Exploring the art of building a strong performance management system chain

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings This research paper analyzes how performance management systems (PMS) affect organizational performance by surveying respondents from an eclectic range of Estonian and Finnish firms. PMS initiatives often fail because of their multiple layers, which form a chain that presents multiple breakage opportunities. PMS at a strategic level most significantly elevated organizational performance. Strengthening a PMS chain increased the chances of the PMS exercise succeeding, therefore managers are advised to achieve high performance by checking that all key characteristics are present to construct a strong PMS chain. Originality/value The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

SMEs' market orientation toward public sector customers in public procurement

PurposeThis paper investigates how the market orientation of SMEs toward public sector customers enables firms to participate and succeed in public procurement.Design/methodology/approachThe authors used a survey-based methodology. First, the authors reconfigured an empirical construct of market orientation for private sector markets to measure the market orientation toward public sector customers. Then they conducted a survey of Finnish firms to test the construct and how it predicted firm performance in public procurement.FindingsThe authors find empirical support for firms to adopt a market orientation toward public sector customers. Their results suggest that customer and competitor orientations are positive predictors of participating and winning supply contracts in public sector tenders.Research limitations/implicationsSelf-reported survey data from a single country may limit the generalizability of results.Originality/valueThis paper is the first to report a market orientation toward public sector customers and describe how it is related to supplier performance in public procurement.

Top management team demography and firm operating performance: a path analysis

PurposeThis paper examined the relationship between TMT demographic properties and firm performance using diversity and level variables and measuring differing constructs of firm performance representing divergent strategies.Design/methodology/approachStructural equation modelling was used to test the relationships between TMT demographic properties and firm performance measured as return on net operating assets (RNOA), and its disaggregates profit margin (PM) and asset turnover (ATO). Data were from 89 Finnish firms during the years 2008–2011, resulting in 320 observations.FindingsTMT team tenure had associations with RNOA through both PM and ATO while TMT age, age diversity, firm tenure, firm tenure diversity and team tenure diversity showed paths through ATO. TMT firm tenure diversity showed effects in opposing directions through PM and ATO.Practical implicationsThe results help to understand and apply the separate effects of age, firm tenure and team tenure on TMT and firm performance. These results also provide explanations on how these TMT properties affect firm performance in diverse types of firms pursuing different strategies.Originality/valueThe results suggest that both diversity and level in a measured TMT demographic property are linked with firm performance, and the effect can be in differing directions. These links go through differing paths when using disaggregated operational firm performance measures. Also, diversity in top management is not always beneficial since it can cause separation or conflict impairing performance.

THE ROLE OF EMPLOYEE INCENTIVES AND MOTIVATION ON ORGANISATIONAL INNOVATIVENESS IN DIFFERENT ORGANISATIONAL CULTURES

Organisational innovativeness is known to be affected by employee incentives and motivation, but the evidence is inconclusive regarding the organisational contexts and contingencies where this phenomenon takes place. To examine this issue, we adopt the Competing Value Framework of four types of organisational cultures, and hypothesise differences in the incentives–motivation–innovativeness relationships. Using an empirical study of 425 Finnish firms in technology industries, we found in general that intangible and tangible incentives facilitate both intrinsic and extrinsic motivation, but only intrinsic motivation leads to improved organisational innovativeness. Testing our model for subsamples that included clan, adhocracy, market, and hierarchy cultures, we found that results vary considerably between those. First, incentives have different implications to motivation under different organizational cultures. Further, intrinsic motivation leads to innovativeness under adhocracy, clan, and market culture, but not under hierarchy culture, and extrinsic motivation does not lead to innovativeness under any culture.

Matching of expenses in financial reporting: a matching function approach

Purpose The purpose of this study is to introduce a matching function approach to analyze matching in financial reporting. Design/methodology/approach The matching function is first analyzed analytically. It is specified as a multiplicative Cobb-Douglas-type function of three categories of expenses (labor expense, material expense and depreciation). The specified matching function is solved by the generalized reduced gradient method (GRG) for 10-year time series from 8,226 Finnish firms. The coefficient of determination of the logarithmic model (CODL) is compared with the linear revenue-expense correlation coefficient (REC) that is generally used in previous studies. Findings Empirical evidence showed that REC is outperformed by CODL. CODL was found independent of or weakly negatively dependent on the matching elasticity of labor expense, positively dependent on the material expense elasticity and negatively dependent on depreciation elasticity. Therefore, the differences in matching accuracy between industries emphasizing different expense categories are significant. Research limitations/implications The matching function is a general approach to assess the matching accuracy but it is in this study specified multiplicatively for three categories of expenses. Moreover, only one algorithm is tested in the empirical estimation of the function. The analysis is concentrated on ten-year time-series of a limited sample of Finnish firms. Practical implications The matching function approach provides a large set of important information for considering the matching process in practice. It can prove a useful method also to accounting standard-setters and other specialists such as managers, consultants and auditors. Originality/value This study is the first study to apply the new matching function approach.

Determinants of voluntary sustainability assurance: the importance of corporate environmental performance

Purpose The purpose of this study is to investigate whether corporate environmental performance (CEP) exerts any significant influence on the voluntary external assurance of sustainability reports. Design/methodology/approach The sample of this study includes 176 firm-year observations covering an eight-year period (2008-2015) for listed Finnish companies that have issued sustainability reports during the sample period. As the dependent variable “voluntary external assurance” is a binary variable, a logistic regression model has been estimated to observe the effect of CEP on the dependent variable. In addition, a number of control variables have also been included in the empirical model. Findings The results of this study exhibit that Finnish firms with superior environmental performance in terms of greenhouse gas emissions and water consumption have their sustainability reports externally assured. Additionally, among the control variables, firm size, leverage and asset age are found to have significant impact on the adoption of voluntary sustainability assurance (VSA). These results are robust, as they do not change substantially when conducting sub-sample analyses. Originality/value The literature on VSA is evolving slowly paying very little attention to the association between CEP and VSA. This empirical research aims to extend such scant literature. The results could have important implications to users of environmental information, managers and regulators.

Impact of the PMOs' Roles on Project Performance

Organizations increasingly often set up project management offices (PMOs) in order to overcome the challenges of increased complexity and importance of projects, and thereby create value, but evidence for value creation, such as improved project performance, has remained scarce. This paper uses a sample of Finnish firms in order to evaluate the impact of PMO roles and processes on project performance. Using factor analysis and regressions, the authors show that the PMO's coordinator and trainer processes have a positive association with project performance. However, a PMO in the role of a strategy manager has a negative impact on project performance.

Corporate environmental reporting practices in Finland: A review and agenda for future research

The research in the area of corporate environmental accounting and reporting in the context of Finland is scarce. This paper outlines the studies conducted to date on Finnish firms’ environmental reporting practices with a view to discovering research gaps in the literature concerning environmental accounting and reporting in the Finnish context. The paper adds to the existing literature by identifying research gaps such as the antiquity of datasets used in the previous studies, the risk of failure to generalize the findings of the prior investigations and most importantly the research negligence towards the impact of Finnish firms’ activities and operations on climate change and changes in biodiversity. Hence, the paper has implications for researchers, who could address the identified void in future research and thereby advance further the literature concerned with environmental accounting and reporting. Policy makers could also benefit from this paper as its findings could help them formulate necessary disclosure requirements for the improvement of corporate environmental reporting practices in Finland. This paper focused only on the studies on Finnish firms and thereby limited the scope for any comparison between Finland and other Nordic countries as far as research on environmental reporting practices is concerned; this is the principal limitation of this study.