The end of the 'iron rice-bowl': whither Chinese human resource management?

This study examines the degree to which enterprise reforms in the PRC have affected human resource management practices over the 1990s. A comparison is made between state-owned enterprises and joint venture firms, involving a national sample of sixty-two companies ranging from those in the North to those in the South. Our main findings show how organizational inertia has obstructed the change of the mind-sets associated with the 'iron rice-bowl' that characterized Chinese state-owned enterprises (SOEs) before economic reform. The main conclusions of the research point to ownership, location and size of the firm as the main factors affecting the evolution of HRM in Chinese enterprises.     

Firm-specific wage growth and changes in the labor market for managers

This paper analyzes recent changes in the employment relationships between managers and firms. In both Becker's and Lazear's models of firm-specific wage growth, compensation is deferred from early in an employee's tenure with a firm until later in the contract. The deferred compensation bonds the worker to the firm. Based on cross-sectional data from Current Population Surveys, rates of firm-specific wage growth are estimated for the managerial labor market. The findings show that the rate of wage growth that is firm-specific for managers in manufacturing industries declined significantly during the early 1980s. It is estimated, for example, that a manager with 12 years of tenure in a manufacturing firm enjoyed, on average, a 25% wage premium in 1979 over an otherwise similar manager who was a new hire in a firm. By 1983 the firm-specific wage premium for a manager with 12 years of tenure was only 5%. These changes represent a significant reduction in the strength of the employment bond between firms and managers, and a reduction in the incentive effects previously enjoyed by firms from the use of deferred-compensation schemes. This change is consistent with the significant increases in the displacement rates of managers that occurred during the 1980s.     

CEO compensation: does it pay to be green?

The relationship between chief executive officer (CEO) compensation and various organizational variables (i.e., size, length of tenure of the CEO, board composition and firm performance) has been explored in academic research. However, the relationship between CEO compensation and the firm's reputation based on the firm's commitment to the community and the environment has been relatively unexamined in the academic research. This study's purpose is to empirically examine this relationship using the Fortune Reputation Index as revised by Brown and Perry (1995) . Using a sample of 186 firms in 1990 and 188 firms in 1991, the relationships between CEO compensation and organization size, financial performance and environmental reputation are examined. The results of the study demonstrate that there is a strong relationship between CEO compensation and firm environmental reputation, firm size and firm financial performance. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment     

Ownership Types and Strategic Groups in an Emerging Economy*

ABSTRACT Existing strategic group studies have rarely examined ownership type as a variable to classify firms in an industry. Using Chinese firms of different ownership types, we suggest that ownership type can be a parsimonious and important variable that managers use to cognitively classify firms into different strategic groups. While ownership itself is an objective variable, we contend that different ownership types lead to different managerial outlook and mentality due to a number of macro and micro foundations giving rise to various managerial cognitions. Employing the Miles and Snow typology, we find that state‐owned enterprises (SOEs) and privately‐owned enterprises (POEs) tend to adopt defender and prospector strategies, respectively, while collectively‐owned enterprises (COEs) and foreign‐invested enterprises (FIEs) exhibit an analyser orientation that falls between defenders and prospectors on the strategy continuum. Three statistical tests suggest that ownership types can be used to successfully predict strategic group memberships in China's emerging economy.     

Why some firms adopt telecommuting while others do not: A contingency perspective

Using a contingency perspective and data from 122 CEOs of Spanish firms, this paper examines what makes a firm likely to adopt telecommuting. We hypothesized that employer adoption of telecommuting would depend on organizational constraints (age and size of the firm), the international composition of the workforce, and the top executives' leadership style. In turn, we argue that firms adopting telecommuting would emphasize outcome‐based control systems. Our empirical evidence showed that telecommuting correlated with small organizational size, a high proportion of international employees, and variable compensation. A contingent reward leadership style at the top moderated the effects of firm age and internationalization on the adoption of telecommuting. © 2009 Wiley Periodicals, Inc.     

Should managers refrain from and investors ignore noisy dividend surprises? Some experimental evidence

A series of experiments is conducted in an asset market that contains a high productivity firm and a low productivity firm. Managers' compensation is a positive function of the market determined value of the firm. Investment decisions are made endogenously and are private information to the managers. The results of the experiments indicate that managers signal earning's information via noisy dividend announcements that result in suboptimal investment decisions. A manager's overinvestment in the signal does not generate significant increases in managerial compensation. The noisy signal does not pay off and in fact would result in a tendency for the market to underpredict earnings. This implies that even in the presence of suboptimal contracts between the managers and the firms, managers are not overcompensated. Thus, in these experiments the signal does not “solve” the dividend puzzle.     

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.     

Industry 4.0 and circular economy practices: A new era business strategies for environmental sustainability

Amid rising environmental concerns, Industry 4.0 and blockchain technology (BCT) are transforming circular economy (CE) practices and prevailing business models. Recognize the same; this study examines the role of blockchain technology in circular CE practices and their impact on eco-environmental performance, which influences organizational performance. The study collects data from 404 enterprises located in Chinese and Pakistani territories, involved in cross-border supply chain operations. Both countries' sample has great relevance due to the China Pakistan Economic Corridor (CPEC), which possesses several positive fallouts in terms of technology spillovers across firms. Using the partial least squares structural equation modeling (PLS-SEM) modeling framework, this study provides three key findings. First, BCT significantly improves the circular economy practices (circular procurement, circular design, recycling, and remanufacturing). Second, CE practices help improve firms' environmental performance and stimulate their financial performance. Third, higher eco-environmental performance significantly boosts organizational performance. This study sets out the foundations for participating countries/firms that simultaneously achieve financial and sustainable goals by integrating blockchain technology in circular economy practices.     

Investment decisions and managerial compensation design in the presence of product market rivalry

We consider an economy where firms operate in an imperfectly competitive industry and mutually affect each others’ investment opportunities. Each firm is assumed to face a mutually exclusive choice of investing in either a short‐ or a long‐term project. For example, firm i's commitment to a short‐term project cuts into firm j's market in the short‐term but frees‐up firm j's long‐term market, and vice versa. Our results show that, even in the absence of an owner–manager conflict, the owner anticipates the product market rivalry and optimally compensates their managers with short‐ as well as long‐term compensation. Although the optimal compensation design induces myopic investment decisions, it is shown to be in the owners’ best interest. Copyright © 1999 John Wiley & Sons, Ltd.     

When do threats mobilize managers for organizational change toward sustainability? An environmental belief model

In pursuit of counteracting today's environmental problems, corporate management will have to implement organizational changes factoring in sustainability, which is why it is important to understand exactly what leads managers to initiate these changes. It has been established that managers' personal values are critical for their behavior and that threats to these values can mobilize managers to change their actions. However, when confronted with environment-related threats, managers may face value conflicts and various tensions between their aim to implement sustainable changes and their desire to fulfill business requirements of their job positions. Only recently have researchers begun to investigate the underlying beliefs that may lead managers to initiate organizational change toward sustainability. Borrowing theoretical assumptions from the domain of health psychology (from the well-established health belief model), the present conceptual article develops an environmental belief model that specifies when exactly threats lead managers to initiate organizational change. The environmental belief model proposes that environment-related threats trigger change (i) when managers believe that their firms are susceptible to these threats, (ii) the threats are considered as serious for the company, (iii) the perceived benefits of the change outperform (iv) the perceived barriers, and when there is (v) an external cue (e.g., an information campaign). All these propositions are supported with empirical findings from business contexts. Besides theoretical advancement on the role of environmental threats as precipitators of organizational change, the model provides guidance on how to frame environment-related threats that will mobilize managers for organizational change toward sustainability.     

Do norms of decision-making styles,organizational design and management affect performance of Japanese firms? an exploratory study of medium and large firms

The success and resilience of Japanese firms have led many scholars and practitioners to theorize and speculate about the impact of what they have termed the 'Japanese management style' upon performance. There have been few studies that have attempted to explore empirically the links between the way Japanese firms organize, manage and decide, and their performance. This paper investigates the association between norms of decision-making style, organizational design and management, and some measures of firm performance. The empirical pattern of norms was assessed on the basis of responses of a random sample (N = 349) of Japanese managers. The study demonstrates that while there appears to be no support for the proposition that certain norms universally affect performance, in some sectors the impacts of norms on decision-making style, organizational design and management may be significant. The study concludes with the implications for theory building of this empirical exploration.     

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.     

Market orientation,HRM importance and competency: determinants of strategic HRM in Chinese firms

This study examined three factors leading to a firm's adoption of strategic human resource management (SHRM): market orientation, HRM importance and HRM competency. Using a sample of firms from China, empirical results showed that the three factors are significantly related to a firm's adoption of SHRM. Given the transitional nature of the Chinese economy, the moderating effects of ownership types and firm size were also investigated. However, the moderating effects were not as strong as predicted. Managerial implications and directions for future research of SHRM in an emerging economy context are discussed.     

Strategic HR system differentiation between jobs: The effects on firm performance and employee outcomes

The purpose of this research was to understand whether firms apply different human resource management systems to different occupations within the same organization (HR differentiation) and how the extent to which they do so may influence firm and employee outcomes. We conducted two studies pertaining to these questions. The first study was based on data collected from managers, and the results suggest that firms differentiate their HR investments based on the strategic value of occupations to the firm, which was further associated with the human capital of those occupations. Differentiation in human capital was also associated with firm performance. The second study was based on data obtained from nonmanagement employees. The findings indicated that employees who were recipients of less HR system investment had lower fairness perceptions, which were further associated with higher turnover intentions and lower organizational citizenship behavior. Although the evidence from these studies suggests that firms may realize benefits from strategic HR system differentiation, managers should carefully consider how to balance the effects of differentiation on firm performance and employee well‐being before implementing such systems.     

Organizational capacity for change and firm performance in a transition economy

This study explored some human resource and human systems' aspects of the competitive dynamics for firms attempting to survive and prosper within Russia, a highly volatile transition economy. Overall, this study adds to our understanding of international strategic human resource management, dynamic capabilities, and the generation of competitive advantage within transition economies.

We found that a relatively new construct derived from the dynamic capabilities and organizational change literatures, known as ‘organizational capacity for change,’ is positively associated with firm performance within a wide variety of Russian firms. Furthermore, we find that the relationship between organizational capacity for change and firm performance is stronger when there are relatively high levels of uncertainty with the task environment. Finally, we found that organizational capacity for change is an important attribute in all sizes of organizations, not just for large organizations as hypothesized.     

Intra‐firm differentiation of compensation systems: evidence from US high‐technology firms

While scholars have long recognised the influence of firm decisions on aspects of compensation (e.g. pay level and pay mix), prior compensation studies offer an ambiguous understanding regarding their scope. Some studies argue that firms customise compensation decisions according to employee groups, whereas others assume that firm compensation decisions apply uniformly throughout a firm. To address this research gap, the current study analyses pay levels and pay mixes for R&D employees and administrative employees in US high‐technology firms. Our empirical analyses show that firms make distinct compensation decisions for these two job families, but these decisions are ultimately consistent. These findings highlight firms' intention to strike a balance between customising compensation systems according to employee groups and maintaining internal consistency. Our findings add interesting insights to the strategic HRM and talent management literatures, which claim that firms should differentiate among employees when designing HRM systems.     

Why a Multinational Firm Chooses Expatriates: Integrating Resource‐Based,Agency and Transaction Costs Perspectives*

abstract This paper develops an integrative organizational economics framework explaining and predicting multinational firms' managerial resource deployments based on resource‐based, agency, and transaction costs theories. Our empirical findings suggest that the governance decision for managerial services of multinational firms is influenced not only by the comparative capabilities of managers, but also by the economic costs to the firm of influencing the behaviours of managers through managerial contracting.     

Career Change and the Iron Cage: Organizations and the Early Labour Market Experience of Professional Managers

Although it is often acknowledged that organizational structure and career outcomes are related, developed theory on how formal features of the design affect inter‐firm job mobility is incomplete. I focus on organizational size and structural differentiation and relate them to ideas about internal labour markets, organizational senescence, bureaucratic complexity, and resource endowments. Analysing data on the early career histories of professional managers, I find that the negative effect of organizational size on quits weakens with organizational age while a firm's elaborate hierarchy monotonically increases quits in all but very large firms. I interpret these effects as potential mechanisms for linking demographic processes between and within organizations and as a basis for integrating research in corporate demography and career mobility.     

Performance Measurement and Incentive Compensation: An Empirical Analysis and Comparison of Chinese and Western Firms' Practices

This paper describes the findings of a study aimed at providing a replication and extension in China of studies focused on incentive compensation practices of automobile retailers in the USA and the Netherlands. Rich, detailed data-sets from all three countries are analysed together and in comparison. As theory is not well developed at the level of detail of the data collected, the purpose of this study was primarily exploratory, to provide empirics that can lead to the development of theory. The findings show that Chinese firms are much more likely to provide incentive compensation than are Dutch firms, and they are even somewhat more likely to provide them than are US firms. But Chinese bonus plans are more likely to be subjective, rather than formula-based. In the situations where incentive payments are based on pre-set formulas, the Chinese firms' systems are more like those used in the Netherlands than in the USA, with bonuses based on non-financial performance measures and with more complex performance–reward functions. Like managers in the US firms, but unlike managers in the Dutch firms, Chinese managers who receive some form of incentive compensation are more satisfied with their pay. The paper concludes with tentative explanations of the findings and suggestions for future research.     

The moderating effect of environmental uncertainty on the relationship between real options and technological innovation in high-tech firms

In the past decade, management scholars have applied aspects of real options theory to organizational settings, considering it an approach to enhancing strategic flexibility in the firm. They have also recognized that technological innovation is a critical mechanism through which high-tech firms try to secure a place in the competitive world of the future. Uncertainty about the environment makes it very important to analyze both factors, since the use of real options obligates managers to reflect constantly on future scenarios for which they will have to propose innovative solutions. This paper attempts to apply the theory of real options to innovation theory to propose a model in which real options reasoning improves the level of product/process technological innovation. We argue that this improvement will increase when the environment's level of uncertainty is higher. The proposal is supported empirically by a study performed on a sample of technology firms from different countries in the European Union.