María J. Sánchez-Expósito and David Naranjo-Gil
The purpose of this paper is to analyze the simultaneous effect of management control system (MCS) designs (belief vs boundary) and cognitive orientations (individualism vs…
Abstract
Purpose
The purpose of this paper is to analyze the simultaneous effect of management control system (MCS) designs (belief vs boundary) and cognitive orientations (individualism vs collectivism) on performance misreporting by combining accounting and psychology literature.
Design/methodology/approach
This paper is based on a laboratory experiment with 67 postgraduate students.
Findings
Results show that an individualist cognitive orientation increased performance misreporting. The results also showed that a boundary design of MCS intensified the relationship between individualist orientation and performance misreporting.
Research limitations/implications
This paper shed some light about the role of non-pecuniary control system for reducing managerial performance misreporting. The findings support that the tendency of individuals to avoid misreporting depends not only on the MCS design but also on the match between it and individual’s cognitive orientations.
Practical implications
Managers in organizations should consider the predominant cognitive orientation of individuals when they design MCS. They should consider that control systems, which impose coercive constraints to individuals, may encourage feelings of psychological reactance and then increase performance misreporting.
Originality/value
This study is among the first to combine psychology and accounting literature to analyze how the design of MCS influences individuals’ motivation to misreport their performance. It provided evidence about the effect of non-monetary control systems on individual’s behavior in organizations.
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Susana Gago-Rodríguez and David Naranjo-Gil
The purpose of this paper is to evaluate whether trust and distrust in upper-level managers exert different influences on the budgetary proposals of middle managers. Such…
Abstract
Purpose
The purpose of this paper is to evaluate whether trust and distrust in upper-level managers exert different influences on the budgetary proposals of middle managers. Such proposals involve different levels of managerial effort that impact overall budgetary slack.
Design/methodology/approach
This paper is based on a laboratory experiment with 160 business managers.
Findings
The results show that the more (less) middle managers trust (distrust) their upper-level managers, the more (the less) effort they commit to budgetary proposals. The authors also find that middle managers with low trust are prone to invest more effort and thus create less budgetary slack than managers with high distrust. The results also show that the introduction of suspicion does not vary this initial choice of effort and budgetary slack.
Research limitations/implications
This paper shows the importance of trust and distrust as informal control systems in organizations. The findings support the importance of extrinsic motivation for enhancing effort and reducing budgetary slack. There are a wide range of exogenous variables that have an effect on the development of trust and distrust.
Practical implications
Practitioners may improve their management control by facilitating trust and preventing distrust in interpersonal relationships because both are informal controls that can reduce and increase, respectively, dysfunctional behaviors in organizations, such as budgetary slack.
Originality/value
This paper is among the first to show the distinct effects of trust and distrust (high and low) in the efforts of middle managers. This study provides a dynamic viewpoint of trust through the introduction of suspicion in a budget negotiation.
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Laura Gómez-Ruiz and David Naranjo-Gil
Team performance frequently is not reached because of motivation losses. The individual identified motivation best fits in team contexts. However, management control systems…
Abstract
Purpose
Team performance frequently is not reached because of motivation losses. The individual identified motivation best fits in team contexts. However, management control systems research has mainly focused on the external motivation. This chapter analyses how identified motivation and team performance can be enhanced through the interactive use of management control systems and the team identity.
Methodology
An experimental study is conducted among 144 postgraduate students. We manipulate the interactive use of management control systems and the team identity. We controlled its effects on team members’ motivation and performance.
Findings
The results show an indirect effect of the interactive control systems on team performance via team members’ identified motivation. Furthermore, the effect of team identity on team performance is also mediated by the identified motivation.
Practical implications
Managers can increase employees’ motivation by using the control information interactively. Controls focused on socialisation processes and shared values best fit with collaborative environments.
Originality/value of chapter
The results provide empirical support for the recent calls about the effect of interactive control systems at individual levels. Despite the considerable attention to the relation between the design of management control systems and team performance, this chapter provides empirical evidence of the positive relation between the style of use of management control systems and individual behaviour in team-based settings.
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Rogério J. Lunkes, Daiane Antonini Bortoluzzi, Marcielle Anzilago and Fabricia Silva da Rosa
The purpose of this paper is to analyze the influence of online hotel reviews (OHRs) on the fit between strategy and use of the management control system (MCS) in small- and…
Abstract
Purpose
The purpose of this paper is to analyze the influence of online hotel reviews (OHRs) on the fit between strategy and use of the management control system (MCS) in small- and medium-sized hotels in Brazil. The study analyzed the influence of the variable OHR on the fit between the deliberate strategy and emergent strategy, as well as the diagnostic use and interactive use, of MCS.
Design/methodology/approach
The study was carried out with the application of a questionnaire in small- and medium-sized hotels in Brazil. The analyses are based on 78 responses from Brazilian hotels. The analysis used the modeling of structural equations by parts (SmartPLS).
Findings
The results show the influence that external variables have in the adjustment of management systems. Specifically, the authors present quantitative evidence that OHR plays an important role in the adjustment between the deliberate strategy and the diagnostic use of MCS.
Research limitations/implications
The results have several implications for research and practice.
Practical implications
The results have several implications for research and practice. A practical implication of this work is to understand how external variables (e.g. OHR) can be important in the fit of management systems. This study offers value for managers in that it supports the argument that hotels can benefit from the use of OHR in the MCS fit.
Originality/value
This study provides evidence for the influence of external variables, such as OHR, on the fit between strategy and MCS use. The study contributes to the literature by providing new evidence of the role of guest evaluations in aligning strategies with the use of MCS.
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Edila Eudemia Herrera Rodríguez and Iván Andrés Ordóñez-Castaño
This research examines the likelihood that Panamanian and Colombian banks listed on their respective stock exchanges voluntarily disclose intangible liabilities based on such…
Abstract
Purpose
This research examines the likelihood that Panamanian and Colombian banks listed on their respective stock exchanges voluntarily disclose intangible liabilities based on such variables as their size, profitability, indebtedness, age and growth. The presented findings concur with agency theory, signalling theory and the owner-cost theory.
Design/methodology/approach
The authors propose a probabilistic model to test the influence of size, profitability, indebtedness, age and growth on the disclosure of intangible liabilities. The dependent variable, the disclosure index, was constructed from a dichotomous approach using Harvey and Lusch's (1999) model, which has 24 characteristics, plus six that we added in our research. These were grouped into four categories: procedures, human activity, information and organisational structure.
Findings
Banks in Panama and Colombia with a larger size, higher profitability, lower age and higher growth are more likely to disclose more information about their intangible liabilities. However, indebtedness does not serve as a determinant of the disclosure of these liabilities, even though its relationship is negative.
Research limitations/implications
The limitation of the research was the voluntary disclosure of information about these liabilities on firms' websites.
Practical implications
The contributions of this research are as follows. First, we used an intangible asset disclosure methodology to verify the disclosure of intangible liabilities, in line with Harvey and Lusch's model, as well as providing another six indicators, thereby producing an extended model. Second, being the first empirical research to study the disclosure of intangible liabilities in Panama and Colombia opens a door to future research on this topic.
Social implications
This research provides a significant practical contribution to society because banks listed on public stock markets, understanding that undisclosed intangible liabilities lead to opportunity costs in their profitability, might tend to disclose more information, thus promoting greater transparency in the market.
Originality/value
The main contribution of this research is applying an intangible asset disclosure methodology to the disclosure of intangible liabilities, following Harvey and Lusch's (1999) model, as well as the creation of an expanded model.
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Ricardo Malagueño, Sudarshan Pillalamarri, Amaury José Rezende and Marcelo Botelho da Costa Moraes
The purpose of this paper is to examine the effects of length of service and ethical ideologies on cognitive moral development (CMD) and ethical behavioral intentions among public…
Abstract
Purpose
The purpose of this paper is to examine the effects of length of service and ethical ideologies on cognitive moral development (CMD) and ethical behavioral intentions among public sector tax auditors in Brazil.
Design/methodology/approach
The research data were collected via survey questionnaires from a sample of 625 auditors who work for the Brazilian tax authority. Participants voluntarily complete an online instrument which included three scenarios with context-specific moral dilemmas, questions about the specific scenarios and an ethics position questionnaire. Multinomial logistic and ordinary least squares regressions were used to analyze the data.
Findings
The findings reveal that public sector tax auditors with shorter length of service are more likely to be at higher stages of moral development; relativistic ideology among public sector auditors is positively associated with more lenient ethical behavioral intention; idealistic ideology among public sector auditors is positively associated with stricter ethical behavioral intention; public sector auditors classified as absolutists are stricter in their ethical behavioral intentions; and public sector auditors classified as absolutists with length of service between 5 and 15 years are more likely to be at higher stages of moral development when compared to public sector tax auditors with longer length of service.
Originality/value
To the best of the authors’ knowledge, the study is one of the first studies that attempt to understand the effects of length of service and ethical ideology on CMD and ethical behavioral intention among public sector auditors. Additionally, it examines these issues in the context of Latin America.
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Gianluca Ginesti, Rosanna Spanò, Luca Ferri and Adele Caldarelli
This study aims to investigate whether the characteristics of the chief financial officer (CFO) have an impact on the intensity of the corporate research and development (R&D…
Abstract
Purpose
This study aims to investigate whether the characteristics of the chief financial officer (CFO) have an impact on the intensity of the corporate research and development (R&D) investment.
Design/methodology/approach
Based on hand-collected data for the CFOs of a sample of the largest European listed companies for the period 2013–2016, this study uses regression analyses to test empirically the association of CFO education, CFO gender and CFO age with R&D investment intensity.
Findings
The presence of female CFOs, CFOs with a Master of Business Administration (MBA) or Doctor of Philosophy (PhD) degree and older CFOs is positively associated with the intensity of R&D investment.
Research limitations/implications
This study relies on some observable characteristics of CFOs and focuses on large listed companies.
Practical implications
The results of this study may help investors, stakeholders and practitioners to understand better which type of CFO characteristics are more likely to result in higher firm-level R&D investment intensity.
Originality/value
This study offers the first insights into the impact of CFOs, as the most prominent C-suite executives, on the level of corporate investments in R&D activity.
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Huei-Wen Pao, Cheng-Yu Lee, Pi-Hui Chung and Hsueh-Liang Wu
The industry-wide adoption of a novel practice is often considered to be an institutional change. Although research on institutionalization has been accumulating, how and why…
Abstract
Purpose
The industry-wide adoption of a novel practice is often considered to be an institutional change. Although research on institutionalization has been accumulating, how and why embedded actors in the field become motivated to embrace change that remains sidelined. Viewing the introduction of a new human resource management practice, the recruitment of non-compulsory certified manpower, which is still in its infancy in the service sector of Taiwan, as a new institution, the purpose of this paper is to identify the distinct motives behind firms’ hiring decisions, and examine the extent to which such hiring decisions are contingent on institutional conditions and firm attributes.
Design/methodology/approach
The data used to test the hypotheses were drawn from a survey on service firms in Taiwan in the second half of 2011. Hypotheses were examined through moderated hierarchical regression analyses in a sample of 254 Taiwanese service firms across major sectors.
Findings
Integrating the resource dependency and social contagion views, the study contends that resource scarcity drives, or legitimacy enables, service firms to deviate from traditional hiring patterns and instead adopt new preferences toward certified manpower. The study not only shows that social factors should be incorporated into the diffusion of a new HR recruitment practice in the service sector, which is traditionally based upon economic considerations, but also sheds light on the context-dependent nature of the process of institutional innovation.
Originality/value
This study is an attempt not only to test a dual-theoretical model on the extent to which a service firm’s new hiring pattern is influenced by two distinct types of motivation, but also to evidence how an institutional innovation, in terms of the regime of service manpower certification, takes root and spreads in the field. The managerially discretional account of the resource dependence theory needs to be reconciled with social contagion theory, which highlights the influence of collective actions and so provides a better understanding of the diffusion of new HR recruitment practices in the service industry.