Shelley Xin Li

We examine how metric intensity—that is, the quantity, frequency, and extent to which performance metrics are tracked and used—varies with a firm's dependency on innovation for business success. Although performance metrics are essential in an organization's management control system, little is known about how the use of metrics differs in organizations with varying dependencies on incremental and radical innovation. Drawing on data from a sample of small-to-medium-sized enterprises (SMEs), we hypothesize and find that firms’ dependency on incremental (radical) innovation is positively (negatively) associated with metric intensity. Further, we find that (1) the positive relationship between the dependency on incremental innovation and metric intensity is stronger when the organizational culture is focused more on “control” and (2) the negative relationship between the dependency on radical innovation and metric intensity is mitigated when the organizational culture is focused more on “flexibility.” Additional analysis shows that the positive (negative) relationship between incremental (radical) innovation dependency and metric intensity can be mitigated by greater use of metrics for decision-facilitating purposes. Our findings suggest that metrics-based formal controls are designed to match the types of innovation dependencies and pre-existing informal controls such as organizational culture. This study highlights the importance of distinguishing different types of innovation dependency in studying management control systems.

Staggered boards (SBs) are one of the most potent common entrenchment devices, and their value effects are considerably debated. We study SBs' effects on firm value, managerial behavior, and investor composition using a quasi-experimental setting: a 1990 law that imposed SBs on all Massachusetts-incorporated firms. We find that relative to a matched control group of companies, for treated companies the law led to an increase in Tobin's Q, investment in capital expenditures and R&D, patents, and higher-quality patented innovations, resulting in higher profitability. These effects are concentrated in innovating firms, especially those facing greater Wall Street scrutiny. An increase in institutional and dedicated investors also accompanied the imposition of SBs, facilitating a longer-term orientation. The evidence suggests that SBs can benefit early-life-cycle firms facing high information asymmetries by allowing their managers to focus on long-term investments and innovations.

Many service organizations rely on information sharing systems to boost employee creativity to meet customer needs. We conducted a field experiment in a retail chain, based on a registered report accepted by JAR, to test whether an information sharing system recording employees’ creative work affected the quality of creative work, job engagement, and financial performance. We found that, on average, this system did not have a significant effect on any outcomes. However, it significantly improved the quality of creative work in stores that had accessed the system more frequently and in stores with fewer same-company nearby stores. It also improved creative work and job engagement in stores in divergent markets, where customers needed more customization. We found weak evidence of better financial results where salespeople had lower creative talent before the system was introduced. Our findings shed light on those conditions in which information sharing systems affect employees’ creative work.