Business Unit Managers Research Articles

Relative Comprehensiveness of Performance Measurement System: Organisational Ownership Structure and Size

Change in the business environment has resulted in significant implication in the use of Management Control System (MCS) particularly Performance Measurement System (PMS). Strategic Performance Measurement System (SPMS) has been widely used by organisation to monitor the implementation, achievement and improvement of its plan objectives. Considerable prior research identified inconsistent findings in the relationship between PMS and organisational performance. In view of the fact that organisational culture would significantly being influenced by ownership structure, this research will further explore the comprehensiveness of PMS, the extent to which the systems provide information and integration with strategy and value chain, with different ownership structure. Data were gathered in two (2) phases; firstly, using the survey data administered to the 120 strategic business unit (SBU) managers of the manufacturing companies, members of the Federation of Malaysian Manufacturers (FMM). The second phase involves conducting semi-structured interviews with SBU managers of the 10 companies with foreign and local ownership structure. Findings from the research identified that more comprehensive PMS is being implemented by foreign owned companies rather than local own companies. The size of the companies may also influence the PMS comprehensiveness. The PMS implementation was also found to be influenced by the parent companies. Adequate information technology (IT) plays an important role for effective use of the PMS, provide added supports for performance assessment, communication and exchange of information within the organisation and inter-organisations worldwide. Findings provide significant insights into the organisational factors influence the PMS design.

The Value of Delegation in Hiring

Delegation in hiring (DIH) is becoming a mainstream management practice among business chains worldwide, yet theoretical and empirical evidence of its effects remains scarce. DIH refers to the use of local business unit managers to do their own recruiting, rather than relying on the headquarters human resource (HR) department. To estimate the impacts of DIH on employee recruitment, productivity, and firm performance, we partnered with a large Chinese firm with 111 retail stores on a 12-month field experiment. Results show that DIH increases both the mean and the variance of individual productivity, with an overall positive impact on store-level productivity by 7.1%. The growth in store-level performance is driven by both direct effects of recruiting higher-performing workers and indirect effects of positive spillovers from new to existing employees. Consistent with our theory, DIH achieves better outcomes in stores that have better incentives, larger shares of repeated customers, and that are less busy. To test the validity of our experiment, we find similar results from observational data on this firm and a second large multinational firm in the spa industry. Overall, this study illustrates the value of information held by local managers in hiring productive employees.

TIMBER LEGALITY OF CUSTOMARY FOREST: CASE STUDY IN NEGERI HONITETU, WEST SERAM, MALUKU

Timber Legality Verification System (TLVS) policy requires all forest management business units in either state forests or private forests, including customary forests to obtain timber legality certificate. The purpose of this study to determine the fulfillment of timber legality according to customary rules and TLVS. The method used was a case study conducted in Negeri Honitetu, West Seram, Maluku. The results showed that TLVS policy is not implementable if it is applied to the utilization of timber from customary forests in Negeri Honitetu, since local customary people do not have the documents as required in the TLVS. Timber utilization from customary forests in Negeri Honitetu has been carried out by referring to the prevailing customary rules, namely (1) felled trees are in the cultivation area and obtain permission from the Head of Dati, (2) outside of the sacred area, (3) profit sharing for all members of dati, and (4) free of charge if it is used to meet the needs of the community itself and the public interest. The study recommend to facilitate local customary people into social forestry schemes by providing protection for the preservation of natural resources as well as protection of the rights of local customary people.

The influence of management accountants on managerial decisions

PurposeThe purpose of this paper is to investigate which factors stimulate or hinder the influence management accountants operating at the business unit (BU) level have on the decisions taken by their BU manager(s).Design/methodology/approachThe authors collected data from 119 management accountants in 77 Dutch, multi-divisional organizations, using surveys.FindingsThe study shows that influence on managerial decisions can have two forms: influence on strategic decisions, and influence on operating decisions. Influence on strategic decisions is positively related to the degree of decentralization of an organization. It also depends on whether a management accountant is more extravert and emotionally stable. There is a negative relationship between influence on operational decisions and management accountants’ agreeableness. Not being sufficiently critical may well diminish their influence on operational affairs.Research limitations/implicationsThe authors put the view that management accountants at the BU level can partially affect their own role. This may also be expected by their managers. There are more opportunities for management accountants to influence strategic decisions than operational decisions. This study, however, is limited to Dutch, multi-divisional organizations. The management accountants who completed the survey also belong to the personal networks of master degree students who assisted in the data collection process, so that the sample used is not random. Data collected in another country, or in smaller companies could yield different results.Practical implicationsKnowing more about the complex relationship between BU management accountants’ personality traits and their degree of influence on managerial decisions allows organizations to make better-informed choices about who to appoint in such a role.Originality/valueThis study distinguishes between management accountants’ influence on strategic decisions and influence on operational decisions. At the BU level, these are two distinct concepts. This reinforces findings from earlier studies conducted at the corporate level. In addition, it turns out that specific personality traits of management accountants, at the BU level, affect the influence they can exert on both strategic and operational decisions taken by their manager(s).

Relative Target Setting and Cooperation

ABSTRACTA large stream of work on relative performance evaluation highlights the benefits of using information about peer performance in contracting. In contrast, the potential costs of discouraging cooperation among peers have received much less attention. The purpose of our study is to examine how the importance of cooperation affects the use of information about peer performance in target setting, also known as relative target setting. Specifically, we use data from an industrial services company where business unit managers need to share specialized equipment and staff with their peers to manage bottlenecks in their capacity. We construct several empirical proxies for the costs and benefits of information about peer performance and examine their effects on target setting. We find robust evidence that the sensitivity of target revisions to past peer performance is higher when peer group performance has greater capacity to filter out noise but lower when the importance of cooperation among peers is greater.

EVALUASI TATA CARA PENILAIAN UNTUK PTPN XII (PERSERO) BERDASARKAN KEP-100/MBU/2002

The objective of this research is to get the descriptive in depth and effectiveness of performance appraisal system (based on financial account, operational account, and administrative account) that has been implemented by PT Perkebunan Nusaniara XII (Pcrsero) based on the Badan Usaha Milik Ncgara of Minister Decree, Number: KEP-100/MBU/2002. This research used qualitative research with single case study and multiple unit analysis approach. The study involved 6 respondents as unit managers and as assistant of unit manager. They are financial manager, plant manager, accounting manager, processing manager, strategic business unit manager, strategic business manager, and assistant of financial manager. This study concluded that the performance appraisal system that has been implemented by PT Perkebunan Nusantara XII (Persero) was not effective in practice. This was caused by the differences of PT Perkebunan Nusantara XII (Persero) core business whose long time plants and harvest for many years from cultivation. It is suggested that the productivity is the main resource to increase as well as to improve performance and the sustainability of PT Perkebunan Nusantara XII (Persero)

The Effects of Superior Trust and Budget-Based Controls on Budgetary Gaming and Budget Value

ABSTRACTControl systems based on budget-based incentives have long been criticized as promoting budgetary gaming that taints the budgeting process. Yet, Libby and Lindsay (2010) find that, on average, North American managers are obtaining “good” value from their budgeting systems. The current study examines the antecedents of budget value through a partial replication and significant extension of Van der Stede (2000) using survey data collected from a sample of senior business unit managers with budget responsibility. Results indicate that the senior manager's trust in subordinate managers' abilities exhibits a positive direct and indirect (through increased subordinate involvement in decision making) relationship with budget value. While budget emphasis has a negative indirect association with budget value (through budgetary gaming), it has a much larger positive direct relationship, resulting in an overall positive effect. Further, budgetary gaming increases with the use of budget-based bonuses, particularly for capped relative to non-capped plans.

PENGELOLAAN KEUANGAN UNIT USAHA : STRATEGI PENGEMBANGAN KAPASITAS PONDOK PESANTREN

With the development of the era, many emerging modern pesantren, which has combined the science of religion and general science, in the learning materials for students santri. This study aims to explore how pesantren pondok seeks to increase its capacity, which can be done one of them through the development and management of business units boarding school. The method used is qualitative method, because it will reveal detailed data related to business unit financial management at boarding school, which can support operational activities and increase the capacity of pesantren cottage. In this research, it can be concluded that with the growth of business units owned by pesantren pondok, whose financial management is done regularly and correctly, can be known correctly the profit generated by each business unit. Where the benefits, which will be distributed for the development of boarding school.

L. Mamatova, H. Andrusenko. Corporate and strategic management as a factor for ensuring sustainable development of the enterprise.

The article considers the essence of corporate and strategic management to ensure sustainable development of the enterprise. The concept of corporate and strategic management of enterprises by different scientists is researched, and the differences in their research are determined. The basic levels of management are defined, namely: general corporate level (portfolio strategies for the development of the general direction of the enterprise activity), the level of business units (for management of individual strategic business units of the enterprise), the functional level (the interaction of the two preceding levels for the formation of general strategies for enterprise development). The criteria of corporate governance efficiency at the world level and the possibility of their application in the domestic management are considered. The application of world-wide management methods requires, firstly, the availability of an intangible asset of the company, which will increase market value and investment attractiveness, and secondly, the existence of a guarantee of loyalty in management and the availability of a mechanism for remote control of work. It is determined that the classical approach to the allocation of strategies depending on the nature of the enterprise development includes groups of strategies for growth, stabilization, and protection.

PENGARUH INTENSITAS KOMPETISI PASAR TERHADAP HUBUNGAN ANTARA PENGGUNAAN INFORMASI SISTEM AKUNTANSI MANAGEMEN DAN KINERJA UNIT BISNIS DAN KEPUASAN KERJA

This research examines the moderating effect of the intensity of market competition on the relationship between the usefulness of management accounting systems (MAS) information and business unit performance and job satisfaction. Fifty six business unit managers from manufacturing industry in Java and Sumatera had participated in this research. The collecting data used a questionnaire survey via electronicmail and post. Data were analyzed using a two-way analysis of variance. The results showed that the effects of the usefulness of MAS information on business unit performance and job satisfaction were dependent on the intensity of market competition. Under high levels of the intensity of market competition, the usefulness of sophisticated MAS information had a positive effect on business unit performance and job satisfaction, but under low levels it had a negative effect.

Relative Target Setting and Cooperation

A large stream of work on relative performance evaluation highlights the benefits of using information about peer performance in contracting. In contrast, the potential costs of discouraging cooperation among peers have received much less attention. The purpose of our study is to examine how the importance of cooperation affects the use of information about peer performance in target setting, also known as relative target setting. Specifically, we use data from an industrial services company where business unit managers need to share specialized equipment and staff with their peers to manage bottlenecks in their capacity. We construct several empirical proxies for the costs and benefits of information about peer performance and examine their effects on target setting. We find robust evidence that the sensitivity of target revisions to past peer performance is higher when peer group performance has greater capacity to filter out noise but lower when the importance of cooperation among peers is greater.

Differentiated strategy, business performance, and intellectual capital: Evidence small medium enterprise from Indonesia

Small and Medium Enterprises (SMEs) have a very important position in Indonesian economics. Implementation of the differentiated strategy has been impacted on improving the business performance of SMEs where the role of intellectual capital strongly supports the success of the implementation of the differentiated strategy. This study applied quantitative research which used survey method. This research examines the relationship between differentiated strategy to the performance of SMEs with mediated by intellectual capital. The results of this study show that intellectual capital mediates the relationship between differentiation strategies and business performance of SMEs. This study theoretically proves the importance of contextual variables in contingency theory. The practical results of this study contribute to raising awareness of business unit managers or other equivalent positions, especially managers in East Java to understand the importance of the role of intellectual capital, this is because intellectual capital meets the criteria as a unique source of the company that is able to create competitive advantage and increase the firm’s value.

Performance Measures and Intra-Firm Spillovers: Theory and Evidence

ABSTRACTWe revisit the question of how performance measures are used to evaluate business unit managers in response to intra-firm spillovers. Specifically, we are interested in variation in the relative incentive weightings of aggregated “above-level” measures (e.g., firm-wide net income), “own-level” business unit measures (e.g., business unit profit), and specific “below-level” measures (e.g., R&D expenses) in response to spillover arising from either the focal unit's effect on other business units or the other units' effect on the focal unit. Our theory highlights complementarity between above- and below-level measures and the existence of an interaction between the two directions of spillovers. Based on a survey of 122 business unit managers, we report evidence consistent with an interaction effect and with complementarity between above- and below-level measures. In particular, we show that firms increase the weighting on both above- and below-level measures when they are coping simultaneously with high levels of spillovers on other units and spillovers from other units.JEL Classifications: D23; L22; M12; M4.

Capturing Relative Importance of Customer Satisfaction Drivers Using Bayesian Dominance Hierarchy

Customer satisfaction (CS) research traditionally focuses on large data sets collected over long periods of time across several business units. Business unit managers or property managers have a different focus in that they need to address dissatisfaction issues on a monthly basis and on a property basis. In search for zero defects, they are often confined to small samples lacking power where they cannot draw the relative importance of each variable responsible for the making of the overall perceived quality in their customer base. We propose to use a Bayesian approach to estimate the relative importance of predictors in the presence of small samples. Based on 12 consecutive months of CS survey data collected in a hotel, we show how the hotel manager can easily prioritize his or her quality management action plan on a monthly basis. The results of our study complement the current CS research methods while managing limited resources.

Process matters—The relevance of the decision making process for divestiture outcomes

We apply strategic decision making and organizational change theory to corporate divestitures and argue that key characteristics of the divestiture decision making process can contribute to explaining the variation in divestiture outcomes. We test our hypotheses in an empirical multi-source quantitative study and find evidence that analytical comprehensiveness in the evaluation of divestiture effects on the corporate portfolio has a positive impact on the effectiveness of divestiture choices, but analytical comprehensiveness at the focal business unit (BU) level does not enhance decision effectiveness. Our results further indicate that involvement of the affected BU management has a varying impact during the decision making process, with negative effects during the early phase and positive effects in the later phase.

Creativity and Control: A Paradox—Evidence from the Levers of Control Framework

ABSTRACT Both control and creativity are important drivers of organizational success (Gilson, Mathieu, Shalley, and Ruddy 2005; Hirst, van Knippenberg, Chen, and Sacramento 2011). However, they are often regarded as conflicting. We use the Levers of Control (LoC) framework to examine the relationships between a system of controls, empowerment, and creativity. Using survey data from 233 business unit managers, a structural equation model shows that the intensity of use of a LoC system of controls is positively associated with both empowerment and creativity. This suggests that the LoC system provides an environment that is rich with information and motivates employees to take action in purposeful, directed ways. This environment facilitates employees' perception that they have the ability to take actions, make decisions, and produce novel ideas. We conclude that there is not a conflict between control and creativity per se. Rather, paradoxically, creativity can flourish in the presence of control.

Responsibility Centers, Decision Rights, and Synergies

We consider the optimal allocation of decision rights over noncontractible specific investments. Risk-averse business unit managers each engage in general (stand-alone) operations and invest in joint projects that benefit their own and other divisions. Which of the managers should have the authority to choose these investments? With scalable investments, we show that decision rights should be bundled in the hands of the manager facing the more volatile environment. With discrete (lumpy) investments, on the other hand, decision rights should be split between the managers, provided they face comparable levels of uncertainty in their general operations. Splitting decision rights better leverages the inherent investment complementarity, counter to conventional wisdom. Our model generates empirical predictions for the equilibrium association of organizational structure and managers' incentive contracts: bundling of decision rights results in pay-performance sensitivity (PPS) divergence across divisions; splitting them results in PPS convergence.

EVALUASI TATA CARA PENILAIAN UNTUK PTPN XII (PERSERO) BERDASARKAN KEP-100/MBU/2002

The objective of this research is to get the descriptive in depth and effectiveness of performance appraisal system (based on financial account, operational account, and administrative account) that has been implemented by PT Perkebunan Nusaniara XII (Pcrsero) based on the Badan Usaha Milik Ncgara of Minister Decree, Number: KEP-100/MBU/2002. This research used qualitative research with single case study and multiple unit analysis approach. The study involved 6 respondents as unit managers and as assistant of unit manager. They are financial manager, plant manager, accounting manager, processing manager, strategic business unit manager, strategic business manager, and assistant of financial manager. This study concluded that the performance appraisal system that has been implemented by PT Perkebunan Nusantara XII (Persero) was not effective in practice. This was caused by the differences of PT Perkebunan Nusantara XII (Persero) core business whose long time plants and harvest for many years from cultivation. It is suggested that the productivity is the main resource to increase as well as to improve performance and the sustainability of PT Perkebunan Nusantara XII (Persero)

Improving Performance Measures through Managerial Rotation

In this study, we examine conditions under which business unit (BU) managers improve performance measures upon which they are evaluated. BU managers often have more information about improving performance measures than corporate managers because they are closer to the actions that cause distortion in performance measures. Consequently, they can either exploit their information advantage and extract rents from inflated performance measure realizations or improve their performance measures and receive implicit rewards from corporate managers. Using a laboratory experiment, we predict and find that improvements to performance measures are higher for BU managers who rotate across business units because managerial rotation lowers the value of BU managers’ information advantage making expected implicit rewards more attractive. By varying the amount of distortion that business unit managers uncover and the value of performance measure improvements to corporate managers, we also examine performance measure improvements under varying circumstances. Our study extends previous research on the involvement of business unit managers in the design of their performance measurement system by documenting that managerial rotation can have beneficial effects.

Relative performance evaluation among business unit level managers

PurposeRelative performance evaluation (RPE) is a widely studied topic in the theoretical and analytical accounting and economics literatures. The empirical literature also addresses this topic, with its main focus on executive compensation. This paper aims to extend the findings of the literature by assessing the extent to which RPE is used at lower organisational levels.Design/methodology/approachThis study uses a purpose-developed survey to gather data from 325 business unit managers.FindingsThis study finds that RPE is used to a great extent in the performance evaluation of business unit managers. Additionally, the findings suggest that RPE use increases the informativeness of the performance evaluation through noise reduction. Noise in the performance evaluation is described in literature as the primary antecedent of RPE, but prior research provides only weak empirical support for this claim.Research limitations/implicationsThis study hypothesises a causal relation between RPE and noise in performance evaluation. However, the use of cross-sectional survey data only allows testing associations, not causations.Originality/valueThe originality and value of the paper lie in the focus on the business unit level and the use of survey data, which are almost completely absent in this area of research that almost exclusively uses archival data at the executive level.