This document proposes a re-balanced scorecard framework to better evaluate managerial performance in complex environments. It views the firm as having social contracts beyond shareholders to stakeholders like employees, communities, and the environment. The conceptual framework is based on social contract theory and sees the firm as a nexus of social rather than just economic contracts. It then maps this conceptual framework to a practical re-balanced scorecard structure that can induce improved managerial behavior aligned with long-term sustainability and social contract obligations. This framework aims to better account for multidimensional factors managers face and costs of misconduct in evaluating performance.
Impact of corporate governance on firm performance publishedMuhammad Usman
In the light of corporate financial scandals, there is an increasing attention on corporate governance issues. The investors look for emerging economies to diversify their investment portfolios to exhaust the possibilities of returns. This paper examines the impact of corporate governance variables on firms’ performance. This Research found that there is a direct positive relationship between profitability measured either by Earnings per share (EPS) or Return on assets (ROA) and corporate governance, also have a positive direct relationship between each of liquidity, dividend per share, and the size of the company with corporate governance, finally the study found a positive direct relationship between corporate governance and corporate performance. Various studies have been conducted in developing countries including Pakistan to investigate the relationship among corporate governance and firm performance. This study indicates that corporate governance can be measured through the following elements.
(1) board size (2) Female Member (3) CEO duality (4) Education of Directors (5) Board working experience(6) independent directors (7) board compensation (8) Board ownership (9) Audit committee (10) Board composition(11)Leadership Structure
The corporate governance is a popular topic within two last decade, and the emerging economies are practicing &enhancing their performances. The review is conducted to assess the effectiveness of the corporate governance implications on firm’s performances. The study followed the deductive approach and the journal articles, and the reports have used the source of the review. As per the literature findings, the researcher developed a conceptual design for the case review. The independent variable is the corporate governance mechanism, and the dependent variable is organizations performances. Both independent and dependent variables comprise the different type of corporate governance practice and the different function of the organizational performances. The review found that all the types of corporate governance practices are influenced to the organizational performance and the better corporate governance mechanism can enhance all type of performances.
Article: Influence of Corporate Board Characteristics on Firm Performance of ...McRey Banderlipe II
Using disclosure information from 29 listed property companies in the Philippines, the results revealed that managerial ownership positively influences firm performance. Moreover, firm size, leverage, and age influence the accounting-based measures of performance to a great extent than the market-based measures. Further research should focus on the overall impact of corporate governance using different measures of performance to better assist the decision making of the company’s stakeholders.
Impact of corporate governance on firm performance publishedMuhammad Usman
In the light of corporate financial scandals, there is an increasing attention on corporate governance issues. The investors look for emerging economies to diversify their investment portfolios to exhaust the possibilities of returns. This paper examines the impact of corporate governance variables on firms’ performance. This Research found that there is a direct positive relationship between profitability measured either by Earnings per share (EPS) or Return on assets (ROA) and corporate governance, also have a positive direct relationship between each of liquidity, dividend per share, and the size of the company with corporate governance, finally the study found a positive direct relationship between corporate governance and corporate performance. Various studies have been conducted in developing countries including Pakistan to investigate the relationship among corporate governance and firm performance. This study indicates that corporate governance can be measured through the following elements.
(1) board size (2) Female Member (3) CEO duality (4) Education of Directors (5) Board working experience(6) independent directors (7) board compensation (8) Board ownership (9) Audit committee (10) Board composition(11)Leadership Structure
The corporate governance is a popular topic within two last decade, and the emerging economies are practicing &enhancing their performances. The review is conducted to assess the effectiveness of the corporate governance implications on firm’s performances. The study followed the deductive approach and the journal articles, and the reports have used the source of the review. As per the literature findings, the researcher developed a conceptual design for the case review. The independent variable is the corporate governance mechanism, and the dependent variable is organizations performances. Both independent and dependent variables comprise the different type of corporate governance practice and the different function of the organizational performances. The review found that all the types of corporate governance practices are influenced to the organizational performance and the better corporate governance mechanism can enhance all type of performances.
Article: Influence of Corporate Board Characteristics on Firm Performance of ...McRey Banderlipe II
Using disclosure information from 29 listed property companies in the Philippines, the results revealed that managerial ownership positively influences firm performance. Moreover, firm size, leverage, and age influence the accounting-based measures of performance to a great extent than the market-based measures. Further research should focus on the overall impact of corporate governance using different measures of performance to better assist the decision making of the company’s stakeholders.
Brennan, Niamh M. [2008] “Introduction. Corporate Governance and Financial Re...Prof Niamh M. Brennan
Corporate governance is the subject of a burgeoning literature. Accordingly it is impossible to summarise an entire field in a book of readings. For this reason, I have focused this selection of readings on the financial reporting aspects of corporate governance, which marries two of my research interests. Given the speed of change in the area of corporate governance, generally-speaking the volume of readings is skewed towards more recent publications. However, some seminal material is included from which a considerable amount of corporate governance empirical research was derived, especially Jensen and Meckling (1976), Fama & Jensen (1983) and Jensen (1993). Denis (2001) suggests that the groundswell for research on corporate governance by financial economists stated with Jensen and Meckling’s (1976) paper on the theory of the firm and featuring agency theory.
This is a focussed interdisciplinary compilation of readings which brings together corporate governance and financial reporting, and issues of accountability. It does not comprise a broad coverage of all corporate governance issues. Instead, it takes a narrower perspective, concentrating only on those corporate governance mechanisms influencing financial reporting and accountability.
Investigating Corporate Governance And Its Effect on Firm Performance with As...QUESTJOURNAL
ABSTRACT: Corporate governance and its effect on firm performance are investigated in this research. Research independent variables include non-bound members of board of directors, board of directors’ independence, institutional shareholders, and dependent variable includes assets return which is the index of firm’s performance. Accordingly, data of 125 accepted firms in Tehran securities exchange during 2009 to 2013 was extracted and panel data regression model was applied to test the hypotheses. Results indicate an inverse significant relationship between non-bound members of board of directors and assets return and a positive significant relationship between board of directors’ independence and firm’s performance. Also, there is a positive relationship between institutional shareholders and firm’s performance. In general, results showed that appropriate corporate governance improves firms’ performance.
In order to survive and sustain in today’s turbulent business environment an organisation needs to explore opportunities and avoid threats constantly. Organisations succeed or fail due to the strategies formulated by its decision makers. Executives working in organisations possess unique perceptions regarding the events occurring in the business environment and they exhibit varied scanning behaviours. This uniqueness is reflected in their decisions and strategies.
Corporate Governance and Corporate Profitability Empirical Study of Listed La...ijtsrd
Corporate governance is concerned with ways in which all parties interested in the well- being of the organization attempt to ensure that mangers and other insiders take measures or adopt mechanisms that safeguard the interests of the stakeholders.. The purpose of the study is to find out the impact of corporate governance on profitability of listed Land and Property companies in Sri Lanka. Return of Assets is used as dependent variable. To measure the corporate governance, Board size, Board composition and independent directors of Remuneration committee. number of auditors are considered in this study. Firm size was considered as control variable in this study. The data were collected from firms annual financial reports and Data Stream over the period of 2011to 2016, from the CSE website. Descriptive statistics, correlation analysis, multiple linear regression analysis were used to analyse the data and examine the hypotheses by using the E-views 10 version, in this study. The findings revealed that there is a positive and significant relationship between ROA with auditors, board composition. Independent directors of Remuneration committee and board size are insignificantly correlated with ROA. Furthermore, it was found that the control variable firm size was insignificant in influencing firm performance ROA ..This study provides useful information for policy makers, regulators in improving the corporate governance policies in the future and also helps in increasing and understanding the relationship between corporate governance and firms performance. S. Anandasayanan | H. Thavarasasingam "Corporate Governance and Corporate Profitability: Empirical Study of Listed Land and Property Companies in Sri Lanka" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-2 , February 2019, URL: https://www.ijtsrd.com/papers/ijtsrd20309.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/20309/corporate-governance-and-corporate-profitability-empirical-study-of-listed-land-and-property-companies-in-sri-lanka/s-anandasayanan
Brennan, Niamh M. [2008] “Introduction. Corporate Governance and Financial Re...Prof Niamh M. Brennan
Corporate governance is the subject of a burgeoning literature. Accordingly it is impossible to summarise an entire field in a book of readings. For this reason, I have focused this selection of readings on the financial reporting aspects of corporate governance, which marries two of my research interests. Given the speed of change in the area of corporate governance, generally-speaking the volume of readings is skewed towards more recent publications. However, some seminal material is included from which a considerable amount of corporate governance empirical research was derived, especially Jensen and Meckling (1976), Fama & Jensen (1983) and Jensen (1993). Denis (2001) suggests that the groundswell for research on corporate governance by financial economists stated with Jensen and Meckling’s (1976) paper on the theory of the firm and featuring agency theory.
This is a focussed interdisciplinary compilation of readings which brings together corporate governance and financial reporting, and issues of accountability. It does not comprise a broad coverage of all corporate governance issues. Instead, it takes a narrower perspective, concentrating only on those corporate governance mechanisms influencing financial reporting and accountability.
Investigating Corporate Governance And Its Effect on Firm Performance with As...QUESTJOURNAL
ABSTRACT: Corporate governance and its effect on firm performance are investigated in this research. Research independent variables include non-bound members of board of directors, board of directors’ independence, institutional shareholders, and dependent variable includes assets return which is the index of firm’s performance. Accordingly, data of 125 accepted firms in Tehran securities exchange during 2009 to 2013 was extracted and panel data regression model was applied to test the hypotheses. Results indicate an inverse significant relationship between non-bound members of board of directors and assets return and a positive significant relationship between board of directors’ independence and firm’s performance. Also, there is a positive relationship between institutional shareholders and firm’s performance. In general, results showed that appropriate corporate governance improves firms’ performance.
In order to survive and sustain in today’s turbulent business environment an organisation needs to explore opportunities and avoid threats constantly. Organisations succeed or fail due to the strategies formulated by its decision makers. Executives working in organisations possess unique perceptions regarding the events occurring in the business environment and they exhibit varied scanning behaviours. This uniqueness is reflected in their decisions and strategies.
Corporate Governance and Corporate Profitability Empirical Study of Listed La...ijtsrd
Corporate governance is concerned with ways in which all parties interested in the well- being of the organization attempt to ensure that mangers and other insiders take measures or adopt mechanisms that safeguard the interests of the stakeholders.. The purpose of the study is to find out the impact of corporate governance on profitability of listed Land and Property companies in Sri Lanka. Return of Assets is used as dependent variable. To measure the corporate governance, Board size, Board composition and independent directors of Remuneration committee. number of auditors are considered in this study. Firm size was considered as control variable in this study. The data were collected from firms annual financial reports and Data Stream over the period of 2011to 2016, from the CSE website. Descriptive statistics, correlation analysis, multiple linear regression analysis were used to analyse the data and examine the hypotheses by using the E-views 10 version, in this study. The findings revealed that there is a positive and significant relationship between ROA with auditors, board composition. Independent directors of Remuneration committee and board size are insignificantly correlated with ROA. Furthermore, it was found that the control variable firm size was insignificant in influencing firm performance ROA ..This study provides useful information for policy makers, regulators in improving the corporate governance policies in the future and also helps in increasing and understanding the relationship between corporate governance and firms performance. S. Anandasayanan | H. Thavarasasingam "Corporate Governance and Corporate Profitability: Empirical Study of Listed Land and Property Companies in Sri Lanka" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-2 , February 2019, URL: https://www.ijtsrd.com/papers/ijtsrd20309.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/20309/corporate-governance-and-corporate-profitability-empirical-study-of-listed-land-and-property-companies-in-sri-lanka/s-anandasayanan
Audits have changed their traditional focus from cost control towards a global strategy of risk management, governance, value creation, and organizational culture. Auditing is a representative element of corporate culture because it defines how companies think and act, but manage decisions are the true reflection of how a company thinks and acts. Thus, this area expands its importance thanks to its direct participation in risk management and value creation.
The Impact of Corporate Sustainability on Organizational Processes and Perfor...Sustainable Brands
This 2011 report is a must-read for sustainability executives and a valuable go-to resource for engaging senior management in the benefits of sustainability integration.
Abstract
We investigate the effect of corporate sustainability on organizational processes and performance. Using a matched sample of 180 US companies, we find that corporations that voluntarily adopted sustainability policies by 1993 -- termed as High Sustainability companies -- exhibit by 2009, distinct organizational processes compared to a matched sample of firms that adopted almost none of these policies -- termed as Low Sustainability companies. We find that the boards of directors of these companies are more likely to be formally responsible for sustainability and top executive compensation incentives are more likely to be a function of sustainability metrics. Moreover, High Sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information. Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market as well as accounting performance.
r Academy of Management Journal2015, Vol. 1015, No. 1, 1–9..docxmakdul
r Academy of Management Journal
2015, Vol. 1015, No. 1, 1–9.
http://dx.doi.org/10.5465/amj.2014.4006
FROM THE EDITORS
RETHINKING GOVERNANCE IN MANAGEMENT RESEARCH
In the field of management, the study of gover-
nance has primarily dealt with decision-making by
boards of directors, chief executives, and senior
managers. The corporate governance literature has
generated important insights regarding incentive
alignment, risk taking, and coordination chal-
lenges. Emerging trends, highlighted in this issue,
raise new questions regarding managerial roles,
organizational contexts, internal and social pro-
cesses, and changes in governance over time. We
encourage management scholars to rethink their
approach to governance research by considering
stakeholder engagement, the implications of big
data, social impact, global dimensions, and com-
parative analysis of governance. A broadened con-
ceptualization of governance may also deal with the
dynamics of interorganizational arrangements, in-
cluding the co-creation of organizations of varying
governance forms.
WHAT IS GOVERNANCE?
In this “thematic issue,” we assembled articles
that reflect evolving practices in governance.1
Corporate governance is the system by which
companies are directed and controlled. Boards of
directors are responsible for the governance of
their companies. The shareholders’ role in gover-
nance is to appoint the directors and the auditors
and to satisfy themselves that an appropriate gov-
ernance structure is in place. The responsibilities
of the board include setting the company’s strategic
aims, providing the leadership to put them into
effect, supervising the management of the business,
and reporting to shareholders on their stewardship.
The board’s actions are subject to laws, regulations,
and the shareholders in general meeting (Cadbury,
1992). Corporate governance is therefore about
what the board of a company does and how it sets
the values of the company, but is distinct from the
operational management of the company by full-
time executives.
These views of corporate governance stem pre-
dominantly from a financial perspective. For ex-
ample, Shleifer and Vishny (1997: 737) address
corporate governance as “the ways in which sup-
pliers of finance to corporations assure themselves
of getting a return on their investment. How do the
suppliers of finance get managers to return some
of the profits to them? How do they make sure
that managers do not steal the capital they supply
or invest it in bad projects? How do suppliers
of finance control managers?” These views stem
primarily from an agency theoretical perspective
that investigates the consequences of separation of
ownership and control in the modern corporation
(Jensen & Meckling, 1976). Recent corporate ac-
tivity and views, however, have an expanded view
of governance as involving stewardship and lead-
ership, in addition to the narrower financial pru-
dence role. From a survey of board members from
15 countri ...
Running Head ECONOMICS AND ADMINISTRATION1ECONOMICS AND ADMI.docxtodd271
Running Head: ECONOMICS AND ADMINISTRATION 1
ECONOMICS AND ADMINISTRATION 5
ECONOMICS AND ADMINISTRATION
Khalia Hart
Dr. Touhey
MGMT 640 – Financial Decision Making for Managers
March 31, 2019
EXECUTIVE SUMMARY
For the success of every business, there needs to be a strong supporting factor that enforces success. The success of a business indicates that the structure of decision making is tough, strict but at the same time lenient to staff and more importantly customers. Financial management is a very vital factor to consider while engaging in any business activity. Not only is it concerned about customers and staff, but also affects every aspect of the business from managing cash flow and maintaining performance index to developing plans to ensure maximum use of opportunities by business owners. Stakeholders and business owners need to realize the importance of financial management as a tool in business administration since it is the force that ensures continuous development of financial capabilities needed for a business to achieve its full potential.
The macro-economic environment addresses issues concerning behavior. Here are where aAdministrative issues lie. Administration can be categorized into two main categories, administration as a practice and as a science. Administration as a practice mainly addresses the normal routine of business owners and managers and their normal administrative roles in any business entity. Administration as a scientific field is bound to face challenges which are broken down into four main classes. They are discussed fully in this document.
Factors that affect administrative decisions include globalization, cost of control, the relationship between stakeholders and demand on ethical behavior and corporate responsibility. Administrations in different organizations should always be keen to ensure that the named issues are always put under the eye . These factors can greatly affect the performance of a business entity as shall be discussed in this document. Comment by debra touhey: Good start, Khalia. The Executive Summary should explain the problems at hand with potential solutions to those problems. Here is a good reference on writing Executive Summaries:
https://www.inc.com/guides/2010/09/how-to-write-an-executive-summary.html
INTRODUCTION
Since time immemorial, business has always been a very important factor in society. To date, business transactions take place daily through the various business entities that have been established. In the modern world, however, various guidelines, strategies, and tools have been established to ensure that business practices go on smoothly (Robert et al., 2004). Comment by debra touhey: A little too informal for graduate writing
One of the practices that have been developed to ensure maximum productivity in the various entities that have been established, is financial management. The financial management function allows for the planning, organizing, monitori.
Relationship between Corporate Social Responsibility and Earnings Management ...ijtsrd
The relationship between corporate social responsibility CSR and earnings management EM is an extensive empirical study. However, the evidence on the nature of the relationship is unclear. A commonly defined reason for divergent and contradictory results is measurement issues. The purpose of this article is to evaluate alternative operation and measurement methods applied to the CSR and EM concepts in the empirical literature on CSR EM relationships. Our systematized appraisal was conducted over the last nine years from 2008 to 2016. This study has come to different observations. First, CSR measurement methods include sustainability indexes, content analyzes and single dimensional measurements, while EM measurement methods include discretionary accruals, discretionary loan loss provisions, real earnings management, abnormal earnings management, earnings persistence and earnings smoothing. In addition to the unique drawbacks of the approach, the subjectivity of the researcher and the selection anomalies that may influence the nature of the CSR EM relationships identified in the empirical literature. Finally, possible ways of overcoming these disadvantages are recommended. Mashiur Rahman | Sarah Chowdhury ""Relationship between Corporate Social Responsibility and Earnings Management: A Systematic Review of Measurement Methods"" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-2 , February 2020,
URL: https://www.ijtsrd.com/papers/ijtsrd29987.pdf
Paper Url : https://www.ijtsrd.com/management/business-ethics-and-legal-issues/29987/relationship-between-corporate-social-responsibility-and-earnings-management-a-systematic-review-of-measurement-methods/mashiur-rahman
Legal Factors affecting Business Law in KurdistanAI Publications
The main purpose of this study is to examine the relationship between legal factors and business law in Kurdistan. The Business's involvement in financing legitimate change, however still constrained, has just yielded some valuable exercises. The researcher employed quantitative technique to analyze the association between factors affecting business law in Kurdistan. For this reason, the researcher used four different legal factors such us (company law, contract law, employment law and competition law) as independent factors to measure the dependent factor which is business law. I distributed 115 questionnaires, but only 102 questionnaires. The results of multiple regression analysis, Company law, contract law, employment law, and competition law as a legal factors influence positively and significantly business law in Kurdistan.
Readings Chapters 9 & 10 in the Dess, Lumpkin, & Eisner textbook, w.docxlaurieellan
Readings: Chapters 9 & 10 in the Dess, Lumpkin, & Eisner textbook, week 5 lecture notes (
Chapter 9 and 10 Lecture
), and review
Chapter 9
and
Chapter 10
PowerPoint presentations.
This week we focus on how management can develop and use effective strategic control. The first two discussions below address:
Informational control (the ability to respond effectively to change), and, Behavioral control (the appropriate balance and alignment among an organization's culture, reward, and boundaries). The third section, focuses on strategic control from a broader perspective - Corporate governance. Here, we focus on a firm's need to assure that the elected representatives (board of directors) of the owners of the firm (shareholders) ensure that the firm's executives (the management team - headed by the Chief Executive Officer) strive to fulfill their fiduciary duty of maximizing long-term shareholder value.
Your text addresses "traditional" and "contemporary" approaches to informational control. Although both have the same purpose - using information to select, monitor, and implement effective strategies - they have a different impact on employees and organizational outcomes. Also, as environmental conditions become more complex or unpredictable, the need for contemporary approaches to informational control increases.
Traditional Approach to Strategic Control - With a traditional approach to strategic control, goals and objectives are set, strategies are implemented, and performance is compared to the desired standards. Then there is a feedback loop in which information about how performance compares to goals is used to revise strategies. Thus, it is a highly sequential process. Examples of control systems that rely on feedback controls include sales quotas, operating budgets, and production schedules. Traditional process can often be time consuming and many firms only update budgets or other control devices once a year during annual planning meetings. Thus, it may be best suited for environments that are relatively simple and stable.
Contemporary Approach to Strategic Control - Because business conditions typically change rapidly, information controls are needed that can quickly adjust. With contemporary controls, an organization's assumptions, goals, and strategies are continuously monitored, tested, and reviewed. Thus, anticipating and adapting to change is built into the control process. Both informational and behavioral controls are needed for the contemporary approach. Informational controls ask whether the organization is "doing the right things." Behavioral controls, by contrast, ask whether the organization is "doing things right." With this framework, therefore, you can illustrate how the combination of effectiveness ("doing the right things") and efficiency ("doing things right") applies in the context of strategic controls.
Behavioral control is an approach to implementing strategy that relies on three behavioral forces or "levers" -.
How is COVID-19 Reshaping the role of Institutional strategy? By.Dr.Mahboob KhanHealthcare consultant
While workers around the globe are keeping essential services running, it is imperative for business leaders, particularly senior strategy executives, to reflect on the lasting implications of COVID-19 and what they can do to best position their people, their businesses, and society to recover and thrive in the long term. Five key shifts can help chief strategy officers (CSOs) successfully guide their organizations through the pandemic.
“Ensuring Competitive Advantage and Sustainability: an Overview of Obligation...inventionjournals
Corporate Governance is a buzz word in the field of economic administration, regulatory framework and behavioral sciences. The subject of corporate governance has its relevance and significance to varied stakeholders in different ways. In fact, Corporate Governance is a form of obligation, which a corporate body has towards shareholders, employees, customers, Government, Public and towards the Society. Organizations, which are known for good governance by fulfilling all these obligations with a proper blend, are the lead players for the others to follow for securing better and effective competitive advantage. Keeping in mind these varied obligations, Organizations and corporate bodies regularly updating their policies and practices especially for continued competitive advantage but the process of updating is not so easy, they have to find it in a pro-active manner to withstand in the market. The present research paper with this in view aimed at understanding the framework of corporate governance and its role in securing better and effective competitive advantage from the ambit of various stakeholders with a broader consideration from the angle and obligation of Sustainability and Corporate Social Responsibility. Further, the study remarked the changing nature obligations for existence of corporate bodies under dynamic environment. The research paper also differentiated the gap between theory and practice in adoption of sustainability practices. Finally, the research paper ends with some suggestions and ways for better and good governance for organizational sustainability.
What is the TDS Return Filing Due Date for FY 2024-25.pdfseoforlegalpillers
It is crucial for the taxpayers to understand about the TDS Return Filing Due Date, so that they can fulfill your TDS obligations efficiently. Taxpayers can avoid penalties by sticking to the deadlines and by accurate filing of TDS. Timely filing of TDS will make sure about the availability of tax credits. You can also seek the professional guidance of experts like Legal Pillers for timely filing of the TDS Return.
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Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Attending a job Interview for B1 and B2 Englsih learnersErika906060
It is a sample of an interview for a business english class for pre-intermediate and intermediate english students with emphasis on the speking ability.
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
HR recruiter services offer top talents to companies according to their specific needs. They handle all recruitment tasks from job posting to onboarding and help companies concentrate on their business growth. With their expertise and years of experience, they streamline the hiring process and save time and resources for the company.
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Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
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A re balanced scorecard- a strategic approach to enhance manageri
1. A re-balanced scorecard: a strategic approach to
enhance managerial performance in complex
environments
Joseph H. Callaghan
School of Business Administration,
Oakland University,
Rochester MI 48309, USA
E-mail: callagha@oakland.edu
Arline Savage and Steven Mintz
California Polytechnic State University,
Orfalea College of Business,
San Luis Obispo CA 93407, USA
Fax: 805-756-6347
E-mail: savage@calpoly.edu
E-mail: smintz@calpoly.edu
Abstract: This paper is a proposal to develop conceptual and practical
frameworks for evolving corporations seeking to improve their managerial
performance in complex environments with actionable strategies for dealing
with social, environmental and corporate governance issues. These frameworks
are coalesced by social contract theory that extends the traditional view of the
firm as a nexus of contracts to a broader view of the firm as a nexus of social
contracts. A re-balanced scorecard is proposed to induce and evaluate
management performance that captures important dimensions and aspects of
the frameworks established for firms strategically choosing to change their long
term objectives to include those related to meeting their social contract
obligations.
Keywords: balanced scorecard; corporate governance; legitimacy;
management behaviour; management performance; social contract.
Biographical notes: Joseph Callaghan is a Professor of Accounting at Oakland
University in Rochester, Michigan. He received his Doctorate in Accountancy
from the University of Illinois at Urbana-Champaign. His expertise lies in the
financial, managerial and accounting information systems (AIS) areas, across
which he develops model-based valuation systems. Hs primary research areas
include evaluating risk and performance of organisations, and reengineering
legacy AIS. He has served as a Consultant for businesses in the areas of
financial planning and valuation analysis, systems planning and risk
assessment.
agency theory
2. 1
Arline Savage is a Professor of Accounting and Deloitte Faculty Fellow at
California Polytechnic State University, San Luis Obispo. She received her
Doctorate from the University of Port Elizabeth (now Nelson Mandela
Metropolitan University) in South Africa. Her areas of expertise are financial
reporting, financial analysis, forensic investigations, and information systems.
She has co-authored a book, Advanced Financial Accounting, and two Elsevier
research monographs.
Steven M. Mintz is a Professor of Accounting in the Orfalea College of
Business at California Polytechnic State University, San Luis Obispo. He
received his PhD in Accounting from The George Washington University. He
is the author of Ethical Obligations and Decision Making in Accounting: Text
and Cases. He has had numerous papers published in the areas of business and
accounting ethics, corporate governance, and accounting education.
Introduction
“Problems cannot be solved at the same level of awareness that created them”
-Albert Einstein
To achieve long-run sustainability, contemporary organisations need to go beyond the
traditional shareholder-wealth-maximisation paradigm in which managerial performance
and compensation are driven mainly by limited accounting-based financial measures,
‘balanced’ by customer, internal process, and employee learning-and-growth measures
(i.e., the traditional balanced scorecard). Often these measures are merely leading
indicators for improved financial performance and no fundamental shift in strategy takes
place when adopting them.
Although, most agree that managers must now focus on longer-term organisational
survivability rather than short-run profit maximisation (e.g., based on quarterly earnings
per share), traditional managerial performance systems often do not include
non-profit-maximisation rubrics. We propose a revised strategic framework that includes
‘social contract obligations’ among its long term objectives. To ensure that this strategic
initiative is effective, organisations also need a managerial performance system that
ensures compliance with the new organisational strategy – i.e., a system that balances the
organisational benefits of market-based economic rewards with real spillover costs (i.e.,
negative economic externalities) incurred from sub-standard managerial behaviour and
violations of social contracts.
The conceptual framework for such rests upon social contract theory and our view
of the firm as a nexus of social contracts. This conception is an extension of the
traditional Jensen-Meckling view of the firm as a nexus of economic contracts that
established the groundwork for agency theory (Jensen and Meckling, 1976), which has
been criticised for failing to consider the external social context surrounding a
principal-agent relationship (Bruce et al., 2005). Our framework provides the basis
for a managerial measurement system that better reflects the complexities faced by
managers in balancing the various claimants to an organisation’s resources. In particular,
it focuses on:
3. 1
2
3
4
managerial behaviour
organisational legitimacy (organisational behaviour)
legal/regulatory processes (enforceable behaviour)
economic activity (micro-organisational behaviour; macro-societal behaviour).
Social contract theory embraces all four components of this conceptual framework. We
also map the progression from this conceptual framework to a practical structure in the
form of a re-balanced scorecard. Our goal is for the practical framework to lead toward
the development of a managerial performance system for implementing this re-balanced
scorecard to better measure, monitor and induce improvements in managerial behaviour
in a multidimensional organisational environment for those organisations that have
decided that it is in their long term best interest to pursue this strategy (see e.g., De
Bettignies and Lépineux, 2009). Consequently, the re-balanced scorecard provides a
framework to assist in using information to improve managerial decision-making and
overall organisational performance (Akdere, 2009; Ravishankar and Pan, 2008; Choi et
al., 2008).
Despite recent governmental interference in several US markets, most economists
continue to believe that free-market economies still offer the best chance for wealth
creation. However, there is also widespread recognition that pure laissez faire policies fail
to incorporate real spillover costs. For example, pollution costs, the lack of property
rights over some common resources, and excessive executive compensation for firms that
receive government bailout funds all illustrate problems deserving governmental action
through legal and regulatory mechanisms. Similarly, unethical conduct by one firm or
even one individual – e.g., Bernard Madoff – can have severe economic, political and
financial consequences to others.
In the USA, experts estimate that in the wake of Enron, WorldCom, etc., over $3
trillion of losses in market equity capitalisation occurred over a two-year period due to
the loss of investor confidence in the financial/capital markets. This does not include
other indirect costs resulting from the related effects, such as general economic downturn,
a loss of jobs, and government and litigation costs. More recently, the sub-prime
mortgage debacle in the USA and the perceived unethical managerial behaviour in such
firms as American International Group, Inc. (AIG) have had severe repercussions
throughout the world. Moreover, a firm’s survival and failure under crisis is not
determined solely by their economic prospects, but by external political and social
factors.
In the 1920s, President Calvin Coolidge said, “the business of America is business”
and this is no truer today, even if the line between corporate US and the government
becomes more obscure. It makes sense, therefore, to view a firm as a nexus of social
contracts. The challenge going forward is how to monitor and incorporate the costs of
managerial misconduct due to the violation of such social contracts, while preserving the
general benefits derived from a market-based economy.
The purpose of this paper is to present the firm as a nexus of social contracts that
permit the establishment of consistent conceptual and practical frameworks to induce and
measure management behaviour in a multidimensional organisational environment that
includes social, environmental and corporate governance issues. These frameworks are
4. intended to lead to performance evaluation systems in the form of a re-balanced
scorecard for monitoring and inducing improvements in managerial behaviour consistent
with the contemporary organisational environments for organisations whose strategies
include adoption of longer term measures of corporate success. This research is
consistent with Chavan’s (2009, p.405) insight into a more balanced scorecard that is
effective in supporting a living, growing, and viable organisation.
This paper makes the following contributions. First, by viewing the firm as a nexus of
social contracts, it permits a direct analysis of important business issues beyond profit
motives. Second, this view (and the revised framework) encourages a longer-term
orientation that seeks to assure firm survivability and sustainability. Third, we broaden
the traditional shareholder focus to include non-traditional claimants who have social
contracts with the firm. Fourth, from the new conceptual framework, we derive a
re-balanced scorecard of managerial performance that better reflects the complex factors
managers currently face to achieve the firm’s long-term survivability and sustainability.
Regular internal-processes evaluate managers with balanced-scorecard metrics. As
such, these processes are organisationally trapped within that manager’s ‘silo’ – e.g., by
measuring the throughput of a manufacturing department. An extension of this idea is to
obtain performance evaluations from a manager’s supervisor (up), subordinates (down),
and co-managers (horizontal), hence completing a 360° circle of feedback.
Though an improvement over traditional supervisor-only measures of performance
feedback, 360° assessments as usually implemented are still silo-trapped. Our assessment
system extends the traditional 360° process to a spherical assessment system that includes
feedback from upstream process ‘suppliers’ and downstream ‘customers’, hence,
completing the sphere. This transforms the traditional assessment from a
‘hierarchically-oriented view of the firm’ to a ‘process-oriented view of the firm’,
informed by effective corporate governance systems.
We do not specifically prescribe the conditions under which an organisation should
adopt our framework. In this sense, we are not prescribing this framework and its
implementation generally, but we do specify an approach conditional upon the
organisation’s decision to change corporate strategy. Such decisions involve a deep
understanding of the firm’s industry, the industry’s regulatory and legal environment, and
a competitive analysis, including first-mover advantages following a firm’s strategic
choice. While these issues are pivotal to a particular organisation, they are beyond the
scope of this study.
The paper proceeds as follows. In the next section, we develop the conceptual
framework and discuss the notion of social contracts, which bind the components of the
conceptual framework. Next, we discuss legitimacy theory, which provides the
connection between managerial behaviour and the legal/regulatory components. After
this, we introduce relevant economic theory in the context of a legal/regulatory
environment. Thus, having established the major institutional aspects of the managerial
performance system, we describe managerial behaviour within this context. We then
present the practical framework using a balanced scorecard approach that implements the
conceptual framework and suggests the use of various managerial measures. This bridges
the gap between the purely theoretical and its pragmatic implementation, while
attempting to maintain the integrity of both. Finally, we draw conclusions and make
suggestions for further research.
5. 2 The conceptual framework
2.1 Discussion of the framework
The traditional view of the firm as a nexus of contracts consists of relationships primarily
between owners and management (as agent of owner); between upper and lower
management (and non-management employees); between management (as agent of
owner) and creditors; and between management and customers and vendors. This view of
profit maximising subject to legal constraints is beset with well-documented agency and
information asymmetry problems (e.g., Saam, 2007), with management performance (and
compensation) based mainly on the use of limited accounting-based financial measures,
which are leavened (or ‘balanced’) by customer (external direct contract), internal
process, and employee (employment contract) learning-and-growth measures in a
traditional balanced scorecard environment. The intention is that these three dimensions
will lead to improved financial measures. The traditional view relies on the use of
financial measures to mitigate the main agency problem between management and
owners.
This traditional view can be summarised as follows: managing (individual/agency
behaviour or m) → legal/regulatory processes (enforceable behaviour or r) → economic
activity (micro-organisational behaviour; macro-societal behaviour; e), from which we
derive the following model:
+Δm r e (1)⇒ −Δ ⇒ Δ
In our view, effective managerial behaviour for evolving firms includes the faithful
execution of the firms’ social contracts. In this context, social contracts subsume
traditional legal contracts (including abiding by tort standards). While minimally-required
managerial behaviour in line with social contracts is enforceable by legal and regulatory
systems, firm-legitimising behaviour that accounts for and incorporates spillover costs
both pre-empts the need for what might otherwise be inefficient additional legal and
regulatory changes and instils within the culture of the firm ethical behaviours that fulfil
obligations, including those to non-traditional external stakeholders. The net effect of
incorporating these spillover costs should preserve the efficient allocation of resources
through pricing mechanisms at the economic level. Consequently, a balanced approach to
the measurement and inducement of managerial behaviour is circumscribed by
organisational legitimatisation, legal/regulatory and economic considerations. The
retention of the benefits derived from a market-based economy is balanced against legal
and regulatory obligations (e.g., compliance with Sarbanes-Oxley legislation in the US)
and costs that would otherwise result if organisational legitimacy is not established
through effective managerial behaviour. Figure 1 depicts the managerial behavioural,
legitimisation behavioural, legal/regulatory enforcement, and economic action
components of the social contract conceptual framework.
From this figure, we amend our view of the firm to: managing (individual/agency
behaviour) → legitimisation (organisational behaviour) → legal/regulatory processes
(enforceable behaviour) → economic activity (micro-organisational behaviour;
macro-societal behaviour). From this, we derive the following model:
+Δm ⇒ +Δ ⇒ −Δ ⇒ +Δl r e (2)
6. Figure 1 Social contract conceptual framework
By focusing on social contracts (as a superset of traditional legal contracts), we include
the legitimacy problem (social agency) alongside traditional agency problems, and we
add the social dimension to legal constraints. We measure economic behaviour more
broadly to include spillover costs (and therefore sustainability) within the societal
framework. We also expand managerial performance measures to include indirect
external stakeholders, internal process, and learning-and-growth measures.
We posit that this balanced approach would induce positive changes in
agency/individual managerial behaviour (m), which would lead to an increase in
organisational legitimacy (l). This increase in legitimacy would reduce the need for
potentially inefficient societal control of spillover costs by excessive legislation and/or
regulation (r), leading to a balanced macroeconomic policy that maximises the benefits
associated with a more laissez faire resource allocation of the private sector while
explicitly and concurrently incorporating spillover costs to the firm (e). At the
organisational level, improvement in managerial performance should lead to positive
changes in organisational legitimacy through a reduction in the risk-adjusted discount
rate applicable to a firm’s cash flows. By the same token, management misbehaviour
(e.g., the granting of sub-prime mortgage loans to unqualified home buyers) would lead
to an increase in risk (Cormier et al., 1993; Gunthorpe, 1997; Hamilton, 1995; Pava and
7. Krausz, 1996). In addition, benefits associated with pre-empting costly legal and
regulatory actions caused by improvement in legitimacy would inure to the organisation.
2.2 The social contract
Organisations and society coexist in a social-contractual relationship (e.g., Keeley, 1988).
The idea of social contracting, consisting of explicit or implicit agreements among
members of society to act with reciprocal responsibility in their relationships, can be
traced back to Plato (428BC-348 or 347BC). Other advocates of the social contract
include philosophers Thomas Hobbes (1588–1679), John Locke (1632–1704), and Jean
Jacques Rousseau (1712–1778). The social contract assumes a societal consensus of what
is, and is not, desirable behaviour by members (including corporations) of a society. It
not only represents an explicit set of formally specified obligations that are enforceable
through legal and regulatory mechanisms, but also a set of indirect, implicit
responsibilities towards those who directly or indirectly conduct business with an
organisation [Donaldson, (1982), pp.32–36]. In our view, social contract theory is
comprised of both legal/regulatory obligations that are institutionally enforceable and
implicit social and environmental obligations that can be met through effective
managerial behaviour. Effective enforcement of the firm’s social contracts through a
balanced management evaluation process informed by the commitment to ethical values
would lead to increased organisational legitimacy.
2.3 Organisational legitimacy theory
All organisations owe their continued existence to the mandate of society-at-large
[Shocker and Sethi, (1974), p.67; Gray et al., (1991), p.15; Mathews, (1993), pp.26–27,
(1998), p.25]. Legitimisation is thus a necessary long-term management strategy for
maintaining the trust of the society that authorises and validates the privileges inherent in
the corporate form of doing business [for an investigation of over 500 Norwegian
companies, see Vidaver-Cohen and Brønn (2008)]. As part of the social system, firms
utilise resources that might be otherwise allocated. Although, in market-based economies
much deference is given to the markets to make resource allocation decisions, excess
spillover costs need to be systematically incorporated in order to establish long-term
economically efficient allocations. We use Dowling and Pfeffer’s (1975, p.122)
definition of organisational legitimacy.
Organisations seek to establish congruence between the social values associated with
or implied by their activities and the norms of acceptable behaviour in the larger social
system of which they are part. Insofar as these two value systems are congruent we can
speak of organisational legitimacy. When an actual or potential disparity exists between
the two value systems, there will exist a threat to organisational legitimacy.
For example, Shell Oil’s Nigerian and Brent Spar scandals culminated in a change to
Shell’s underlying business principles, in which the organisation formally committed
itself to supporting ‘fundamental human rights in line with the legitimate role of
business’ [Harveson and Corzine, (1997); Donaldson and Dunfee, (1999), pp.1–5].
Consequently, organisational legitimacy is philosophically rooted in the notion of a social
contract between organisations and society [Belkaoui, (1984), p.44].
8. Neither profit-making nor legal compliance alone establishes organisational
legitimacy [Mathews, (1993), p.30]. Dowling and Pfeffer (1975, p.124) discuss the
existence of three partially interdependent sets of organisational behaviours, namely,
those that are economically viable, legal, and legitimate. Our conceptual framework
formally integrates a fourth interactive component, effective managerial behaviour,
which relies on underlying ethical values and effective corporate governance and is
the vehicle for the implementation of the three interdependent factors. Thus, our
framework establishes the firm as a nexus of social contracts, coalesced by social contract
theory, which is effectively managed by managers who establish an ethical tone at the top
and whose performance is measured in a balanced, consistent and comprehensive
manner.
Legitimacy theorists predict recurrent conflicts between management and society
over the form of legitimisation activities, which consists of two types. The first type is
substantive activity, where management materially changes its behaviour, and/or
manages to change social norms and values because the society that the firm depends
upon for critical resources generally prefers substantive responses [Ashforth and Gibbs,
(1990), pp.178–182; Suchman, (1995), p.576]. The second type is symbolic activity,
where management does not change its behaviour, but attempts to portray its activities in
a manner in which they appear to be compatible with social norms and values (Ashforth
and Gibbs, 1990, p.180; Pfeffer, 1981, p. 28). In the past, management has generally
favoured offering symbolic assurances rather than substantive action (Ashforth and
Gibbs, 1990, p.182; Suchman, 1995, p.585), since the former reflects the traditional
shareholder-centric view of the firm. Since our motivation is to develop a performance
system that motivates substantive managerial legitimisation activities, our focus is on
substantive strategies. These strategies are briefly summarised below:
1 Role performance: Management adapts goals, methods of operation, and/or outputs
to conform to the performance expectations of the society upon which it depends for
critical resources [Ashforth and Gibbs, (1990), p.178; Dowling and Pfeffer, (1975),
p.127].
2 Coercive isomorphism: Management blends evolving societal norms and values into
its organisational structure in order to conform to society’s collectively valued
purposes and institutionalised practices [DiMaggio and Powell, 1983; Meyer and
Rowan, 1977; Suchman, (1995), p.581].
3 Altering socially institutionalised practices: Management attempts to communicate
an altered definition of social legitimacy which reflects its activities. This is the most
difficult strategy to implement [Dowling and Pfeffer, (1975), p.127].
Our approach is to implement a role performance strategy that temporally induces
coercive isomorphism. While altering socially institutionalised practices is possible, it has
rarely been achieved and thus is not included in our framework.
In summation, there is a need for management performance-based evaluation systems
to motivate behaviour that establishes some level of substantive organisational
legitimacy. While some substantive legitimisation may merely reflect self-interested
economic behaviour (in that it may avoid certain legal/regulatory sanctions), it might also
reflect changes in the organisational culture that recognises the broader obligations under
the social contract. It also may specifically incorporate spillover costs that are detrimental
9. to both society and the firm itself in the long-term. Organisational legitimacy thus
provides the logical connection between effective management behaviour of individuals
and the social legal/regulatory environment that the contemporary firm faces.
2.4 The legal/regulatory environment and economic theory
2.4.1 Legal/regulatory
The legal/regulatory environment concurrently promotes and constrains economic
activities in market-based economies. Through the enforcement of private property rights
and private commercial contracting, private sector economic activity is facilitated. These
enforcement activities (or threats thereof) reduce the risk associated with engaging in
market-based transactions. Thus, the efficient allocation of scarce economic resources
associated with market-based economies has as its underpinning certain legal institutional
arrangements. These arrangements include constitutional (e.g., US interstate commerce
and ‘taking’ clauses), legislative (e.g., the US Uniform Commercial Code and Internal
Revenue Code) and common law provisions. Conversely, the legal environment, along
with its regulatory apparatus, proscribes certain private economic activity. Examples
include anti-trust, labour, environmental and discrimination (e.g., price, racial, age, and
gender) law. In addition, tort law (the standards enforcing ‘reasonable’ behaviour and
duties with the threat of monetary damages for breaches of those duties) and criminal law
(with the threat of fines and/or imprisonment for criminal conduct) deter or prohibit
certain types of individual and business conduct.
Of course laws and standards evolve temporally. In terms of legitimacy, as societal
expectations of individual and organisational behaviour changes, behaviour that once was
induced by legitimisation can be induced by new court rulings, legislation, and
regulation, such as the Sarbanes-Oxley Act that was enacted following the accounting
frauds at Enron and WorldCom and a house bill in the USA that would tax executive
bonuses at 90% for firms in receipt of at least $5 billion in federal bailout funds, as
described in A Wall Street Journal report aptly entitled ‘Wall street shudders as
lawmakers take aim at the industry’s pay system’ [Lucchetti and Lattman, (2009), p.A6].
These changes are intended to and in fact do impose costs upon the organisation and the
economic system generally.
Costs imposed by legal/regulatory mechanisms may be economically inefficient for
several reasons. First, compliance costs are incurred by all, not just to those who have
exhibited the undesirable behaviour. Second, enforcement necessarily has elements of
randomness in that the proscribed behaviour may be hard to observe and consequently
enforcement resources themselves have to be allocated. Third, proscription by definition
bars certain conduct, whereas the societal interest may lie in inducing positive action for
which legal/regulatory systems are not particularly well-designed. Finally, it may not be
the ‘wrong doers’ who necessarily bear these costs, but the consumers of the
organisation’s products and services may have to bear the burden. A good example is the
cost of complying with Sarbanes-Oxley legislation. According to the findings of the first
annual Directorship/RHR International Board Survey (2004) of corporate boards,
compliance costs increased 77% between 2003 and 2004, the first two years following
enactment of the law. In fact, general electric spent $30 million on internal control
requirements in 2004. Many have criticised the internal control (Section 404)
10. requirements for imposing costs upon companies that have been complying with relevant
laws all along. Support exists for such criticisms with respect to the recent financial crisis
brought on by the greed of some managers. One may wonder where the internal controls
were to prevent and detect the risky behaviour that led to the $700 billion bailout to be
paid by the public.
For all of these reasons, it may be in society’s interest not to use the legal/regulatory
system, but rather to allow for self-regulation through legitimisation processes. That is,
dynamic balancing is necessary to achieve desired societal behaviour between
legal/regulatory mechanisms and social contract enforcement. In either case, the
organisation can be viewed as the nexus of implicit and explicit social contracts. The
question becomes what the better enforcement mechanism is for these organisational
duties. This becomes the crux between the legal/regulatory and the organisational
legitimacy components, with each having a differential impact on the market-based
economy.
2.4.2 Economic theory
Economic systems can theoretically run the continuum from pure laissez faire (i.e.,
‘invisible hand’) to purely controlled economies (where central governmental planning
leads to resource allocation such that no private property rights adhere to individuals). To
date, it appears that market-based economies have been more successful at generating
wealth than either socialised or communist systems. The sine qua non of market-based
economies is the establishment of market mechanisms that through an unregulated
pricing process allocates scarce economic resources. Individuals and organisations
motivated by economic profit manifest their preferences (and private information) in the
formation of market prices. Societies with market-based economies have a keen interest
in permitting markets to function well. However, a lack of clearly delineated property
rights causes markets to ignore the incorporation of the full cost of the economic
resources utilised into prices. The classic example is of a manufacturer that pollutes a
river as part of its production process because nobody owns the rights to the clean water
in the river, resulting in spillover cost being incurred by others or society at large.
Further, the costs of other externalities, such as an interstate transportation system, are
not fully incorporated into measurable organisational costs. To some extent, the Pigovian
taxes attempt to incorporate these costs, but the cause and effect is very noisy and
inherently inefficient.
Thus, the failure of laissez faire policies to incorporate spillover costs on the one
hand, versus economic incentives lost by excessive or inefficient legislation and
regulation on the other hand, necessitates a balancing of interests to achieve optimal
social arrangements. This balancing would require legislative/regulatory action where
persistent failure of organisations to attend to all of their social contractual obligations
through the maintenance and changing of managerial behaviour in a dynamic social
system exists.
In summary, varying economic systems, legal/regulatory institutional arrangements
and legitimacy theory play important roles in establishing the nature, scope, benefits and
costs of social contracting. Proper consideration and balancing of these components
provide a conceptual basis for determining and understanding what a particular society
demands with regard to individual managerial behaviour.
11. 2.5 Effective management behaviour
To attain improved substantive legitimacy that reduces the need for inherently inefficient
regulation or legislation, while incorporating spillover costs, requires a change in
individual manager behaviour. Organisations, markets, and institutions are aggregations
of individual behaviour (Barnard, 1938; De Gaus, 1997). Moreover, in the
legal/regulatory area, moral- and/or culturally-based standards of business behaviour
need to go beyond the letter of the law to fulfil the intent of the law or higher ethical
values. Thus, for both short-term self-interest and long-term survival, business
organisations need to systematically incorporate processes that improve the managerial
performance of their people.
If an improved managerial component can be incorporated into the traditional view of
the firm as a profit maximiser, then the theory of the firm can transform from a limited
agency view as a ‘nexus of contracts’, to the more encompassing view of the firm as a
‘nexus of social contracts’, within a realistic institutional environment. Therefore, the
conceptual development provides a framework for considering the most important
constructs for the logical sequence of changed individual manager behaviour. Changed
manager behaviour, informed by ethical values that help to set the proper tone, leads to
changed organisational behaviour at the microeconomic level. The firm will then interact
with the legal/regulatory institutional environment in a market-based economy to
preserve the best aspects of private market mechanisms, while systematically embedding
spillover costs.
Having first established the conceptual framework relating management behaviour to
organisational legitimacy and then to its effect upon both the legal/regulatory and
economic environments, we turn to the practical measurement system that implements
these conceptual constructs.
3 The practical framework
3.1 Introduction
While the first framework proposes re-balancing the traditional balanced scorecard at a
theoretical level, the practical framework proposes specific measures that can be used by
actual organisations to measure the new dimensions of the re-balanced scorecard. Given
the strategic approach of this research, traditional empirical validation of our proposed
model is not possible at this time. However, the practical framework proposed does
systematically capture many real-world phenomena that would otherwise be seemingly
unrelated. Currently, corporate initiatives related to, e.g., sustainability, carbon
management, corporate social disclosures, and control of spillover costs, generally, are
observable phenomena that our framework can capture and systematise. Otherwise,
these phenomena would not only appear to be ad hoc but incapable of being measured in
a way that would give management specific incentives consistent with their
organisation’s strategy. As our proposed framework is adopted by organisations,
empirical validation of this approach would be possible, especially by comparing external
performance measures of adopting organisations against otherwise similar non-adopting
organisations.
12. The introduction of indirect stakeholders as a scorecard category, and its associated
suggested measures, offers organisations to systematically think about and implement
these underlying strategic initiatives. Moreover, the framework provides a way for
organisations to motivate managers to implement these initiatives and achieve their ends.
Specifically, managers’ performance is measured by the re-balanced scorecard on both
the indirect stakeholder and associated learning-and-growth dimensions that are
consistent with chosen corporate strategy.
3.2 Stakeholder taxonomy
The previous section includes the integration of the four dimensions of the conceptual
framework: improved managerial behaviour constructs, legitimacy theory,
legal/regulatory institutional arrangements, and balanced economic systems.
Organisational legitimacy, while internally attempted through improved individual
management behaviour (guided by ethical values, supported by effective corporate
governance systems, and induced by an effective management evaluation system), is
externally conferred by various coalitions of stakeholders. The legitimacy component of
the social contract theory permits consideration of quasi contracts with indirect
stakeholders emphasising ethical behaviour of management. The separation of owners
from management in the contemporary corporation manifests itself by the delegation of
shareholder authority to an elected board of directors, who set policy and appoint
executive management, who, in turn, hire middle and lower management. Consequently,
the board of directors represents the boundary between external and internal direct
stakeholders. Corporate governance issues are raised on this boundary. Table 1 provides
taxonomy of the types of stakeholders.
Table 1 Extended stakeholder taxonomy, including examples
Direct stakeholders Indirect stakeholders
External to
firm
Shareholders SEC and other governmental
regulators
Creditors Competitors
Customers Environmental coalitions
Vendors Animal rights coalitions
External auditors Other activist coalitions
Markets Public-at-large
Internal to
firm
Management (includes Board of
Directors)
Audit committee
Organisational adaptation based on all
feedback (by adding indirect
stakeholders)
Employees
Internal ‘customers and vendors’
The external/internal dimension in Table 1 delimits the information available and the
intensity of the contractual relationship, whereas the direct/indirect dimension goes to the
enforceability and magnitude of economic claim that the group has on the organisation.
Traditional measures of organisational performance focus on direct claimants with public
information being required for direct external stakeholders (traditional nexus of contracts)
13. -
and are well-developed. Conversely, measures for external indirect stakeholders are not
well developed (i.e., the social aspect added to traditional nexus of contracts).
Collectively, these measures will monitor overall organisational compliance with its
nexus of social contracts.
3.3 The conventional balanced scorecard
In the 1990s, Kaplan and Norton (1992, 1993, 1996a, 1996b, 1996c) introduced the
balanced scorecard, which is an internal assessment, improvement and reporting system.
It ties a typical measurement system to an entity’s strategic plan and supplies key
indicators for management to perform its function. The successful implementation of this
management system turns strategy into action. The balanced scorecard remains one of the
most popular management tools and has gained global prominence (Aravamudhan and
Kamalanabhan, 2007a, 2007b, 2009; Korhonen and Baumgartner, 2009; Lee and Lai,
2007; Punniyamoorthy and Murali, 2009).
The conventional scorecard (see Figure 2) measures performance by combining
financial measures with non-financial measures from the following perspectives:
1 financial
2 customer
3 internal business processes
4 learning-and-growth.
Figure 2 The conventional balanced scorecard (see online version for colours)
Managerial
Performance
Customer
(External Direct)
Employee
Learning-
and-Growth
(Internal Direct)
Internal
Processes
(Internal Direct)
e.g., Throughput
Financial
Measures
(Shareholders, as
main external direct)
-Traditional
-Financial
Monitors
MeasuresMeasures
Measures Measures
Feedback
14. The balancing is done by including non-financial measures (customer, internal business
processes, and learning-and-growth) with historical financial accounting measures.
Inducing improved performance to meet the objectives of the strategic plan requires
monitoring of the entity’s obligations to its traditional stakeholders, the most common
being the stockholders, creditors, customers, and employees. In turn, a thorough
assessment of the organisation’s business processes is needed to align these obligations,
and with the business strategy. Learning-and-growth opportunities facilitate
improvements to business processes, and also require that employees change their
behaviours when necessary.
3.4 The re-balanced scorecard
Figure 3 depicts the major dimensions of our re-balanced scorecard approach to the
development of an improved managerial rating system. From the corporation’s
perspective, to induce improved managerial behaviour requires an analysis of both the
organisation’s obligations under its social contracts and the public’s perception of its
managerial performance. This includes the traditional view of obligations to its
stakeholders. In turn, the organisation needs a thorough assessment of its internal
processes to align them to its expanded obligations. Finally, this requires that individual
organisational members change their behaviours via organisational learning-and-growth
opportunities, given the dynamic nature of the social, contractual relationships and the
corresponding changes in obligations.
Figure 3 Dimensions of the re-balanced scorecard (see online version for colours)
Traditional
External Direct
How do we look to
these stakeholders?
e.g., profitability, liquidity,
risk, growth, market share,
number of customer complaints
Extended
Internal Adaptation
How does the firm adapt?
Can the firm adapt to
attain/maintain legitimacy?
Extended
External Indirect
How do we look to
these stakeholders?
e.g., comply with
intent of laws/regulations,
Global Reporting Initiative,
eliminate animal testing,
CEO compensation
Traditional
Internal Direct
Which key internal processes
must we improve?
e.g., manufacturing cycle efficiency,
hours of training per employee
15. -
-
--
-
-
-
-
This practical framework adapts the widely-used ‘balanced scorecard approach’ (Kaplan
and Norton, 1992, 1993, 1996a, 1996b, 1996c) to operationalise the conceptual
framework. Practical measurements are outlined that would permit the actual monitoring
of organisational managerial performance and suggests a path for inducing temporal
improvements in this performance.
In the dimensions of the re-balanced scorecard presented in Figure 3, we substitute
the traditional ‘customers’ category with ‘indirect, external stakeholders’, and now
include customers under direct external stakeholders, along with investors and vendors.
Consequently, we expand traditional financial measures to include metrics on all external
stakeholders and we add a new dimension for indirect external stakeholders. This
dimension permits the systematic incorporation of measures related to indirect
stakeholders of the firm. Often, through regulatory or political action, these groups bring
performance considerations that would otherwise be ignored by managers. By including
this dimension, we lift the time horizon that managers face by including emerging,
possibly strategic issues. After all, the ‘customers’ of managerial performance are the
various classes of stakeholders, and from each group we can extract various measures of
performance. Thus this framework provides a change from narrowly defined direct
stakeholders (e.g., managers and customers) to wider categories of stakeholders.
Figure 4 depicts the re-balanced scorecard for monitoring and changing
organisational legitimacy with the internal methods available to the organisation to
monitor and change its managerial performance.
Figure 4 The re-balanced scorecard (see online version for colours)
Managerial
Performance
Indirect
External
Stakeholders
-Regulatory
(includes SOX)
Non-traditional
Organizational
Learning-and-
Growth:
Core
Feedback Driven
Internal
Processes
(Includes those for
Corporate Governance)
Spherical Assessment
Direct
External
Stakeholders
Traditional
Financial
Customers
Vendors
Monitors
MeasuresMeasures
Measures Measures
Feedback
Organisational performance has external measures related to direct external stakeholders
(traditional), balanced by external measures related to indirect external stakeholders.
These external measures are coupled with analogous and extended internal process
measures that can be broken down on a direct and indirect basis (from 360° to spherical
assessment). Internal direct absorbs the traditional internal processes category, but
16. extends this category by inclusion of assessment measures from both internal ‘suppliers’
and ‘customer’. The traditional learning-and-growth dimension has been changed to
capture organisational adaptation that is used as a mechanism to motivate managers and
employees to learn, assess and implement the feedback obtained from all stakeholders
and internal processes of our re-balanced scorecard.
The standard financial analysis measures related to direct external stakeholders would
be gathered and standardised. For example, traditional profitability, liquidity, leverage,
and growth measures arising from financial statement analysis can be performed and
compared to industry norms. These analyses, especially those related to financial distress,
operating risk and financial risk would give insight not only into shareholder return
prospects, but also to risk associated with financial environments conducive to potential
unethical behaviour including earnings management techniques that are designed to
report earnings based on management’s desires and not as it should be reported under
generally accepted accounting principles.
Unsound financial environments and business models are breeding grounds for
earnings and balance sheet manipulations, a manifestation of unethical financial
reporting. In addition, earnings manipulation measures (e.g., the overuse of accruals
relative to an industry average), financial risk and an analysis of financial analysts’
forecasts properties are additional sources of empirical information bearing on the ethical
risk environment. Customers and vendors, now included as direct external stakeholders
would thus have measures (e.g., sales returns, warranty work and survey data) included in
this category.
Indirect, external stakeholders would vary by organisation. For example, an oil
refinery would rank an environmental coalition higher than would a non-manufacturing
service company. Once important coalitions are identified, indirect and direct empirical
measures of these groups’ perceptions could be gathered in several ways including the
number of adverse media reports, SEC complaints, pending law suits, class action
lawsuits, and surveyed perceptions of coalition members.
For internal direct measures, along with traditional internal process measures such as
throughput, manufacturing efficiency, and product quality measures, we would include
formal spherical assessment measures. Feedback from indirect stakeholders, along with
feedback from traditional direct stakeholders, could include formal questionnaire-based
survey results as measurements.
The legal/regulatory and legitimacy components of the conceptual framework can be
better operationalised by viewing them from the perspective of various stakeholder types
that form coalitions (or agents), and who perform the conference of legitimisation, with
certain types of stakeholder coalitions having more power than others (Mitchell et al.,
1997). The traditional balanced scorecard is directed at managerial performance and the
balancing is done by including non-financial measures (i.e., internal processes, customer,
and employee learning-and-growth measures). The importance of transforming the
traditional ‘customers’ into ‘indirect external stakeholders’ in our re-balanced scorecard
should be underscored. After all, the ‘customers’ of managerial performance are the
various classes of stakeholders, and from each group we can extract various measures of
performance. Under our approach, organisational performance has external measures
related to direct external stakeholders (traditional), balanced by external measures related
to indirect external stakeholders that are coupled with internal processes, involving
organisational learning-and-growth measures built on a foundation of ethics and
supported by corporate governance mechanisms.
18. Table 2 shows the four measurement groups that will be employed. These are:
1 external, direct measure derived using finance and financial accounting methods
2 external, indirect measures, including, e.g., the perceptions of various indirect
coalition groups, say environmentalists organisations
3 internal process measures (including those for corporate governance) using spherical
assessment techniques
4 organisational learning-and-growth opportunities for the organisation’s board and
employees that induce observable changes in managerial conduct.
The resulting managerial performance measures are then constructed by weighting the
various measures from the four dimensions.
Table 2 provides re-balanced scorecard taxonomy with examples of measures for
each category. These measures are not prescriptive, but will be chosen by the firm.
Measures are also not necessarily mutually exclusive to each category. Under the first
category, the standard financial analysis measures related to direct, external stakeholders,
i.e., shareholders and creditors, would be gathered and standardised. For example,
traditional profitability, liquidity, leverage (risk), and growth measures arising from
financial statement analysis can be performed and compared to industry norms. These
analyses, especially those related to financial distress, operating risk and financial risk
would give insight not only into direct claimant return prospects, but also to risk
associated with financial environments conducive to potential unethical behaviour.
Unsound financial environments and business models may be breeding grounds for
earnings and balance sheet manipulations, a manifestation of unethical financial
reporting. In addition, earnings manipulation measures (e.g., the overuse of accruals
relative to an industry average), financial risk measures (e.g., firm beta), and an analysis
of financial analysts’ forecasts properties are additional sources of empirical information
bearing on the ethical risk environment.
Second category measures would entail the systematic identification of important
indirect, external claimants. This would vary by organisation. For example, from a
stakeholder perspective, an oil refinery would rank an environmental coalition higher
than would a non-manufacturing service company. Once important coalitions are
identified, indirect and direct empirical measures of these groups’ perceptions could be
gathered in several ways, as suggested by the legitimacy literature. The number of
adverse media reports, SEC complaints, pending law suits, class action lawsuits, and
surveyed perceptions of coalition members are possible candidates for inclusion as
elements of this dimension.
One approach to the implementation of the internal processes and learning-and
growth dimensions of the balanced scorecard is the use of some assessment instrument.
Proper assessment of internal processes leads to implied learning-and-growth
opportunities for organisational improvement. The hierarchical orientation of the 360°
assessment, though an improvement on traditional assessment methods, has limitations.
Being hierarchical, feedback is limited to internal feedback-providers, while excluding
internal and external vendors and customers. This precludes a process-oriented
assessment approach. The use of our spherical assessment approach can overcome these
limitations.
19. On the internal processes dimension, our spherical assessment instrument improves
the traditional 360° instruments in two ways. First, the important categories and
constituent elements of managerial behaviour can be identified from the literature. For
example, under a category of ‘managerial leadership’ might be an element such as: ‘The
manager communicates the importance of individual ethical behaviour’. A participant
could then evaluate the manager on a survey scale, based upon his/her observation of this
behaviour. Participants would include the multiple subordinates, multiple co-workers,
and the supervisor of the target manager. Second, to make the 360° process ‘spherical’
would entail including as participants the ‘suppliers’ and ‘customers’, whether they be
internal or external to the organisation. These external stakeholders are generally
concerned about fair treatment and reliability. The systematic use of the spherical
assessment results would give rise to individual, departmental, divisional and
organisational measures of managerial performance. Gap analysis at the elemental level
would give rise to manager-tailored learning-and-growth opportunities.
Simpler measures of this dimension could include indicators like whether or not there
is an organisational managerial policy, whether or not employees are required to sign
such a policy, and so forth. All of the measures would assume management ‘buy-in’ to
the new measurement system, the commitment to ethical values, and the acceptance of
costs imposed by the monitoring processes. The management of the monitoring process
itself is critical. Ideally, board sponsorship and management by the audit committee
would be mandated, with management-independent consultants performing the actual
monitoring tasks.
The spherical assessment internal monitoring process would give rise to a natural
mapping of managerial performance gaps to training and development in terms of
specific learning-and-growth opportunities. For example, if a manager were deemed
deficient on the ‘knowledge of corporate managerial policies’ element, then training on
this specific dimension would ensue. Subsequent spherical assessments could measure
the effectiveness of the training as well as the training measures themselves. Thus the
internal process could be both iterative and dynamic, with the dynamic aspect picking up
new elements as the environment changes. Consequently, learning-and-growth
opportunities provide a mechanism to improve internal processes. Improved processes
and behaviour would presumably improve stakeholders’ satisfaction. Improved societal
and stakeholder satisfaction increases legitimacy and improves long-term financial
performance of the organisation, and at the aggregate level the market-based economy
itself.
This framework also provides the basis for externally validated organisational
managerial performance. Similar to bond rating agencies, external measures could
provide a managerial rating component. Governance metrics rating agencies such as
Governance Metrics International rate corporate governance characteristics of
participating companies. Other rating agencies are The Corporate Library, ISS Corporate
Governance Quotient, and TRUE Course-Shark Repellent.
In conjunction with direct internal observations of managerial behaviour, externally
validated traces of such behaviour would be also captured. These external observations
would measure phenomena like earnings management, lack of auditor independence, and
financial environments generally conducive to unethical behaviour.
It is one thing to identify the important dimensions and empirical measures of an
organisation’s balanced managerial assessment. It is quite a challenge, however, to
20. properly weigh the measures within and across these dimensions. Each organisation
would have to struggle with these problems. On the other hand, established rating
agencies, e.g., Standard and Poors for bond ratings, have confronted these difficult issues.
The use of multivariate statistical techniques, along with post hoc analysis of failures,
would improve weighting schemes over time. Finally, good faith attempts to measure
managerial performance trump no attempt at all, if there is a recognition that an
organisation’s success and ultimate viability depend upon societal acceptance of its
managerial performance in fulfilling its explicit and implicit obligations.
4 Conclusions and further research
To arrive at a more balanced management evaluation system that more fully incorporates
spillover costs, organisations should be more proactive in changing and maintaining
individual manager behaviour to attain substantive legitimacy that fulfils the social
contract. This should lead to a more balanced economic system that continues to use
private incentives and market allocation mechanisms in a politically stable environment,
while reflecting the values and full costs of its economic activities. This paper offers
conceptual and practical frameworks to help achieve this social goal.
The progression from the conceptual framework to the practical framework
(re-balanced scorecard) is as follows: Managerial behaviour manifests itself in the
internal processes, which are improved by learning-and-growth opportunities for
management and employees and spherical assessment of suppliers and customers, all
reflecting the ethical values of the organisation. Legitimacy (and lower legal/regulatory
costs/risks) is manifested by perceptions of indirect external stakeholders. Finally,
traditional external stakeholders provide the macroeconomic measures.
If implemented well, our re-balanced scorecard should force management
to articulate a coherent strategy built on a commitment to ethical behaviour that is
to be communicated throughout the organisation, and the feedback loop will make
the evaluation process a dynamic one. Managerial measures are more likely to be
actionable and consistent with the organisation’s strategy. Additionally, the portfolio
of measures will reduce gaming problems. More specific benefits of the re-balanced
scorecard include increased shareholder value via risk reduction, reduced legal
exposure to negligence and criminal liabilities, reduced insurance premiums, decreased
regulatory costs, reduced spillover costs, and improved corporate image and citizenship.
Possible problems are lack of corporate buy-in, culture shock/resistance, management
push for measures they do relatively well on, and potential gaming via side
agreements.
Subsequent phases of this research include finding appropriate metrics for monitoring
organisational managerial performance and inducing temporal improvements in this
performance; assigning appropriate weights to these metrics; doing ex-post analysis; and
developing and assessing the usability of a computer information system to implement
the re-balanced scorecard. A further direction for research could take a Galbraithian
perspective on this same issue within the broader context of entrepreneurial capitalism’s
evolution towards the advanced industrial state of today.
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