Innovation, ownership and profitability

There is lots of evidence that innovating firms are persistently more profitable than non-innovators, but little agreement on why this is the case. It may be because innovators are somehow able to protect their new products from the competition which normally erodes profits, or because innovating firms have superior capabilities and are able to introduce multiple innovations over time. And very little is known about the relationship between innovation, external ownership and profitability, despite the fact that foreign-owned firms are frequently highly innovative and very profitable. This paper considers the relationship between innovation, ownership and profitability for a panel of manufacturing plants in Ireland and Northern Ireland. We consider the link between innovation and profits separately for innovators and non-innovators, and for indigenous innovators and non-innovators and externally-owned plants. We also consider the determinants of innovation over the distribution of plant-level profitability, and find that the determinants of profitability – including innovation and external ownership – are quite different for low and high-profitability plants. We find support for the view that innovators and non-innovators have different profitability determinants, and that externally-owned plants have their profitability determined in a quite different way from indigenous enterprises. For indigenous non-innovators only the sector matters. Profitability in these enterprises is dictated largely by the industry they are in, with plants having virtually no means of differentiating their profitability from the norms of the industry. By contrast, indigenously-owned innovators are able to differentiate their profit performance from industry norms to some extent. Absolute size matters (negatively) and they get a strong boost from product innovation, but having a high market share does not matter for the profitability of indigenously-owned innovators. Externally-owned plants have a quite different set of profitability determinants from both of these groups. What matters for these plants is not the boost they get from innovating (there is none) but instead their position in the domestic market – a high market share boosts profitability. In policy terms our results suggest both optimistic and cautionary messages. On the positive side our results suggest that efforts to promote innovation activity among indigenously-owned plants are likely to have significant longer term benefits through their capability effects. For the development agencies in Ireland this is a reassuring result. On the more negative side, the lack of any relationship in our models between the innovation activities of externally-owned plants and their (profitability) performance raises potential concerns. This finding may reflect the lack of linkages between externally-owned plants and their Irish resource base, in turn raising some worrying issues about the ‘embeddedness’ of much FDI into Ireland and therefore its ‘stickiness’ in the face of Ireland’s increasing high relative cost base.

Between a rock and a hard place:exploring women's experience of participation and progress in managerial careers

Purpose – The growth of women in management has been argued to offer a route to reduce organizational and social inequality. The purpose of this paper is to explore the careers and experiences of female managers from a variety of organizations operating in the West Midlands region of the UK. Design/methodology/approach – This study is based on 56 interviews conducted with women managers within various sectors. The interviewees also completed pictorial careers maps, which along with interview recordings were analyzed. Findings – The key themes to emerge from this research centre upon the factors that draw women into management (which we term seductive elements) as well as some of the hindering practices that prevent women from progressing. Significantly, we find that managerial careers are associated with gendered assumptions and practices (e.g. facilitating and developing people) which contribute to construct management (done by women) as bounded-up characteristically with “feminized” behaviours. Research limitations/implications – The research is based upon a relatively small sample that is multi-sectorial. Wider studies that increase population size, together with deeper studies that hold sectorial variables constant would further add weight to the findings presented here. Practical implications – The paper draws attention to the “lived reality” of doing management, which, we argue often, for women in particular involves the reconciliation of contradictions and conflicting pressures. We draw attention to the lack of “alternative models” of organization and highlight the potential for gender-focus mentoring and management education. Originality/value – The paper is of value in giving voice to a selection of women managers by allowing them to reflect upon and explore their experience of management. The paper also documents the day-to-day reality of women's managerial careers that require the re-enactment and reproduction of stereotypical gender norms.

Strategic information systems at the Colombian President's Office (1990-1992) : a managerial cybernetic approach

This research studies the issue of using strategic information technology for improving organisational effectiveness. It analyses different academic approaches explaining the nature of information systems and the need organisations feel of developing strategic information systems planning processes, to improve organisational effectiveness. It chooses Managerial Cybernetics as the theoretical foundation supporting development of a "Strategic Information Systems Planning" Framework, and uses it for supporting the analysis of a documented story about the process lived by the Colombian President's Office, in 1990-1992. It argues that by analysing the situation through this new analysis framework we may enlighten some previously unclear situations lived, and not yet properly explained through other approaches to strategic information systems planning. The documented history explains the organisational context and strategic postures of the Colombian President's Office and the Colombian Public Sector, at that time, as well as some of the strategic information systems defined and developed. In particular it analyses a system developed jointly by the President's Office and the National Planning Department, for measuring results of the main national development programmes. Then, it reviews these situations, in the light of the new framework and presents the main findings of the exercise. Finally, it analyses the whole research exercise, the perceived usefulness of the chosen frameworks and tools to enlighten the real situations analysed that were not clear enough, and some open research paths to follow for future researchers interested in the issue.

Managerial cognitions in technological innovation processes:a study of interpretative processes

In this research, conceptualizations of the links between technological innovation and organizational change are explored and recommendations in the literature concerning such changes are reviewed and criticized. Such recommendations do not usually address the details of social interactions by which organizational changes take place. As a consequence, the issue of how these recommendations become relevant for the actors who would carry them out is not addressed. The complexity of organizational change processes highlights the role of actors' interpretations of organizational reality. Interpretations take place through the use of language in the interaction between actors. Theoretical contributions and recommendations concerning organizational changes should be seen therefore as discourses which contribute to these interpretations. They will influence the process of change only if they become relevant for organizational actors'. A method for analysing discourse in organizations is presented. It is used to identify the variety of discourses which are put forward in organizations, and to describe the structure of their distribution among actors. The structures of discourses in three companies suggest that knowledge about technological innovation processes becomes relevant to the extent that it contributes to political/discursive processes maintained by actors attempting to secure or change their role definitions. It follows that recommendations concerning planned organizational change should take into account these processes explicitly. It is therefore suggested that the analysis of discourse can be a valuable instrument for monitoring change processes. Suggestions for further research are made, concerning (i) the development of the method itself and its use in real situations (ii) the study of how discourse structures evolve over time and episodes of change.

A longitudinal study of Chinese managerial behaviour:an inside view of decision-making under the economic reform

This research compared decision making processes in six Chinese state-owned enterprises during the period 1985 to 1988. The research objectives were: a) To examine changes in the managerial behaviour over a period of 1985 to 1988 with a focus on decision-making; b) Through this examination, to throw light on the means by which government policies on economic reform were implemented at the enterprise level; c) To illustrate problems encountered in the decentralization programme which was a major part of China's economic reform. The research was conducted by means of intensive interviews with more than eighty managers and a survey of documents relating to specific decisions. A total of sixty cases of decision-making were selected from five decision topics: purchasing of inputs, pricing of outputs, recruitment of labour, organizational change and innovation, which occurred in 1985 (or before) and in 1988/89. Data from the interviews were used to investigate environmental conditions, relations between the enterprise and its higher authority, interactions between management and the party system, the role of information, and effectiveness of regulations and government policies on enterprise management. The analysis of the data indicates that the decision processes in the different enterprises have some similarities in regard to actor involvement, the flow of decision activities, interactions with the authorities, information usage and the effect of regulations. Comparison of the same or similar decision contents over time indicates that the achievement of decentralization varied according to the topic of decision. Managerial authority was delegated to enterprises when the authorities relaxed their control over resource allocation. When acquisition of necessary resources is dependent upon the planning system or the decision matter is sensitive, because it involves change to the institutional framework (e.g. the Party), then a high degree of centralization was retained, resulting in a marginal change in managerial behaviour. The economic reform failed to increase decision efficiency and effectiveness of decision-making. The prevailing institutional frameworks were regarded as negative to the change. The research argues that the decision process is likely to be more contingent on the decision content than the organization. Three types of decision process have been conceptualized, each of them related to a certain type of decision content. This argument gives attention to the perspectives of institution and power in a way which facilitates an elaboration of organizational analysis. The problems encountered in the reform of China's industrial enterprises are identified and discussed. General recommendations for policies of further reform are offered, based on the analysis of decision process and managerial behaviour.

Public ownership and control in the private sector

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The impact of national cultures and interpersonal factors on managerial communication

This study was undertaken for two primary purposes. The first was to discover whether or not two of the four cultural dimensions depicted by Hof-stede (1980), namely Power Distance and Uncertainty Avoidance, could be repeated using samples from seven organizations operating in three distinct cultural settings. The second was to assess the degree to which these dimensions affect superior-subordinate communication across the culturally-different groups. Also, the impact of the three interpersonal factors: Trust in Superior, Upward Influence and Mobility Aspirations was investigated cross-culturally. Participants were 291 managers from seven organizations; four Sudanese, two white British and an organization in Britain run by a group of British citizens of Pakistani extraction. It was hypothesized that the Power Distance and Uncertainty Avoidance of the three groups would replicate Hof-stede's. Specific implications of these dimensions for organizational communication and in particular for superior-subordinate communication were also hypothesized. Multiple regression analyses were performed with items of the two cultural dimensions and the three interpersonal factors (each in turn) forming the independent variables, while the organizational communication aspects formed the dependent variables. T-tests between means were also used to compare and contrast issues such as directionality of information flow across organizations operating in these settings. Work-related values of each of the three cultural groups provided support for Hofstede's model. However, only tentative support was given to the hypothesized relationships between the cultural dimensions and organizational communication. Similarly, weak associations were found between the three interpersonal factors and superior-subordinate communication behaviour. Some practical and theoretical implications are offered. An evaluation of the study and recommendation for further research are also given.

An investigation of managerial skills:Implications for personnel policy

This research explores the conceptual basis in adopting a skills approach to management development. The literature reveals a number of development approaches but only a limited appreciation of how the manager does his job i.e. of the skills that he needs. An investigation of managerial skills was conducted with 10 manager s mainly occupying middle and senior positions. The principal source of evidence was the manager's thoughts on what he did and how he did it, although the interviews were supplemented by formal and informal observation. There was also a dialectic value from discussions with other analysts/managers and empathy between analyst and practitioner also played a part. Each manager was invited to comment upon his own skills analysis as a check upon validity. The study supports the view that the manager similar to other skilled practitioners, is conceptually a model builder and operationally a navigator (Singleton 1978b) . The manager variously holds enactive, pictorial, symbolic and hybrid models that enable him to understand his world and act in it. The universal managerial function is decision making and the study presents a preliminary nomenclature in classifying decision processes or perceptual skills. Managerial skills are also reflected in interpersonal interaction where the hallmark is mutual construction and attribution and in 'self-management’ where the requirement is to cope with the inner rather than the outer world. Differences between the managers are most evident in perceptual skills, the more senior manager requiring increasing ability to process abstract information and take account of environmental uncertainty. He will also make greater use of 'off- line’ information. The practical purpose in studying managerial skills is to facilitate the improvement of managerial performance and the implications of the research for training, selection and appraisal are explored.

Managerial job satisfaction:a longitudinal study

The study examines the job satisfaction of supervisors and managers in four organisations over time. It also considers the importance which they attached to different facets of their job. The major objectives were: To examine the constituent dimensions of job satisfaction at intervals over one year. To examine reasons for change inthe level of job satisfaction at intervals over one year. To provide information on job satisfaction for those concerned with job satisfaction policies. The sample consisted of one hundred and eight people. Each was interviewed on at least three occasions over the course of a year. Interviews took place at predetermined time intervals. The study shows that job satisfaction is dynamic over a relatively short period of time. The ratings which supervisors and managers gave to aspects of their job did not, however, all change by equal amounts or in the same direction. Changes in job satisfaction were associated with events experienced but it was the meaning of those events to correspondents which appeared to be particularly important. People tended to adopt a localised frame of reference when considering their work situation. Certain job variables, such as variety, were consistently and positively correlated with job satisfaction. With some other variables, the relationship varied across time. Frequently, age and job level moderated the association between independent variables and job satisfaction. Links were found between the quality of life and job satisfaction. There was a consistent positive association between job satisfaction and life satisfaction. However, the job was rarely considered to be the main factor contributing to a person's quality of life. The research highlights the difficulties and desirability of introducing standardised job satisfaction policies in the light of individual differences. In addition, it demonstrates that merely correlating variables with job satisfaction at one point in time may conceal complex relationships and meanings. A new measure of job satisfaction - whereby facets are assessed and rated relative to each other was also developed as part of this study.

Do managerial strategies influence service behaviours? Insights from a qualitative study

Based on a review of the extant literature, a conceptual framework for analyzing the associations between managerial strategies (internal communications, empowerment, supportive leadership and professional development), employee job attitudes (organizational commitment and job satisfaction) and prosocial service behaviours (PSBs) is developed. The authors explore the relevance of the proposed conceptual model and testable propositions regarding the associations between managerial strategies, employee attitudes and PSBs by conducting in-depth interviews of FLEs in a travel service organization. Based on the findings of the in-depth interviews, the relationships between managerial strategies, job attitudes and PSBs in the conceptual framework are largely supported.

'Family' ownership, tunnelling and earnings management:a review of the literature

In this review paper, we bring together a number of aspects of family firms that are ubiquitous in a number of institutional contexts, often as part of larger business groups. We pay particular attention to the mechanisms by which families retain control over firms, and the incentives of the families in control to expropriate other stakeholders by way of tunnelling. We examine the role of earnings management in facilitating tunnelling, and evidence about the incidence of earnings management in family firms. Our review suggests that while the literature on these aspects of family control is rich, the contexts in which the empirical exercises are undertaken are relatively few, and hence there is considerable opportunity to expand it to other contexts, in particular in the form of cross-country comparisons of the relative impact of agency conflicts and institutions on these issues.

Bridging the gap? Corruption, knowledge and foreign ownership

We argue that in addition to host corruption per se, as accounted for by the existing literature, an explanation of inter-country variation in FDI needs to account for the distance between the host and home corruption, which we call relative corruption. We use a large matched home-host firm-level panel data-set for 1998-2006 from CEE transition countries. Year-specific selectivity corrected estimates suggest that, ceteris paribus, higher relative ‘grand’ corruption lowers foreign ownership as the returns to investment tends to be lower in more corrupt environment. However, after controlling for the selectivity bias, knowledge-intensive parent firms are found to hold controlling ownership, as the difficulty of successful joint venture looms large in more corrupt environment. Results are robust to alternative specifications.