Organizational Financial Performance Research Articles

The Models Exploring the “Black Box” between HRM and Organizational Performance

Rapid environmental change, globalization, competition to provide innovative services and products have become the standard frame for organizations. In order to compete effectively, firms have to improve their performance (Chang, Huang, 2005). Because performance stands out as one major organizational goal, many of human resource management (HRM) research efforts have been directed to understand the HRM-Performance linkage (Gardner, Moynihan, Park, Wright, 2001). Much of empirical research on the added value of HRM demonstrate evidence that HRM does matter (Arthur, 1994; Huselid, 1995;), however contrary approach also exists: evidence for HRM-Performance link should be treated with caution (Wall, Wood, 2005). By supporting the HRM-Performance link it is not clear why this link exists. In order to provide a convincing explanation of HRM-Performance link, according Guest (1997), it is necessary to improve theoretical and analytical frameworks in three key areas: the nature of HRM, the nature of performance and the linkage between HRM and performance. The paper provides an insight into HRM drawing a conclusion that there is no single agreed or fixed list of human resource (HR) practices which are used to define human resource management. To better disclose performance, the paper looks into four levels of performance outcomes which makes HRMPerformance link more evident. Assuming that there is a little understanding of the mechanisms through which HRM influence performance, the paper defines the “black box“ problem. The paper provides an overview of a number of conceptual models (Becker, Huselid, Pickus, Sprat,1997; Guest, 1997; Purcel, Kinnie, Hutchinson, Rayton, Swart 2003; Wright, Nishii, 2006) that attempt to depict the processes through which HR practices ultimately impact organization financial performance. Assuming that the similarity among all of these models is that they all have their basis in a linear causal process, the paper looks into two additional aspects: first, the number of boxes in the “black box“; second, the content of each box. Finally the comparison and summing-up of four models is presented in this paper. This brings to conclusion that the identification of the specific mechanisms that mediate between HRM practices and organizational performance should be considered as a central issue in HRM literature.

Do human resource management practices have an impact on financial performance of banks

Human resource management (HRM) practices are being increasingly considered as major contributory factors in financial performance of organizations. This research study effectively highlights the importance of HRM practices with impact on financial performance of banks (FPB) operating in Pakistan. The major objective of the study is to find out the relationship between ‘HRM Practices’ and the ‘Financial Performance of Banks’. As a sample, 46 scheduled banks were contacted, of which 38 responded. The HRM practices selected for the research study were selection, training, performance appraisal system, compensation system and employee participation. Empirical evidence was calculated through stepwise regression analysis, Pearson correlation and descriptive statistics to support theoretical models that link HRM practices with financial performance of banks. The study concluded that all tested variables have a positive relation and impact on financial performance of banks but the major contributory practices are selection, training, compensation and employee participation. Key words: HRM practices, selection system, training, job description, performance appraisal system, compensation system, career planning system, employees participation, financial performance of the banks, planning, development, rewards.

Societal Marketing – A Tool for Financial Performance or Simply a Donation: An Empirical Investigation of Pakistani Firms

A socially beneficial project, entity or an organization only exists when its social benefits are more than its social costs. Previously, businesses were virtually of no benefit to the society, except for providing employment and utilities to the society. In this study, we explored the impact of societal marketing on the financial performance of the organization. This research will hopefully encourage the organizations to engage themselves further in societal marketing activities; as it is not merely a donation and it will yield future returns. Financial statistics of ten organizations involved in societal marketing activities in Pakistan, were taken from Karachi Stock Exchange. From the financial data collected, we analyzed the impact of societal marketing on their overall financial performance by using Paired Sample t-test. There is a significant impact of societal marketing on organization's financial performance. The results verify that societal marketing is an investment for the organization that yield high returns. Our findings are specific only to those organizations which are listed on the KSE. In Pakistan, there are number of organizations which actively engage in societal marketing activities but these organizations were not willing to share their financial data. For this reason, these organizations were not incorporated in this study. The positive impact of societal marketing on financial performance has made a strategic discovery for organizations operating in Pakistan. These firms can not only earn handsome profits but also will have improved image in the society. Through this study, we have negated the perception of some of the Pakistani firms who perceive societal marketing as wastage of financial resources and consider it as a donation.

Nonprofit mission statement focus and financial performance

AbstractMission statements have been adopted nearly universally in nonprofit organizations. Their ubiquity is based on a presumption that a well‐designed mission statement is linked to better organizational performance because it provides a framework for decision making, influence over staff and volunteer motivation, and a mechanism for signaling organizational legitimacy to stakeholders. Despite collective confidence in mission statement utility, the relationship between mission statements and performance has received minimal attention. In this exploratory study we measured several attributes of mission statements in women's rights nonprofit organizations, with particular attention to the degree to which the statement focuses on organizational purpose and the relationship between focus and several measures of organization financial performance. The findings indicated that mission statements with a more focused geographic scope were associated with lower overhead ratios. In contrast, mission statements that identified more target client groups were associated with larger one‐year increases in contribution. Despite the statistical significance, the relationships were weak, calling into question common assumptions about the importance of the mission statement to a nonprofit organization.

Concentração de mercado e desempenho das indústrias brasileiras de papel e celulose - recorrendo à modelagem de Fleuriet para analisar o paradigma ECD

This study aimed to analyze whether there is a relationship between the performance of pulp and paper industries, through the use of Fleuriet modeling and the concentration levels of the market, between the years 2003 and 2007. Methodologically, this paper can be categorized as: [1] formal study, [2] ex post facto, [3] descriptive and causal and, [4] longitudinal, because it is done over a period of five years. The data source used for identification and classification of Brazilian pulp and paper industries was the database of BRACELPA - Associacao Brasileira de Celulose e Papel. It was decided to use the CRk and Hirschman-Herfindahl Index (HH) to measure the concentration of pulp and paper market. It was found that the balance in cash (T), the working capital (CCL) and the need for working capital (IOG), which define the operational and financial performance of organizations, the Fleuriet methodology, remained at levels acceptable and very robust for the four largest companies in the industry, except for the first years analyzed, while the concentration remained a slight downward trend.The results indicate that the relationship between concentration and performance depends on the time series and indicators used.

Influence of inter‐organisational integration on business performance

PurposeThe purpose of this paper is to investigate the mediating role of organisational level supply chain activities on the effect of inter‐organisational information systems (IOIS) and activity (IOA) integration on business performance of retailing organisations within Australia.Design/methodology/approachThe study followed a causal research approach and survey methodology to collect data from the managers of food and hardware retailers. Multiple regression and MacKinnon et al.'s mediation analysis were used to investigate the hypothesised relationships.FindingsThe results suggest that inter‐organisational information systems (IOIS) and activity integration have positive effects on customer responsiveness and financial performance of organisations. Organisational‐level supply chain functions mediate the relationships between IOIS and activity integration and customer responsiveness, as well as financial performance.Research limitations/implicationsThe research focused at the retailer level of the supply chain. Large‐scale cross‐sectional studies that include other levels of supply chain are required for generalisability.Practical implicationsThe research suggests that organisations need to integrate their inter‐organisational information systems and activities with supply chain partners to enhance supply chain and business performance.Originality/valueThe results extend the body of knowledge on inter‐organisational information systems, inter‐organisational integration and supply chain management. The study also provides some empirical insights into management practices in the retailing sector.

The relationship between multiple levels of learning practices and objective and subjective organizational financial performance

AbstractMulti‐level learning approaches suggest that individuals, groups and organizations act both independently and interact dynamically to contribute to organizational performance. We directly examined this proposition in an Australian sample using a longitudinal design that employed subjective and objective financial performance data. Respondents completed a survey that provided details on their individual, team and organizational learning practices (ILP, TLP and OLP, respectively), and self assessed performance compared to 3 years ago. Concurrently, we collected objective performance data (sales/employee numbers) at 3 yearly intervals and averaged these data to create an index. Using hierarchical and moderated regression, we found a positive main effect for OLP with both subjective and objective performance. Main effects for ILP and TLP were not found. Further, we found a significant interaction between ILP and TLP such that the effect of TLP on productivity was better in organizations with less ILP. Three‐way interactions were not found. Overall, these results provide some support for the model. We discuss some limitations of the study and make recommendations for future studies. Copyright © 2009 John Wiley & Sons, Ltd.

An empirical study on the construct and effective mechanism of organizational learning

The organizational learning construct and its effective mechanism are two research issues. This study is based on a survey of 908 managers and employees from 43 companies in different regions of China. The results of exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) show that organizational learning in Chinese enterprises is a multi-dimensional construct comprising of inter-organizational learning, organization-level learning, collective learning, individual learning, exploitation learning and exploration learning. The results of hierarchical linear modeling (HLM) reveal that the unit-level dimensions of organizational learning affect employee’s satisfaction and emotional commitment through the mediation of individual learning. In organizations characterized by high level of organization-level learning and low level of exploitation learning, there is a strong correlation between employees’ satisfaction/emotional commitment and their turnover intention. Hierarchical regression analysis (HRA) also indicates that organizational learning affects perceived organizational financial performance through the full mediation of organizational innovation. Some implications are discussed for organizational learning research and practice.

Organizational Service Climate Drivers of the American Customer Satisfaction Index (ACSI) and Financial and Market Performance

The climate for service is conceptualized and studied as a correlate of customer satisfaction and corporate financial and market performance, with customer satisfaction as a mediator of the climate-performance relationship. Brief reviews of relevant literatures yield three hypotheses: (1) customer satisfaction will be a significant correlate of organizational financial and market performance, (2) organizational service climate will be a significant correlate of organizational customer satisfaction, and (3) customer satisfaction will mediate the relationship between service climate and financial and market performance. The hypothesized relationships are supported in a 3-year longitudinal study of Fortune 200 service companies (not units within companies) from diverse service sectors with path analyses supporting full mediation for customer satisfaction in the link between service climate and corporate financial and market performance. Management implications for corporate competitive advantage through a focus on service climate are discussed.

Comparing multi-dimensional contingency fit to financial performance of organizations

Abstract In theory, it is widely accepted that an organization’s optimal structure is contingent upon various situational factors such as market conditions, nature of work and properties of technology. In practice, providing practical advice based on this understanding has been difficult. This paper demonstrates that it is possible to find a correlation between financial performance, as measured by growth in Return on Assets, and degree of compliance with the recommendations of the contingency theory model known as Interaction Value Analysis (IVA). IVA is based on an abstract theoretical representation of organizational work as a series of value-adding interactions among rational value-maximizing agents. Six different dimensions of an organization’s situation are represented as parameters of the equation that sums up the value added by all interactions within the organization. This “Multi-dimensional” approach is contrasted with the “Multi-contingency” model, which aggregates the effects of multiple contingent-design rules without considering how the rules overlap or otherwise influence one another. The success of the six-parameter IVA model in partially predicting financial performance is an inducement to expand IVA to include more of the parameters included in the Multi-contingency model.

STRATEGI MEMENANGKAN PERSAINGAN DENGAN BALANCED SCORECARD

Abstract: Balanced scorecard is a management step, which is needed to improve the organization's financial performance in the process. Measurement of non-financial and financial information systems part of all staff throughout the organization. Balanced scorecard as a tool to exchange the work process, which must be with some organization that recently envisioned. Some companies which are designed on a vision and strategy can not be controlled for the competitive position in BSC. Companies can propaganda on planning to make an appointment BSC can also provide measurement system better. In the competitive process is prepared BSC consists of the implementation of interviews, workshops, and estimates on a reconsideration of research each year. As part of strategic planning is the location of the main objectives, therefore, can perform the primary purpose strategy location is therefore better able to perform the BSC to give effect to the level of customer satisfaction and improve the level of achievement. Customers will be loyal to the company if the company agreed to complete the request in a timely manner Keyword: balance score value, financial performance

Business outsourcing and organisational performance: the case of the Greek hotel industry

The adoption of the outsourcing strategy for services and products is expanding rapidly worldwide. The strategic character of outsourcing has led many hotels in Greece to appreciate its significant role in the pursuit of improved performance. This study empirically investigates the outsourcing strategy adopted by Greek hotels. The research models were validated, using data collected from 106 questionnaires, completed by Greek hotel managers. It is found that hotel managers believe that outsourcing has a clear, significant and positive influence on achieving operational objectives such as financial and flexibility improvements, access to new managerial and sourcing methods and quality improvements. In addition, the impact of outsourcing on organisational financial and non-financial performance, from the aspect of the strategic value of the activities, is also examined. Surprisingly, the results indicate that there is no evidence supporting the existence of a significant direct effect of outsourcing on the performance of hotels in Greece. Hotel managers, therefore, should realise that outsourcing is a tool that is used sensibly it can help hotels improve specific activities and achieve some, mainly non-financial, targets. Further research should attempt to led some light on the conditions under which outsourcing of specific activities can enhance hotels' performance.

Organizational Effectiveness and Financial Performance: A Healthcare Study

Many studies have been conducted on approaches to organizational effectiveness and financial performance in the healthcare industry. The purpose of this article is to study the Relationship Between Measures of Perceived Organizational Effectiveness and Actual Financial Performance in the Medical Group Practice Environment. The population in this study came from an annual survey of U.S. medical practices conducted by the Medical Group Managers Association (MGMA). The evaluation instruments developed are a composite of documented and currently active instruments, including components of organizational effectiveness, general demographics, locus of control, and constituent/environmental influences. Statistical analysis of data includes regression analysis and descriptive statistics measures. The three tested hypotheses in the study are not supported. However, the study does support an understanding of industry relationships and reinforces the findings of former studies. Additionally, a new level of confirmation is established indicating that even under greater levels of environmental control, perceived organizational effectiveness and actual financial performance has no significant relationship. This article provides a concise summary and update of a larger and more detailed body of work.

SOCIAL CAPITAL, KNOWLEDGE TRANSFER AND PERFORMANCE: META-ANALYTIC EVIDENCE.

The article reports on meta-analysis of social capital, knowledge transfer, and performance. Social capital is needed for knowledge transfer and success in business through different factors such as structural and relational. Social capital is gained through an organization's position within social networks. Knowledge transfer can be done internally and externally and can affect the innovativeness and financial performance of organizations. The meta-analysis focuses on three criteria including r-family effects like correlation coefficients and independent studies with no overlapping data.

State-owned Enterprises: NWSC's Turnaround in Uganda

: Oversight agencies in the water sector emphasize performance monitoring based on outputs, such as customers served, volume delivered, and service quality. However, bureaucratic tendencies can curtail operational innovation and creativity. In situations where managers lack full operating knowledge and capacities, proactive and consultative monitoring and regulation can yield benefits. This study reviews the results of Uganda's National Water and Sewerage Corporation's (NWSC) approach to performance monitoring (and ‘self-regulation’). The purpose of this study is to outline corrective actions undertaken by the NWSC Management and Staff to turn around performance, the sequencing of those steps, and the outcomes from this reform program. The NWSC focuses on promoting improvements in technical processes and input selection. Improvements in service quality and network expansion resulted from aligning performance improvement initiatives with the organization's financial performance and team development. The program's success required managing organizational rigidities and moving towards full cost-recovery. In particular, organizational incentives and information flows encouraged managers to reduce rules and procedures that hindered strong performance. African proverbs are interspersed throughout the article to underscore key themes and lessons for those designing, implementing, and evaluating infrastructure sector reform initiatives.

Organizational Design and Financial Performance: Innovation Focus

Organizational Design and Financial Performance: Innovation Focus

CEO values, organizational culture and firm outcomes

AbstractFew empirical works have examined the process through which CEO dispositions relate to organizational outcomes. In this study we examined the relationships between CEO values and organizational culture, and between organizational culture and firm performance. Data were collected from different sources (26 CEOs, 71 Senior Vice Presidents and 185 other organizational members), and include organizational financial performance data collected at two points in time. In support of our hypotheses, CEO self‐directive values were associated with innovation‐oriented cultures, security values were associated with bureaucratic cultures and benevolence values were related to supportive cultures. In turn, cultural dimensions showed differential associations with subsequent company sales growth, an index of organizational efficiency and assessments of employee satisfaction. Copyright © 2007 John Wiley & Sons, Ltd.

Variance vs average: supply chain lead‐time as a predictor of financial performance

PurposeThe purpose of this paper is to examine the impact of supply chain lead‐time averages and variability on an organization's financial performance.Design/methodology/approachThe “executive” list for manufacturers, consisting of 1,264 individuals of the Institute of Supply Management provided the study's sampling frame, with surveys sent to 402 firms and responses obtained from 210 firms. The empirical model is tested using LISREL.FindingsThe results show that as variance in supply chain lead‐times increases, the financial performance of the organization decreases. Of equal significance, the results show that average supply chain lead‐times have no direct impact on financial performance. The results also indicate that demand uncertainty associates with greater supply chain lead‐time variance and that production technology routineness associates with lower supply chain lead‐time variance. Product complexity and organizational size have no impact on supply chain lead‐time variance or supply chain lead‐time average.Research limitations/implicationsThe research is an initial effort to understand variance in supply chain systems. An ongoing challenge in this area is operationalization of measures and data collection techniques that go beyond a single firm and examine a network of organizations cooperating in a value‐added supply chain.Practical implicationsThe results suggest that managing the variance in a supply chain system may be more important to an organization's financial performance than managing averages.Originality/valueThis is particularly significant since organizations often act contrary to these findings, focusing scarce resources on reducing average lead‐times rather than on reducing variability in supply chain lead‐times.

The connected enterprise: beyond division of labor

PurposeThe central messages of the article are threefold. First, a summary of research testing the perception that cross‐functional organization designs provide key advantages and differentiators for firms in today's hypercompetitive business climate. Second, includes a multifaceted “body of evidence” (e.g. multiple data sources, a range of industries, and various levels of management). Third, pragmatic recommendations regarding how to advance elusive cross‐functional organization design constructs, which today's executives are increasingly seeking to implement.Design/methodology/approachThe article addresses several key questions – are organizations today more like cross‐functional “symphonies” or do they still resemble the traditional, functional, manufacturing model? Are cross‐functional organizations really more effective than functional organizations? And, if cross‐functional organizations are more effective, why aren't they more prevalent? To answer these questions, information from three key sources was assembled to test a body of evidence: first, a Business Schools Programs Review: a comparison of “functional” versus “cross‐functional” business school programs, that included 61 schools offering Masters of Business Administration degrees, located across the USA; second, a scan of the business literature available from five key online sources; and third, a management survey that included 212 total respondents from 37 different industries.FindingsThe evidence presented supports five key conclusions: “Functionality” is still the prevailing organization design. Business schools are not functionally focused, but corporate training is. Functionality dominates the management literature. More managers manage functionally. Cross‐functional organizations appear to have several performance advantages over functional organizations.Research limitations/implicationsThe key limitation of the current research, and implication for future research, is that cross‐functional and functional organizational financial performance comparisons were not conducted. Financial performance comparisons should be addressed by future research.Practical implicationsThe article provides a set of 12 pragmatic recommendations regarding how to implement cross‐functional organization design structures.Originality/valueThe content of the article is useful to executives and managers for several reasons, including: pragmatic recommendations regarding how to implement cross‐functional organization design structures, which today's executives are increasingly seeking to employ. Multifaceted evidence highlighting the differences between functional and cross‐functional structures. Research confirming the assumption that cross‐functional organization designs provide a key differentiator for firms in today's hypercompetitive business climate. Broad application to companies across multiple industries. An overview of available organization design literature and case examples.

Does Executive Intuition Matter? An Empirical Analysis of Its Relationship With Nonprofit Organization Financial Performance

This study tests the relationship between a chief executive’s intuitive decision style and financial measures of nonprofit organization performance. Providing additional support for earlier theories that emphasized top managers’ ability to influence change in their organizations, executive intuition was found to be significantly associated with three of the six financial performance outcomes examined in this study. Executive intuition was a significant and positive predictor of both fiscal performance measures and one of two public support measures. Implications and future research ideas are offered.