Moderating role of CEO compensation in lean innovation strategies of Chinese listed family firms

Zulfiqar, Muhammad; Hussain, Khalid; Yousaf, Muhammad Usman; Sohail, Nadeem; Ghafoor, Sadeen

doi:10.1108/cg-03-2019-0092

Cited by 13 publications

(10 citation statements)

References 47 publications

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“…Previous studies explored the role of traditional governance mechanisms (e.g. compensation (Zulfiqar et al, 2020), employment arrangements (Dobrzykowski and McFadden, 2020)) in aligning principal-agent relationshipour study demonstrates that SLPs can be used for this purpose in a lean implementation context.…”

Section: Empowermentmentioning

confidence: 87%

“…AT is applied to analyze management processes and practices (Eisenhardt, 1988). Previous LT studies have also underscored the importance of taking principal–agent relationships into account by focusing on the role of executive compensation and employment arrangements in successful LT implementation (Zulfiqar et al. , 2020; Dobrzykowski and McFadden, 2020).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

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Does organizational readiness matter in lean thinking practices? An agency perspective

Akmal

Podgorodnichenko

Greatbanks

et al. 2022

IJOPM

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PurposeExtant research documents the importance of lean thinking for organizations, however, as prior research has largely focused on hard lean practices, but little is known about the effects or the significance of soft lean practices. This research attempts to address this issue by examining how soft lean practices enhance organizational lean readiness, and in turn increase the success of lean implementation.Design/methodology/approachThis research adopts a single case study design in a small-medium enterprise livestock feed manufacturing organization, and investigates the period from late 2011 through the end of 2019 covering two attempts at lean implementation – an initial failed attempt followed by a successful introduction of lean within the case organization. The research analyzes interviews with 29 managers and employees from all organizational levels and departments within the case organization. Secondary data including organizational documents and performance measures and metrics were also incorporated into the research design.FindingsDrawing on agency theory, the authors advance a principal-agent interaction perspective to conceptualize organizational lean readiness – specifically, the authors consider the “state or condition” of four agency factors (goal conflict, information asymmetry, risk aversion and length of relationship), and explore if these four agency factors can be utilized as proxies for organizational readiness for lean implementation. The authors identify the formation of a shared vision and identity within the organization as an effective mechanism through which soft lean practices enhance organizational lean readiness. Finally, the analysis offers an understanding of how the long-term success of lean implementation is improved by the introduction of soft lean practices as a prerequisite to create organizational readiness for the implementation of hard lean practices.Originality/valueThe study is unique in the sense that it empirically links agency theory and the role of soft lean practices in developing organizational lean readiness in a small-medium enterprise context by defining the ideal state of four agency factors as proxies for organizational readiness.

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Section: Empowermentmentioning

confidence: 87%

Section: Theoretical Backgroundmentioning

confidence: 99%

Does organizational readiness matter in lean thinking practices? An agency perspective

Akmal

Podgorodnichenko

Greatbanks

et al. 2022

IJOPM

View full text Add to dashboard Cite

show abstract

“…When family firms design executive compensation system in a highly transparent and principles-based governance framework, their interest in non-financial goals leads to less attention to the relationship between compensation and performance. However, some studies have found that lean innovation of family firms will be negatively regulated by executive compensation, which is the key to reducing agency costs (Zulfiqar et al, 2020) [52].…”

Section: Considerations For Designing Incentive Executive Compensationmentioning

confidence: 99%

Incentive Executive Compensation Management System: A Literature Review

2022

2022 2nd International Conference on Management Science and Industrial Economy Development (MSIED 2022)

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Senior executives control the operation of the enterprise. Whether the executive compensation management is reasonable and whether it can meet the needs of executives will directly affect the operation efficiency and management efficiency of the whole enterprise. In modern enterprises, the separation of ownership and management is a major feature, and the emergence of agency issues is inevitable, mainly due to adverse selection and moral hazard under the background of information asymmetry. Determining executive compensation by evaluating corporate performance, on the one hand, can mobilize the enthusiasm of executives; on the other hand, it can effectively reduce the agency cost caused by information asymmetry. Based on the principal-agent theory, this paper firstly discusses the agency problem caused by the information asymmetry between shareholders and executives, and then points out that executive compensation, as an incentive means, can effectively alleviate the agency conflict. Previous studies have shown that there is a positive correlation between executive compensation and corporate performance. Then, this paper summarizes the research on the compensation dispersion and compensation stickiness in executive compensation management, so as to put forward some considerations and suggestions for the design of executive compensation management system. Finally, it makes a summary and puts forward the prospect of future research on the shortcomings of existing studies.

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“…Keeping in view the current research objectives and earlier discussion, RBV is well suited for this research as different types of family firms are examined for their resource utilization in the form of R&D investment. Although family firms tend to invest lower in R&D as compared to non-family firms, however, getting more output with lesser input is also one of the notable characteristics of family firms (Zulfiqar et al , 2020). Moreover, family entering time is also important as this characteristic may define the varying behaviour of direct-established and indirect-established family firms towards R&D investment.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Birth mode of family firms, family entering time and R&D investment: evidence from China

Zulfiqar

Chen

Yousaf

2021

EJIM

Self Cite

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PurposeOn the basis of behavioural agency theory and resource-based view, this study investigates the influence of family firm birth mode (i.e. indirect-established or direct-established), family entering time on R&D investment and the moderating role of the family entering time on the relationship between birth mode and R&D investment.Design/methodology/approachThe authors collected 2,990 firm-year observations from family firms listed on A-share in China from 2008 to 2016 in the China Stock Market and Accounting Research database. They used pooled regression for data analysis and Tobit regression for robustness checks.FindingsIndirect-established family firms show more inclined behaviour towards R&D investment than direct-established counterparts. Family entering time positively affects the R&D investment of family firms. Moreover, family entering time plays a significant moderating role in the relationship between family firm birth mode (i.e. indirect-established or direct-established) and R&D investment.Originality/valueTo the best of the authors’ knowledge, this work is a pioneering study that introduced the concept of family firm birth mode (i.e. indirect-established or direct-established) and family entering time. This work is novel because it differentiated family firms according to their birth modes, an approach which is a contribution to the existing literature of family firms. Moreover, the investigation of the moderating role of family entering time has also produced notable results that help understand the impact of family entering time on different types of family firms. The interpretation of outcomes according to behavioural agency theory also produced useful insights for future researchers as well as for policymakers.

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Moderating role of CEO compensation in lean innovation strategies of Chinese listed family firms

Cited by 13 publications

References 47 publications

Does organizational readiness matter in lean thinking practices? An agency perspective

Does organizational readiness matter in lean thinking practices? An agency perspective

Incentive Executive Compensation Management System: A Literature Review

Birth mode of family firms, family entering time and R&D investment: evidence from China

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