Managerial family ties and employee risk bearing in family firms : evidence from Spanish car dealers

The paper argues that family firms in which the Top Management Team (TMT) is dominated by non-family managers are more likely to shift risk to employees through incentive pay schemes than family firms with TMTs dominated by family members. We also argue that this tendency is aggravated in firms of bigger size as this condition makes non-family managers more vulnerable. We further note that differences between family and non-family dominated TMTs may lessen when the sales trend is negative. The analyses conducted on a sample of 219 family controlled car dealerships in Spain confirm our expectations

Compensation framing and the risk-taking behavior of the CEO: testing the influence of alternative reference points

El artículo analiza como el modo en el que el Director General (DG) de la empresa cataloga su retribución afecta al riesgo que asume en sus decisiones, así como el papel mediador del riesgo soportado. El estudio hace uso de una muestra de 108 empresas estadounidenses que comenzaron a cotizar en el mercado de valores en los años 1993, 1994 y 1995. La información de una encuesta realizada a los DG de estas empresas se completó con información secundaria. Se estima un modelo de ecuaciones estructurales que toma en consideración el efecto mediador del riesgo soportado en la relación entre la catalogación de la retribución – riesgo asumido. Los análisis indican que mientras los objetivos de resultados incluidos en el contrato de retribución del DG afectan de manera indirecta al riesgo asumido a través de su influencia en el componente de riesgo percibido de empleo del riesgo soportado, el nivel retributivo en relación a otros ejecutivos no tiene ningún efecto. Muestra por tanto que no todos los puntos de referencia son igualmente relevantes a la hora de definir la propensión del DG a asumir riesgos, ni que todos los elementos del riesgo soportado juegan el mismo papel. El artículo extiende trabajos previos centrados en la modelización del riesgo asumido por los gestores. El artículo proporciona una guía para reflexionar acerca de las consecuencias sobre el comportamiento del nivel retributivo en el mercado de ejecutivos y de los objetivos de rendimiento que se incluyen en los contratos de retribución. El artículo propone y contrasta un modelo sobre cómo diferentes puntos de referencia empleados para catalogar la retribución influyen sobre el riesgo asumido por el DG. A su vez proporciona el primer test de una proposición central del Behavioral Agency Model: el riesgo soportado media parcialmente la influencia de la catalogación de la retribución en el riesgo asumido.This paper seeks to analyze how compensation framing influences the risk-taking behavior of the firm’s chief executive officer (CEO), and the mediating role played by risk bearing. The study employs a sample of 108 US firms that issued an initial public offering in 1993, 1994 and 1995. Data from a survey filled out by the CEO of the firm are completed with secondary information. A structural equation model is estimated which explicitly considers the mediating effect of risk bearing on the compensation framing-risk taking relationship. The analyses indicate that while the performance targets included in the CEO’s compensation contract indirectly influence the riskiness of the CEO’s strategic decisions through its influence on the employment risk component of executive risk bearing, the level of compensation relative to peers does not. It shows that not all reference points are equally relevant in determining the CEO’s willingness to take risk, nor do all the elements of risk bearing play the same role in that partial mediation. The paper provides a refinement of previous work on modelling the risk-taking behavior of managers. The paper provides a guideline to think about the behavioral consequences of the pay level in the market for executives and the performance targets included in the compensation contracts. The paper proposes and tests a model on how different reference points used to frame compensation influence CEO risk taking. It also provides the first test of a central proposition of the behavioral agency model: risk bearing partially mediates the influence of compensation framing on risk taking.Martin Larraza‐Kintana acknowledges financial support provided by the Spanish Ministry of Education (project ECO2010‐21393‐C04‐03)

Managing in Latin America: Common Issues and a Research Agenda

Latin America is a paradoxical region. It has unique conditions that make it one of the most attractive contexts worldwide for doing business, but it also faces serious challenges that severely underscore these opportunities. We apply a simple framework of analysis to describe the Latin American business environment and detect research opportunities. For that, we focus on four aspects of the region: (1) the institutional context, (2) the macroeconomic environment, (3) the consumer profile, and (4) the natural resource endowments. We summarize firms' strategic choices that result from this context and analyze their consequences for new business creation, incumbents' survival and growth, and sources of competitive advantages. We conclude by outlining a management research agenda.Fil: Vassolo, Roberto Santiago. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina. Universidad Austral; ArgentinaFil: De Castro, Julio O.. IE University; EspañaFil: Gomez Mejia, Luis R.. Texas A&M University; Estados Unido