Matching organizational climate and control mechanisms for fast strategic change in transitional economics

2017 ◽  
Vol 30 (2) ◽  
pp. 124-141 ◽  
Author(s):  
Hao Shen ◽  
Yu Gao ◽  
Xiuyun Yang
Keyword(s):  
Organizational Climate ◽  
Internal Control ◽  
Strategic Change ◽  
Transitional Economies ◽  
Internal Controls ◽  
Financial Control ◽  
Control Mechanisms ◽  
Open Communication ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this paper is to explore how organizational climate impacts the speed of strategic change (SSC) for firms in transitional economies and whether if the effects were contingent on internal control mechanisms. Design/methodology/approach A theoretical model including five constructs is developed. The questionnaire survey is deployed to scale main constructs, including organizational climate, such as open communication and hierarchical bureaucracy, internal controls such as strategic and financial control, and SSC. The moderation regression method in five steps is employed to test all hypotheses using the survey data from the 120 sampled Chinese firms. Findings The findings show that open communication has a positive effect on SCC, whereas hierarchical bureaucracy has a negative effect on SSC. Furthermore, strategic control positively moderates the relationship between open communication and SSC but negatively moderates the relationship between hierarchical bureaucracy and SSC; meanwhile, financial control negatively moderates the relationship between open communication and SSC but positively moderates the relationship between hierarchical bureaucracy and SSC. Originality/value This research integrates organizational climate and internal control mechanisms into the framework of strategic change to investigate how firms achieve fast strategic change through aligning organizational climate with proper organizational control mechanisms. The findings advance the authors’ understanding of the organizational climate, internal controls, and strategic change literature, and offer valuable managerial insights for managers in situations when strategic change is of central importance in the transitional economies.

Comparative analysis of the relationship between internal control weakness and different types of auditor opinions in fraudulent and non-fraudulent firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahmoud Lari Dashtbayaz ◽  
Mahdi Salehi ◽  
Mahdi Hedayatzadeh
Keyword(s):  
Internal Control ◽  
Stock Exchange ◽  
Internal Controls ◽  
Statistical Population ◽  
Content Type ◽  
Listed Firms ◽  
Logit Regression ◽  
Different Types ◽  
Logit Regression Model ◽  
The Relationship

Purpose This study aims to assess the relationship between internal control weakness and different types of auditor opinions in fraudulent and non-fraudulent firms. The study's main objective is to investigate fraud in business firms and analyze internal controls and types of proposed opinions by the auditor about his desired firm. The outbreak of fraud in firms is of utmost importance to a broad spectrum of society. Internal controls and the auditor's role in preventing and detecting frauds should not be taken for granted. Design/methodology/approach The present study's statistical population includes 179 listed firms on the Stock Exchange selected as the study sample using the systematic elimination method during 2012–2019. As the study's dependent variable (the type of auditor’s opinion), research hypotheses were analyzed using the Logit regression model. Findings The results show that the relationship between internal control weakness and opinion type is significantly different in fraudulent and non-fraudulent firms. Moreover, the relationship between internal control weakness and type of auditor opinion in fraudulent firms and the relationship between internal control weakness and type of auditor opinion in non-fraudulent firms are significant. Originality/value By assessing the related literature, the authors have found no study to directly assess the comparative relationship between internal control weakness and the type of auditor opinion, which can be named as the main objective of the study.

Board independence, CEO succession and the scope of strategic change

2014 ◽  
Vol 5 (3) ◽  
pp. 309-325 ◽  
Author(s):  
Wei’an Li ◽  
Jian Xu
Keyword(s):  
Strategic Change ◽  
Control Process ◽  
Independent Directors ◽  
Financial Control ◽  
Company Performance ◽  
Strategic Control ◽  
Content Type ◽  
Strategic Process ◽  
Board Directors ◽  
The Relationship

Purpose – This paper aims to examine the effectiveness of independent directors based on the perspective of strategic control. Design/methodology/approach – This is an empirical study carried out between 2007 and 2012 based on a sample of Chinese A-share-listed companies. Findings – The results indicate that the departure of a CEO provides conditions for the new CEO to become empowered to carry out strategic change. The behavior of a new CEO results in the phenomenon of “a new broom sweeps clean” and increases the scope of strategic change. In addition, the results indicate that the board’s independence negatively moderates the relationship between the CEO’s succession and the scope of strategic change, and that independent directors are effective in supervising risk-taking behavior on the part of the CEO which ultimately results in damaging company performance. Practical implications – The corporate internal and external supervisory mechanisms should be improved during the process of succession of a new CEO, and the effectiveness of the supervision of board directors should also be strengthened during the implementation of the strategic process of a new CEO. Originality/value – Previous research on the effectiveness of independent directors mostly focuses on financial control, with a single leap from independent directors to corporate performance, which neglects the strategic control of independent directors. From the micro perspective of the strategic control process as a means of discussing the independent directors’ watchdog role, this paper extends and enriches the research on “the effectiveness of independent directors”.

Effect of Financial Control Mechanisms on Performance of Income Generating Units in Selected Public Universities in Kenya

2019 ◽  
Vol 3 (V) ◽  
pp. 286-304
Author(s):  
Shadrack Musunkui Towett ◽  
Isaac Naibei ◽  
Williter Rop
Keyword(s):  
Risk Management ◽  
Internal Control ◽  
Public Universities ◽  
Management Strategies ◽  
Internal Audit ◽  
Simple Random Sampling ◽  
Target Population ◽  
Control Measures ◽  
Financial Control ◽  
Control Mechanisms

In an attempt to bridge the gap between the budgetary allocations and actual expenditures most universities have started income generating units with the aim of boosting their operational expenses. Whereas there is the potential of the use of Income Generating Units (IGUs) to generate additional funds, most universities still experience challenges in full implementation and realization of the revenue goal. This study therefore sought to determine the financial control mechanisms affecting performance of income generating units among selected public universities. The study sought to determine the effect of internal controls, credit policies, financial risk management and internal audit on performance of income generating units in selected universities. Targeted population was all the 290 employees in the IGU departments of selected public universities. The respondents were sampled using simple random sampling so as to enable equal representation of the target population without any biasness. Data collection was done using the questionnaire to ensure sufficient data was collected from the respondents. Descriptive statistics assisted in the determination of respondent’s views and opinions on every variable. Qualitative data was analysed using content analysis into meaningful, precise and comprehensive statements and presented in quotations. Data analysis was done using SPSS version 21 and data presented in form of figures and tables. The study ensured that all ethical considerations were considered by the study. The findings were that most employed Income Generating Units in Public Universities were Collection of rental fees, Evening and executive programs and Trainings of both short and long courses while the least was established to be Sales of memorabilia and books. All the financial control mechanism investigated namely internal audit, internal control measures, risk management strategies and credit policies had large extents of adoption in the selected universities. The results of the regression analysis showed that the financial control mechanisms investigated had a significant positive relationship on performance of the IGUs. Specifically, 47% of the variation of the performance of IGUs was established to be explained by the studied factors. The study concluded that the performance of the IGUs among the selected public universities was largely accounted for by the implemented financial control measures. Therefore effective financial control mechanisms is concluded to lead to better IGU performance whereas shortcomings in the financial control mechanisms is concluded to lead to diminished returns in the IGUs. The study recommended that the management in charge of the IGU department in the public universities to prioritize the formulation, implementation and monitoring of financial control mechanisms in the IGUs. To facilitate effective financial controls, the study recommended that the management especially those in the audit section to conduct regular checks and inspections on the IGUs. Additionally, frequent reforms were recommended to address the shortcomings experienced in integrating financial control measures in IGUs.

Are federal single audit reports of internal control weaknesses a useful tool for evaluating management? The case of charter schools

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jean Ryberg Bradley ◽  
Dana A. Forgione ◽  
Joel E. Michalek
Keyword(s):  
Charter Schools ◽  
Executive Compensation ◽  
Internal Control ◽  
Boards Of Directors ◽  
Content Type ◽  
External Stakeholder ◽  
Wide Range ◽  
Internal Control Weaknesses ◽  
Single Audit ◽  
The Relationship

PurposeThe authors examine whether reports of internal control weaknesses (ICWs) under federal single audit (FSA) guidelines are a useful tool for evaluating non-profit (NP) management, using a unique nationwide sample of NP charter schools. While prior research focuses on external stakeholder reactions to reported ICWs, little if any research addresses the utility of these reports for internal users. The authors fill this gap in the literature, finding evidence suggesting that NP charter school decision-makers use internal control (IC) reports when setting executive compensation – awarding lower pay increases when deficiencies are reported.Design/methodology/approachThe authors regress executive compensation changes on reported ICWs and likely determinants of NP compensation, including organization size, growth, liquidity and management performance, using a sample of 173 school/year observations representing 113 unique schools for the years 2012–2015.FindingsThe authors find a negative relationship with executive pay increases subsequent to reports of initial and repeated IC deficiencies, indicating that lower than average pay increases are awarded subsequent to reports of ICWs.Research limitations/implicationsInterpretation of the authors' results is subject to several limitations, including the possibility of omitted variable bias and the authors' sample, though it comprises all available data for the sample period, and is relatively small and may be considered exploratory in nature. Further, charter schools represent a unique public/private partnership in the educational sector, and the results may not be generalizable to other NPs. Future research could explore the relationship between reported IC deficiencies and governance in other, broader NP sectors.Practical implicationsThe authors' findings are useful to NP organization boards of directors as they consider what factors to evaluate in their chief executive officer (CEO) compensation decisions. In addition to other criteria, inclusion of IC effectiveness in the CEO reward system is prudent, especially in today's environment of increasingly important information security and IC matters. The results suggest such information is being included. This previously undocumented use is also of particular value to regulators when weighing the costs and benefits of mandating single audits for smaller NPs, who are otherwise unlikely to obtain information on the organization's IC environment.Social implicationsThese findings may help inform the debate regarding NP charter schools, a fast-growing, economically significant and highly controversial sector in public education. Charters are predominantly funded by state and local taxes. As such, the quality of governance in NP charter schools is of interest to a wide range of stakeholders including parents, regulators and the public at large.Originality/valueWhile prior research on ICWs and NPs focuses on external stakeholder reactions to reported ICWs, little if any research addresses the utility of these reports for internal users, especially in relatively smaller organizations. The research leverages the existence of charter schools, which are independent but present nationwide, providing a suitable sample of like organizations. Further, no extant research to the authors' knowledge examines the relationship of NP executive compensation and reported ICWs – a topic previously addressed in the for-profit (FP) literature.

Board structure changes after accounting fraud: the case of Schneider Electric

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Benedicte Millet-Reyes ◽  
Nancy Uddin
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Multinational Corporation ◽  
Business Case ◽  
Annual Reports ◽  
Board Structure ◽  
Control Mechanisms ◽  
Accounting Fraud ◽  
Content Type ◽  
The Impact

Theoretical basis The impact of corporate governance on internal controls and quality of financial disclosures. Research methodology Analysis of a real financial fraud event for a non-US multinational corporation. The case relies on accessing and analyzing annual reports for the firm, both before and after the fraud. Additional information on industry governance characteristics are provided in the case itself so that students can compare the firm to the industry. Case overview/synopsis This business case is centered on the analysis of Schneider Electric, a French multinational corporation, which had to restate their financial statements in 2011 because of accounting fraud. Following this event, Schneider undertook major changes in their board structure to improve internal control mechanisms. This pedagogical business case familiarizes students with international differences in ownership and board structure and emphasizes potential corporate governance changes after financial statement fraud. Complexity academic level Managerial finance, corporate finance, international finance, auditing. This case is more appropriate for upper-level undergraduate and graduate courses.

Bullying and turnover intentions: how creative employees overcome perceptions of dysfunctional organizational politics

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dirk De Clercq ◽  
Tasneem Fatima ◽  
Sadia Jahanzeb
Keyword(s):  
Organizational Climate ◽  
Workplace Bullying ◽  
Turnover Intentions ◽  
Organizational Politics ◽  
Content Type ◽  
Organizational Environments ◽  
Mediating Role ◽  
The Relationship ◽  
Moderating Role

PurposeThis study seeks to unpack the relationship between employees' exposure to workplace bullying and their turnover intentions, with a particular focus on the possible mediating role of perceived organizational politics and moderating role of creativity.Design/methodology/approachThe hypotheses are tested with multi-source, multi-wave data collected from employees and their peers in various organizations.FindingsWorkplace bullying spurs turnover intentions because employees believe they operate in strongly politicized organizational environments. This mediating role of perceived organizational politics is mitigated to the extent that employees can draw from their creative skills though.Practical implicationsFor managers, this study pinpoints a critical reason – employees perceive that they operate in an organizational climate that endorses dysfunctional politics – by which bullying behaviors stimulate desires to leave the organization. It also reveals how this process might be contained by spurring employees' creativity.Originality/valueThis study provides novel insights into the process that underlies the connection between workplace bullying and quitting intentions by revealing the hitherto overlooked roles of employees' beliefs about dysfunctional politics and their own creativity levels.

The curvilinear relationship between team informational faultlines and creativity: moderating role of team humble leadership

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jin Yao ◽  
Xinmei Liu ◽  
Wenxin He
Keyword(s):  
Social Information Processing ◽  
Curvilinear Relationship ◽  
Open Communication ◽  
Team Creativity ◽  
Content Type ◽  
Collective Creativity ◽  
Longitudinal Survey Data ◽  
The Social ◽  
The Relationship ◽  
Humble Leadership

PurposeThe purpose of this paper is to examine the curvilinear relationship between team informational faultlines and team creativity and the moderating effects of team humble leadership on the relationship.Design/methodology/approachThe multisource and longitudinal survey data were collected from 85 teams. The authors conducted linear regression analyses to analyze the data.FindingsThe results indicate that the relationship between team informational faultlines and team creativity is inverted U-shaped and such relationship is stronger in teams with low levels of humble leadership.Research limitations/implicationsThe research reconciles the mixed findings in prior research and enhances our understanding of the functionality of informational faultlines.Practical implicationsTeam managers should seek optimal levels of informational faultlines and make diversity coexist with similarity when assembling a new working group so as to utilize the benefits of team composition diversity and fuel collective creativity. Team leaders should learn humble leadership skills to encourage open communication.Originality/valueThe research is the first to adopt and build on the social information processing (SIP) perspective to explain the curvilinear relationship between team informational faultlines and team creativity.

Corruption as distinct crime: the need to reconceptualise internal control on controlling bureaucratic occupational fraud

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ach Maulidi ◽  
Jake Ansell
Keyword(s):  
Local Government ◽  
Internal Control ◽  
Local Governments ◽  
Internal Controls ◽  
Financial Statement Fraud ◽  
Content Type ◽  
Practical Applications ◽  
Occupational Fraud ◽  
Asset Protection ◽  
Control Framework

Purpose The purpose of this study is to provide theoretical guidance that enables local governments to deal with occupational fraud. Design/methodology/approach The quantitative approach is used to examine the efficacy of the Committee of Sponsoring Organisations of the Treadway Commission (COSO) internal control framework in tackling occupational fraud in local government. To achieve the goals, the authors performed a survey of the Indonesian auditor institutions. Findings It is not appropriate to argue that all types of local government fraud can be deterred by a single internal control. The study suggests that COSO internal controls are not effective for dealing with corruption cases. However, the authors do find the efficacy of those controls are obvious for controlling asset misappropriation and financial statement fraud. This result indicates that if the COSO internal control framework is only designed for routine financial control and asset protection, it significantly and negatively influences its efficacy to deal with occupational fraud. This study has both theoretical and managerial implications, discussed separately. Originality/value In the field of prevention, the authors cannot make generalised theories and approaches for dealing with occupational fraud. Whilst previous authors have offered fraud deterrents in terms of internal controls, they have failed to realise the need to understand their effectiveness for particular forms of fraud. This paper sheds light on the effectiveness of internal controls in achieving their goals. This has both practical applications and stimulates theoretical insights.

Participatory HRM and firm performance

2019 ◽  
Vol 41 (5) ◽  
pp. 1098-1119 ◽  
Author(s):  
Neha Gahlawat ◽  
Subhash C. Kundu
Keyword(s):  
Firm Performance ◽  
Organizational Climate ◽  
Structural Equation ◽  
Affective Commitment ◽  
Intention To Leave ◽  
Employee Attitudes ◽  
Primary Data ◽  
Equation Modeling ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between participatory HRM and firm performance through a series of mediators. Design/methodology/approach Primary data were collected from 569 respondents belonging to 207 organizations operating in India. Structural equation modeling and bootstrapping via PROCESS were used to analyze the hypothesized relationships between participatory HRM and firm performance. Findings The study has highlighted that participatory HRM in the form of self-managed teams, flexible work arrangements and empowerment results in better organizational climate, heightened affective commitment, reduced intention to leave and enhanced firm performance. Furthermore, it has been established that organizational climate, affective commitment and intention to leave serially mediate the relationship between participatory HRM and firm performance. Practical implications The study gives strong indications that adopting bundle of participatory HRM practices is beneficial for generating positive organizational climate, enhanced employee attitudes and superior firm performance. Originality/value By establishing serial mediation through organizational climate, affective commitment and employees’ intention to leave, this study brings new insights into the interpretation of underlying mechanism existing between participatory HRM and firm performance, thus uniquely contributes to the HRM and OB literature.

Corporate responsibility for employees and service innovation performance in manufacturing transformation

2019 ◽  
Vol 24 (6) ◽  
pp. 580-595 ◽  
Author(s):  
Lan Li ◽  
Gang Li ◽  
Shui F. Chan
Keyword(s):  
Social Exchange ◽  
Corporate Responsibility ◽  
Control Mechanism ◽  
Service Innovation ◽  
Innovation Performance ◽  
Control Mechanisms ◽  
Content Type ◽  
Difficult Time ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to examine, within a context of manufacturing transformation, whether corporate responsibility for employees (CRE) promotes the service innovation performance (SIP) of the firm; whether this effect is mediated by employee innovative behavior (EIB), and how two control mechanisms (process-control (PC) and outcome-control mechanism) moderate the relationship. Design/methodology/approach Drawing on social exchange and control mechanism theory, this paper establishes a conceptual model and adopts a hierarchical regression analysis to examine the model with a sample of 110 manufacturing firms from China. Findings The study finds that CRE positively affects SIP. EIB mediates such effect. Output-control weakens the effect of CRE on EIB, and PC does not impact on the relationship. Practical implications The findings suggest that, facing tremendous pressure in manufacturing transformation, firms must be cautious in treating their employees. Given that EIB is crucial to improving the SIP, and in turn to meet the ever upgrading customer demands, firms ought to actively take responsibilities to protect employees’ interests, and cautiously adopt control mechanisms. Thus employees could be motivated to involve in service innovation actively. This effect not only benefits employees with a sustainable career but also help the firm survive in this tough transformation period. Originality/value This study is one of the first (if any) research that examining the impact of CRE on SIP and EIB. The findings are an extension of the existing research, and show the explanation potential of corporate social responsibility on EIB and SIP in a difficult time such as manufacturing transformation.

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