CONTRIBUTION AND REWARD OF SENIOR IT EXECUTIVES IN IT CAPABLE FIRMS

The main objective of this study is to propose and test a pattern of positive reciprocity between senior IT executives (sITes) and firms with superior dynamic IT capability (ITC). Results based on panel data of 1326 large US firms from a wide spectrum of industries over a 13 year period (1997-2009) support the following positions: 1. There is a positive association between accrued sources of managerial power of sITes, such as structural and expert power, and a firm\u27s ability to develop superior ITC. 2. Firms that achieve such ITC superiority are more likely to signal their appreciation and reward their sITes with more structural power (a proxy for higher compensation). If sITes value these rewards, they are more likely to stay longer with their firm. 3. There is a positive association between continuity of an already successful IT leadership and a firm’s ability to sustain its ITC superiority (durable ITC heterogeneity), thus setting in motion a virtuous cycle of positive reciprocity between sITes and IT capable firms. These findings have several and significant implications for top management teams, directors, and sITes

The Challenges of Globalization: The Strategic Role of Local Managers in Japanese-Owned U.S. Subsidiaries

[Excerpt] After spending billions of dollars moving manufacturing plants to all corners of the world, and endowing numerous programs in Japanology in the world\u27s best institutions of learning, Japanese companies have just uncovered a disconcerting truth: their competitors do not love them. Winning in global competition and being popular are clearly two different things

The Executive Pay Drama: From Comedy to Tragedy

[Excerpt] Should we rely on legislation to correct problems or should we act collectively to make ethical decisions? After careful thought, it becomes clear that legislation is a seductive copout that makes matters worse and detracts from our obligation to accept accountability for our individual and collective decisions

The Price of Doing Good: Executive Compensation in Nonprofit Organizations

This article examines whether nonprofit executive pay patterns are consistent with the espoused social mission of these organizations. We find that nonprofit CEOs are paid a significant fixed component, and many CEOs also receive additional pay associated with managing larger sized organizations. Our analysis indicates that nonprofit executive compensation is not significantly related to CEO performance, as measured either by improved fund-raising results or better administrative efficiency. This weak pay-for-performance link may be due in part to nonprofits concern about violating the non-distribution constraint in the sector, which prohibits the distribution of excess earnings. While nonprofits may not be breaching the letter of the law, some organizations appear to challenging its spirit: We present evidence that CEO compensation is significantly higher in organizations where free cash flows is present, as measured by commercial revenues, liquid assets and investment portfolios.This publication is Hauser Center Working Paper No. 8. The Hauser Center Working Paper Series was launched during the summer of 2000. The Series enables the Hauser Center to share with a broad audience important works-in-progress written by Hauser Center scholars and researchers

Management and the Financial Crisis (We have met the enemy and he is us …)

The financial crisis of 2008-9 has revealed that our broad model of corporate governance is broken, independent of the shortcomings in the regulatory system. Managers and boards of directors in scores of systemically important firms failed to protect employees, customers, or shareholders, and placed the global financial system at risk. I assert that the root cause of the crisis can be found in five related systems: incentives; risk management and control; accounting; human capital; and culture. The worst firms had lethal combinations of strong incentives, weak control and risk management, flawed internal and external accounting, low skill and/or low integrity people, and corrosive cultures. Piecemeal attempts to fix elements of corporate governance will fail. The problem, to illustrate, is not just the structure of compensation. Nor will increasing required capital prevent problems at companies with strong incentives and weak controls. I believe that we may need a new kind of external agency for systemically risky firms that would take a holistic look at the five systems to identify weaknesses, make recommendations to managers and boards, and set regulatory policies, including assessing charges for insuring against losses. Without such a comprehensive assessment and improvement plan, boards cannot do their jobs, and the system will remain as subject to calamitous events as it was before the crisis.

Evaluating the board of directors of financial intermediaries: competencies, effectiveness and performance

This paper proposes a model for analysing the effectiveness of boards of directors of financial intermediaries. The European Union recommends that companies in the Member States annually evaluate the performance of their boards. The degree of effectiveness of a board should be appreciated taking into account the business structure, ownership and institutional model of the firm, on the one hand, and the characteristics of its board, in terms of its composition, structure and skills, on the other hand. This paper also outlines the specificity of the role played by boards of directors in financial intermediaries, also in the light of the industry standards and regulations, and provides an overview of the board assessment methodologies proposed in literature, or developed by listed companies on the Anglo-saxon markets, with a view to considering their applicability to the financial sector. Lastly, and based on the foregoing, the paper proposes a model for diagnosing the conditions that need to be put into place to ensure the suitability of boards of directors and to evaluate the performance of both the board as a whole and the individual directors.Corporate Governance; Board of Directors; Performance