Do Managers Matter? Manager Effects on Organization Performance

In this study, we examine how pre‐managerial experience and performance relates to managerial success. Some prior research has documented that managers contribute to organization performance, but the link between specific manager characteristics and performance has been dubious because data about managers' prior work history are typically quite limited. We overcome this limitation by examining our research question in the context of Major League Baseball, where data on pre‐managerial work history are available for a large subset of managers. This allows us to focus on two questions that have not been adequately addressed in prior studies. First, does success prior to becoming a manager translate into success as a manager? Second, what is the relative importance of measurable versus unobservable manager characteristics on performance? Copyright © 2015 John Wiley & Sons, Ltd.     

The Bargaining–sales‐delegation Game

This article revisits the managerial delegation literature led by Vickers ( 1985 ), Fershtman and Judd ( 1987 ) and Sklivas ( 1987 ) by introducing a bargaining mechanism between owners and managers over managerial contracts. It shows that the degree of bargaining interacts with the extent of product differentiation in determining whether the sub‐game perfect Nash equilibrium is sales delegation or profit maximisation. In contrast with the classical result, no sales delegation emerges and the typical prisoner's dilemma of the managerial delegation literature is solved. This holds in both contexts of Cournot and Bertrand rivalries. The article also provides results for the more general cases with heterogeneous managerial bargaining power and endogenous decisions of the owners regarding the bargaining power of the manager that should be or not be hired in a firm. Copyright © 2016 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.     

Chairmen and Chief Executives: an Exploration of Their Relationship

This longitudinal study of the relations between 20 general managers and their chairmen in the UK National Health Service has wider implications despite its distinctive setting. It showed that the two roles are very dependent upon each other, and occupy overlapping domains, so that what each can do is considerably affected by the other's behaviour. the chairman has more power to determine their relative domains so that studies of individual chief executives should take account of this relationship. the ways in which both chairmen and general managers played their roles differed widely. One reason for the differences in the chairmen's roles was the wide variation in the time that they gave to the job. Different types of relationship are described. the most common was that of partners where the two complemented each other. the study crosses different literatures: corporate management, leadership, role theory and managerial work and behaviour. Its main concern is with managerial work and behaviour but it also has some implications for corporate management.     

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.     

The perceived importance of HR duties to Danish line managers

Today, HR scholars widely acknowledge that realising HRM requires the involvement of all managers and that the personal motivation of line managers plays an important role in their successful involvement. Yet, previous research has neglected to study how line managers rate the importance of particular HR duties and how the importance assigned to HR duties varies across managers. Based on a survey of 1,500 Danish managers, we find that ‘motivating others’ is considered the most important HR duty whereas ‘team building’, ‘handling conflicts’ and ‘coaching’ are considered the least important HR duties. Female top managers in the public sector exhibit the greatest interest in HR whereas men at lower managerial levels in the private sector give lowest priority to HR work. We conclude with possible explanations for the observed differences in a Danish context and beyond and provide suggestions for facilitating managerial involvement in HRM. In doing so we are well aware that the Scandinavian model of HRM in general and the Danish implementation in particular may represent a unique frame for the results.     

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.     

Managers and Wage Policies

Do individual top managers matter for wages and wage policies? Are there general differences in “style” among managers with respect to worker compensation? To shed light on these questions, we exploit a large panel dataset from Portugal that allows us to match workers, firms, and managers, and follow the movements of the latter across different firms over time. While accounting for the effect of worker and firm heterogeneity, we estimate the role of top manager fixed effects in determining wages and wage policies. The estimates suggest that (i) top managers have a significant influence on wages and wage policies; (ii) there exists different managerial “styles”; and (iii) managers’ (observable) attributes matter for worker compensation.     

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.     

Rewarding employee performance: line managers' values,beliefs and perspectives

This article explores managerial perceptions of the effectiveness and fairness of individual performance-related pay schemes. It draws upon findings from a two-part study of middle managers' interpretation and application of performance-related pay processes in a variety of organizational contexts. The analysis reveals that middle managers all too often do not share the principles or the stated objectives of the schemes they are required to operationalize. It concludes that the importance of managerial values and beliefs about rewarding individual contribution has been an overlooked and underestimated dimension in the design and application of individual performancerelated pay schemes (IPRP) despite the significance of the manager's role in their organizational effectiveness.     

THE INTERDEPARTMENTAL INFLUENCE OF MANAGERS: INDIVIDUAL AND SUB-UNIT PERSPECTIVES

This paper examines the extent to which managerial influence over group-interdepartmental decisions is derived from sub-unit contingencies or is due to more individualistic characteristics of the manager. Both individual and sub-unit perspectives are presented in a framework composed of seven power factors each of which is investigated empirically. The major finding from a survey of 142 departmental managers is that individual managerial expertise is more important than sub-unit-based power with access to and control of information being of equal importance. We suggest that the investigation of managerial influence from a sub-unit perspective alone may be insufficient and that, in certain circumstances, both individualistic and sub-unit perspectives should be taken into account.     

Endogenous managerial incentive contracts in a differentiated duopoly,with and without commitment

In a differentiated Cournot duopoly, we examine the contracts that firms' owners use to compensate their managers and the resulting output levels, profits and social welfare. If products are either sufficiently differentiated or sufficiently close substitutes, owners use Relative Performance contracts. For intermediate levels of product substitutability, they use Market Share contracts. When owners do not commit over the types of contracts, each type is an owner's best response to his rival's choice. Product substitutability has differential effects on output levels and profits, depending on the configuration of contracts in the industry. Finally, managerial incentive contracts are welfare enhancing if they increase consumers' surplus. Copyright © 2010 John Wiley & Sons, Ltd.     

An analysis of operations efficiency in large-scale distribution systems

This research applies Data Envelopment Analysis (DEA) methodology to evaluate the efficiency of units within a large-scale network of petroleum distribution facilities in the USA. Multiple inputs and outputs are incorporated into a broad set of DEA models, yielding a comprehensive approach to evaluating supply chain efficiency. This study empirically separates three recognized, important and yet different causes of performance shortfalls which have been generally difficult for managers to identify. They are: (1) managerial effectiveness; (2) scale of operations and potential for a given market area (and efficiency of resource allocation given the scale); and (3) understanding the resource heterogeneity via programmatic differences in efficiency. Overall, the efficiency differences identified raised insightful questions regarding top management’s selection of the appropriate form and type of inputs and outputs, as well as questions regarding the DEA model form selected.     

Do self-serving managers choose Chapter 11 filing over out-of-court restructuring?

I investigate whether self-serving managers in financially distressed firms influence a firm’s decision on the choice of debt restructuring method. I show that there is a non-linear relationship between managerial ownership and the probability of Chapter 11 filing. I find that distressed firms are more likely to choose Chapter 11 with the increase of managerial ownership when managerial ownership is in the 5%–25% range. I also find a significant curvilinear relation between managerial ownership and the probability of Chapter 11. My results are consistent with the hypothesis that managerial ownership plays a significant role in corporate decisions.     

Power in the Firm and Managerial Career Concerns

More powerful managers make more important decisions. Therefore, firm performance is more informative about the abilities of such managers, who, realizing that they are more visible, are more eager to improve performance. If this reputation effect exists, how should firms allocate power? I analyze the optimal allocation of power and derive implications for several issues that often arise in management practice: the choice of departmentation criteria, the importance given to seniority, and the width of job definitions. Finally, I show that the model is consistent with the empirical evidence on managerial succession.     

Pay fairness and intrinsic motivation: the role of pay transparency

The fairness of managerial pay can be judged in terms of its distributive justice properties (‘is my pay fair when compared to others’) and its procedural justice properties (‘is my pay fairly determined’). While both types of justice have been studied extensively in the organizational literature, their relative importance in predicting work-related outcomes is still open to debate. In this paper, we provide field evidence that the relationship between pay justice and managers' intrinsic motivation is moderated by pay transparency, which is the extent to which managers know each other's pay levels. In a homogeneous sample of 139 Slovenian bank managers, we find that procedural justice is a better predictor of intrinsic motivation when pay transparency is low, and that distributive justice is a better predictor of intrinsic motivation when pay transparency is high. These findings that are congruent with fairness heuristic theory (Van den Bos, Lind, Vermunt and Wilke 1997a) suggest the importance of considering pay transparency for understanding and designing fair managerial pay systems.     

Agreeing to disagree? Explaining self–other disagreement on leadership behaviour

ABSTRACT

Leadership research tends to treat differences among ratings of the same leaders as measurement error. Our study makes such varying perceptions of leadership behaviour its main phenomenon of investigation. We conceptualize divergent leadership ratings based on the difference between managers’ self-ratings and team members’ assessments of leadership behaviour. Using data from three German public organizations on 51 teams and 190 leader–follower dyads, we find that divergent leadership ratings are a function of managers’ motivation, their use of managerial reflection routines, and team members’ personality. The findings point to the importance of using multisource feedback and developing managers’ self- and other-awareness.     

Communicating management: The role of the mass media in the institutionalization of professional management and productivity discourse in Israel

Against the tendency to ground depictions of management professionalization in the analysis of professional media, this article argues that such literature represents the end of the institutionalization process rather than its beginning. Based on a systematic analysis of one general (non-professional) daily newspaper in Israel, I suggest that the mass media constitute a vehicle through which professional ideas are crystallized, disseminated, and become “taken for granted” prior to the emergence of management as an autonomous field. I show how a particular managerial concept, that of productivity, emerges in the popular media and travels into the managerial field evoking a process of institutionalization. Thus, it enables managers to establish and legitimize their distinct professional identity.     

Gender difference and job replacement for mutual fund

This paper develops parametric shared-frailty models to analyze the likelihood of the spell time of job replacement. This empirical study identifies the importance of window dressing, herding behavior, and fund manager’s characteristics from the viewpoints of gender and performance differences. Finally, it considers how gender difference contributes to managerial turnover, while it finds that performance difference is not quite different among fund managers in Taiwan.