Managerial myopia and short-termism of innovation strategy: Financialisation of Korean firms

2020 ◽  
Vol 44 (6) ◽  
pp. 1197-1220
Author(s):  
Hwan Joo Seo ◽  
Sung Jin Kang ◽  
Yong Jun Baek
Keyword(s):  
Innovation Strategy ◽  
Proxy Variables ◽  
Managerial Myopia ◽  
Negative Effect ◽  
Korean Firm ◽  
Short Termism

Abstract This study empirically examines whether managerial myopia leads to short-termism of innovation strategy using Korean firm and USPTO data covering 1980–2017. The main finding is that payout indicators, as the proxy variables for financialisation and managerial myopia, have a negative effect on innovation, quantitatively and qualitatively. Hence, managerial myopia and short-termism of innovation strategy are related. Further, estimation by the firm’s size reveals that the hypothesis of managerial myopia leading to short-termism of innovation strategy is valid only for conglomerates.

Financialization and Innovation Short-termism in OECD Countries

2020 ◽  
Vol 52 (2) ◽  
pp. 259-286 ◽  
Author(s):  
Young Soo Lee ◽  
Han Sung Kim ◽  
Seo Hwan Joo
Keyword(s):  
Technological Innovation ◽  
Generalized Method Of Moments ◽  
Oecd Countries ◽  
Incremental Innovation ◽  
Innovation Strategy ◽  
Managerial Myopia ◽  
Method Of Moments Estimation ◽  
Recent Trends ◽  
Corporate Funding ◽  
Short Termism

This study looks at how financialization has changed technology innovation strategy. It is our contention that, as conditions of managerial myopia worsen in line with deepening financialization, economic entities direct technological innovation strategy toward incremental innovation at the expense of radical innovation that involves high-risk and long-term investment. We test this hypothesis on data for thirty-one OECD countries between 1990 and 2006 and use both generalized method of moments estimation and Poisson regression models. We find that, as financialization advanced, the radicalness of technological innovation declined, while the number of patent registrations increased. This finding could be the result of recent trends wherein financialization has led to a rise in corporate funding through financial markets and an increase in the importance of patents, which, in turn, has boosted the motivation of companies to increase their patent registrations quantitatively. On the other hand, the qualitative importance of these patents (radicalness of technological innovation) decreased over the period of study, reflecting growing short-termism in technological innovation strategy.

Why Do Firms Disagree with Short Sellers? Managerial Myopia versus Private Information

2019 ◽  
Vol 55 (8) ◽  
pp. 2431-2465 ◽  
Author(s):  
Leonce Bargeron ◽  
Alice Bonaime
Keyword(s):  
Private Information ◽  
Trading Strategy ◽  
Short Sellers ◽  
Managerial Myopia ◽  
Agency Issues ◽  
Target Management ◽  
Short Interest ◽  
Short Termism ◽  
Informational Advantage

Though short sellers on average succeed at identifying overvalued equity, firms often signal disagreement with short sellers by repurchasing stock when short interest increases. We investigate whether this disagreement reflects a myopic defense of inflated prices, or positive private information. These repurchases appear motivated by managers’ private information, not agency issues, even when managerial benefits to short-termism are enhanced or monitoring is weaker. Managers’ informational advantage relates to subsequent news, earnings, and risk, but is attenuated if activists target management or insiders sell. A trading strategy based on our findings earns 7.5% annually.

Does institutional short-termism matter with managerial myopia?

2015 ◽  
Vol 68 (4) ◽  
pp. 845-850 ◽  
Author(s):  
Yu-Fen Chen ◽  
Fu-Lai Lin ◽  
Sheng-Yung Yang
Keyword(s):  
Managerial Myopia ◽  
Short Termism

The sustainable executive: antecedents of managerial long-term orientation

2017 ◽  
Vol 8 (2) ◽  
pp. 179-195 ◽  
Author(s):  
Dietmar Sternad ◽  
James J. Kennelly
Keyword(s):  
Organizational Level ◽  
Temporal Orientation ◽  
Managerial Behavior ◽  
Content Type ◽  
Long Run ◽  
Managerial Myopia ◽  
Decision Making Processes ◽  
Sustainable Organizations ◽  
Short Termism

Purpose The purpose of this paper is to explain how managers incorporate long-term thinking in their decision-making processes as an antipode to a widely criticized managerial short-termism. For this purpose, the authors present a model of the influence of institutional, cultural and individual temporal factors on managerial long-term orientation (LTO). Design/methodology/approach This conceptual paper is based on a multidisciplinary review of the literature on the causes of managerial LTO. Findings It is proposed that managerial LTO is influenced by cultural and institutional factors on both a societal and an organizational level, as well as by managers’ individual temporal predispositions and the strengths of relational commitments with different stakeholder groups. It is further expected that managerial LTO has an influence on sustainability-related managerial behavior. Practical implications As the presented model reveals the main factors that orient managers toward the long run in their decisions, it can also be used as a framework to evaluate policies to curb managerial myopia on both an organizational and a societal level. Social implications As sustainability is intrinsically linked with the ability to think and act in the long term, understanding the factors that influence managerial LTO can also contribute to building more sustainable organizations. Originality/value One of the main contributions of this paper is that it highlights the link between reciprocal relationships and LTO, an aspect that has not yet been the focus of the literature on the temporal orientation of managers.

"Ownership Transition, Managerial Short-Termism, and Exploratory vs Exploitative Innovation Strategy"

2016 ◽  
Vol 2016 (1) ◽  
pp. 12762 ◽  
Author(s):  
Guoli Chen ◽  
Huasheng Gao ◽  
Po-Hsuan Hsu ◽  
Kai Li
Keyword(s):  
Innovation Strategy ◽  
Short Termism

Managerial myopia or systemic short‐termism?

2004 ◽  
Vol 42 (8) ◽  
pp. 949-962 ◽  
Author(s):  
Kevin J. Laverty
Keyword(s):  
Managerial Myopia ◽  
Short Termism

Social Motives Predict Loneliness During a Developmental Transition

2017 ◽  
Vol 76 (4) ◽  
pp. 145-153 ◽  
Author(s):  
Jana Nikitin ◽  
Alexandra M. Freund
Keyword(s):  
Social Relationships ◽  
Well Being ◽  
Social Avoidance ◽  
Social Approach ◽  
Social Motives ◽  
Developmental Transitions ◽  
Avoidance Motivation ◽  
Negative Effect ◽  
Low Levels

Abstract. Establishing new social relationships is important for mastering developmental transitions in young adulthood. In a 2-year longitudinal study with four measurement occasions (T1: n = 245, T2: n = 96, T3: n = 103, T4: n = 85), we investigated the role of social motives in college students’ mastery of the transition of moving out of the parental home, using loneliness as an indicator of poor adjustment to the transition. Students with strong social approach motivation reported stable and low levels of loneliness. In contrast, students with strong social avoidance motivation reported high levels of loneliness. However, this effect dissipated relatively quickly as most of the young adults adapted to the transition over a period of several weeks. The present study also provides evidence for an interaction between social approach and social avoidance motives: Social approach motives buffered the negative effect on social well-being of social avoidance motives. These results illustrate the importance of social approach and social avoidance motives and their interplay during developmental transitions.

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