Aggregate Performance Measures in Business Unit Manager Compensation: The Role of Intrafirm Interdependencies

Bushman, Robert M.; Indjejikian, Raffi; Smith, Abbie J.

doi:10.2307/2491377

Cited by 282 publications

(213 citation statements)

References 18 publications

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“…For this, we proceed as follows: As an illustration we refer to the study by Bushman et al (1995), which analyzes whether interactions between business units affect the (optimal) incentive system of business unit managers, in particular, when compensation is based on firm performance or on the performance of business units.…”

Section: Agent-based Models Addressing Both Tensionsmentioning

confidence: 99%

“…In Sect. 4.2 we introduce an agent-based simulation model which takes up major aspects of the closed-form model by Bushman et al (1995). Section 4.3 presents and discusses the results of our agentbased model.…”

Section: Agent-based Models Addressing Both Tensionsmentioning

confidence: 99%

“…These are analytical studies, surveys and experiments as well as what the authors call ''frameworks'', i.e., the development of new conceptual frameworks providing new perspectives, drawing from, and combining, ''multiple perspectives and information sources such as empirical facts, theoretical or practical observations, prior literature (in other areas or disciplines), supplemented with the authors' own synthesis and perspectives'' (Hesford et al 2007, p. 7). Bushman et al (1995) …”

Section: Agent-based Models Addressing Both Tensionsmentioning

confidence: 99%

“…To measure the level of intra-firm interdependencies, Bushman et al (1995) use firm-wide characteristics like diversification or intersegment sales. In particular, high diversification across product lines is assumed to lead to business units that are rather independent from each other.…”

Section: Empirical Partmentioning

confidence: 99%

“…Hence, in order to explore the perspectives of ABM in this area of managerial science, we apply ABM to a well-studied question in management accounting, namely when to apply aggregate measures (in terms of firm-related performance measures) rather than measures related to the business unit. In particular, we compare a ''classical'' approach in economics based on a principalagent model and a related empirical study, both conducted by Bushman et al (1995), with an agent-based simulation model.…”

Section: Introductionmentioning

confidence: 99%

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Agent-based modeling in managerial science: an illustrative survey and study

Wall

2014

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This article provides an overview of the current state of agent-based modeling in managerial science. In particular, the aim is to illustrate major lines of development in agent-based modeling in the field and to highlight the opportunities and limitations of this research approach. The article employs a twofold approach: First, a survey on research efforts employing agent-based simulation models related to domains of managerial science is given which have benefited considerably from this research method. Second, an illustrative study is conducted in the area of management accounting research, a domain which, so far, has rarely seen agentbased modeling efforts. In particular, we introduce an agent-based model that allows to investigate the relation between intra-firm interdependencies, performance measures used in incentive schemes, and accounting accuracy. We compare this model to a study which uses both, a principal-agent model and an empirical analysis. We find that the three approaches come to similar major findings but that they suffer from rather different limitations and also provide different perspectives on the subject. In particular, it becomes obvious that agent-based modeling allows us to capture complex organizational structures and provides insights into the processual features of the system under investigation.

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Section: Agent-based Models Addressing Both Tensionsmentioning

confidence: 99%

Section: Agent-based Models Addressing Both Tensionsmentioning

confidence: 99%

Section: Agent-based Models Addressing Both Tensionsmentioning

confidence: 99%

Section: Empirical Partmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Agent-based modeling in managerial science: an illustrative survey and study

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Profit Center Performance, Measurement Of

Haka

2015

Wiley Encyclopedia of Management

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Top management incentive compensation and knowledge sharing in multinational corporations

Fey

Furu²

2008

Strategic Management Journal

158

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Growing interest has emerged in viewing the multinational corporation as a knowledge creating and diffusing entity. The importance of sharing knowledge across organizational and national boundaries has been established in previous research. However, the question of which organizational policies lead to knowledge sharing between multinational units is still not fully understood. In particular, the link between compensation mechanisms and knowledge sharing has not received attention in previous studies. By studying 164 foreign-owned subsidiaries located in Finland and China, this article attempts to identify the relationship between subsidiary bonus pay based on MNC-wide performance and knowledge sharing between different units of the MNC. In line with the knowledge-based perspective of the firm, the results suggest that incentive pay based on the collective performance of the MNC leads to greater knowledge sharing.

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Aggregate Performance Measures in Business Unit Manager Compensation: The Role of Intrafirm Interdependencies

Cited by 282 publications

References 18 publications

Agent-based modeling in managerial science: an illustrative survey and study

Agent-based modeling in managerial science: an illustrative survey and study

Profit Center Performance, Measurement Of

Top management incentive compensation and knowledge sharing in multinational corporations

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