Why we hate performance management—And why we should love it

Individual performance is a building block of organizational success. Not surprisingly, virtually all organizations have in place some type of performance management system. Yet, managers and employees are equally skeptical that performance management adds value; usually, it is seen as a waste of time and resources. We argue that the potential benefits of performance management are not realized because most systems focus exclusively on narrow and evaluative aspects such as performance appraisal. Herein, we offer a broader view of performance management, including discussion of how it differs from performance appraisal. We highlight specific and important benefits of performance management for employees, managers, and organizations. We also describe research-based conclusions regarding how performance management systems should be designed and implemented to realize these benefits. We hope our article will demonstrate that well-constructed performance management systems should not be hated, but rather embraced.     

Model-Based Decision Support in Manufacturing and Service Networks

In this paper, we sketch some of the challenges that should be addressed in future research efforts for model-based decision support in manufacturing and service networks. This includes integration issues, taking into account the autonomy of the decision-making entities in face of information asymmetry, the modeling of preferences of the decision makers, efficiently determining robust solutions, i.e. solutions that are insensitive with respect to changes in the problem data, and a reduction of the time needed for model building and usage. The problem solution cycle includes problem analysis, the design of appropriate algorithms and their performance assessment. We are interested in a prototypical integration of the proposed methods within application systems, which can be followed up with field tests of the extended application systems. We argue that the described research agenda requires the interdisciplinary collaboration of business and information systems engineering researchers with colleagues from management science, computer science, and operations research. In addition, we present some exemplifying, illustrative examples of relevant research results.     

Commonality in Codes of Ethics

We create a database of company codes of ethics from firms listed on the Standard & Poor’s 500 Index and, separately, a sample of small firms. The SEC believes that “ethics codes do, and should, vary from company to company.” Using textual analysis techniques, we measure the extent of commonality across the documents. We find substantial levels of common sentences used by the firms, including a few cases where the codes of ethics are essentially identical. We consider these results in the context of legal statements versus value statements. While legal writing often mandates duplication, we argue that value-based statements should be held to a higher standard of originality. Our evidence is consistent with isomorphic pressures on smaller firms to conform.     

Institutional Impediments to Voluntary Ethics Measurement Systems

In this paper, we argue that calls for widespread implementation of ethics measurement systems would be better informed by institutional economic analysis. Specifically, we assert that proponents of such systems must first recognize and understand the institutions that potentially impede such efforts. We identify two potential institutional impediments to measuring ethics and social responsibility. First, we suggest that neoclassical economics, supported by traditional business education and legal precedent, serves to reinforce the notion that shareholders are the primary corporate constituency group. Such an emphasis on the needs of shareholders severely hinders implementation of measurement systems that address the needs of multiple stakeholder groups. Second, we argue that the threat of litigation may constrain corporate managers from measuring and considering ethics and corporate social responsibility matters. In particular, managers may be reluctant to quantify various ethical concerns if the resulting measurements could be used as evidence against the corporation in a lawsuit.     

Corporate social responsibility and stock price informativeness: The public interest perspective

In this paper, we propose a new theory that sheds a different light on the potential relationship between Corporate Social Responsibility (CSR) and Stock Price Informativeness (PI). More specifically, we explain why a neutral association between CSR and PI can be an indicator of high economic and social welfare, while a positive association can be an indicator of both markets and governments failure. Under a neutral relationship, we argue that mandatory disclosure is getting firms to disclose near their optimal level. Therefore, any voluntary disclosure beyond the mandatory regime (such as CSR disclosure) should not improve PI. We base our hypothesis on public interest theory that suggests that regulators promote the public interest when a market failure is identified. On the other hand, under a positive association between CSR and PI, we argue that regulators do not offer adequate incentives for firms to disclose at their socially optimal levels because the level of voluntary disclosure by socially responsible firms is optimal in comparison to the level of mandatory disclosure provided by other firms with weak CSR engagement.     

An Experienced-Based Measure of Service Quality

In this article we argue that there is a great need in service quality research to develop better procedures for collecting, selecting and interpreting data on service quality. We argue that such a proce- dure should be qualitative in nature rather than quantitative. The focus for study must then be measuring the total service ex- perience from the (internal) customer's point of view. We suggest a new experience-based method for generating qualitative aspects of service experiences. With these qualitative aspects we have a base for measuring service quality. This is illustrated in two case studies of industrial development services.     

Strategy–organization configurations in corporate venture units: Impact on performance and survival

We develop a typology of corporate venture units, based on their strategic role in the corporation, and specifically on (a) their relative emphasis on exploration versus exploitation and (b) the internal versus external locus of opportunity they pursue. Following configurations logic, we argue that the structures and systems used by venture units will be a function of their strategic role, and that their performance will be higher when internal elements are aligned. We also argue that exploitation-oriented units will survive for longer than exploration-oriented units. Using primary data collected on 95 venture units during 2001–2003, we use configurational analyses to test and find support for our hypotheses.     

Technostress from a Neurobiological Perspective

Despite the positive impact of information and communication technology (ICT) on an individual, organizational, and societal level (e.g., increased access to information, as well as enhanced performance and productivity), both scientific research and anecdotal evidence indicate that human-machine interaction, both in a private and organizational context, may lead to notable stress perceptions in users. This type of stress is referred to as technostress. A review of the literature shows that most studies used questionnaires to investigate the nature, antecedents, and consequences of technostress. Despite the value of the vast amount of questionnaire-based technostress research, we draw upon a different conceptual perspective, namely neurobiology. Specifically, we report on a laboratory experiment in which we investigated the effects of system breakdown on changes in users’ levels of cortisol, which is a major stress hormone in humans. The results of our study show that cortisol levels increase significantly as a consequence of system breakdown in a human-computer interaction task. In demonstrating this effect, our study has major implications for ICT research, development, management, and health policy. We confirm the value of a category of research heretofore largely neglected in ICT-related disciplines (particularly in business and information systems engineering, BISE, as well as information systems research, ISR), and argue that future research investigating human-machine interactions should consider the neurobiological perspective as a valuable complement to traditional concepts.     

Virtuous Professionalism in Accountants to Avoid Fraud and to Restore Financial Reporting

Over the past decade, a number of accounting and financial reporting frauds have led to lost stock wealth, destroyed public trust, and a worldwide recession that called for necessary reform. Regulatory responses and systemic reforms quickly followed, and we show that, while necessary, these reforms are insufficient. The purpose of this paper is to forward virtuous professionalism as a necessary path toward restoring financial reporting systems. We take the position of external observer and analyze the accounting profession over time to assess what has transpired within our financial reporting systems. Our analysis reveals that the combined influence of commercialism and regulatory response has led to a systemic decline in accounting’s professional ideals and, as a result, an erosion of public trust. We then propose virtuous professionalism as a necessary process for restoring financial reporting systems based on sociological, professional, and philosophical theories. We argue that virtuous professionalism is necessary for restoring the public servant identity of the accounting professional. We conclude that efforts to restore financial reporting systems should begin with reforms that restore professional identity shaped by virtues.     

Can an Ethical Revival of Prudence Within Prudential Regulation Tackle Corporate Psychopathy?

The view that corporate psychopathy played a significant role in causing the global financial crisis, although insightful, paints a reductionist picture of what we present as the broader issue. Our broader issue is the tendency for psychopathy, narcissism and Machiavellianism to cluster psychologically and culturally as ‘dark leadership’ within global financial institutions. Strong evidence for their co-intensification across society and in corporations ought to alarm financial regulators. We argue that an ‘ethical revival’ of prudence within prudential regulation ought to be included in any package of solutions. Referencing research on moral muteness and the role of language in framing thoughts and behaviours, we recommend that regulators define prudence in an explicitly normative sense, an approach that may be further strengthened by drawing upon a widely appealing ethic of intergenerational care. An ethical revival of prudence, we argue, would allow the core problems of greed and myopia highlighted by corporate psychopathy theory to be addressed in a politically sensitive manner which recognises the pitfalls of regulating directly against corporate psychopathy. Furthermore, it would provide a viable conceptual framework to guide regulators along the treacherous path to more intrusive cultural regulation.     

Configurable e-negotiation systems for large scale and transparent decision making

Participatory democracy is one of several conceptions of democracy which strives to create opportunities for all members of a group to contribute to the decision making process. Recent developments in information technologies in general and Internet technologies in particular are affecting the existing democratic mechanisms, hence enabling citizens and organizations to participate widely, efficiently and transparently in the decision making process and, most importantly, to arrive at better decisions faster, through negotiation. E-negotiation systems rely on such technologies to implement protocols ranging from motion raising and voting to auctions, and to make them available on the web for general use. E-negotiation systems can be used for political and societal decision making as well as business dealings within e-government and B2B settings. In order for these systems to fulfill their promise of bringing decision making opportunities to all, we need a structured approach and a configurable framework for designing, implementing and deploying them. The resulting systems should be web-based, easy to use, affordable, traceable, reliable, secure, flexible, efficient, and open for integration with other systems. This paper starts by examining leading research initiatives to devise such a framework and discussing the motivations behind them. We then introduce several design requirements derived from the expectations of e-negotiation systems providers and users. We argue that meeting these requirements fosters a more democratic and efficient decision making process. We also present our approach and vision of a configurable framework for designing, implementing and deploying e-negotiation systems.     

W(h)ither Ecology? The Triple Bottom Line, the Global Reporting Initiative, and Corporate Sustainability Reporting

This paper offers a critique of sustainability reporting and, in particular, a critique of the modern disconnect between the practice of sustainability reporting and what we consider to be the urgent issue of our era: sustaining the life-supporting ecological systems on which humanity and other species depend. Tracing the history of such reporting developments, we identify and isolate the concept of the ‘triple bottom line’ (TBL) as a core and dominant idea that continues to pervade business reporting, and business engagement with sustainability. Incorporating an entity’s economic, environmental and social performance indicators into its management and reporting processes, we argue, has become synonymous with corporate sustainability; in the process, concern for ecology has become sidelined. Moreover, this process has become reinforced and institutionalised through SustainAbility’s biennial benchmarking reports, KPMG’s triennial surveys of practice, initiatives by the accountancy profession and, particularly, the Global Reporting Initiative (GRI)’s sustainability reporting guidelines. We argue that the TBL and the GRI are insufficient conditions for organizations contributing to the sustaining of the Earth’s ecology. Paradoxically, they may reinforce business-as-usual and greater levels of un-sustainability.     

Channel design,coordination, and performance: Future research directions

The marketing literature has made significant progress toward a better understanding of how firms can effectively design and manage their channels of distribution. However, the complexity of today’s channel systems raises additional issues that remain unaddressed. The purpose of this article is to suggest promising research directions in this domain. We suggest several possible avenues to relate multiple channel design and management to channel-system, channel-relationship, and customer-level outcomes. In particular, we see a great opportunity to integrate multichannel customer management and traditional channel design research. We argue that future research should account for cross-level effects and incorporate variables at more than one relationship level.     

On the interpretation of price-quality relations

While low price-quality correlations are commonly cited as evidence of markets which are in some way inefficient, we argue in this paper that price-quality correlations do not necessarily reflect the degree of efficiency of a market. We first define a measure of market efficiency as the aggregate amount which consumers lose due to not choosing the maximum utility brand. Given this measure, and a model of consumer search behavior, we demonstrate analytically that losses in a particular market depend on the distribution of prices and qualities, on the number of alternative brands, and on the level of search costs, as well as on the price-quality correlation. We construct several numerical examples which demonstrate that losses need not be closely related to price-quality correlations.     

Beyond Agency and Structure: Triple-Loop Learning

With the demise of Andersen, LLP and new legislation that puts an end to self-governance in public accounting, the effectiveness of current models of accounting ethics have been seriously called into question. We argue that the profession suffers from fundamental limitations in its ethical framework that makes it impossible to effectively address ongoing ethical problems. The dominant representation of professional behavior is an agency model of ethics, in which the ultimate responsibility for identifying and dealing with ethical dilemmas resides with the individual. We argue that structural forces such as control over resources, meaning systems, and community norms and values also have a strong influence on the actions of accountants and that these must also be considered. The recent legitimation crisis has forced the accounting profession and its constituencies to begin to recognize and address the structural aspects of ethics as they enable and constrain action. We propose a framework based on structuration theory and learning theory that allows for systematic, multi-level investigation of the structural forces that cause ethical dilemmas to arise and to be recognized and that influence the manner in which they are analyzed and resolved. This framework should be capable of continual critique and reconfiguration as environmental conditions change.     

New business histories! Plurality in business history research methods

We agree with de Jong et al.'s argument that business historians should make their methods more explicit and welcome a more general debate about the most appropriate methods for business historical research. But rather than advocating one ‘new business history’, we argue that contemporary debates about methodology in business history need greater appreciation for the diversity of approaches that have developed in the last decade. And while the hypothesis-testing framework prevalent in the mainstream social sciences favoured by de Jong et al. should have its place among these methodologies, we identify a number of additional streams of research that can legitimately claim to have contributed novel methodological insights by broadening the range of interpretative and qualitative approaches to business history. Thus, we reject privileging a single method, whatever it may be, and argue instead in favour of recognising the plurality of methods being developed and used by business historians – both within their own field and as a basis for interactions with others.     

Developing the evidence base of patient and public involvement in health and social care research: the case for measuring impact

While patient and public involvement (PPI) in health and social care research has progressed successfully in the last decade, a range of difficulties with the evidence base exist, including poor understanding of the concept of impact, limited theorization and an absence of quantitative impact measurement. In this paper, we argue that a paradigm change towards robust measurement of the impact of involvement in research is needed to complement qualitative explorations. We argue that service users should be collaboratively involved in the conceptualization, theorization and development of instruments to measure PPI impact. We consider the key advantages measurement would bring in strengthening the PPI evidence base through a greater understanding of what works, for whom, in what circumstances and why.     

MNEs and policy networks: Institutional embeddedness and strategic choice

Political strategies are a crucial matter for MNEs in the context of globalization. We argue that MNEs’ influence on political decision-making depends on their insertion into policy networks, which define the institutional framework and the interaction patterns of business/government relations in different issue-areas. Then, we propose a stylized taxonomy regarding the differentiation of MNEs’ political leverage in various domains, at a home country level. Finally, we explore the influence of political power at home on MNEs’ strategic approaches to the host countries, taking into account the bargaining power of local actors in the concerned issue-areas.     

Consumer Marketing in Britain 1914–60

This paper explores the implications of the post-war settlement for British industrial productivity performance during the period 1945–60. We argue that the exigencies of the situation at the end of the war precluded supply-side reforms which might have promoted faster growth. At the same time, however, the informal ‘social contract’ which emerged was conducive to low unemployment without inflation. Building upon our earlier findings for the 1930s, we show that the weakness of competition policy inhibited British catching-up on American productivity levels, while long-standing aspects of the British systems of human capital accumulation and industrial relations became more costly as industry adopted more American-style production methods. We support our conclusions with both econometric analysis and case studies.     

Searching for the existence of entrepreneurial ecosystems: a regional cross-section growth regression approach

In this paper, we propose a method by which the entrepreneurial ecosystem, if present, reveals itself in the data. We first follow the literature and define the entrepreneurial ecosystem as a multidimensional set of interacting factors that moderate the effect of entrepreneurial activity on economic growth. The quality of such an ecosystem, by its multidimensionality, is impossible to measure directly. But so defined, we argue that variation in entrepreneurial ecosystem quality should result in variation in the estimated marginal effect of entrepreneurial activity on economic growth. Testing for such variation is possible using a combination of a multilevel growth regression and latent class analysis. We motivate and validate our approach in simulated data before illustrating its applicability in a data set covering 107 European NUTS1-2 regions across 16 EU member states. For this dataset, we cannot reject the hypothesis of a homogeneous contribution of entrepreneurship to regional growth. That is, in this dataset, we find no evidence of statistically significant heterogeneity in the estimated slope coefficients for entrepreneurial activity across regions. There are several possible explanations for this negative result. The two we deem most likely are first that the NUTS1-2 level may not be disaggregated enough to coincide with the relevant boundaries of the entrepreneurial ecosystem. We suspect our method would reveal significant differences across smaller geographical units, but the data unfortunately do not yet allow us to empirically test this hypothesis in a multi-country regional analysis. The second possible explanation is that the growth rates from 2006 to 2014 coincided with the global financial and the European crisis, and during this time, the effect of entrepreneurship on (long-run average) growth overall has been obscured. Our simulations also suggested a third reason. If measurement error is large (in the order of 33 or 0.015% point annual GDP-growth), the effects may also have been obscured.