Corporate culture has long been a vital, if elusive, element of a company’s success. Cost-cutting and entrepreneurial cultures, for example, have been credited for the long-term success of many companies. Conversely, culture clashes have been blamed for merger and acquisition failures and incompatible employees. But just how corporate culture can be measured is still a mystery. For instance, the causal link, if any, between casual Fridays and a “risk-taking culture” remains empirically undemonstrated.
Three researchers are beginning to get a handle on measurable and meaningful characteristics through which corporate culture manifests. Corporate policies captured by investment and financial styles and operational budgeting provide windows into a company’s culture. In their January 2007 working paper, Does Corporate Culture Matter for Firm Policies?, Henrik Cronqvist and Mattias Nilsson, assistant professors of finance at Ohio State University’s Fisher College of Business and Worcester Polytechnic Institute, respectively, and Angie Low, a Ph.D. student at Ohio State University and Nanyang Technological University, suggest that when companies spin off new business units, those new corporations will inherit their parent companies’ culture. This inheritance, the authors propose, is evident in the comparison of the corporate policies of parents with their spinoffs. They looked at 217 spinoffs (excluding those forced by mergers and those owned by multiple parents) from 1980 through mid-2005 to see whether those companies’ policies more closely resembled those of their parents or their industry peers. Read more →
Christopher Marquis and Julie Battilana develop an institutional theory of how local communities continue to matter for organizations, and why community factors are particularly important in a global age. Since globalization has taken center stage in both practitioner and academic circles, research has shifted away from understanding effects of local factors.
In their paper, entitled Acting Globally but Thinking Locally? The Influence of Local Communities on Organizations, they try to redirect theoretical and empirical attention back to understanding the determinants and importance of local influences. They review classical and contemporary research from organizational theory, sociology and economics that have focused on geographic influences on organizations–adapting Scott’s influential three pillars model, including regulative, social-normative and cultural-cognitive features to conceptualize an overarching model of how communities influence organizations.
Their approach thus runs counter to the idea that globalization is a homogeneity-producing process and the view that society is moving from particularism to universalism. With globalization, not only has the local remained important, but in many ways local particularities have become more visible and salient, and so understanding these dynamics will be helpful for researchers addressing institutional isomorphism and change.
Hedge funds have historically lodged in a dark corner of the investment universe, where investors and regulators were happy to leave them. There they have rested, mostly in the investment portfolios of the wealthy clients of private banks as tools to preserve wealth.
But institutional investors – the big pension funds, local authorities, charities and university endowment funds –- have become more interested in alternative investments. Falling markets have highlighted the benefits of funds that can pay positive returns regardless of what stock markets are doing, apparently with less volatility.
Fund managers, too, are seeking more flexibility in the way they invest, and have migrated in their hundreds to set up and run their own hedge funds. The number of hedge funds now exceeds 6,500, according to some estimates. And the amount of money invested has more than doubled since 1998 to more than $750bn. Read more →
When a change-management consultant interviewed a group of workers, he realized they didn’t understand the impact of returned shipments. After that meeting, the consultant placed a pickle jar in the middle of the shipping department floor. For every successful shipment, management placed a quarter in the jar. For every shipping error, management removed $10. The money that remained in the jar at the end of the month was distributed to department staff.
While some business strategies analyze the affects of change on the bottom line, change management focuses on people and how they resist, cope with, and ultimately accept change in the workplace. Executive leaders use change-management strategies to create a culture that embraces change, and often find that these strategies make the difference between the success and failure of new management processes and system implementations. Read more →
Innovation is one of those words that can mean different things to different people — indeed, if you ask a group of your colleagues to write a sentence or two about what they mean by the term, you should expect a lot of variety, for example:
- A new idea.
- A really great new product.
- Something different from the competition.
- Something that makes real money.
- Something that is so radically different.
Some people tend to emphasize the creativity aspect of innovation; others stress the need for commercial success; yet others highlight the importance of being radical. Read more →
The son of a stockbroker, David Ogilvy was born in 1911. Despite the family’s reduced financial circumstances Ogilvy was dispatched to Fettes School, a prestigious private school near Edinburgh, Scotland. What Ogilvy lacked in natural academic ability he made up for in scholarly application, securing a scholarship to study history at Christ Church College, Oxford University.
When he left university, the young Ogilvy sought adventure, trading the Cotswold stone of the Oxford colleges for the boulevards of Paris. In France, he worked in the kitchens of the Hotel Majestic. His first assignment was to prepare meals for customers’ dogs. When Ogilvy had tired of la vie Parisienne he returned to England to sell a new type of cooking stove, the AGA.
As a salesman Ogilvy proved a great success. So much so that he was asked to write a manual on how to sell the cooker for the AGA sales force (thirty years later the editors of Fortune magazine announced that it was probably the best sales manual of all time). Read more →
It’s hard to manage any organization so that its long-term interests aren’t sacrificed to short-term expedience. But there is an added wrinkle for organizations whose operations are globally dispersed: Cultural orientation toward the future varies widely the world over.
Mansour Javidan and his colleagues discovered that looks at how cultures vary in relation to a set of factors important to organizational management and leadership.
They found that societies vary greatly in how oriented they actually are to the long term, but in most cultures people’s personal values and aspirations are similar and quite future oriented. What’s more, most people feel their cultures aren’t as forward thinking as they should be.
In their study, Singapore emerged as the most future oriented of cultures, followed by Switzerland, the Netherlands, and Malaysia. The least future oriented were Russia, Argentina, Poland, and Hungary. Squarely in the middle were Germany, Taiwan, Korea, and Ireland. Read more →
Harold Geneen was born in Bournemouth, England, in 1910. Geneen’s childhood was spent at boarding schools and summer camps. When Geneen started work, as a runner for the New York Stock Exchange, he continued to study at night at New York University. In 1934 his hard work was rewarded with a degree in accounting.
For the next 25 years his career took in a string of companies starting with the forerunners of Coopers & Lybrand followed by Montgomery an accounting firm, then the American Can Co., Bell and Howell Co., Jones and Laughlin Steel Co. and Raytheon. After Raytheon, where Geneen was vicepresident, came the biggest challenge of Geneen’s career and the job that made him famous — International Telegraph and Telephone Company (ITT).
When Geneen arrived at ITT in 1959 the corporation was a ragbag collection of businesses, loosely focused around telecommunications, with revenues of $800,000. During the 1960s the predominant organisational trend was one of diversification and conglomeration. CEOs went into a purchasing frenzy raiding the corporate aisles for any company, no matter what business it was in, so long as it turned a profit. Geneen was no exception. Read more →
Under pressure to hit immediate performance targets, many managers inflate earnings, often by cutting expenditures. In a recent survey of 401 top financial executives by Natalie Mizik and Robert Jacobson, 80% said they would decrease spending on “discretionary” activities like marketing and R&D to meet short term goals.
It’s true that this kind of shortsightedness may temporarily fool the stock market by giving the appearance of improved prospects. However, in their study, firms that appeared to make short-term expense adjustments to inflate earnings when they issued equity ended up losing profits in the long run, causing their market value to drop by more than 20% four years out.
Because the amount of capital collected by a firm depends on the stock price on the day the equity is issued, managers have an acute interest in that price and may be tempted to give it a quick boost by inflating earnings through cost cutting. After all, investors rely on current earnings measures when they form their expectations of future performance and, therefore, when they value equity. Read more →
We all know the main contributors to carbon dioxide emissions: Europe, the United States, China, India, and Russia. The sheer size of these economies — and the expected growth rates in the developing ones — makes avoiding an increase in global CO2 emissions unlikely in the short term. That’s why we need to manage that increase carefully.
Those of us in the energy industry can do a lot about it, and we’re already making progress. E.ON is working on a design for a gas-fi red power station that will convert 60% of the gas consumed into energy. A couple of coal projects hope to reach effi ciency rates of 46%, and other projects that aim for efficiency rates approaching 50% are already under way.
By achieving those kinds of numbers in countries like Russia or China, where power stations have efficiency rates of 35% or less, we could reduce CO2 growth rates significantly and immediately. E.ON is also investing €8 billion in sustainable and new energy technology between now and 2012.
We’re researching and developing clean coal technology that could create a new generation of power stations worldwide. And we’re planning to build more large-scale offshore wind farms in the UK and Germany. Read more →
