Shifting Our Lenses to Behavioral Finance Paradigm

Author(s):  
Sibel Dinç Aydemir

Recent crisis periods have shown how corporate communication could contribute to organizational performance regarding financial outcomes, reputation concern, etc. The efforts to reduce information asymmetry, deal with agency problems, improve stakeholder engagement have brought it to the fore. Past research on reporting mechanisms has overly focused on its normative structure and manifested ethical or problematic issues. Some research has argued credibility of both reporters and assurance providers of this information. Although some limited research on management control over reporting mechanisms and on some weaknesses of assurance providers' verification statements, this research doesn't explain enough why this manipulative control occurs. Shifting our lenses to behavioral finance paradigm, it's understood that judgmental decision making seems to be exposed to diverse systematical biases and fallacies. Amidst them, inopportune optimism, alias overconfidence, stands for one of the most serious biases.

2019 ◽  
Vol 34 (3) ◽  
pp. 25-50
Author(s):  
Lee Yunsoo

New Public Management posed challenges to governments by emphasizing the flexibility of workforce, innovation, and the role of supervisors in running public sector organizations. However, there is debate over whether job insecurity and organizational innovativeness contribute to organizational performance in the public sector. Furthermore, despite the growing awareness of the importance of supervisors, the issue of public sector employees’ trust in their supervisors has received relatively little attention. The purpose of this article is to examine the impacts of job insecurity, innovation, and employees’ trust in supervisors on organizational performance in order to explain these inconsistencies and fill the void in past research. It develops a structural equation model, built on two sets of Korean public employee survey data, whose results show that job insecurity is negatively related to performance, while employees’ trust in supervisors and organizational innovativeness are positively associated with performance. In addition, employees’ trust in supervisor is positively related to innovativeness.


2018 ◽  
Vol 6 (3) ◽  
pp. 280-295
Author(s):  
Shafique-ur Rehman ◽  
Rapiah Mohamed ◽  
Hazeline Ayoup

This paper intends to demonstrate the relationships between the management control system (MCS) as a package elements with organizational performance. Many studies conducted and investigated the impact of the management control system (levers of control) and organizational performance and ignore the elements of MCS as a package. Pakistan textile industry faces a lot of issues regarding MCS as packages elements and due to these issue organizational performance reduced. Therefore, current study portray a framework that consists of some vital elements of control adopted from Malmi and Brown (2008) MCS as a package like planning control, cybernetic controls, rewards and compensation controls, administrative controls, and cultural controls which if empirically investigated would demonstrate the extent of by in Pakistan textile industry and how these controls generate better organizational performance. This suggests that the need for more explanation of Pakistani textile industry managers on the need to adopt better MCS practices as these practices lead to better organizational performance. Although the current paper is conceptual in nature thus, needs an empirical study to address in the light of resource-based view theory.


Management ◽  
2013 ◽  
Author(s):  
Mary Ann Von Glinow ◽  
William D. Schneper

The body of research related to global leadership is both vast and confounding. Some observers trace the field’s domain back thousands of years to the first rulers and military commanders with worldwide aspirations or to religious and spiritual figures such as Abraham, Laozi, Gautama Buddha, Confucius, Jesus, and Muhammad. Within the business context, the literature is considerably younger but still includes some of the earliest international management classics, such as Perlmutter 1969 (cited under Global Mindset) and Levitt 1983 (cited under Globalization). Despite the accomplishments of past research, critics contend that our understanding of global leadership has progressed too slowly. Joyce Osland, in Osland 2008 (cited under Developing Global Leaders and Ensuring Effectiveness), compares the state of the field to the earliest phases of domestic leadership scholarship. Indeed, the bulk of the literature remains conceptual, normative, and prescriptive. There is a scarcity of rigorous ethnographic work, and quantitative studies often focus more on measuring and comparing rather than developing and testing complex theory. Even the definition of global leadership is uncertain. This is partially due to the breadth and diversity of leadership research in general. As Ralph Stogdill noted as far back as 1974, “there are almost as many definitions of leadership as there are persons who have attempted to define the concept” (Handbook of Leadership, New York: Free Press, p. 259). Hollenbeck 2009 (cited under Traditional Leadership Theories) finds global leadership to be “even more mysterious, with something about the term that beckons interested writers and researchers to offer their own definitions. There is a temptation to dance on the head of a definitional pin” (p. 5). In other words, the definition of global leadership depends on one’s personal inclinations and theoretical starting point. Global leadership means something different to managers and policymakers, as it does for scholars in organizational behavior, strategy, or psychology. To encompass such diverse perspectives, we define global leadership broadly as the capacity to bring about change and enhance organizational performance across national borders. This capacity in turn requires the skills and acumen to influence and energize employees, business partners, and other organizational stakeholders. Closely related and overlapping with the study of global leadership, the cross-country or comparative leadership field explores the similarities and differences in leadership traits and practices across countries, which helps explain the aspects of leadership that are generally universal across countries, or largely dependent upon the unique institutional and country context.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kaveh Asiaei ◽  
Nick Bontis ◽  
Omid Barani ◽  
Majid Moghaddam ◽  
Jasvinder Sidhu

PurposeThis study aims to explore the extent to which companies rely on sustainability management control systems (SMCS) to translate corporate social responsibility (CSR) into superior performance building upon the premise of the natural resource orchestration perspective.Design/methodology/approachData were collected based on a survey data set from 118 Chief Financial Officers of publicly listed companies in Iran. The theoretical model was tested using partial least squares structural equation modeling (PLS-SEM, SmartPLS 3.0) as a method that enjoys minimum demands concerning normality assumptions and sample size.FindingsThe findings support the full mediation effect of SMCS on the relationship between CSR and organizational performance. This implies that CSR affects performance only through the mediating role of SMCS.Practical implicationsThe central premise in the proposed theoretical framework is that the utilization of proper management control mechanisms (i.e. SMCS) can help the organization to better synchronize, measure and manage – i.e. “orchestrate” – the social, environmental and economic impacts, and this, in turn, leads to improved organizational performance.Originality/valueTo the best of the authors’ knowledge, this is the first study of its kind, building on a unique synthesis of the agency cost perspective and resource orchestration theory, to introduce the “natural resource orchestration” approach for examining the intervening role of SMCS between CSR and organizational performance.


2015 ◽  
Vol 30 (3) ◽  
pp. 1-31 ◽  
Author(s):  
Michael T. Lee ◽  
Sally K. Widener

ABSTRACT Accounting researchers are becoming increasingly interested in the performance effects of business intelligence (BI) systems in their role as management control systems. Extant research focuses on the performance effects of adopting and implementing such systems. However, there is less known about how organizations use the information in BI systems for management control once implemented, and whether the use of this information translates into organizational performance. We utilize the theoretical connection between information systems and organizational learning to explain the performance effects of BI system use through organizational learning. Evidence from recent literature indicates the need for organizations to engage in exploitation and exploration learning in pursuit of organizational ambidexterity. Our study draws on agenda setting and framing theories to provide insights that will enable organizations to strategically use the information in two fundamental BI systems to emphasize either or both modes of learning. Subsequently, we examine whether the two modes of learning translate into performance.


This chapter begins by describing the common problems associated with implementing IT business strategy that are faced by companies and other organizations, resulting in business planning that is not directly aligned with IT planning and IT investments not clearly supporting business strategies. It is stressed that all organizations should pursue strategic alignment practices to improve organizational performance when using IT-based resources. Case studies specific to the construction industry are presented to illustrate practical problems that companies face. With this background, the critical success factors of implementing IT business strategy are discussed. They mainly center around the goal of enabling businesses to reduce costs while at the same time improve IT’s contribution to their overall performance in terms of overall profit or net earnings. In the discussion, research finding of organizational success in strategic IT and business alignment are used to elaborate on the factors involved, both internal and external to the organization. Overall, the essential traits of successfully aligned organizations are mentioned. This is followed by describing a proposed model that is able to successfully address the alignment of business and IT by adopting a process-driven architecture that focuses on information management. Moving on, there are several aspects of preparing an organization for successful IT business strategy implementation. The next part describes some major steps of implementation like defining the goals and linking them to the performance criterion, focusing on the strategic intentions, adopting an effective plan, quantifying the cost and benefits of IT, measuring and tracking the results, and, last but not least, managing culture. Specifically on the construction industry, the chapter covers the main advantages and disadvantages of adopting IT to increase strategic competitiveness of construction companies. The illustrations from past research focus on links that are established between competitive advantage or project success and the use of technology. As background to proposing a set of recommendations on how IT business strategies can be implemented in design and construction firms, the case of IT adoption in the construction industry of Singapore is presented to serve as an overview of developments in this area. Based on the performance criteria established for these two types of firms in Singapore, appropriate enablers of implementation are suggested, including the kind of business strategy applicable to different firm types, through a process framework. The chapter concludes with a summary of the main points covered on the implementation of IT business strategy in the construction industry.


Author(s):  
Selena Aureli

Management control systems (MCSs) can undoubtedly support organizations' strategic processes as they help coordinate and align personnel behaviour to organizational goals, verify the validity of the organization's strategic plan and contribute to better formulate future plans. However, past research indicates that SMEs scarcely adopt MCSs. With the aim to update past research, the present chapter explores the current role and quality of MCSs used by SMEs in relation to strategic processes. Moreover, it evaluates whether MCSs adoption is associated to specific SMEs owner-managers' beliefs and other contingency factors. A survey conducted in Italy in 2012 indicates that SMEs attribute an important role to MCSs in supporting strategy formulation, its control and subsequent reformulation, but this strategic role is not associated with the adoption of advanced MCSs. SMEs still rely on traditional accounting-based control systems or perform some ad hoc analysis to obtain information useful for top managers strategic decision making.


Author(s):  
Sibel Dinç Aydemir

The accounting profession has intensely witnessed compelling challenges in the 21st century. Due to increased number in stakeholders and huge informational need, the traditional model has become unsatisfactory in meeting this need and evaluating company's future performance. Apparently, companies trying to survive in globally competitive markets couldn't attain this goal by focusing merely on financial outcomes. Thus, sustainability reporting has emerged as a vital non-financial information demanded by stakeholders. However, ethical insights on credibility and accountability of this information have been documented and discussed in the literature. Tapping into behavioral finance paradigm and upper echelon approach, this chapter exerts an effort to link financial reporting/audit quality to sustainability reporting and discusses those ethical issues on these processes. Further, while drawing attention to overconfidence bias in individuals involved in reporting and assurance stages, it suggests influential role of decision-makers' personal traits on these mechanisms in a misleading way.


Author(s):  
Peggy M. Beranek ◽  
Ben Martz ◽  
Monique French

Trust among team members is a major factor influencing the cohesiveness of the group, trust also has a direct impact on team performance, problem solving, organizational performance, and organizational communication. Virtual teams are teams in which members are distributed and communicate via computer-mediated communication systems (CMCS). Past research has indicated that the development of trust among team members requires face-to-face communication, thereby making it difficult for virtual teams to develop trust. Recent research has shown that it is possible to train virtual teams to exhibit higher levels of trust. This paper describes and discusses different methods of trust training for virtual teams. We offer a comprehensive comparison of the results and analysis of the training programs of these studies and offer advice on developing and conducting such programs.


Author(s):  
Rabia Imran ◽  
Raghad Ezzeldin Aldaas

PurposeThe current research is aimed at exploring entrepreneurial leadership (EL) as a mediator in perceived organizational support (POS) and organizational performance (OP) relationship. Furthermore, it also examined the impact of POS and entrepreneurial leadership on the performance of an organization.Design/methodology/approachA purposively selected sample of 216 respondents from the SME sector of Oman was chosen for the study.FindingsThe results revealed that POS and entrepreneurial leadership positively and significantly have an effect on organizational performance. Moreover, the hypothesized role of entrepreneurial leadership as a mediator between POS and OP relationship was also supported.Research limitations/implicationsIn spite of the novelty of the research, it was limited due to a few reasons. First, the research design is cross-sectional. Second, the research only focused SME sector. This research only focused on entrepreneurial leadership as a mediator, whereas, other mediators could have been explored as well.Originality/valueThe research on POS and organizational performance relationship is still in its exploration stage. Past research indicate that POS has an effect on different outcomes within an organization, including its performance. However, still, the research on the entrepreneurial leadership process is quite scarce. The current research will explore it in the context of Oman, where there is a dire need to establish SME sector performance. The unique combination between POS, entrepreneurial leadership and performance in the SME sector of Oman marks the novelty of the current research. This study contributes to the SME’s literature and it is among the pioneer studies exploring the mediating role of entrepreneurial leadership in the relationship between POS and OP.


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