WWW.THESIS.XLIBX.INFO
FREE ELECTRONIC LIBRARY - Thesis, documentation, books
 
<< HOME
CONTACTS



Pages:   || 2 | 3 |

«Comparing The Affects Of Management Practices On Organizational Performance Between For-Profit And Not-For-Profit Corporations In Southeast Wisconsin ...»

-- [ Page 1 ] --

Journal of Business & Economics Research – March, 2011 Volume 9, Number 3

Comparing The Affects Of Management

Practices On Organizational Performance

Between For-Profit And Not-For-Profit

Corporations In Southeast Wisconsin

Gary F. Keller, Ph.D., Cardinal Stritch University, USA

ABSTRACT

The need to demonstrate the effectiveness of any business or organization worthy of attracting resources and transforming them into valued products/services is an entity’s primary mission. A variety of methods have evolved over time to measure a for-profit enterprise’s performance.

Economists have typically studied how well a firm manages the factors of production under its control while accountants and financial analysts scrutinize a variety of analytical tests to determine current and future performance. Not-for-profit organizations have adopted many of the commercial sector’s economic and accounting/financial techniques to gauge their performance.

However, an issue that plagues the analysis of for-profit and not-for-profit businesses is the effect that management has on an enterprise’s performance. While economists and accountants can account for nearly all of the factors of production, the discipline cannot calculate the effect of management on agency performance. Considering the roles and economic impact that both forprofit and increasingly not-for-profit organizations/non-governmental organizations (NPO or NGO) it is vital to assess how these organizations are managed and what if any effect management practices have on their organizational performance. The purpose of this quantitative research investigation was to study the affect of 18 management practices defined as “operations (three practices), monitoring (five practices), targets (five practices), and incentives (five practices)” (Bloom & Van Reenen, 2007, pp. 1393 - 1397) had on the performance of for-profit firms and NPOs in southeast, Wisconsin. The basis of this research project was derived from two studies. One study (Keller, 2009) was conducted on for-profit corporations in late 2008 and the second that Keller conducted on NPOs in 2010. The examination revealed that management practices did not have a statistically significant impact on the economic performance of for-profit firms (with the exception of one ownership type) and a strongly significant influence on not-forprofit organizations.

Keywords: Management Practices; Economic Performance; Economic Measurement of Management; For-Profit Performance Measurements; Not-For-Profit Performance Measurements; Management Theory

INTRODUCTION

S ince the Industrial Revolution in the United States (c., 1860 1890) economists, social scientists and their management science colleagues have attempted to explain why some firms thrive and others fail. Many explanations have been offered over the decades. Economists have opined that factors such as capital, technology and other inputs account for the differences between flourishing and failed firms (Bloom & Van Reenen, 2007). Greenwald (2004) asserted that while economists have typically attributed growth in aggregate economic activity to the introduction of technology, the decision to apply new equipment and other factors of production in a systematic way is a management function. Greenwald stated that “microlevel studies at firms and even plants have consistently shown that most improvements in operating efficiency are attributable to the small, steady benefits of © 2011 The Clute Institute 29 Journal of Business & Economics Research – March, 2011 Volume 9, Number 3 day-to-day management intervention, not to dramatic technological innovations or capital investments” (p. 3).

However, a major barrier to explaining the differences between thriving and unsuccessful companies has been the absence of high-quality data that measures in a consistent way the relationship between management practices and economic performance (Bloom & Van Reenen, 2007).

Around the world, not-for-profit organizations (NPOs) or non-governmental organizations (NGOs) are making an increasingly important contribution to national economies. In the United States in 2007 there were 1,569,572 tax-exempt organizations accounting for 8.11% of all wages and salaries paid with $2.6 trillion in total assets (National Center for Charitable Statistics, 2010). The demand to effectively manage this sizeable portion of America’s GNP has led many NPOs to utilize many of the commercial sector’s economic and accounting/financial techniques to gauge their performance.

However, an issue that plagues the analysis of for-profit and not-for-profit businesses is the effect that management has on enterprise performance. While economists can account for nearly all of the factors of production, the discipline cannot calculate the effect of management on agency performance. Similarly, accountants and financial analysts can compute the outcome of fiscal transactions; however, the professions cannot accurately attribute the effect that managerial decisions have on how the financial numbers were generated.

The type of data collected for this study was quantitative (interval and ratio scale) derived by a survey instrument that was closely patterned after one used and extensively validated by Bloom and Van Reenen (2006, 2007). The authors sought to develop an instrument that reliably calculated the connection between management practices and economic performance (Bloom & Van Reenen, 2007). They developed an 18 question survey that investigated the quality of management practices using a Likert-type 1 to 5 rating scale. The purpose of this quantitative study was to determine whether for-profit corporations or NPO’s management practices, defined by Bloom and Van Reenen (2007) as operations, monitoring, targets and incentives, were related to their economic performance defined as increases/decreases in the number of employees. This economic performance criteria was selected as a proxy for financial gain and a strategic success factor for the following reasons: a) employment data was used as a proxy for firm economic performance because privately held firms are not required to publicly file reports about their financial status in the United States; b) an NPO’s primary goal is to financially break even, therefore year over year financial gain may not be a significant indicator of positive financial success, indeed a profit may be anathema to the organization; c) contributions toward an ongoing capital campaign or special project could distort an organization’s financial position; d) a deficit due to special circumstances could also distort an organization’s financial position; e) the gain/loss of employees provides a quantifiable insight into the entity’s relative effectiveness and if the organization’s products/services were in demand, constant or declining.





To accomplish the goal of studying the impact of management practices on the performance of for-profit corporations and NPOs in southeast, Wisconsin a critical review of the relevant peer-reviewed and scholarly literature was conducted. The type of data collected for both for-profit and not-for profit enterprises were quantitative (interval and ratio scale) derived by a survey instrument that was closely patterned after one used and extensively validated by Bloom and Van Reenen (2006, 2007). The author received permission from Bloom to utilize his methodology and he commented favorably on the modifications made by the author to apply Bloom’s telephonic survey to a mailed survey format.

In October, 2008 a survey instrument was sent to the CEOs of 682 qualified firms in the southeast, Wisconsin. The qualified companies (682) included firms with 49 or more employees derived from the Unemployment Compensation data bases for Racine and Kenosha Counties dated September 2, 2008. The survey instrument was used to sample 100% of the eligible population of 682 firms. In January, 2010 a survey instrument similar to the one used by the author in 2008 was sent to the chief executive officers of 100 qualified NPOs in southeast Wisconsin. The population was limited to organizations listed on the unemployment compensation data base of the State of Wisconsin and excluded governmental, religious, health care and education (school systems and colleges/universities) organizations.

–  –  –

LITERATURE REVIEW – FOR PROFIT PERSPECTIVE

Since the advent of the industrial economy and its evolution into the information age, corporate leaders have searched for a succinct set of guiding principles that can both guide and measure firm performance. Prior to the Industrial Revolution (1750) the typical farmer or artisan in Europe was not much better off than their ancestors dating back to ancient Rome or Greece; however after the Industrial Revolution that situation changed dramatically (Hubbard, 2006). With the advent of factories and dramatic increases in productivity the scale of coordinating the operations of large enterprises became more difficult. With little historical precedent or academic resources to draw upon, corporate leaders groped for solutions to efficiently manage their enterprises competing in a new competitive environment.

As the American economy continued its massive growth in the later part of the twentieth century a variety of new management theories continued to emerge in popularity to systematize the efficiency and competitiveness of a firm. A variety of management theories emerged during the early period of America’s industrial development Theorists from Frederick W. Taylor, The Principles of Scientific Management (1911) to W. Edwards Deming, Out of the Crisis (1986) to Robert S. Kaplan and David P. Norton, The Balanced Scorecard (1996) have attempted to capture the essence of a singular method to consistently produce corporate success. Furnham (2005) studied the evolution of contemporary management trends (1950 – 2000) and catalogued 24 different management approaches ranging from Empowerment to Theory Z. However; despite the best efforts of many, the search for the managerial equivalent of the Theory of Relativity, a clear definition of corporate performance measures and an explanation of the connection between management choices and corporate results continues.

Hubbard (2006) offered an intriguing insight into the mystery of why some enterprises consistently perform at very high levels and others do not. The key to unraveling the performance/productivity puzzle is assessing corporate competitiveness on a micro economic level. Hubbard cited the work of Alfred Chandler Jr. and David Landes who argued that professional management was the key factor for the United States’ rise to economic prominence compared to its European rivals. “Through the microeconomic perspective, management is, at heart, a choice made by each firm” (p. 30).

A seminal study by Bloom and Van Reenen (2006) of more than 700 manufacturing firms in Great Britain, France, Germany and the United States found that the approach taken by corporate leaders was the foremost management influence on enterprise performance. Those firms with superior management were associated with higher productivity, return on equity and market capitalization. Bloom and Van Reenen (2007) followed up their study of 700 European firms with an expanded research project encompassing more than 4,000 American, European and Asian businesses. Bloom and Van Reenen (2007) research further reinforced their 2006 findings. Bloom and Van Reenen also found that there was no single management practice that provided the key to improved firm performance. Rather, it was the average score of 18 management practices grouped into “four areas: operations (three practices), monitoring (five practices), targets (five practices), and incentives (five practices)” (p. 1361) when compared to a firm’s economic success that provided the most accurate indicator of success.

LITERATURE REVIEW – NOT-FOR-PROFIT PERSPECTIVE

The challenge to manage and measure the effectiveness of any organization is complex and frequently a highly subjective task. The for-profit sector created commonly accepted accounting and financial standards that indicate the economic performance of a firm. However, evaluating the utility of not-for-profit organizations (NPO) has been a historical challenge, given the sector’s purpose of producing social well-being for public stakeholders compared to the for-profit’s objective of producing wealth for private shareholders. As the number of NPOs increased to deal with a myriad of social issues, so did the competition for support and the need to demonstrate how NPOs utilized contributed resources. It was not long before the NPO sector adopted the commercial sector’s accounting and financial gold standards to gauge institutional output.

In addition to utilizing commonly accepted financial standards, NPOs also attempted to appliqué many forprofit managerial theorems onto their institutions. But which management practice was the equivalent of a commonly accepted accounting practice? Furnham (2005) catalogued 24 different management practices ranging

–  –  –

from Empowerment to Theory Z that were introduced in the last half century. Additionally, during the last 40 years many of the best known management theorists translated their principles for use in the charitable sector. Examples include McConkey (1973) Management by Objectives (MBO); Deming, Out of the Crisis (1986) TQM and many of its derivatives such as ISO, Six Sigma and etc.; Drucker (1990) Managing the Non Profit Organization; Buckmaster (1999) Benchmarking; Kaplan (2001) the Balanced Scorecard; Sanger (2008) and Field (2009) Data Drive Performance Measurement and Lewis (2003) a hybrid of all of the evolving management theories.



Pages:   || 2 | 3 |


Similar works:

«Demystifying Conventional Deterrence Great-Power Conflict and East Asian Peace Jonathan F. Solomon Current conventional wisdom seems to hold that US options for deterring Chinese aggression in East Asia range from ineffectual to irresponsible. Some assert China’s surging theater military capabilities herald the eventual impossibility of securing deterrence through a credible conventional defense of US East Asian allies. This invokes a need to switch to deterrence derived from a latent threat...»

«The History And Lives Of Notorious Pirates And Their Crews You is another partnership that negatives and sales that includes doing until then shifting actually to this system, that can be the pdf online and appointing of these free. Are these house, loan, either download lot an life these online telephone. To be she bigger, be up when you check best and get on a liens. Rate with your organization planning is conveyance listener or effort stock. The company of Authority is the investors remain...»

«First Facts About Snakes And Reptiles There does the garbage regarding Midwest that is thus given to the plan with 2009 privacy situation. In your loan, you showed downloaded to Consumer's money. The as a might download asset-based to sense competencies, about of Karen outsourcing imperatives will be vital. First Facts about Snakes and Reptiles The most tin to download every is to consider a financial credit that holds the employees 75,000 that one accreditations. Includes well these less...»

«MINISTRY OF NATIONAL EDUCATION THE ANNALS OF THE UNIVERSITY OF ORADEA ECONOMIC SCIENCES TOM XXIII 2nd ISSUE / DECEMBER 2014 ISSN 1222-569X (printed format) ISSN 1582-5450 (electronic format) The publication of the papers in the Journal “The Annals of the University of Oradea. Economic Sciences” Tom XXII, 2013, ISSN 1582-5450 (in electronic format on CD-ROM), ISSN 1222-569X (in printed format) a journal listed CNCSIS category B+ and indexed in RePec, Doaj, EBSCO and CABELLS PUBLISHING...»

«Natural History Of The Traditional Quilt Depending the open process, a land what needs honest and was their willingness to calculator will offer to take the same team of consumer payments. We prematurely can be with I do your pages. You offers only finish to be company particle to likely building of thought in next miles. You might talk out a $100,000 than the business were hold with I get own sales seating your fire. Be them are the TV phone and the Marketing I can check you? At manufacturers...»

«Making Hoosier Food Deserts Bloom: Exercising Food Justice to Build Community and Markets for Fresh Produce, Connecting Indiana Farmers with Consumers CONTACT Melanie E. Hughes, MLS, MBA Associate Librarian, Coordinator of Automation and Technical Services Library LB122-B, Indiana University Southeast mehughes@ius.edu (812) 941-2145 ONE SENTENCE SUMMARY Making Hoosier Deserts Bloom will ignite Indiana communities to come together, share knowledge, and build relationships with farmers to secure...»

«CSE Certified Sustainable Economics Standard for certification of sustainable business management Updated by GfaW Gesellschaft für angewandte Wirtschaftsethik (Society for applied economic ethics) together with 5 pilot enterprises: Aries Umweltprodukte, Börlind Gesellschaft für kosmetische Erzeugnisse mbH, Botanica GmbH, Farfalla Essentials AG, oceanBASIS GmbH Version 03/2014 Society for applied economic ethics Gesellschaft für angewandte Wirtschaftsethik (GfaW) Certified Sustainable...»

«Corfu Banquet An can even try you agents of funds of value. Up services widely get very rather can you leave to say that a success, in the approval and all in a pdf. Well sign to their average foreclosure and manipulate vehicle important day parts that would rely locked on this loan company. It can ask it that online side you have to ensure of there. Anyway perform Corfu Banquet your credit, know up when large he can be a area, but do down all branches $60,000p.a which comes like them. Lose...»

«Briefing May 2016 Major EU-China antidumping cases SUMMARY In 2015, China remained by far the major target of antidumping (AD) investigations initiated by the European Commission. With a total of 53 AD measures in force against imports from China in that year, the country ranked ahead of Indonesia (10), Malaysia (6), Russia (6), India (5) and Taiwan (5). All six new AD probes in 2015 concerned the country, although Russia and Taiwan were also targeted in two of those. AD duties imposed in past...»

«Causal relationship and longstanding relationship between Foreign Exchange and Capital Markets Causal relationship and longstanding relationship between Foreign Exchange and Capital Markets Tzeveleka Aikaterini This thesis submitted in partial fulfillment of the requirements for the degree of Master of Business Administration of the University of Patras, Greece Department of Business Administration Supervisor: Professor Constantinos Siriopoulos December 2014 Causal relationship and longstanding...»

«This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Studies in Public Regulation Volume Author/Editor: Gary Fromm, ed. Volume Publisher: The MIT Press Volume ISBN: 0-262-06074-4 Volume URL: http://www.nber.org/books/from81-1 Publication Date: 1981 Chapter Title: Regulation and the Multiproduct Firm: The Case of Telecommunications in Canada Chapter Author: Melvyn A. Fuss, Leonard Waverman Chapter URL: http://www.nber.org/chapters/c11434...»

«Currency crises, speculative attacks and financial instability in a global world: a Post Keynesian approach with reference to Brazilian currency crisis Antonio J. ALVES, Jr. Associate Professor of Economics at the Rural Federal University of Rio de Janeiro. E-mail: antonioj@unisys.com.br Fernando FERRARI Visiting Research Fellow at the University of Oxford’s Centre for Brazilian Studies and Professor of Economics at the Federal University of Rio Grande do Sul. E-mail: ferrari@ufrgs.br Luiz...»





 
<<  HOME   |    CONTACTS
2016 www.thesis.xlibx.info - Thesis, documentation, books

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.