The equivalence of supporting software delegation and sales delegation

This paper considers a duopoly market with horizontally differentiated system goods to examine system owners' behaviors under supporting software delegation, in which owners of system firms use varieties of supporting software, coupled with profit, to evaluate their managers' performance. Supporting software delegation seems to induce managers to act more aggressively in price competition than sales delegation does; however, we prove that if two systems are compatible and the varieties of supporting software are determined by hardware owners' overall expenditure amount on software, then supporting software delegation is equivalent to sales delegation. Owners of system firms induce their managers to act less aggressively in hardware price competition by offering contracts with a negative weight on varieties of supporting software under supporting software delegation. We find that stronger network externalities do not reverse system owners' contracting behaviors under supporting software delegation. Finally, it is worth mentioning that hardware technologies are static in this paper. In other words, dynamic changes such as hardware evolution are not considered in our analysis.     

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.     

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.     

Chinese managers' career success networks: the impact of key tie characteristics on structure and interaction practices

Structured personal interviews were conducted with 105 senior and mid-level Chinese male and female managers, in which each respondent provided information about their career success network (CSN) ties. Using this data, we tested hypotheses on: (1) the age composition of Chinese managers' CSNs; (2) the face-to-face interaction practices within Chinese managers' CSNs; and (3) the roles of tie sex composition and tie content (position-centred versus person-centred ties) in influencing the age composition of and interaction practices within Chinese managers' CSNs. The results demonstrated that both Chinese male and female managers, while generally preferring to form CSN ties with individuals who are older than themselves, are relatively more reluctant to include middle-aged or elder women in their CSN. The age of those included in the respondents' CSN was also influenced by tie content and whether the tie spans the organizational boundary. With respect to interaction practices within the CSN, tie content moderated the relationship between tie sex composition and interaction practice. Female managers' person-centred ties with men had significantly lower levels of interaction outside the workplace than person-centred ties composed of members of the same-sex. However, this difference was not exhibited in the case of position-centred ties. Interestingly, the reluctance to socialize with the opposite-sex exhibited by female managers did not appear to be shared by their male counterparts. The implications of these results for career success in China are discussed.     

Rivalry Restraint as Equilibrium Behavior

Rivalry restraint has received a lot of attention as a theory of profits in recent research on business strategy. Its economic rationale is explained as the consequences of either exogenous or endogenous anticompetitive forces present in different industries. In this paper, we use a dynamic oligopolistic industry model and show that rivalry restraint emerges as equilibrium behavior among firm owners who delegate decisions to managers. In the corresponding two‐stage game, managers choose optimal production rates in a dynamic Cournot market and owners set incentives for managers, acting sequentially rational. Equilibrium incentives correspond to rivalry restraint, that is, managers are less aggressive in the product market with lower outputs and increasing profits for all firms in the industry.     

Debt finance and the cost of management ownership: Some elementary results

Increased debt reduces a company's equity base, which reduces the dollar investment a manager must make to hold a given proportion of stock. Therefore, it is often argued, managers' effort incentives are improved by high leverage. This paper shows that while risky debt reduces the cost of providing managers with substantial equity ownership, the cheaper equity captures less of the fruits of the manager's effort. Managers' effort incentives are improved by high debt levels only under quite restrictive conditions. These conditions are more plausible when agency problems are due to a managerial propensity to expand size by investing in negative net present value projects. The results also imply that when debt is increased to reduce the agency costs of free cash flow, the accompanying covenants should allow for substantial cash distributions to shareholders even before bondholder claims are satisfied.     

An empirical test of a correspondence model of expatriate managers' work adjustment

We develop and empirically test a model of expatriate managers' work adjustment. In this model we relate the fit between work-related abilities and needs of expatriate managers as well as the fit between the job requirements of, and incentives associated with, an international assignment to the level of expatriate managers' work adjustment. We test this model with data gathered by means of an electronic survey among 118 German expatriate managers. The empirical findings largely support our theoretical model. The paper enhances our understanding of expatriate managers' work adjustment and its antecedents and contributes to the theoretical and empirical basis of research into expatriate management.     

Strategic Delegation and Vertical Integration

This paper proposes a game‐theoretic model to analyze owners' vertical integration choices if they delegate pricing decisions to their managers. We find that all three vertical structures are possible Nash equilibrium outcomes. If the products are weak substitutes, then the outcome is that both owners adopt vertical integration. When the products are close substitutes, both owners adopt vertical separation in equilibrium. When substitution between the products is medium, the coexistence of vertical integration and vertical separation is the equilibrium outcome, and the owner corresponding to vertical separation offers exactly a profit‐maximization contract to his or her manager under this situation. Copyright © 2014 John Wiley & Sons, Ltd.     

Subordinates' perception of managers' transformational leadership style and satisfaction: a comparison of electronic manufacturing companies in Mainland China and Taiwan

Rapid economic growth has made leadership studies a significant subject in Asia. The present research compared subordinates' different perceptions of managers' transformational leadership style in Mainland China and Taiwan. Quantitative methodology was used in collecting 250 random samples from Shanghai and Taipei. Subordinates in Taiwan perceived that more managers had a transformational leadership style and also employees had higher satisfaction with managers' leadership style than those in Mainland China. The results of the present research would provide suggestions and directions for industrial managers seeking to display appropriate management behavior for an effective business environment.     

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.     

CEO Pay Contracts and IFRS Reconciliations

Abstract

We examine whether UK managers exploit the discretion provided in the UK GAAP to IFRS reconciliation process to manage earnings and whether this earnings management is associated with the structure of the managers' compensation contracts. We use a comprehensive data set of mainly hand-collected information from the firms' annual reports to provide evidence that, given the existence of an accounting-related vesting target in their pay schemes, CEOs use UK GAAP to IFRS reconciliations as an earnings management tool. We test our hypotheses under a number of different specifications, including a propensity score matching analysis. Our study contributes to the literature on the relation between earnings management and contractual incentives by focusing on a major structural change in accounting policies.     

Employee involvement and the middle manager: saboteur or scapegoat?

This article reports on the results of a study of managers' attitudes to employee involvement. Contrary to a number of existing studies, this research found middle managers' attitudes to be no more negative than those of senior managers. As hypothesised, managers' intentions to support employee involvement were found to be inversely related to recent managerial job loss and positively related to managers' experience of employee involvement. Contrary to expectations, the study revealed a positive relationship between recent delayering and intentions to support the involvement of employees. The study also reveals a complex curvilinear relationship between managers' perceptions of their own empowerment and their attitudes to employee involvement. The article draws out a number of implications for practice.     

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.     

Professors,managers, and human resource education

his article examines whether Masters of Business Administration (MBA) programs adequately prepare human resource professionals. It also compares managers' and professors' evaluations of the competencies HR managers will need in the twenty‐first century. It finds that both managers and professors view interpersonal and problem‐solving competencies and integration of HR with bottom line concerns as more important than technical know‐how. HR managers, however, are much more critical of what MBA programs are doing than are HR professors. HR professors may be risking complacency about their product. © 2000 John Wiley & Sons, Inc.     

A note on the impact of the internal organization on the accuracy of the information transmitted within the firm

We investigate the incentives of sales managers to transmit information on demand conditions to headquarters under different organizational structures and its subsequent impact on firm performance. When headquarters determine quantities of production, sales managers' interests are aligned with that of the firm, and reliable information is transmitted. On the other hand, when the authority of decision making on quantities of production is delegated to sales managers, they prefer not to transmit reliable information; consequently, headquarters set transfer prices given poor information about demand. Due to such difference in the quality of the information available to headquarters, a centralized organizational structure frequently leads to the best performance.     

R&D in a strategic delegation game

This paper studies how a separation of ownership and management affects firms' R&D and production decisions in Cournot quantity competition. It is found that when R&D spillovers are small, owners strategically direct their managers away from profit maximization towards sales. Consequently, managerial firms invest more in R&D and have higher output and lower prices compared to their entrepreneurial counterparts. On the other hand, when spillovers are large, owners ‘penalize’ managers for sales. In this case, managerial firms have lower R&D, lower output and higher prices. Nonetheless, managerial firms have lower profits than their entrepreneurial counterparts regardless of spillovers. This paper also examines the welfare effects of a separation of ownership and management. It is found that in terms of first-best social welfare, managerial firms are more (less) efficient than their entrepreneurial counterparts with low (high) spillovers. However, in terms of second-best social welfare, managerial firms are less efficient with all spillovers. © 1997 John Wiley & Sons, Ltd.     

Willingness to relocate internationally

This study used a sample of 405 managers and their spouses from twenty Fortune 500 multinational corporations to document the availability of American managers for international assignments. Aside from their spouses' feelings about international relocation, managers' willingness to relocate internationally was also predicted by their own attitudes about moving in general and their willingness to relocate domestically. Implications for human resource policy suggest that corporations must increasingly focus on human resource policies targeted toward the spouse. Results suggested that monitoring managers' intentions to relocate will enhance the organization's ability to adequately staff international sites with experienced managers. © 1995 by John Wiley & Sons, Inc.     

Tactics of speaking up: The roles of issue importance,perceived managerial openness,and managers' positive mood

Extant voice research has focused mainly on the conditions under which employees speak up, but we have limited knowledge about how employees speak up. This study examines voice tactics or the various ways in which employees express concerns to or share suggestions with their managers. Based on the notion that voice is a deliberative behavior, we draw upon a cost–benefit framework and propose that voice tactics are influenced by messages' characteristics and managers' stable and temporal characteristics. Specifically, we examine the joint effects of issue importance, perceived managerial openness, and managers' positive mood on employees' public (vs. private) and formal (vs. informal) voice tactics. Across two independent studies, our findings demonstrate that employees tend to use public channels and formal procedures only when three conditions are met simultaneously: (a) the issue is important, (b) managers are perceived as being open to employees' voice, and (c) managers are in a positive mood at the time of voicing. In addition, we found that speaking up via public channels or formal procedures is positively related to the success of voice.     

Vertical externality and strategic delegation

This paper examines the effects of vertical externality generated by the upstream monopoly on the incentives that owners of competing downstream firms give their managers. It is shown that the introduction of the upstream monopoly may have significant effects on the incentive schemes for the downstream firms' managers. In particular, it is shown that in equilibrium, each owner obtains the simple Nash equilibrium outcome regardless of the mode of competition (quantity or price) in the downstream market. Copyright © 2002 John Wiley & Sons, Ltd.     

Antecedents and Employee Outcomes of Line Managers' Perceptions of Enabling HR Practices

To learn more about the role of line managers in the implementation of HR practices, we propose and test a model of line managers' perceptions of enabling HR practices on the one hand and employee outcomes on the other. In a field study of 89 line managers and 631 employees, we observed that the relationship between line managers' perceptions of enabling HR practices and employees' intrinsic motivation, affective organizational commitment, and turnover intention was mediated by employees' perceived supervisor support. Line managers' perceptions of enabling HR practices, in turn, were predicted by line managers' perceived quality of the HR training they received. Theoretical and practical implications and directions for future research are discussed.