Management Myopia Research Articles

Central bank communication, corporate maturity mismatch and innovation

This paper analyzes the relationship between central bank communication and corporate innovation. The results show that: (1) Communication in a loose direction of the central bank will promote corporate innovation. (2) The higher the degree of consistency between words and deeds, the stronger the positive impact of central bank communication on corporate innovation. (3) The increase in the proportion of policy continuity words in the central bank communication text will amplify the positive impact of the loose communication on corporate innovation. (4) Communication in the loose direction of the central bank will inhibit the corporate behavior of “Corporate Maturity Mismatch”, so as to promote corporate innovation. (5) The positive impact of central bank communication on corporate innovation is more significant in companies with stable investor sentiment and a high degree of management myopia. (6) The period of low moderation of monetary policy will help to strengthen the role of central bank communication in promoting corporate innovation.

Informal institution and corporate innovation: From the perspective of social trust

Purpose: This study examines how social trust, as an informal institution, creates a cooperative and honest atmosphere to improve managers’ willingness for firm innovation. This study also addresses that the informal system may substitute for the formal institutions in promoting corporate innovation. Design/methodology/approach: This study opts a sample of Chinese listed firms over the period of 2007–2014. We obtain the detailed patent application information from the official website of China Patent and Intellectual Property Office. The social trust information is based on the results of Chinese Enterprise Survey System. Findings: The results indicate that firms located in regions of high social trust tend to have more innovation output, and is robust to a battery of sensitivity tests. The authors further document that this effect is more pronounced for firms with poor short-term financial performance, which are located in regions with weak legal environments and firms having lower information transparency. In addition, the authors also demonstrate that social trust can help firms to get adequate funds to reduce financial pressure and encourage firms to pay more attention to long-term benefits, alleviating investors as well as management myopia. Research limitations/implications: Limited by the data sources, when measuring innovation activity, the authors only use patent numbers represent for innovation output. Then, this study measures the patent quality through classifying patent categories (invention patent or others), since in China, the citation data are imperfect and inadequate. Practical implications: The results suggest that social trust means a good culture of honesty and cooperation can promote firm’s innovation engagement. Especially, in emerging markets, where formal mechanisms are relatively less effective, informal institutions can serve as an alternative system for alleviating information asymmetry. Originality/value: This study contributes to the literature in two ways. First, this study finds the positive effect of social trust on corporate innovation, which provides a new perspective for deepening the understanding of the influence factors of innovation. Second, this study further clarifies the mechanism of social trust promoting firm innovation, indicating that social trust can effectively alleviate outsiders’ concern about moral hazard risk. Then the stakeholders are more willing to provide financial support and pay more attention to the firm’s long-term performance.

The impact of accounting estimates on performance-emphasizing managers’ Myopia

Accounting estimates, arising from the flexibility of accounting standards, will potentially increase the relevance of accounting information because they provide the ground for transferring information from insiders to the outsiders. On the other hand, in the case of managers’ myopia, it is expected that management will reduce the amount of capital and long-term expenditures, that do not have a clear and current benefit and will strive to increase profitability of current financial period, if the firm's profitability had declined in the previous financial period. This study tried to investigate the relationship between accounting estimates, management myopia and firm's performance. The results showed that there was significant and direct relationship between accounting estimates and firm's performance and management myopia diluted the direct relationship between accounting estimates and firm's performance.

The Impact of Technological Distance on M&A Target Choice and Transaction Value

ABASTRACT: Using a sample of 538 M&A transactions covering public and private US firms in a wide range of predominantly high technology industries, I investigate how the innovation characteristics of the target as well as the technological and product market distance between the target and the acquirer affect the acquirer’s choice of M&A targets and the transaction price. I match a set of non-chosen alternatives, either based on target sector affiliation and size or randomly, to each acquirer and estimate a conditional logit model. I show that the existence of an inverted U-shape relationship between technological distance and the likelihood of being chosen as a target is not very robust. Overall acquirers appear to prefer technologically close firms as targets. The higher the product market (technological) distance between the acquirer and the target, the more do acquirers prefer firms which are close in technological (product market) space. Regarding the role of acquirer characteristics, I find that the lower the acquirer’s return on assets and patenting growth, the more technologically distant firms are chosen. The relationship between technological distance and the transaction price is also investigated parametrically and semi-parametrically, but no statistically robust inverted U-shape relationship is found. I also provide possible explanations for the apparent inconsistency between the evidence found herein and previous studies on the impact of technological distance on post M&A innovation performance. These comprise insufficient robustness checks of the post M&A evidence and management myopia.

Culture and its Effect on Management Myopia and Financial Performance: A Comparison of Firms from Short-term and Long-term Oriented Cultures

Myopic management has been defined as making decisions based on short-term profitability as opposed to the long-term value. Myopic firms typically cut expenditures in advertising and R&D which result in the destruction of the long-term value of the firm. This paper reports the findings of a study that investigated the impact of culture on myopic management, i.e., do firms from cultures that are short-term oriented behave more myopically than firms from cultures that are long-term oriented? The findings support the hypotheses that firms from long-term oriented cultures spend more on R&D and advertising than firms from short-term cultures which then translates to higher profitability for firms from long-term oriented cultures in comparison to firms from short-term oriented cultures.

School Managers and Teachers' Opinions Regarding Compulsory Rotation Application Applied to School Managers/Okul Yöneticilerine Uygulanan Zorunlu Yer Değiştirme Uygulaması Hakkında Okul Yöneticilerinin ve Öğretmenlerin Görüşleri

Extended Abstract Problem: The basic reason behind compulsory rotation application is based on the idea that long-term employment of managers in the same institution will create various problems. Working in the same institution could lead to some problems in organizations such as laziness, metal fatigue, ego inflation or management myopia (Leblebici, 2005; Reynolds, White and Brayman, 2005; Tonbul and Sagiroglu, 2012). These explanations show that there is a relationship between duration of working in the same school and stagnation, slackness and insistence on resorting to same solutions for problems (Tonbul and Sagiroglu, 2012). Rotation implementation that is actually a career management application aims to provide new career opportunities, to increase especially successful employees' motivation and their contribution to organization. Through “Regulation Related to Change to be Made Related To National Ministry of Education Institutions Managers' Appointments and Rotation Regulation” published in Official Gazette dated 09.08.2011 and volume 28020, compulsory rotation application that was applied only for school principals started to be applied for school vice-principals, too. The aim of this study is to assess school managers and teachers' opinions related to compulsory rotation application that is applied to school managers. Method: In the study which is in phenomenology model, qualitative data collection tools were used. Study group of the research is composed of 71 participants with 23 school principals, 11 vice-principals and 37 teachers by using purposive sampling technique. Data was gathered through semi-structured interview form composed of seven questions and descriptive analysis technique was used. Results: Opinions of participants regarding compulsory rotation application were classified under such themes: 1) Reasons for compulsory rotation application, 2) Positive and negative effects of compulsory rotation application, 3) Suggestions for improvement of the application. According the findings gathered, participants expressed that, in principle, they were not against compulsory rotation application applied to school managers, but some participants were of the opinion that compulsory rotation application was carried out based on ideological reasons. Participants' opinions related to positive-negative effects of application were collected under titles such as organizational culture, communication, adaptation problems and negative effects on individual life. Majority of participants think that compulsory rotation application will harm organizational culture and will lead to adaptation problems and also influence individual life. Participants' suggestions about improvement of the application were collected under sub titles such as performance evaluation, duration and time of the application. Despite differences in participants' opinions, there is a consensus that rotation must be made in 8-10 years period. According to participants, current application is not based on a healthy performance evaluation, does not differentiate between successful and unsuccessful managers, takes seniority as basic criterion and thus, it is an application towards punishing successful managers. Key Words: Compulsory Rotation Application, School managers, Teachers --------------------------------------------------- Ozet 09.08.2011 tarih 28020 sayili Resmi Gazetede yayinlanan “Milli Egitim Bakanligi Egitim Kurumlari Yoneticilerinin Atama ve Yer Degistirmelerine Iliskin Yonetmelikte Degisiklik Yapilmasina Dair Yonetmelik” ile daha once sadece okul mudurlerine uygulanan zorunlu yer degistirme uygulamasi mudur yardimcilarina da uygulanmaya baslamistir. Bu calismanin amaci, okul yoneticilerine uygulanan zorunlu yer degistirme uygulamasi hakkinda okul yoneticilerinin ve ogretmenlerin goruslerini belirlemektir. Olgubilim desenindeki arastirmada nitel veri toplama yontemleri kullanilmistir. Arastirmanin calisma grubunda, amacli ornekleme teknigi kullanilarak belirlenen 23 okul muduru, 11 mudur yardimcisi ve 37 ogretmen olmak uzere 71 katilimci bulunmaktadir. Veriler, yedi sorudan olusan yari yapilandirilmis gorusme formu ile toplanmis ve betimsel analiz teknigi ile analiz edilmistir. Katilimcilarin, zorunlu yer degistirme uygulamasi ile ilgili gorusleri; 1) Zorunlu yer degistirme uygulamasinin gerekceleri, 2) Uygulamanin olumlu-olumsuz etkileri ve 3) Uygulamanin iyilestirilebilmesi icin oneriler temalari altinda ele alinmistir. Elde edilen bulgulara gore, katilimcilar okul yoneticilerine uygulanan zorunlu yer degistirme uygulamasina prensip olarak karsi olmadiklarini belirtmislerdir ancak bazi katilimcilar zorunlu yer degistirmenin ideolojik nedenlerle uygulandigi gorusundedir. Katilimcilarin, uygulamanin olumlu-olumsuz etkileri ile ilgili gorusleri, orgut kulturu, iletisim ve uyum sorunlari ve bireysel yasam uzerindeki olumsuz etkiler basliklari altinda toplanmistir. Katilimcilarin buyuk cogunlugu zorunlu yer degistirme uygulamasinin orgut kulturune zarar verecegini, iletisim ve uyum sorunlarina neden olacagini ve bireysel yasamlarini etkileyecegini dusunmektedir. Katilimcilarin uygulamanin iyilestirilmesine iliskin onerileri, performans degerlendirme ve sure ve uygulanma zamani alt basliklari altinda toplanmistir. Katilimcilarin farkli gorusleri olmasina ragmen, genel olarak yer degistirmenin 8–10 yil gibi bir zaman dilimi icerisinde yapilmasi konusunda gorus birligindedir. Katilimcilara gore mevcut uygulama, saglikli bir performans degerlendirmeye dayanmamakta, basarili-basarisiz yonetici ayrimi yapmamakta, kidemi temel olcut almakta ve bu nedenle de basarili yoneticileri cezalandirmaya yonelik bir uygulamadir. Anahtar Kelimeler: Zorunlu yer degistirme uygulamasi, Okul yoneticileri, Ogretmenler

Records management myopia: a case study

PurposeThis paper seeks to provide some important lessons learned from the introduction of a new records management system in a tertiary educational institution and its relation to records management.Design/methodology/approachThe paper takes the form of a case study using after action review.FindingsThe key findings build on the extant literature that is largely case study based. The findings were that: it is easy to lose sight of key systems issues and knowledge management in a busy world; knowledge and records management are strategic issues; records management is essential to organizational effectiveness; records and knowledge management is not just another task; implementation needs to be driven from the top and built from the bottom; training and support are essential; development is ongoing; and external expertise should be used when necessary.Research limitations/implicationsThe research is limited by being a single case study.Practical implicationsThe case study provides practical advice about implementing effective records keeping systems for those overseeing such a process.Originality/valueThe case study contributes to the understanding of records management as a component of knowledge management and provides some new insights into implementation of new systems. It also provides evidence that after action review is a valuable tool in being a good knowledge management citizen.

Going global in R&D.

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Measuring ‘tight budgetary control’

This paper presents an effort to construct a measurement instrument to capture tight budgetary control. While there is not a strong tradition of publishing articles of this nature in the accounting literature, there is a role for this for constructs for which there are no ready-made instruments available from other disciplinary areas. The notion of tight (budgetary) control seems to fall into this category: it has troubled theorists for many years (Simons, R., 1995.Levers of Control: How Managers Use Innovative Control Systems to Drive Strategic Renewal , Boston, Harvard Business School Press.), and identifying and calibrating its components has been called a fruitful area for academic inquiry (Chow, C. W., Kato, Y. and Merchant, K. A., 1996. The use of organizational controls and their effects on data manipulation and management myopia: A Japan v. U.S. comparison, Accounting, Organizations and Society, 21, 175–192.). In this paper, the tight budgetary control macro-construct is defined, de-composed into its micro-attributes, operationalized into scale-items, and re-composed empirically through factor analysis on data obtained from 153 business units. The data suggest that tight budgetary control involves, in order of importance, low tolerance for interim budget deviations, detailed budget line-item follow-ups, intense discussions of budget results, and strong emphasis on meeting short-run budget targets. Broadly speaking, tight budgetary controls seem more stringent than simply monitoring bottom-line budget deviations in a hands-off management-by-exception basis.

An empirical examination of corporate myopic behavior: a comparison of Japanese and U.S. companies

The purpose of this study is to examine whether differences in the corporate environments of Japanese and U.S. companies are associated with differences in the extent to which Japanese and U.S. managers engage in corporate myopic behavior. This paper empirically examines the management myopia issue by comparing the level of income smoothing that occurs between U.S. and Japanese companies. A system of simultaneous equations is employed to measure the extent that management uses discretionary accruals and research and development (R&D) investments to smooth income. Our results suggest that while both Japanese and U.S. managers engage in some amount of myopic behavior (i.e., smooth income), Japanese managers do so at a significantly higher level.

The use of organizational controls and their effects on data manipulation and management myopia: A Japan vs U.S. comparison

Two prior papers by Merchant (1985b, 1990) have explored the use and effects of five management controls at the profit center level of a large U.S. firm. This study extends the investigation to a crosscultural context. Data were collected from first-line profit center managers at Toshiba — a Japanese manufacturer matched in size and industry to Merchant's (anonymous) U.S. firm. These data were combined with those of Merchant to test four predictions derived from Hofstede's (1980) taxonomy of national culture. The findings supported the predictions that relative to their U.S. counterparts, the Japanese profit center managers were subject to tighter procedural controls and controls via directives given at meetings. Further, when faced with the same level of control tightness, they did not engage in as high a level of dysfunctional activities. However, contrary to prediction, the Japanese managers were subject to significantly tighter controls overall than were the U.S. managers.

Management myopia: A by-product of the business contract system in China?

This paper examines the role various environmental factors play in shaping short-term management behaviour in the context of the business contract system in China. Seven government officials and ten senior firm managers were interviewed in the city of Chongqing. It was found that dysfunctional behaviour displays itself mainly in the form of inappropriate performance measures and widespread manipulation of data. The study also demonstrates that most management problems originated from the environment over which the firm had little control rather than derived from the internal organisation of the firm. Environmental factors like uncertainties, inflation, government systems and capability of government officials were regarded as major determinants of the short-term behaviour.

The effects of financial controls on data manipulation and management Myopia

This paper reports the findings of a field and survey study aimed at discovering the incidence and causes of two potentially important, often dysfunctional, control system side effects: manipulation of short-term performance measures and encouragement of a myopic, short-term orientation. Data collected from interviews and questionnaires show that these side effects were evident and that their incidence was positively related to the felt pressure to meet financial targets. Tests of possible moderating effects of environmental uncertainty, supervisor consideration, and profit center strategy were consistent with expectations only for the environmental uncertainty variable, however; managers operating in relatively uncertain environments were significantly more likely to react to budget pressure by pulling profits from the subsequent year into the current year than were those operating in relatively certain environments.

Measurements to cure management myopia

Measurements to cure management myopia

Predictable Problems Arising from Management Myopia in the NHS

Predictable Problems Arising from Management Myopia in the NHS

Predictable Problems Arising from Management Myopia in the NHS

Predictable Problems Arising from Management Myopia in the NHS