John A. Pearce

Boards of Directors and Corporate Financial Performance: A Review and Integrative Model

This article synthesizes empirical researchfindings on the impact of boards of directors on corporate financial performance. An integrative model of board attributes and roles is presented, and research support on their links is discussed. The review identifies critical short-comings of past studies and concludes by offering an agenda for future studies in this promising area of empirical research.

The Design and Activation of Self-Regulating Work Groups:

This paper reviews the literature on self-managing work groups as implemented in organizations, and briefly reviews relevant laboratory and other non-SR WG research. A model is developed exploring the processes of SR WG implementation and operation. Task, organization, and personnel preconditions to implementation are identified, including appropriate expectations by managerial personnel. Design features should include heterogeneous composition and minimal status differences. Activation mechanisms are thought to smooth the way for the successful group, which exhibits the positive process criteria of variety in group member responses, coordination of members, and commitment to group success.

Toward Improved Theory and Research on Business Turnaround

Statistics on business failure rates corroborate the conclusion that neither academics nor practitioners have succeeded in designing a model to guide strategic management action during periods of financial decline. Therefore, a comprehensive review was conducted on the turnaround literature from multiple disciplines and related research streams. The product of this work is an empirically-driven conceptual model of business level turnaround. Building on data-supported hypotheses from prior research and confirmatory anecdotal evidence from practitioner literature, the model is intended to help focus future theory testing efforts and to accelerate the advancement of strategic management practice.

Entrepreneurial Orientation and the Performance of Religious Congregations as Predicted by Rational Choice Theory

Empirical and anecdotal evidence suggests that businesses that act with an entrepreneurial orientation enjoy superior performance. Our research investigates whether nonprofit, religious congregations can benefit from similar initiatives. We based our hypotheses on the Rational Choice Theory of Religion, which was developed by social scientists to bring economic analysis to the understanding of the effects of competition among nonprofit organizations. Using a sample of 250 religious congregations in five different geographical markets, an entrepreneurial orientation is found to be positively associated with organizational performance. A hypothesized interaction effect between environmental munificence and entrepreneurial orientation is assessed.

Marketing strategies that make entrepreneurial firms recession-resistant

Abstract The recession of 1990–1991 adversely affected nearly every industry in the United States, and entrepreneurial manufacturing firms were among those hardest hit by the recession. The failure rate among this group by mid-year 1991 had risen 37% from the previous year. Thus, recessions pose a serious threat to the survival of entrepreneurial firms. Understanding how the business cycle influences performance and what strategies are effective in such turbulent times has practical value for managers of entrepreneurial firms. In this paper we report a large-scale empirical research study involving subjective and financial information from 118 publicly traded U.S. manufacturing firms. The participating firms are involved in technologically demanding and highly innovative industry segments: Industrial and Computer Equipment; Electrical Equipment and Components; and Measuring, Analysis, and Control Instruments. None of the firms has achieved a market share of more than one half of one percent ( We find that, in these industries, a companys marketing strategies preceding a recession strongly impact the extent of economic downturn on the firm, and influence its odds of a timely and complete recovery. Our specific prescriptions follow: First, maintain marketing activities in the core business as assurance against recession. Increasing sales and advertising, increasing breadth of production, and increasing geographic coverage improve performance during both the peak and the contraction of the business cycle. Second, during the peak period, cautiously expand with an emphasis on marketing efficiency. Increasing the number of channels of distribution and cutting price have a negative effect unless accompanied by sales-force performance measurement. A simple emphasis on incentives and efficiency alone hurts a firm as a recession hits. All of these prescriptions run counter to existing views that suggest that recession simply requires cutbacks and retrenchment. Recessions seem to be different from other threats to firm viability, and marketing activities appear to help pull the firm through a macroeconomic downturn.

The need for innovation as a rationale for government involvement in entrepreneurship

Governments around the world seek to support entrepreneurship, yet the justification for such intervention varies. Some governments support entrepreneurship as a means to create jobs. Others support entrepreneurship as a means to create competition in markets, with attendant lower prices. In this paper, we offer a different justification for government support for entrepreneurship: to support and encourage innovation. Innovation does raise competition, lower prices, and create jobs, but more importantly through innovation entrepreneurship creates wealth for individuals and nations. We offer a model of government support for entrepreneurship to yield innovation that is grounded in theory yet rich in practical implications. Innovation is stimulated when the innovator receives the resulting payoff (termed residual claims in economic theory). In many instances, because small firms concentrate residual claims more effectively than large firms, entrepreneurial firms out-innovate established corporations. To accelerate this process, government should advance policies that facilitate new business formation and the concentration of residual claims. Such a prescription suggests two direct approaches: raising the returns to entrepreneurship and reducing the risk. Each has specific policy implications that are discussed at length. Finally we analyse aiding entrepreneurship without a commitment to innovation, and our analysis suggests that this approach is unlikely to be as successful as the focus on innovation.

Satisfaction with Firm Performance in Family Businesses

Business goals in family businesses are often subsumed by family goals. As a result, reference performance for each family business is different. This makes the popular financial performance measure of publicly traded companies, profit maximization, insufficient for family businesses. We believe that for evaluating family businesses, the family members‘ satisfaction with firm performance is a better measure of performance. In the study, we identify three predictors of family members‘ satisfaction with firm performance and test the proposed linkages on two samples of family businesses.

Determinants of board directors' strategic involvement

The role of boards of directors in shaping corporate strategy has increased in importance in recent years. However, evidence suggests that boards differ significantly in their involvement in the strategic arena. In this study of 139 Fortune manufacturing and service corporations we identify sources of variations in level of board strategic involvement. Boards that have a majority of insiders, whose directors possess significant expertise in the firms major industry, and whose internal operations are efficient are more involved in the strategic process.

Entrepreneurial recovery strategies of small market share manufacturers

Abstract Field studies of organizational decline and turnaround have provided evidence that economically troubled firms can undertake recovery from sharp financial losses in different ways. As suggested by a recent stream of research, the most promising of these ways is for businesses that have retrenched to initiate recovery strategies designed to redirect their remaining resources toward more promising product-market combinations. The choice of this set of alternatives, known as entrepreneurial recovery strategies, is the topic of the research that was undertaken. Entrepreneurial recovery strategies involve reformulation of a firms products, services, markets, or principal technologies in ways that represent a new or radically altered competitive posture. They are contrasted to efficiency recovery strategies that entail retaining the current product-market-technology orientation but on a smaller and more efficient scale. As these descriptions suggest, the thrust of research on recovery strategies has been to merge the findings from entrepreneurship studies on new venture creation and corporate intrapreneurship with strategic management studies on retrenchment and recovery. Our project extends this process by treating recovery strategies as the central element in a turnaround model. The research was specifically designed to address two research questions: 1. Which functional areas are most emphasized by small market share (SMS) firms that pursue entrepreneurial versus efficiency recovery strategies? 2. What are the performance implications for adopting entrepreneurial versus efficiency recovery strategies for mature-industry, SMS manufacturers based on the cause of the performance downturn? The research questions were investigated through an empirical analysis of 32 companies, each of which controlled less than 1% of their mature manufacturing industrys total sales. Two executives from each of these companies responded to a 162-item questionnaire designed to assess the cause of a downturn that occurred anytime during the period of 1976–1985, any changes in strategy components during the recovery, and the emphasis placed on specific functional level activities during the response to the decline. Additionally, objective measures of performance were used to assess the performance implications of entrepreneurial and efficiency strategies. The major findings from the research included: (1) a high degree of strategy change among the participant firms; (2) a focus on marketing and production functional areas by SMS firms that pursued entrepreneurial recovery strategies, and a focus on finance and management functional areas for SMS firms that pursued efficiency recovery strategies; and (3) a relatively poor level of performance among SMS firms that pursued entrepreneurial recovery strategies. The main implication from the study is that SMS companies in mature manufacturing industries should consider the adoption of efficiency-oriented recovery strategies to foster economic revival. The research should be replicated in industries that vary both technologically and in stage of life cycle to determine if entrepreneurial strategies represent more viable alternatives in certain other turnaround situations or for other industry populations.

Planning Activities Related to Independent Retail Firm Performance

This study examined the relationship between company performance and 50 specific planning activities in a small, independent retail firm setting. Performance was measured using one set of objective measures and one set of subjective measures. Six specific planning activities emerged as having significant relationships with both sets of performance measures.