The HRM practices of innovative knowledge-intensive firms

There is little research on HRM practices in knowledge-intensive firms (KIFs), especially in comparison to that conducted in traditional production environments. Whether such HRM practices are appropriate for KIFs, particularly ones that differentiate themselves on their ability to innovate, is the basis of this research. The study investigates the HRM practices being used by four innovative firms: two KIFs and two traditional production companies. The findings suggest that there are some similarities between the HRM practices of the case firms, but there are also important differences. Specifically, the KIFs emphasise use of selection criteria and processes that secure a workforce with a desire for challenging work and the ability to work collaboratively. The KIFs are also more likely to provide a breadth of training and development opportunities for teams and individuals, to make extensive use of performance management systems, and to utilise a range of strategies to encourage and reward innovation.

A longitudinal study of corporate earnings guidance in Australia’s continuous disclosure environment

Since the introduction of a statutory‐backed continuous disclosure regime (CDR) in 1994, regulatory reforms have significantly increased litigation risk in Australia for failure to disclose material information or for false and misleading disclosure. However, there is almost no empirical research on the impact of the reforms on corporate disclosure behaviour. Motivated by the absence of research and using management earnings forecasts (MEFs) as a disclosure proxy, this study examines (1) why managers issue earnings forecasts, (2) what firm‐specific factors influence MEF characteristics, and (3) how MEF behaviour changes as litigation risk increases. Based on theories in information economics, a theoretical framework for MEF behaviour is formulated which includes antecedent influencing factors related to firms‟ internal and external environments. Applying this framework, hypotheses are developed and tested using multivariate models and a large sample of hand-collected MEFs (7,213) issued by top 500 ASX-listed companies over the 1994 to 2008 period. The results reveal strong support for the hypotheses. First, MEFs are issued to reduce information asymmetry, litigation risk and signal superior performance. Second, firms with better financial performance, smaller earnings changes, and lower operating uncertainty provide better quality MEFs. Third, forecast frequency and quality (accuracy, timeliness and precision) noticeably improve as litigation risk increases. However, managers appear to be still reluctant to disclose earnings forecasts when there are large earnings changes, and an asymmetric treatment of news type continues to prevail (a good news bias). Thus, the findings generally provide support for the effectiveness of the CDR regulatory reforms in improving disclosure behaviour and will be valuable to market participants and corporate regulators in understanding the implications of management forecasting decisions and areas for further improvement.

A model of organizational innovation implementation effectiveness in small to medium firms

The present study aims to validate the current best-practice model of implementation effectiveness in small and mid-size businesses. Data from 135 organizations largely confirm the original model across various types of innovation. In addition, we extended this work by highlighting the importance of human resources in implementation effectiveness and the consequences of innovation effectiveness on future adoption attitudes. We found that the availability of skilled employees was positively related to implementation effectiveness. Furthermore, organizations that perceived a high level of benefits from implemented innovations were likely to have a positive attitude towards future innovation adoption. The implications of our improvements to the original model of implementation effectiveness are discussed.

Corporate governance mechanisms and earnings management in transitional countries – evidence from Chinese listed firms

The objective of this thesis is to investigate whether the corporate governance practices adopted by Chinese listed firms are associated with the quality of earnings information. Based on a review of agency and institutional theory, this study develops hypotheses that predict the monitoring effectiveness of the board and the audit committee. Using a combination of univariate and multivariate analyses, the association between corporate governance mechanisms and earnings management are tested from 2004 to 2008. Through analysing the empirical results, a number of findings are summarised as below. First, board independence is weakened by the introduction of government officials as independent directors on the boards. Government officials acting as independent directors, claim that they meet the definition of independent director set by the regulation. However, they have some connection with the State, which is the controlling shareholder in listed SOEs affiliated companies. Consequently, the effect of the independent director’s expertise in constraining earnings management is mitigated as demonstrated by an insignificant association between board expertise and earnings management. An alternative explanation for the inefficiency of board independence may point to the pre-selection of independent directors by the powerful CEO. It is argued that a CEO can manipulate the board composition and choose the "desirable" independent directors to monitor themselves. Second, a number of internal mechanisms, such as board size, board activities, and the separation of the roles of the CEO and chair are found to be significantly associated with discretionary accruals. This result suggests that there are advantages in having a large and active board in the Chinese setting. This can offset the disadvantages associated with large boards, such as increased bureaucracy, and hence, increase the constraining effects of a large and resourceful board. Third, factor analysis identifies two factors: CEO power and board power. CEO power is the factor which consists of CEO duality and turnover, and board power is composed of board size and board activity. The results of CEO power show that if a Chinese listed company has CEO duality and turnover at the same time, it is more likely to have a high level of earnings management. The significant and negative relationship between board power and accruals indicate that large boards with frequent meetings can be associated with low level of earnings management. Overall, the factor analysis suggests that certain governance mechanisms complement each other to become more efficient monitors of opportunistic earnings management. A combination of board characteristics can increase the negative association with earnings management. Fourth, the insignificant results between audit committees and earnings management in Chinese listed firms suggests that the Chinese regulator should strengthen the audit committee functions. This thesis calls for listed firms to disclose more information on audit committee composition and activities, which can facilitate future research on the Chinese audit committee’s monitoring role. Fifth, the interactive results between State ownership and board characteristics show that dominant State ownership has a moderating effect on board monitoring power as the State totally controls 42% of the issued shares. The high percentage of State ownership makes it difficult for the non-controlling institutional shareholders to challenge the State’s dominant status. As a result, the association between non-controlling institutional ownership and earnings management is insignificant in most situations. Lastly, firms audited by the international Big4 have lower abnormal accruals than firms audited by domestic Chinese audit firms. In addition, the inverse U-shape relationship between audit tenure and earnings quality demonstrates the changing effects of audit quality after a certain period of appointment. Furthermore, this thesis finds that listing in Hong Kong Stock Exchanges can be an alternative governance mechanism to discipline Chinese firms to follow strict Hong Kong listing requirements. Management of Hong Kong listed companies are exposed to the scrutiny of international investors and Hong Kong regulators. This in turn reduces their chances of conducting self-interested earnings manipulation. This study is designed to fill the gap in governance literature in China that is related to earnings management. Previous research on corporate governance mechanisms and earnings management in China is not conclusive. The current research builds on previous literature and provides some meaningful implications for practitioners, regulators, academic, and international investors who have investment interests in a transitional country. The findings of this study contribute to corporate governance and earnings management literature in the context of the transitional economy of China. The use of alternative measures for earnings management yields similar results compared with the accruals models and produces additional findings.

Towards a model of dynamic capabilities in innovation-based competitive strategy : insights from project-oriented service firms

With the growing significance of services in most developed economies, there is an increased interest in the role of service innovation in service firm competitive strategy. Despite growing literature on service innovation, it remains fragmented reflecting the need for a model that captures key antecedents driving the service innovation-based competitive advantage process. Building on extant literature and using thirteen in-depth interviews with CEOs of project-oriented service firms, this paper presents a model of innovation-based competitive advantage. The emergent model suggests that entrepreneurial service firms pursuing innovation carefully select and use dynamic capabilities that enable them to achieve greater innovation and sustained competitive advantage. Our findings indicate that firms purposefully use create, extend and modify processes to build and nurture key dynamic capabilities. The paper presents a set of theoretical propositions to guide future research. Implications for theory and practice are discussed. Finally, directions for future research are outlined.

Editoral : Correspondence regarding Anker SD, Koehler F, Abraham WT. Telemedicine and remote management of patients with heart failure. The Lancet 2011; 378: 731–39. Published 20 August 2011.

We read the excellent review of telemonitoring in chronic heart failure (CHF)1 with interest and commend the authors on the proposed classification of telemedical remote management systems according to the type of data transfer, decision ability and level of integration. However, several points require clarification in relation to our Cochrane review of telemonitoring and structured telephone support2. We included a study by Kielblock3. We corresponded directly with this study team specifically to find out whether or not this was a randomised study and were informed that it was a randomised trial, albeit by date of birth. We note in our review2 that this randomisation method carries a high risk of bias. Post-hoc metaanalyses without these data demonstrate no substantial change to the effect estimates for all cause mortality (original risk ratio (RR) 0·66 [95% CI 0·54, 0·81], p<0·0001; revised RR 0·72 [95% CI 0·57, 0·92], p=0·008), all-cause hospitalisation (original RR 0·91 [95% CI 0·84, 0·99] p=0·02; revised RR 0.92 [95% CI 0·84, 1·02], p=0·10 ) or CHF-related hospitalisation (original RR 0·79 [95% CI 0·67, 0·94] p=0·008; revised RR 0·75 [95% CI 0·60, 0·94] p=0·01). Secondly, we would classify the Tele-HF study4, 5 as structured telephone support, rather than telemonitoring. Again, inclusion of these data alters the point-estimate but not the overall result of the meta-analyses4. Finally, our review2 does not include invasive telemonitoring as the search strategy was not designed to capture these studies. Therefore direct comparison of our review findings with recent studies of these interventions is not recommended.

New Evidence for Structured Telephone Support in the Management of Patients with Heart Failure [Letter to Editor]

Letter to the Editor of New England Journal of Medicine on behalf of the Cochrane Systematic Review team.

Telemonitoring or Structured Telephone Support Programmes for Patients with Chronic Heart Failure: Systematic Review and Meta-Analysis

Objective: To determine whether remote monitoring (structured telephone support or telemonitoring) without regular clinic or home visits improves outcomes for patients with chronic heart failure. Data sources: 15 electronic databases, hand searches of previous studies, and contact with authors and experts. Data extraction: Two investigators independently screened the results. Review methods: Published randomised controlled trials comparing remote monitoring programmes with usual care in patients with chronic heart failure managed within the community. Results: 14 randomised controlled trials (4264 patients) of remote monitoring met the inclusion criteria: four evaluated telemonitoring, nine evaluated structured telephone support, and one evaluated both. Remote monitoring programmes reduced the rates of admission to hospital for chronic heart failure by 21% (95% confidence interval 11% to 31%) and all cause mortality by 20% (8% to 31%); of the six trials evaluating health related quality of life three reported significant benefits with remote monitoring, and of the four studies examining healthcare costs with structured telephone support three reported reduced cost and one no effect. Conclusion: Programmes for chronic heart failure that include remote monitoring have a positive effect on clinical outcomes in community dwelling patients with chronic heart failure.

Adherence, adaptation and acceptance of elderly chronic heart failure patients to receiving healthcare via telephone-monitoring

Background: Although the potential to reduce hospitalisation and mortality in chronic heart failure (CHF) is well reported, the feasibility of receiving healthcare by structured telephone support or telemonitoring is not. Aims: To determine; adherence, adaptation and acceptability to a national nurse-coordinated telephone-monitoring CHF management strategy. The Chronic Heart Failure Assistance by Telephone Study (CHAT). Methods: Triangulation of descriptive statistics, feedback surveys and qualitative analysis of clinical notes. Cohort comprised of standard care plus intervention (SC + I) participants who completed the first year of the study. Results: 30 GPs (70% rural) randomised to SC + I recruited 79 eligible participants, of whom 60 (76%) completed the full 12 month follow-up period. During this time 3619 calls were made into the CHAT system (mean 45.81 SD ± 79.26, range 0-369), Overall there was an adherence to the study protocol of 65.8% (95% CI 0.54-0.75; p = 0.001) however, of the 60 participants who completed the 12 month follow-up period the adherence was significantly higher at 92.3% (95% CI 0.82-0.97, p ≤ 0.001). Only 3% of this elderly group (mean age 74.7 ±9.3 years) were unable to learn or competently use the technology. Participants rated CHAT with a total acceptability rate of 76.45%. Conclusion: This study shows that elderly CHF patients can adapt quickly, find telephone-monitoring an acceptable part of their healthcare routine, and are able to maintain good adherence for a least 12 months. © 2007.

[Letter to the Editor] Telemonitoring in Patients with Heart Failure

To the Editor: Chaudhry et al. suggest that enhanced support in the use of a telephone-based interactive voice-response system for patients recently discharged after worsening heart failure does not improve outcomes. This finding is broadly consistent with previous systematic reviews of telephone support1 and contrasts with the substantial effect observed with home telemonitoring of vital signs in similar populations.1 The treatment of patients in the control group was excellent, but unrepresentative of usual clinical care and not inferior to the treatment of patients receiving enhanced support. Monitoring alone is unlikely to improve outcomes but may do so when it improves prescription of or adherence to lifesaving treatments. Given enough resources, traditional methods for delivering care may render an interactive voice-response system or a home telemonitoring system ineffective. Nonetheless, there may be more cost-efficient approaches to ensuring quality care.2 Informal post hoc addition of these data to our recent meta-analysis of telephone support1 does not substantially alter the point estimates for death from any cause or heart-failure−related hospitalizations, but it does nullify the small benefit in hospitalizations for any cause, which may not be reduced by a heart-failure−focused intervention.1 Original article: Telemonitoring in Patients with Heart Failure NEJM. December 9, 2010 | S.I. Chaudhry and Others

Domestic and international innovation partnerships : do they matter for innovation outcomes of South African firms?

This paper studies the impact of the diversity of domestic and international innovation partnerships on the innovation outcomes of South African firms. A number of competing hypotheses are formulated and tested empirically using a sample of South African firms in manufacturing and services by applying Ordinary Least Squares regression analyses. Results show that having an innovation partnership, particularly an international partnership, is beneficial to innovation outcomes. However, it also emerges that too diverse a set of international partnerships is detrimental to innovation outcomes. The paper concludes with a discussion and a number of proposals for future research.

Internationalisation of emerging market firms : an exploratory study of Chilean companies

Purpose This paper explores how firms from a Latin American market internationalise using the resource-based view (RBV) of the firm as a theoretical foundation. Specifically, it examines the internationalisation process of three Chilean companies that have become relevant international players. Design/methodology/approach Drawing on interviews with company managers, as well as industry data and corporate reports, this paper provides insights into the successful internationalisation process of emerging market firms. Findings The findings of this study suggest that specific capabilities and resources, such as belonging to a family conglomerate, domestic and foreign partnerships and networks, innovation and market orientation, and an experienced management team, are required for emerging market firms to internationalise and improve their performance in foreign markets. Originality/value This study is one of the few to address the internationalisation process of Chilean companies.

Unintended consequences of regulatory reporting requirements for small and medium size construction entities : Australian evidence

The Queensland Building Services Authority (QBSA) regulates the construction industry in Queensland, Australia, with licensing requirements creating differential financial reporting obligations, depending on firm size. Economic theories of regulation and behaviour provide a framework for investigating effects of the financial constraints and financial reporting requirements imposed by QBSA licensing. Data are analysed for all small and medium construction entities operating in Queensland between 2001 and 2006. Findings suggesting that construction licensees are categorizing themselves as smaller to avoid the more onerous and costly financial reporting of higher licensee categories are consistent with US findings from the 2002 Sarbanes-Oxley (SOX) regulation which created incentives for small firms to stay small to avoid the costs of compliance with more onerous financial reporting requirements. Such behaviour can have the undesirable economic consequences of adversely affecting employment, investment, wealth creation and financial stability. Insights and implications from the analysed QBSA processes are important for future policy reform and design, and useful to be considered where similar regulatory approaches are planned.

The impact of regulatory reforms on the earnings forecasting behaviour of IPO firms

Purpose – The purpose of this paper is to jointly assess the impact of regulatory reform for corporate fundraising in Australia (CLERP Act 1999) and the relaxation of ASX admission rules in 1999, on the accuracy of management earnings forecasts in initial public offer (IPO) prospectuses. The relaxation of ASX listing rules permitted a new category of new economy firms (commitments test entities (CTEs))to list without a prior history of profitability, while the CLERP Act (introduced in 2000) was accompanied by tighter disclosure obligations and stronger enforcement action by the corporate regulator (ASIC). Design/methodology/approach – All IPO earnings forecasts in prospectuses lodged between 1998 and 2003 are examined to assess the pre- and post-CLERP Act impact. Based on active ASIC enforcement action in the post-reform period, IPO firms are hypothesised to provide more accurate forecasts, particularly CTE firms, which are less likely to have a reasonable basis for forecasting. Research models are developed to empirically test the impact of the reforms on CTE and non-CTE IPO firms. Findings – The new regulatory environment has had a positive impact on management forecasting behaviour. In the post-CLERP Act period, the accuracy of prospectus forecasts and their revisions significantly improved and, as expected, the results are primarily driven by CTE firms. However, the majority of prospectus forecasts continue to be materially inaccurate. Originality/value – The results highlight the need to control for both the changing nature of listed firms and the level of enforcement action when examining responses to regulatory changes to corporate fundraising activities.

Police misconduct and crime : bad apples or systems failure?

There is a debate in the research literature whether to view police misconduct and crime as acts of individuals perceived as 'rotten apples' or as an indication of systems failure in the police force. Based on an archival analysis of court cases where police employees were prosecuted, this paper attempts to explore the extent of rotten apples versus systems failure in the police. Exploratory research of 57 prosecuted police officers in Norway indicate that there were more rotten apple cases than system failure cases. The individual failures seem to be the norm rather than the exception of ethical breaches, therefore enhancing the rotten apple theory. However as exploratory research, police crime may still be explained at the organizational level as well.