Target difficulty, intra-year target revisions and firm performance: evidence from business units' targets

Target difficulty is often argued to increase performance. While this association is well established in experimental research, empirical evidence in field research is rather mixed. We attempt to explain this inconsistency by analyzing the importance of intra-year target revisions, which are especially prevalent in real-world field settings. Using survey and archival data from 97 firms, we find that firms with more challenging business unit targets revise targets more often, in line with asymmetric, downward target revisions. Results further show that the degree to which targets are revised during a period results in negative effects on firm performance, as the anticipation of revision negatively affects the business unit management’s performance incentives. Additionally, we find that using targets predominantly for either decision-making or control influences the overall performance effects of target revisions. Our findings may partially explain the mixed field study evidence regarding the effects of target difficulty.

Self-licensing effects on food choices

Recalling an egoistic act nudges people to choose healthy over unhealthy food options. Conversely, participants preferred unhealthy over healthy food options when they recalled an altruistic deed. Consistent with this choice pattern participants were willing to pay more for healthy than for unhealthy options. This experiment extends the self-licensing literature.

Impact of family control/influence on stakeholders' perceptions of benevolence

This article proposes a model explaining how family control/influence in an organization affects individual stakeholders’ perceptions of benevolence. The model suggests two effects. First, based on socioemotional wealth research, we propose that family control/influence positively affects stakeholders’ perceptions of benevolence through the benevolent behavior that the organization shows toward its stakeholders. However, this effect can be negatively influenced if the family’s socioemotional wealth goals in terms of “Family control and influence” and/or “Renewal of family bonds to the firm through dynastic succession” are at risk. Second, we argue that family control/influence, to the extent that it is perceivable to the stakeholder, influences stakeholders’ perceptions of benevolence through categorization processes. However, the impact of perceivable family control/influence on stakeholders’ perceptions of benevolence is not straightforward but instead hinges on a set of individual-level contingency factors of the stakeholder, such as stakeholders’ family business in-group membership, stakeholders’ secondhand category information, and stakeholders’ firsthand category information.

Which Combinations Of New Venture Firms Resources Payoff? A Configurational Perspective

Baldauf, Artur; Schweiger, Simone A.; Wuethrich, Adrian

The Nestlé crash

On November 17, 1988, the board of directors of Nestlé AG decided to allow foreign investors to hold Nestlé registered stock, reversing a longstanding practice. This decision had a tremendous impact on the prices of the firm's three classes of common stock, as well as on the prices of several other corporations traded on the Zürich stock exchange. These price changes can be explained by the hypothesis that demand curves slope down.

Optimal Scheduling of Work-Content-Constrained Projects

The execution of a project requires resources that are generally scarce. Classical approaches to resource allocation assume that the usage of these resources by an individual project activity is constant during the execution of that activity; in practice, however, the project manager may vary resource usage over time within prescribed bounds. This variation gives rise to the project scheduling problem which consists in allocating the scarce resources to the project activities over time such that the project duration is minimized, the total number of resource units allocated equals the prescribed work content of each activity, and various work-content-related constraints are met. We formulate this problem for the first time as a mixed-integer linear program. Our computational results for a standard test set from the literature indicate that this model outperforms the state-of-the-art solution methods for this problem.

Identity, incentives and the value of information

We examine the impact of identity preferences on the interrelation between incentives and performance measurement. In our model, a manager identifies with an organization and loses utility to the extent that his actions conflict with effort-standards issued by the principal. Contrary to prior arguments in the literature, we find conditions under which a manager who identifies strongly with the organization receives stronger incentives and faces more performance evaluation reports than a manager who does not identify with the organization. Our theory predicts that managers who experience events that boost their identification with the firm can decrease their effort in short-term value creation. We also find that firms are more likely to employ less precise but more congruent performance measures, such as stock prices, when contracting with managers who identify little with the organization. In contrast, they use more precise but less congruent measures, such as accounting earnings, when contracting with managers who identify strongly with the firm.