The role of marketing in today's enterprises

Purpose The purpose of this paper is to explore the role of marketing in today's enterprises and examines the antecedents of the marketing department's influence and its relationship with market orientation and firm performance. Design/methodology/approach Data were collected from the West (i.e. the USA and Europe) and the East (i.e. Asia). Partial least squares (PLS) was used to estimate structural models. Findings The findings support the idea that a strong and influential marketing department contributes positively to firm performance. This finding holds for Western and Asian, and for small/medium and large firms alike. Second, the marketing department's influence in a firm depends more on its responsibilities and resources, and less on internal contingency factors (i.e. a firm's competitive strategy or institutional attributes). Third, a marketing department's influence in the West affects firm performance both directly and indirectly (via market orientation). In contrast, this relationship is fully mediated among Eastern firms. Fourth, low-cost strategies enhance the influence of a firm's marketing department in the East, but not in the West. Research limitations/implications The paper assumes explicitly that a marketing department's influence is an antecedent of its market orientation. While the paper finds support for this link, the paper did not test for dual causality between the constructs. Originality/value Countering the frequent claim in anecdotal and journalistic work that the role of the marketing department diminishes, the findings show that across different geographic regions and firm sizes, strong marketing departments improve firm performance (especially in the marketing-savvy West), and that they should continue to play an important role in firms.

Director independence or decision bias? An investigation of alternative sources of agency costs in board decision making

Research into boards traditionally focuses on independent monitoring of management, with studies focused on the effect of board independence on firm performance. This thesis aims to broaden the research tradition by consolidating prior research and investigating how agents may circumvent independent monitoring. Meta-analysis of previous board independence-firm performance studies indicated no systematic relationship between board independence and firm performance. Next, a series of experiments demonstrated that the presentation of recommendations to directors may bias decision making irrespective of other information presented and the independence of the decision maker. Together, results suggest that independence may be less important than the agent's motivation to misdirect the monitoring process.

Next Generation SHRM Research: From Covariation to Causation

[Excerpt] In response to the longstanding and repeated criticisms that HR does not add value to organizations, the past 10 years has seen a burgeoning of research attempting to demonstrate that progressive HR practices result in higher organizational performance. Huselid’s (1995)groundbreaking study demonstrated that a set of HR practices he referred to as High Performance Work Systems (HPWS) were related to accounting profits and market value of firms. Since then, a number of studies have shown similar positive relationships between HR practices and various measures of firm performance. While the studies comprising what I refer to as “first generation SHRM research” have added to what is becoming a more convincing body of evidence of the positive relationship between HR and performance, this body tends to lack sufficient data to demonstrate that the relationship is actually causal in the sense that HR practices, when instituted, lead to higher performance. This next generation of SHRM research will begin (and, in fact has begun) to focus on designing more rigorous tests of the hypothesis that employing progressive HRM systems actually results in higher organizational performance. This generation of research will focus on two aspects: demonstrating the HRM value chain, and proving causality as opposed to merely covariation.

On reconsideration of IT governance structures to govern cloud computing services

There is an increase in the uptake of cloud computing services (CCS). CCS is adopted in the form of a utility, and it incorporates business risks of the service providers and intermediaries. Thus, the adoption of CCS will change the risk profile of an organization. In this situation, organisations need to develop competencies by reconsidering their IT governance structures to achieve a desired level of IT-business alignment and maintain their risk appetite to source business value from CCS. We use the resource-based theories to suggest that collaborative board oversight of CCS, competencies relating to CCS information and financial management, and a CCS-related continuous audit program can contribute to business process performance improvements and overall firm performance. Using survey data, we find evidence of a positive association between these IT governance considerations and business process performance. We also find evidence of positive association between business process performance improvements and overall firm performance. The results suggest that the suggested considerations on IT governance structures can contribute to CCS-related IT-business alignment and lead to anticipated business value from CCS. This study provides guidance to organizations on competencies required to secure business value from CCS.

Governing cloud computing services: Reconsideration of IT governance structures

There is an increase in the uptake of cloud computing services (CCS). CCS is adopted in the form of a utility, and it incorporates business risks of the service providers and intermediaries. Thus, the adoption of CCS will change the risk profile of an organization. In this situation, organizations need to develop competencies by reconsidering their IT governance structures to achieve a desired level of IT-business alignment and maintain their risk appetite to source business value from CCS. We use the resource-based theories to suggest that collaborative board oversight of CCS, competencies relating to CCS information and financial management, and a CCS-related continuous audit program can contribute to business process performance improvements and overall firm performance. Using survey data, we find evidence of a positive association between these IT governance considerations and business process performance. We also find evidence of positive association between business process performance improvements and overall firm performance. The results suggest that the suggested considerations on IT governance structures can contribute to CCS-related IT-business alignment and lead to anticipated business value from CCS. This study provides guidance to organizations on competencies required to secure business value from CCS.

ACE Research Vignette 051: How and Why is Small Business Managers’ Age Related To Business Growth?

This series of research vignettes is aimed at sharing current and interesting research findings from our team of international entrepreneurship researchers. This vignette, written by Professor Hannes Zacher, Professor Michael M. Gielnik and Dr Antje Schmitt, reports findings on relationships between small business managers’ age, their focus on opportunities, and business growth (sales and number of employees) over five years.

How small business managers’ age and focus on opportunities affect business growth: A mediated moderation growth model

Research on business growth has been criticized for methodological weaknesses. We present a mediated moderation growth model as a new methodological approach. We hypothesized that small business managers' age negatively affects business growth through focus on opportunities. We sampled 201 small business managers and obtained firm performance data over 5 years, resulting in 836 observations. Growth modeling showed systematic differences in firm performance trajectories. These differences could be explained by modeling focus on opportunities as a mediator of the relationship between small business managers' age and business growth. The study illustrates how mediation models can be tested using growth modeling.

Determinants and Consequences of Information Sharing with Key Suppliers

As companies become more efficient with respect to their internal processes, they begin to shift the focus beyond their corporate boundaries. Thus, the recent years have witnessed an increased interest by practitioners and researchers in interorganizational collaboration, which promises better firm performance through more effective supply chain management. It is no coincidence that this interest comes in parallel with the recent advancements in Information and Communication Technologies, which offer many new collaboration possibilities for companies. However, collaboration, or any other type of supply chain integration effort, relies heavily on information sharing. Hence, this study focuses on information sharing, in particular on the factors that determine it and on its value. The empirical evidence from Finnish and Swedish companies suggests that uncertainty (both demand and environmental) and dependency in terms of switching costs and asset specific investments are significant determinants of information sharing. Results also indicate that information sharing improves company performance regarding resource usage, output, and flexibility. However, companies share information more intensely at the operational rather than the strategic level. The use of supply chain practices and technologies is substantial but varies across the two countries. This study sheds light on a common trend in supply chains today. Whereas the results confirm the value of information sharing, the contingent factors help to explain why the intensity of information shared across companies differ. In the future, competitive pressures and uncertainty are likely to intensify. Therefore, companies may want to continue with their integration efforts by focusing on the determinants discussed in this study. However, at the same time, the possibility of opportunistic behavior by the exchange partner cannot be disregarded.

Essays on the Costs and Benefits of Large Shareholders in Corporate Governance (summary section only)

“Corporate governance deals with the ways in which suppliers of finance to firms assure themselves of getting a return on their investment” (Shleifer and Vishny (1997, p. 737). According to La Porta et al. (1999), research in corporate finance relevant for most countries should focus on the incentives and capabilities of controlling shareholders to treat themselves preferentially at the expense of minority shareholders. Accordingly, this thesis sets out to answer a number of research questions regarding the role of large shareholders in public firms that have received little attention in the literature so far. A common theme in the essays stems from the costs and benefits of individual large-block owners and the role of control contestability from the perspective of outside minority shareholders. The first essay empirically examines whether there are systematic performance differences between family controlled and nonfamily controlled firms in Western Europe. In contrast to the widely held view that family control penalizes firm value, the essay shows that publicly traded family firms have higher performance than comparable firms. In the second essay, we present both theoretical and empirical analysis on the effects of control contestability on firm valuation. Consistent with the theoretical model, the empirical results show that minority shareholders benefit from a more contestable control structure. The third essay explores the effects of individual large-block owners on top management turnover and board appointments in Finnish listed firms. The results indicate that firm performance is an important determinant for management and board restructurings. For certain types of turnover decisions the corporate governance structure influences the performance / turnover sensitivity. In the fourth essay, we investigate the relation between the governance structure and dividend policy in Finnish listed firms. We find evidence in support of the outcome agency model of dividends stating that lower agency conflicts should be associated with higher dividend payouts.

Essays on Stock Option Compensation and the Role of Incentives and Risk (summary section only)

Managerial pay-for-performance sensitivity has increased rapidly around the world. Early empirical research showed that pay-for-performance sensitivity resulting from stock ownership and stock options appeared to be quite low during the 1970s and early 1980s in the U.S. However, recent empirical research from the U.S. shows an enormous increase in pay-for-performance sensitivity. The global trend has also reached Finland, where stock options have become a major ingredient of executive compensation. The fact that stock options seem to be an appealing form of remuneration from a theoretical point of view combined with the observation that the use of this compensation form has increased significantly during the recent years, implies that research on the dynamics of stock option compensation is highly relevant for the academic community, as well as for practitioners and regulators. The research questions of the thesis are analyzed in four separate essays. The first essay examines whether stock option compensation practices of Finnish firms are consistent with predictions from principal-agent theory. The second essay explores one of the major puzzles in the compensation literature by studying determinants of stock option contract design. In theory, optimal contract design should vary according to firm characteristics. However, in the U.S., variation in contract design seems to be surprisingly low, a phenomenon generally attributed to tax and accounting considerations. In Finland, however, firms are not subject to stringent contracting restrictions, and the variation in contract design tends, in fact, to be quite substantial. The third essay studies the impact of price- and risk incentives arising from stock option compensation on firm investment. In addition, the essay explores one of the most debated questions in the literature, in particular, the relation between incentives and firm performance. Finally, several strands of literature in both economics and corporate finance hypothesize that economic uncertainty is related to corporate decision-making. Previous research has shown that risk tends to slow down firm investment. In the fourth essay, it is hypothesized that firm risk slows down growth from a more universal perspective. Consistent with this view, it is shown that risk not only tends to slow down firm investment, but also employment growth. Moreover, the essay explores whether the nature of firms’ compensation policies, in particular, whether firms make use of stock option compensation, affects the relation between risk and firm growth. In summary, the four essays contribute to the current understanding of stock options as a form of equity incentives, and how incentives and risk affect corporate decision-making. By this, the thesis promotes the knowledge related to the modern theory of the firm.

Towards Explaining the Tasks and Roles of the Boards of Directors

While previous research has helped to improve our understanding of corporate governance and boards of directors, less is known about the factors that affect boards’ tasks and roles and directors’ motivation and engagement. This requires knowledge of how board decisions are being made and the internal and external factors that affect the decision-making process. Large inferential leaps have been made from board demographics to firm performance with equivocal results. This thesis concentrates on how the institutional, behavioral and social identification factors impact the enactment of board roles and tasks. Data used in this thesis were collected in 2009 through a mailed survey to Finnish large and middle-sized corporations. The findings suggest that firstly, the national context of an organization is reflected in board roles and shapes how and for what reasons the board roles are carried out; secondly, the directors’ human and external social capital invariably impacts their engagement in board tasks and that conflicts among directors moderate those relationships; finally, directors’ identification with the organization, its shareholders and its customers affect the directors’ involvement in board tasks. By addressing the impact of organisational context, board-internal behaviour and social identification of board members on board roles and tasks, this thesis firstly complements the shareholder supremacy view as the only reason for the board’s involvement with specific tasks; secondly questions the existence of the board as separate from its institutional context; and thirdly questions the view that a board is a ‘black box’, subject to a selection of input demographic variables and producing quantifiable results. The thesis demonstrates that boards are complex organisational bodies, which involve much interaction among board members. Director behaviour and its influence on board decision making is an important determinant of board tasks and boards are likely subjected to inter-group tensions and are susceptible to the influence of internal and external social forces.

Kapital sozialaren garrantzia familia enpresetan

[EU]Kapital sozialaren ikuspegian oinarriturik eta kotizatu gabeko 172 familiaenpresa espainiarren lagin bat erabiliz, barne hartuz enpresan kudeaketa-funtzioak betetzen dituzten pertsona elkarrizketatu bi eta guztira 344 galdetegi izanik, uste dugu kapital sozial familiarrak bitartekari gisa balio duela kapital sozial ez-familiarraren eta enpresaren jardueraren artean. Gainera, gure emaitzek kapital sozialaren ulermena familia-enpresatik haratago hedatzen dute, erakundeek talde sozial nagusi baten presentzia ezaugarritzat duten testuinguru batean.

The cost of multiple large shareholders

Previous research argues that large non-controlling shareholders enhance firm value because they deter expropriation by the controlling shareholder. We propose that the conflicting incentives faced by large shareholders may induce a nonlinear relationship between the relative size of large shareholdings and firm value. Consistent with this prediction, we present evidence that there are costs of having a second (and third) largest shareholder, especially when the largest shareholdings are similar in size. Our results are robust to various relative size proxies, firm performance measures, model specifications, and potential endogeneity issues.

De la cooperativa agroalimentaria a la "learning netchain". Hacia un planteamiento teorico interorganizativo e interpersonal

Se propone un planteamiento teórico/conceptual para determinar si las relaciones interorganizativas e interpersonales de la netchain de las cooperativas agroalimentarias evolucionan hacia una learning netchain. Las propuestas del trabajo muestran que el mayor grado de asociacionismo y la mayor cooperación/colaboración vertical a lo largo de la cadena están positivamente relacionados con la posición horizontal de la empresa focal más cercana del consumidor final. Esto requiere una planificación y una resolución de problemas de manera conjunta, lo que está positivamente relacionado con el mayor flujo y diversidad de la información/conocimiento obtenido y diseminado a lo largo de la netchain. Al mismo tiempo se necesita desarrollar un contexto social en el que fluya la información/conocimiento y las nuevas ideas de manera informal y esto se logra con redes personales y, principalmente, profesionales y con redes internas y, principalmente, externas. Todo esto permitirá una mayor satisfacción de los socios de la cooperativa agroalimentaria y de sus distribuidores y una mayor intensidad en I+D, convirtiéndose la netchain de la cooperativa agroalimentaria, así, en una learning netchain.

Cooperativism, entrepreneurship and economic development: a linking theoretical model

Cooperatives, as a kind of firms, are considered by many scholars as an remarkable alternative for overcoming the economic crisis started in 2008. Besides, there are other scholars which pointed out the important role that these firms play in the regional economic development. Nevertheless, when one examines the economic literature on cooperatives, it is detected that this kind of firms is mainly studied starting from the point of view of their own characteristics and particularities of participation and solidarity. In this sense, following a different analysis framework, this article proposes a theoretical model in order to explain the behavior of cooperatives based on the entrepreneurship theory with the aim of increasing the knowledge about this kind of firms and, more specifically, their contribution to regional economic development.