Business Unit Managers Research Articles

Managing Licensing in a Market for Technology

Technology licensing is an important means for companies to extract more value from their intellectual assets. We build a model that helps understand how licensing activity should be organized within large corporations. More specifically, we compare decentralization—where the business unit using the technology makes licensing decisions—to centralized licensing. The business unit has superior information about licensing opportunities but may not have the appropriate incentives because its rewards depend on product market performance. If licensing is decentralized, the business unit forgoes valuable licensing opportunities because the rewards for licensing are (optimally) weaker than those for product market profits. This distortion is stronger when production-based incentives, especially private benefits, of business unit managers are more powerful, making centralization more attractive. Surprisingly, we find that interdependency across business units may result in more, not less, decentralization. Furthermore, even though centralization results in less information, centralized licensing deals are larger. Our model conforms to the existing evidence that reports heterogeneity across firms in both licensing propensity and organization of licensing. This paper was accepted by Bruno Cassiman, business strategy.

Win–Win–Win: The Influence of Company‐Sponsored Volunteerism Programs on Employees, NGOs, and Business Units

Although the number of firms adopting corporate volunteerism programs is rising steadily, very few firms are assessing the benefits of such programs on target groups, such as employees and nongovernmental organizations (NGOs), and identifying the conditions under which benefits to the various groups are maximized. This study addresses both by examining the conditions of employees’ corporate volunteer assignments that lead to increased employee engagement, sustainability of the volunteers’ project within the NGO, capability development for the business unit, and employees’ continuation of volunteerism. Using a longitudinal and multisource design, responses from 116 corporate volunteers from a global pharmaceutical organization are matched with responses from their NGO managers and their business unit managers at 3 points in time: at the start of the volunteer assignment, at the end of the assignment, and 6 months after the completion of the assignment. Across these outcomes, we found that employees’ volunteer assignments are most valuable when they are international, when the volunteers perceive that their projects contribute meaningfully the NGO's functioning, when volunteers have professional skills (and are able to use them), when there are opportunities for skills to be developed that can be applied in the volunteers’ regular work role, and when the NGOs have tangible resources to sustain the volunteers’ projects.

Performance Measures and Intra-Firm Spillovers: Theory and Evidence

We revisit the question of how performance measures are used to evaluate business unit managers in response to intra-firm spillovers because prior studies have documented conflicting empirical evidence. 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 manager’s effect on other business units’ performance or the other units’ effect on the focal manager’s performance. Our theory highlights existence of an interaction between the two directions of spillovers. In our empirical work, we account for the interaction effect. Based on a purpose-developed survey of 122 business unit managers, we report that the incentive weighting on above-level measures increases by approximately 50 percentage points when managers face both types of spillovers (as opposed to one type of spillover).

A cross-sectional, multivariate, disaggregated study on impact of key drivers of customer satisfaction on brand perception and loyalty in selected hotel chains of India

The key to sustained business performance for any organisation lies undoubtedly with the customer loyalty towards that organisation. But to keep them remain loyal towards the organisation is an important challenge for most of the businesses today across the globe and across the sectors like hotels, banks, etc. The present study views a hotel as an integrated system that needs to be managed and measured to enhance the customer’s overall satisfaction to enhance customer loyalty to maximise the hotel’s performance. The present study tries to explore: 1) how the overall consumption experience has direct impact on satisfaction; 2) satisfaction in-turn has direct impact on brand perception; 3) how both the satisfaction and brand perception have combined effect on loyalty. Hence, an attempt was made to study the explicit linkages that extend from internal processes to customer satisfaction to customer loyalty. The framework of research is designed to be: multivariate, disaggregated and cross-sectional where the derivation of multivariate models depicts significant strategic value for business unit managers where it acknowledges that key drivers of customer satisfaction may differ across chain affiliated hotels.

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

Proponents of “beyond budgeting” suggest the major control problem in organizations today is the use of budgets for both planning and performance evaluation (Hope and Fraser 2003). Rigidly evaluating and rewarding managers relative to budget targets set at the beginning of the year motivates managers to play budgetary games which taints the budgeting and forecasting process. Contrary to this view, a recent survey of North American budgeting practices by Libby and Lindsay (2010) indicates a large proportion of the organizations sampled continue to use budgets for performance evaluation and control purposes and also offer budget-based bonuses to their managers as an incentive to perform. In addition, a large proportion of these firms appeared to be finding ways to get good value out of the budgeting process even though results indicated a negative correlation between budget value and managers’ perceptions of the degree to which budget gaming occurs in their organizations. The objective of the current study is to provide some insight into what drives higher versus lower budget value from the point of view of the business unit managers. Based on a review of the academic and practitioner literatures, we develop and test a theoretical model of the antecedents of budget gaming and budget value using additional data collected in the Libby and Lindsay (2010) survey. Results indicate good prior period performance is associated with less budget gaming, high budget emphasis is associated with higher budget gaming and increased interpersonal trust between lower and higher levels of management is negatively associated with budget gaming. By splitting the sample into high and low trust groups, we are able to show that lower level manager’s trust in higher level managers is key to explaining perceptions of budget value in our sample.

Relational Demography Between Managers and Stakeholders and Business Unit Performance

This study explores the influence of demographic similarity between business unit managers and their internal and external stakeholders—line employees and residents of the community being served—on financial performance. A sample of 52 business units of a service industry organization totaling 254 managers and 2,935 employees was used. The study relies on the social categorization and information/decision-making perspectives on diversity, which suggest that managerial demographic similarity to firm stakeholders is related to greater expertise to access diverse markets and networks and management in a diverse environment. Implications for research and for organizational leadership diversity are addressed.

Ambidexterity and Survival in Corporate Venture Units

Corporate venture (CV) units constitute vehicles through which firms may act ambidextrously, thereby increasing their longevity, but they suffer from a high failure rate. The authors examine why and how some CV units last significantly longer than others. They argue that CV units endure by developing an ambidextrous orientation themselves—they build new capabilities for the parent firm while simultaneously leveraging its existing strengths. They argue that CV units become ambidextrous by nurturing a supportive relational context, defined by the strength of their relationships with three different sets of actors—parent firm executives, business unit managers, and members of the venture capital community. Using primary data collected from 95 CV units over a three-year period, the authors test and find support for these arguments.

Interaksi Budaya Organisasi dengan Sistem Pengendalian Manajemen Terhadap Kinerja Unit Bisnis Industri Manufaktur dan Jasa

The role of Management Control System is very significant in improving the performance of companies that depend on the shape and culture of the organization. This study aims to determine the effect of interactions of organizational cultural with the process of management control systems, focussed at device controls and its mechanisms (such as evaluation and feedback system) to business unit performance in manufacturing and service industries in Jakarta. Data of the study was collected via a mail survey to business unit managers who heading a strategic business unit (SBU), profit center, or of divisional in manufacturing and services companies which listed in the Jakarta Stock Exchange. The statistic method used to test the hypotheses is a multiple regression multiplicative model. The results showed that corporate culture does not strengthen the relationship between attributes and mechanisms of SPM with business unit performance.

Development and validation of a customized competency‐based questionnaire

PurposeThe purpose of this paper is to report data empirically linking competencies of individual leaders to business profitability and demonstrate that competencies are cross‐culturally valid.Design/methodology/approachParticipants in the initial competency study were 15 business unit managers identified as high performing. Data were collected using Critical Incident Interviews that were systematically coded using thematic analysis to identify the presence of competencies. Competencies identified were then adapted into a behaviourally‐based questionnaire used in a follow‐up validation study. Participants in the validation study (n=70) were managers from North America and two European countries who were participants in a management development program. Boss ratings of competencies were then correlated with business unit profitability.FindingsA set of competencies was identified as predictive of unit profit growth in managers in both North America and the European Union. Subsequent regression analysis showed that 17 per cent of the variance in business unit profitability could be accounted for by four competencies, specifically team leadership, developing others, achievement orientation, and impact and influence. Cross‐cultural validity was demonstrated to the degree that similar competencies predicted performance in both North America and the European Union as evidenced by the correlation between boss rating of subordinate competencies and profit growth.Research limitations/implicationsThe initial study using Critical Incident Interviews was conducted with a small sample size and did not employ a comparison group of average performers.Practical implicationsInitial competency research using empirical methods should be used to help focus competency models used for selection, feedback, training, and performance management.Originality/valueThe study is one of the few published studies that link competencies to business unit profitability. The paper demonstrates that competencies have a degree of cross‐cultural validity.

Limiting the Effect of Attribution and Construal Errors on Strategy Evaluation Using a Strategic Performance Measurement System

The multiple performance measures included in strategic performance measurement systems (SPMS), including the balanced scorecard, should be selected to represent a set of causally-linked strategic drivers and outcomes (Ittner and Larcker 2001, 2005; Chenhall 2005; Kaplan and Norton 1996). The pattern of results thus can provide useful information concerning the proper execution of the underlying strategy (i.e., the performance evaluation role) and the strength of the cause-and-effect linkages assumed by the strategy (i.e., the strategy evaluation role). Unfortunately, managers’ tendency to re-examine strategy when divisional performance falls short of target is relatively low in practice (Campbell et al. 2008; Ittner and Larcker 2005). Possible explanations include attribution error (i.e., the tendency to attribute poor financial results to poor subordinate performance rather than to strategic factors) and construal error (i.e. the tendency to focus on specific individual performance metrics instead of the overall pattern of results presented in a complicated SPMS) (Koonce et al. 2011). We experimentally examine two decision aids designed to help strategic business unit managers avoid attribution and construal errors. Results of our first experiment indicate that the decision aids, individually as well as interactively, increase managers’ tendency to re-examine strategy. We find consistent results in a second experiment that examines the effects of the two decision aids (when used together) on evaluators’ judgment under a different pattern of driver and outcome performance, and among a sample of more experienced managers.

Organizational structuring and strategic business units in function of an effective management

In modern business conditions, in the conditions of extremely fast market changes which affect the way and the organization of a company's business, it is necessary to set up such an organizational structure which will provide the necessary flexibility and the base for further growth and development of the company. Each wrong business decision results in a waste of time, money and energy. In order to minimize mistakes as much as possible it is necessary to have a quality system of accounting information which is essential for making business decisions. In that sense, in order to provide quality accounting information and to enable the monitoring of the performances of particular parts of the company by the central management, forming and organizational structuring of the strategic business units is an effective way to answer the challenges of the business environment. Recently, a certain tendency of changes in the field of organizational structuring is noticeable, or, more precisely, of organizational restructuring of the business systems in closer and wider environment with a goal of delegating authorities and responsibilities to the organizational divisions. Profit centre, as an organizational part of a company which does not have a legal status, is of an exceptional importance.

Do creative marketing strategy and its effective execution promote business performance? An empirical assessment

The present study aimed at investigating the impact of creative marketing strategy and marketing strategy implementation effectiveness on business performance across diversified industries of Pakistan. Structured questionnaire was personally administered to collect the data from marketing and sales managers of business units from eleven corporate sectors of Pakistan. Bivariate regression analyses endorsed that creativity marketing strategy and its effective implementation had significant role in promoting business performance. Based on survey findings, marketing management is urged to launch change programs to promote innovativeness in marketing strategy crafting and to ensure its perfect execution to gain superior business performance. This study is first of its kind (to the best knowledge of the researchers) to examine the relationship of marketing strategy creativity and marketing strategy implementation effectiveness with business unit performance in corporate sector of Pakistan. In addition, the findings contribute to improving our understanding regarding how to foster business performance. Key words: Marketing strategy creativity, marketing strategy implementation effectiveness, business unit performance, corporate sector, Pakistan.

The Role of Performance Measures in the Intertemporal Decisions of Business Unit Managers

Accounting performance measures are often argued to lead to short-sighted behavior by managers facing intertemporal decisions. We assess the association between different types of performance measures and the time horizon of business unit managers who have profit responsibility. Our results, based on a sample of 105 managers, indicate that accounting return measures direct business unit managers’ attention toward longer-term activities. Non-financial measures similarly direct managerial attention toward longer-term activities, although not to the same degree as accounting return measures. We conclude that accounting return measures can balance out potential congruity problems associated with the profit measures by directing managerial attention to activities that have longer term consequences on firm performance.

How Much Influence Do Business Unit Management Accountants Get From Their Business Unit Managers? An Empirical Investigation

In this study, the relationship is investigated between the allowed Business Unit (BU) Controller Influence on Management (CIM) by the BU manager and the perception of the actual influence of the BU management accountant. BU managers and BU management accountants are working together to reach the goals of the BU. How much influence do BU management accountants get from their BU managers to help them in making decisions? What kinds of the organizational culture can be associated with the degree of CIM? Answers to these kinds of questions are not yet available in literature. Based upon the analyses of a rather unique dataset of 123 interviews with BU management accountants and 123 interviews with their corresponding BU managers, we find that there is a strong relationship between the permission of the BU manager and operational CIM. Unlike our expectations, in Clan or Hierarchy culture this strong relation between allowed CIM and operational CIM is less strong than in other cultures. The relationship between the permission of the BU manager and strategic CIM is less clear than the relationship with operational CIM. In Adhocracy culture and larger organizations BU management accountants have more strategic CIM. Young and male BU management accountants seem to have more strategic CIM than their older or female colleagues.

Managerial Influence in Performance Measurement System Design: A Recipe for Success?

Allowing business unit (BU) managers to influence the design of their performance measurement system (PMS) is generally thought to be beneficial. It increases user satisfaction, improves system quality, and ensures consideration of managers’ functional expertise. However, we argue that giving managers this influence is not always a good strategy. We examine whether and when granting BU managers influence in the design of their PMS either exacerbates or partially mitigates PMS failure (i.e., the BU managers’ perception that it does not contain adequate information to enable decision making and control within the BU). In certain circumstances BU managers may not possess either the breadth or depth of functional expertise needed to design a successful PMS. Their level of influence may be incongruent with their level of expertise. Using survey data from 313 BU managers, we find that that the effects of incomplete translation of goals and the information advantage of the manager (relative to superior) on PMS failure are partially mitigated when BU managers have more influence in the design of the existing PMS. Hence, increasing BU managers’ influence under these circumstances is a ‘good’ strategy. We also find that interdependencies and the information advantage of the employees (relative to the BU manager) are not significantly associated with PMS failure unless BU managers are involved in the design of the existing PMS. Under these circumstances increasing managers’ influence is a ‘bad’ strategy.

Accounting Decentralization and Performance Evaluation of Business Unit Managers

ABSTRACTWe use survey data to examine firms' propensity to rely on financial measures in evaluating local business unit managers. We find that firms rely less on financial measures (and more on nonfinancial measures or subjective evaluations) in determining local managers' bonuses when those managers have greater influence over the design of internal accounting systems. At the same time, we find no significant association between the choice of performance measures and local managers' authority to make operating decisions. Instead, we find that local authority to make operating decisions is positively associated with local managers' influence over accounting systems. Taken together, our findings suggest that the design of internal accounting systems is an important dimension of overall organizational design. Our findings also cast doubt on the maintained assumption in prior work that major organizational design choices are complementary.Data Availability: Data used in this study cannot be made public due to confidentiality agreements with participating firms.

Joining public accountability and performance management: A case study of Lethbridge, Alberta

Abstract: This article presents an in-depth assessment of how performance measurement, public reporting, and internal performance management have been merged in Lethbridge, Alberta. Business-unit managers and council members both share the view that performance measurement and reporting are useful and that performance information is credible. This finding contrasts with the more general view that performance information is not used much, despite widespread commitments to collecting it. In Lethbridge, a balance has been struck between performance measurement for management uses and council uses. The current system is driven by managers who share the view that performance measurement and reporting are useful for improving programs and providing information that can be a part of public accountability. If performance measurement is to add value in public-sector organizations, it needs to have the continued support of managers – they are key to developing the measures, collecting the information and using it, and sustaining such systems. Changes that undermine the trust that is critical to a workable compromise for performance measurement, public reporting and performance management ultimately undermine the integrity of these systems. Sommaire: Le présent article offre une évaluation approfondie de la manière dont la mesure de la performance, la présentation de rapports destinés au public, et la gestion interne de la performance ont été fusionnées à Lethbridge, en Alberta. Les gestionnaires des unités de gestion comme les membres du conseil conviennent que la mesure de la performance et la présentation de rapports au public sont utiles et que l'information sur la performance est crédible. Cette conclusion va à l'encontre de l'avis plus général selon lequel l'information sur la performance est très peu utilisée, malgré l'importance accordée à sa collecte. À Lethbridge, un équilibre a été trouvé entre la mesure de la performance à l'usage des unités de gestion et celle à l'usage du conseil. Le système actuel est dicté par les gestionnaires qui sont d'avis que la mesure de la performance et la présentation des rapports sont utiles pour améliorer les programmes et fournir des informations dans le cadre de l'obligation de rendre des comptes au public. Si la mesure de la performance doit ajouter de la valeur aux organismes du secteur public, les gestionnaires doivent continuer à l'appuyer – ces derniers sont essentiels à la mise au point des mesures, à la collecte et l'utilisation de l'information, et au maintien de tels systèmes. Les changements qui ébranlent la confiance, valeur essentielle pour parvenir à un compromis viable pour la mesure de la performance, la présentation des rapports destinés au public et la gestion de la performance, sapent en fin de compte l'intégrité de ces systèmes.

AMBIDEXTROUS CAPITAL IN THE AIRLINE INDUSTRY

Through a qualitative study of business unit managers from an international airline, we build theory about the underlying features of organisational context that are most critical in developing contextual ambidexterity. We found that strategic capital defines a context that allows the meta-capabilities of alignment and adaptability to simultaneously flourish in strategic management, and sustain strategic success. The strategic capital endowments found to facilitate contextual ambidexterity are identified and discussed, which include championing, strategy commitment, implementation support, implementation effectiveness, learning and memory. Implications of our findings for both theory and practice are discussed.

Advice networks in teams: The role of transformational leadership and members' core self-evaluations.

This article examines the team-level factors promoting advice exchange networks in teams. Drawing upon theory and research on transformational leadership, team diversity, and social networks, we hypothesized that transformational leadership positively influences advice network density in teams and that advice network density serves as a mediating mechanism linking transformational leadership to team performance. We further hypothesized a 3-way interaction in which members' mean core self-evaluation (CSE) and diversity in CSE jointly moderate the transformational leadership-advice network density relationship, such that the relationship is positive and stronger for teams with low diversity in CSE and high mean CSE. In addition, we expected that advice network centralization attenuates the positive influence of network density on team performance. Results based on multisource data from 79 business unit management teams showed support for these hypotheses. The results highlight the pivotal role played by transformational leadership and team members' CSEs in enhancing team social networks and, ultimately, team effectiveness.

The role of performance measurement and evaluation in building organizational capabilities and performance

This study examines the processes through which the availability of broad-based strategically relevant performance information impacts on the performance outcomes of organizations. We explore the role of evaluation mechanisms in influencing managers’ use of broad-based performance measurement information for feedback and feed-forward control. We hypothesize that these resultant decision-making patterns impact the exploitation and identification of strategic capabilities within an organization and in turn organizational performance. Using a structural equation model, we find support for a model in which the degree of commonality between measures identified as decision-facilitating and decision-influencing is significantly associated with the use of decision-facilitating measures for both feedback and feed-forward control. In turn, the extent to which decision-facilitating measures are actually used by strategic business unit managers impacts on the strategic capabilities of the organization and subsequently its performance. Overall the results suggest that to encourage managers to use the multiple financial and non-financial performance indicators increasingly incorporated in contemporary performance measurement systems it is imperative that performance evaluation schemes are also designed to reflect these measures. To the extent performance evaluation schemes do not reflect such decision-facilitating measures it is less likely managers will use these indicators to effectively manage performance. The resultant performance implications for the organization arise from the impact of these decision effects on the exploitation of existing capabilities and the search for and identification of new strategic opportunities.