Management Assumptions Research Articles

Improving Auditorss Consideration of Evidence Contradicting Management's Assumptions

Auditors must assess the reasonableness of management’s estimates and have difficulty evaluating the assumptions underlying these estimates. One source of these problems is that auditors appear to dismiss evidence that contradicts management’s assumptions, due to their initial preference to support management’s accounting. We experimentally examine whether focusing auditors on documenting evidence inconsistent with their preferred conclusion reduces their dismissiveness of evidence that contradicts management’s assumptions. We find that preference-inconsistent auditors prepare documentation that is overall less dismissive of key evidence that contradicts management’s biased estimate and that they document more inferences that contradict, rather than support, management’s assumptions. Importantly, preference-inconsistent auditors do not increase their documentation of contradicting facts, indicating that a preference-inconsistent documentation focus affects how auditors interpret contradicting evidence rather than merely increasing their attention to this evidence. These documentation effects persist to improve auditors’ evaluations of the biased estimate. Thus, focusing auditors on documenting evidence inconsistent with their preferred conclusion improves audit quality in an important and difficult area.

Managing New Salespeople’s Ethical Behaviors during Repetitive Failures: When Trying to Help Actually Hurts

Despite acknowledgment that performance failure among new salespeople is a prevalent issue for organizations, researchers do not fully understand the consequences of repetitive periods of failure on new salespeople’s unethical selling behaviors. Further, little is known about how a sales force’s reward structure and managerial attempts to intervene following failure affect new salespeople’s behavior. Combining an experiment with longitudinal growth models, we show that repetitive periods of failure increase unethical behaviors, and interventions intended to remind the salesperson to behave in the customer’s best interests attenuate this effect under a non-contingent reward structure. However, counter to managerial assumptions, under a contingent reward structure these customer-oriented interventions actually backfire by amplifying the original relationship between repetitive failure and unethical behaviors. The results have potentially important managerial implications for those who manage new salespeople learning how to sell or during other failure-prone periods.

Revisiting of Theory X and Y

Purpose– The purpose of this paper is to investigate the influence of leaders’ Theory X and Y managerial assumptions on subordinates’ attitudes and behaviors.Design/methodology/approach– Military leaders (n=50) completed a questionnaire with Theory X and Y scale and their subordinates (n=150) completed a questionnaire with the scales of satisfaction with leader, affective commitment, and organizational citizenship behavior. The paper used hierarchical linear modeling to test the hypotheses.Findings– The results indicated that the Theory Y management style is significantly and positively associated with subordinates’ satisfaction with the leader, affective commitment, and organizational citizenship behaviors. The Theory X management style had a significantly negative impact on subordinates’ satisfaction with the leader, but no significant impact on affective commitment and organizational citizenship behavior. The findings of the present study suggest that the Theory X and Y managerial assumptions are a worthwhile basis from which to examine several important organizational and individual outcomes.Research limitations/implications– The sample consisted of military personnel and were predominantly male. This may limit the generalizability of the findings.Practical implications– The findings of the present study suggest that the Theory X and Y managerial assumptions are a worthwhile basis from which to examine several important organizational and individual outcomes.Originality/value– Although McGregor's (1960) Theory X and Y have contributed to management and leadership thinking and practice for many years; empirical studies examining the Theory X and Y managerial assumptions in a work environment are very scarce. By examining the effect of leader's Theory X and Y managerial assumptions on follower's attitudes and behaviors, the study provides important insights for leadership literature.

‘Lean’, new technologies and employment in public health services: employees' experiences in the National Health Service

This article considers employees' experiences of a major organisational redesign project, which sought to deploy robotics technologies to improve the performance of National Health Service pharmacy distribution in one part of the UK. The principles of Lean-type approaches partly informed the redesign project, with senior managers seeking to tap the benefits of new technologies to streamline processes, while also arguing that change would bring opportunities for upskilling and inter-professional collaboration. The project managed to avoid some of the negative consequences for job quality predicted by the critical literature on Lean-type approaches in public services. However, employees' experiences varied, with some reporting new engagement in learning and collaborative service delivery ‘nearer the patient’, while others complained of fewer opportunities to rotate across a variety of job roles. More fundamentally, employees questioned management's assumption that new technologies and Lean-type approaches are crucial to improved performance and better jobs. For many employees, both performance and job quality were compromised by the ‘leanness’ of staffing models, which limited opportunities for development and contributed to work intensification. This tension is likely to remain a key theme in employment relations in the UK and beyond for as long as the public sector faces financial austerity.

Changes in the measurement of fair value: Implications for accounting earnings

With the FASB's issue of staff position papers in 2009 and the relaxation of how fair value standards are applied, there has been a change in the practice of how fair value is measured. Since the FASB staff position papers in 2009, fair value measurement by financial institutions has increasingly relied on managerial assumptions. This study examines the impact of this change on the quality of earnings. Consistent with attribute substitution theory that emphasises reliability over relevance, we find that an apparent increase in managerial discretion in fair value measurement is associated with a higher probability of earnings management and lower earnings informativeness. The results indicate that allowing more managerial discretion in fair value measurement adversely affected the quality of financial reporting. Our study highlights the issue of reliable measurement in the debate among academics and practitioners of increasing the use of fair value accounting.

Performance topology mapping: understanding the drivers of performance

Understanding the drivers of performance is fundamental to the development of operations strategy and the effective management of operations. Emerging from the service management literature, the service profit chain is a framework which draws together many assumptions about the drivers of performance. From a different perspective, the performance management literature offers several approaches to understanding performance relationships, the most widely recognised being strategy mapping. Each of these approaches has been influential in both academic and practitioner domains, but they share a common limitation: each may lead researchers and managers to make assumptions about performance relationships that may not hold true. In this paper a different approach, called performance topology mapping, is proposed and evaluated. The evaluation is based on a comparative analysis of the service profit chains and performance topology maps generated on the basis of data collected in two large retail chains. The analysis suggests that performance topologies provide rich, context specific descriptions of the complexities of service performance, revealing performance relationships that were not apparent in the service profit chain and leading to a better understanding of performance relationships in the two organisations. Reconfiguring, or ‘morphing’ the topologies provides a fresh perspective which can facilitate organisational learning and provide a more robust basis for building strategy maps. It is contended that performance topology mapping may facilitate the generation of new narratives to explain performance, without the constraint of generic models or prior managerial assumptions, and thus enhance the context sensitive understanding of performance relationships.

The Mainland Chinese Managerial Behaviors and Assumptions since the Economic Reform: The Literature Review and Research Proposition

China is a country that does not stand still. The nation has been on the move since the launch of her reform and opening-up policy in Chinasome 30 years ago. From the infrastructural projects to the look of her people, there is no doubt that great change is taking place. Many entertain the hope that the change this time is for real: China will come out in this process a different country. Some even venture to propose that “China Model” has appeared as a challenge to “Washington Consensus”. What about the world of Chinese managers? What changes of Chinese managerial styles did we find in these years? This study will attempt to answer these questions as it tries to ascertain the key driver of this managerial style—the managerial assumptions of the Chinese managers. This analysis will attempt to sketch a Chinese managerial style and propose a set of assumptions that could be shaping this style. The different sources of influence that have come to shape the Chinese managerial assumptions since China launched her economic reform in 1978 would be of particular interest in this adventure. Accordingly, several propositions of Chinese managerial assumptions will be suggested for future research.

A critical argument in favor of theoretical pluralism: Project failure and the many and varied limitations of project management

In project management, failure is often assumed to be evidence of deficient management: a problem that can be overcome by better management. Drawing on qualitative research within UK construction projects we examine how four different theoretical approaches (positivism, structural Marxism, interpretivism and actor–network theory) all challenge this managerial assumption. Each theoretical perspective enables a specific analysis of empirical data that critiques the notion that project failures are easily, simply, or largely, associated with the failure of project management. In so doing, our pluralist analysis reveals the social and political contextualization of performance in project management. We thus conclude by proposing that practitioner and scholarly concerns with project failure (and success), can actively contribute to attempts to reflect upon various matters of political concern as developed within the Making Projects Critical community, and by extension Critical Management Studies. Thus, we propose greater interaction between critical and mainstream project research communities.

Using southern theory: Decolonizing social thought in theory, research and application

Recent work in social science challenges managerial assumptions about homogenous knowledge domains, and traces the effects of a world economy of knowledge structured by the history of colonialism and current north-south global inequalities. The differentiation of knowledge rests on the very different histories and situations of metropolitan, creole, colonized and post-colonial intelligentsias. Different knowledge projects have been constructed in global space, which feed back on our understanding of knowledge itself. Less recognized, but increasingly important, are uses of southern and postcolonial perspectives in applied social science, in areas ranging from education to urban planning. Some implications of these applications are discussed: southern theory is not a fixed set of propositions but a challenge to develop new knowledge projects and new ways of learning with globally expanded resources.

Normal Turbulence or Perfect Storm? Disparity in Fair Value Estimates

The use of fair value measures in financial statements embeds managerial assumptions about the future into the reporting process. This is particularly so for Level 3 measurements that are developed from financial models of future cash flows. This article documents a case where a firm bought a majority stake of 52% in November 2009 of a subsidiary where it already had an equity holding of 29% (i.e., acquired an additional 23%). The proportionate fair value implied for the 48% noncontrolling stake as well as the 29% prior equity holding in the acquired firm using Level 3 methodology was roughly triple the amount reported as Level 1 measures for these very same holdings. The discrepancy in valuation boosted the bargain gain at acquisition wiping out the retained earnings deficit of the parent firm. In addition, the acquirer reported a US$200 million (40%) impairment of the subsidiaries’ primary asset (housing stock) in November 2009 whereas the subsidiary reported the unimpaired value in its year-end financial statements in December 2009. While we agree that Level 3 valuations potentially provide useful information to shareholders, they can fulfill this role only if the disclosures can be effectively audited. Our primary motivation in writing this article is to show that fair value disclosures are not being audited sufficiently rigorously in practice and to make some suggestions on how these rules may be improved.

HRD and Management- A Case Study of Public Sector Undertakings in India

Top Management of an organization plays an important role in designing Human Resource policies and their execution. Human Resource policies of an organization are mainly based on top management's assumption about people working in the organization. It reflects the attitude of the top management about the 'people'. Human Resource Development (HRD) is somehow related with the type of approach and commitment of the top management towards its people. Human Resource Development (HRD) has been given due importance by all the organizations in India as it aims at developing all the employees of an organization in a planned manner to acquire and apply their existing capabilities as well as their inner potentials. Theory X and Theory Y developed by McGregor further strengthen the view that the managements who consider its people as its assets plays a positive role in their development and those who consider that they need to be directed and are just a means of production like other means don't make policies for their development and believe it to be wasteful expenditure. The present study is an attempt to ascertain whether the top management in public sector organizations believes in employee development and to what extent they are helpful in developing organizational development climate in their undertakings. The study is quite significant as it has significant impact on the efficiency and productivity of the organization.

The Entreprise Network, a Managerial Assumption in the Social Market Economy

The network of enterprises in various forms existed before the advent of computing, and consisted of a business. Network businesses are based on the idea of sharing and trust, they are valid attributes for internal computer networks and network o f partners. The main problem is the management of enterprise networks and interdependence between the formulation of management strategies, skills development, technology development and human resource management systems.

The relationship of managerial values and assumptions with performance management in Turkey: understanding within culture variability

The present study examined the relationship of managerial values and assumptions with performance management (PM) practices with the aim of understanding the within culture variability in the managerial implementation of PM in the context of a developing country – Turkey. The model of culture fit served as the theoretical basis of this study. Data were gathered from 214 business organizations in Turkey. Participating managers completed a self-administered questionnaire, which assessed managerial values, employee-related managerial assumptions, and PM practices. The proposed model and the hypothesized relationships were examined through structural equation modelling. Results revealed that managerial values and assumptions were significantly related to their PM practices, above and beyond the established organizational PM systems. Managers were more likely to implement practices the way it was congruent with their values and assumptions.

Managers' Context: How Government Capability Affects Managers

We draw attention to two changes in management research over the past 25 years: more focus on the different contexts that constrain management action, and applications of management knowledge to non‐business societal challenges. There has been much speculation but little comparative empirical research on how government quality affects what managers do. Building on theory and research from international business, organization theory and organizational behaviour we propose and test an account of the ways government capability affects organizational performance through its effects on managerial assumptions and actions. In a sample of managers working under four different governments, we find that the more capable the government the less managers depend on their personal relationships to get their work done, and these in turn mediate governments' effects on the managerial cultivation of relationships with government officials, their use of personal relationships for competitive business advantages, and their greater distrust, secrecy and withholding of information from business associates. The implications for cross‐national management research and public policy for economic development are highlighted.

Douglas McGregor: theoretician, moral philosopher or behaviorist?

PurposeMcGregor was the consummate process consultant, but his behavior was derived not from his philosophy of participation but from his theory of human behavior. He was a Theory Y person who found in an academic setting that the managerial style resulting from this set of assumptions was ideally suited to what an academic environment needed. Douglas McGregor was a theoretician, moral philosopher or behaviorist. This reflection aims to provide an analysis of the interconnections between assumptions, values and behavior and an analysis of how his behavior impacted both his theory and value system.Design/methodology/approachThis paper provides an analysis of the interconnections between assumptions, values and behavior.FindingsSome of the misunderstanding of McGregor's views is based on the failure to see him above all as a theoretician.Originality/valueMcGregor displayed the patience to wait for the right time, to lead by asking the gentle questions, to focus on small changes in process rather than pushing content. For us, it is time to take McGregor's theory seriously and do a great deal more research on managerial assumptions. We have pretty good measures of performance but we must put more effort into studying the assumptions underlying managerial behavior.

Asset Allocation and Managerial Assumptions in Corporate Pension Plans

We empirically examine the effect of regulations on pension decision-making. We find that in the face of mandatory contributions, pension plans alter their asset allocations and increase their risk taking to avoid mandatory contributions. This behavior resembles gambling for resurrection. The economic effects we document are large, representing annual active reallocations of over $103M for the average plan. We also examine the effect of regulations on pension accounting assumptions affecting net income. We find that plan sponsors increase their assumed rates of return on plan assets when subject to pension-related costs. The evidence suggests an earnings-management interpretation. Finally, we examine whether pension fund managers are tactical in their asset allocations. We find that pension fund managers are active as an investor class, but do not seem to time the market in a manner consistent with return predictability.

Taking the long view

PurposeThis paper aims to enhance understanding of organizational change by countering managerial and critical assumptions that it is possible to break with the past.Design/methodology/approachA qualitative, case study approach involving interviews with 50 staff, ten supervisors, eight deputy supervisors, four assistant managers, two departmental managers plus the IT, training and personnel managers. The paper focuses on the experiences of supervisors and deputy supervisors.FindingsThat culture cannot be so readily forgotten or reinvented as management gurus assume or critics fear. Memories are stubborn and culture is constituted through them in ways that lead to continuity and change.Research limitations/implicationsLimitations leading to future research include that the study explores only one organization. Second, consultants are not used. Third, the reengineering only focus on a part of the organization. Fourth, the findings can be contrasted with an organization that is considered leading edge.Originality/valueThe qualitative findings provide a complex understanding of change especially in terms of how memory can serve to both facilitate and hinder change initiatives and how attempts to introduce more “informal” cultures simultaneously reproduce “formality”.

Constructing and re-constructing narratives of patient safety

In the pursuit of enhanced patient safety, new forms of organisational learning have been introduced within healthcare services across the developed world. This paper examines how these systems contribute to the creation of knowledge about patient safety. The approach taken in this paper departs significantly from methods found within mainstream patient safety research. Rather than attempting to define clinical incidents through taxonomies or classifications, it considers how knowledge is socially constructed in clinical practice and through the processes of risk management. Specifically, it considers how narratives - the stories produced by staff in a large teaching hospital in the UK - about patient safety events are developed within the interactions of clinical practice, reflecting a dynamic mix of emotion and shared notions of responsibility. It then shows how these are re-produced as incident reports which transform knowledge through check-boxes and pre-defined categorisations leading to de-contextualised 'narrow narratives'. The paper then examines how these accounts are further re-produced through risk management activities as they become de-authored and re-constructed to reflect managerial assumptions about learning. Through considering how patient safety narratives emerge through these processes, the paper highlights the contribution that ethnographic research, with a particular focus on narrative construction, can make to the study of patient safety. It offers an alternative to the current orthodoxy of policy and raises questions about the capacity of such systems to shape the production of knowledge to the determinant of service improvement and to act as a mechanism of organisational power.

Renewing the Holy Grail of human motivation in the delivery of public service

PurposeThis paper draws on a recent case study in Ghana that explored the human resource development (HRD) challenges facing local government in a reforming public sector. It aims to investigate how public sector reform (PSR) has affected worker motivation and effectiveness among civil servants (bureaucrats) serving local government at all levels of operation.Design/methodology/approachBased on an exploratory case study design, the work triangulates both secondary and primary sources of data. Primary data were generated from self‐completing questionnaire and interview schedule tools covering 105 local government employees from national, regional and district levels. Key person interviews also solicited views from 16 senior public officers and managers in nine public and quasi‐public organisations. These primary sources are complemented with relevant secondary documents from the organisations investigated.FindingsThe main finding of the study is that while the new public management reform expects public sector leadership to behave and act as private sector entrepreneurs, it is difficult to pursue a worker motivation agenda based on a “private sector management model”, since the public and private sectors have different policy goals and business objectives to accomplish.Originality/valueThe value of this paper lies in its ability to argue that although the managerial assumptions of new public management reform seem to be realistic for public sector actors, they are more often than not challenged to be innovative and adaptive, unlike their private sector counterparts, on the question of worker motivation.

Employee motivation in Ghana: A factor structure and measurement tool

Purpose: This paper reports research on the factor structure of employee motivation as well as provides a tool for measuring the level of employee motivation in Ghanaian organisations. Methodology: The study was designed as exploratory, comparative and cross-sectional. 260 respondents drawn from across the gender, status and job grade hierarchy of 19 organisations participated. The organisations were matched in terms of tenure (over 5years), number of employees (50 or more) and geographic location (headquartered in Accra). A 41-item questionnaire on the Level of Motivation (LoM); Characteristics of Employee Motivation (CEM); aspects of Organisational Citizenship Behaviour (OCB); Managerial Assumptions about employee behaviour (MA); Contextual Institutional Analysis (IAN) and Organisational Leadership Issues (Le) was developed and used. The instrument combined fixed response format on a 3-point scale with open-ended responses. Findings: Exploratory Factor Analyses (Varimax Rotation, converging in 26 iterations) yielded 6 factors, which account for 60% of the variance. Thematic analyses of both interview and open-ended questionnaire data support the emergent factor structure, providing some tentative indication that employee motivation in the Ghanaian (or indeed African) context should be looked at more in an integrated manner rather than in terms of the limiting confines of any one theory of motivation. The 3 items hypothesised to constitute the measure of level of employee motivation loaded neatly onto Factor 6. One-way ANOVA demonstrated no differences in the level of motivation across the organisational samples; this was confirmed by the interview data. Implications/Originality/Value: The implications and value of this research are: that motivation research in Africa does need to focus more on developing an integrated model of employee motivation; also, a simple 3-item but novel tool for measuring the level of employee motivation as well as its underlying dynamics, is tentatively put forward. This, in the Ghanaian context, is a much needed psychometric.