constrained by market complexity. A longitudinal study of cable television operators confirms that the firm's market expansion follows an inverted U‐shape for agents and a downward slope for founders, while market complexity reduces market expansion, especially for founders. Copyright © 2011 John Wiley & Sons, Ltd.     

Shareholder perceptions of the changing impact of CEOs: Market reactions to unexpected CEO deaths, 1950–2009

Research summary : Despite a number of studies highlighting the important impact Chief Executive Officers (CEOs) have on firms, several theoretical and methodological questions cloud existing findings. This study takes an alternative approach by examining how shareholders' perceptions of CEO significance have changed over time. Using an event study methodology and a sample of 240 sudden and unexpected CEO deaths, we show that absolute (unsigned) market reactions to these events in U.S. public firms have increased markedly between 1950 and 2009. Our results indicate that shareholders act in ways consistent with the belief that CEOs have become increasingly more influential in recent decades. Managerial summary : With Chief Executive Officers (CEOs) facing increased scrutiny and receiving ever‐increasing pay packages, substantial debate exists about their overall contribution to firm outcomes. While prior research has sought to calculate the proportion of firm outcomes attributable to the CEO, this study takes an alternative approach by using the “wisdom of the crowds” to assess how shareholders think about the importance of CEOs. Our study finds that shareholders, perhaps the most financially motivated stakeholder, view CEOs as increasingly important drivers of firm outcomes, good and bad, versus their peers from decades earlier. Notably, market reaction to the unexpected death of a CEO has increased steadily over the last six decades, highlighting the importance of succession planning and supporting, at least partially, the increased compensation given today's top executives. Copyright © 2016 John Wiley & Sons, Ltd.     

Business partnering—a driving force for innovation

Win-Win situations are used and also created by companies which cooperate with each other, complement each other on a synergy basis and work together fairly and competently. Today, business partnering has therefore become a key qualification for companies. This should not depend alone on the commitment of individual persons.This article describes how Siemens has organized its company, services and products using partnering solutions and how it has installed this concept as an intrinsically dynamic process. Thanks to institutionalized partnering, B2B interfaces have been established to form a rational alliance, offering benefits to all involved, and can be used regardless of the size of the company. These offerings generate Win-Win situations themselves—and provide individual employees in large companies with a structural framework for a personal partnering initiative.     

The effect of CEO pay deviations on CEO withdrawal,firm size,and firm profits

We build upon previous work on the effects of deviations in CEO pay from labor markets to assess how overcompensation or undercompensation affects subsequent voluntary CEO withdrawal, firm size, and firm profitability, taking into account the moderating effect of firm ownership structure. We find that CEO underpayment is related to changes in firm size and CEO withdrawal, and that the relationship between CEO underpayment and CEO withdrawal is stronger in owner‐controlled firms. We also show that when CEOs are overpaid, there is higher firm profitability; a relationship that is weaker among manager‐controlled firms. We then discuss the implications that these findings have for future research. Copyright © 2010 John Wiley & Sons, Ltd.     

Compensation transparency and managerial opportunism: a study of supplemental retirement plans

Existing research on managerial compensation is based primarily on optimal contracting and managerial hegemony theories. Under the optimal contracting theory, observed compensation contracts are optimally determined, aligning the interests of managers and shareholders. Under the managerial hegemony theory, observed compensation contracts deviate from the optimum because top managers with power over boards are able to influence their own pay. I argue that the impact of managerial power over boards on managerial pay, and hence the deviation of compensation contracts from the optimum, is contingent on the transparency of managerial compensation. Within this framework, I investigate the impact of supplemental executive retirement plans (SERPs)— historically the least transparent compensation component— on opportunistic decision making. An empirical analysis based on a time series sample of CEOs of S&P/TSX60 firms provides support of the compensation transparency theory. I find that SERP benefits are primarily driven by variables proxying for CEO power over the board, whereas more transparent compensation components are primarily driven by economic factors. The results also suggest that CEOs whose SERPs are contingent on firm performance appear to reduce firm R&D expenditures as they approach retirement. Both findings provide important contributions to existing research on the impact of managerial compensation on opportunistic decisions. Copyright © 2008 John Wiley & Sons, Ltd.     

How CEOs protect themselves against dismissal: A social status perspective

In this study, we address the question of why some CEOs stay in office during a performance downturn while others don't. Taking a social status perspective, we argue that an individual's board network embeddedness—as reflected in the number of outside directorships—plays an important role in dismissal decisions. We predict that a high status of the CEO relative to the chairman of the board protects an underperforming CEO against dismissal, while the relative salience of board network outsiders can counter this effect. Using longitudinal data of large German corporations, we find support for our predictions. Ltd. Copyright © 2015 John Wiley & Sons, Ltd.     

企业R＆D商业化能力研究

知识经济的飞速发展凸显出技术创新的重要性，企业R＆D商业化能力作为企业技术创新能力的重要组成部分越来越被人们所重视。本文认为，企业R＆D商业化能力的强弱在很大程度上影响着R＆D投入的收益多少．企业可以从多个层次来改善其R＆D商业化的水平．不同的商业化途径对R＆D的盈利水平亦有着显著影响。企业应该重视其R＆D商业化能力的改善．因为．它为企业在技术创新活动中实现真正意义上的自主提供了必要的资源支持．是企业实现自主创新战略的必然选择。     

Technology development mode: a transaction cost conceptualization

Technology alliances have emerged in the past decade as a significant mode for the development of innovation. The present research assesses the factors explaining whether firms will engage in such technology alliances or utilize the more traditional mode of internal R&D. The hypotheses stem from a transaction cost conceptualization. Results suggest that firms which pursue technology alliances are likely to have less commitment to product category-specific assets, to face higher technological uncertainty, to be more capable at measuring innovation performance, to have more successful technology alliance experiences, and to compete in lower growth product categories. © 1998 John Wiley & Sons, Ltd.