Essays on managerial myopia and subject positions in companies with different governance structures

Citation

Terhi Chakhovich, D.S. (2013), "Essays on managerial myopia and subject positions in companies with different governance structures", Journal of Accounting & Organizational Change, Vol. 9 No. 1. https://doi.org/10.1108/jaoc.2013.31509aaa.001

Essays on managerial myopia and subject positions in companies with different governance structures

Article Type: Doctoral abstracts From: Journal of Accounting & Organizational Change, Volume 9, Issue 1

Purpose – This dissertation examines managerial myopia and subject positions in companies with different governance structures. The study investigates how the use of time models is potentially related to myopia and how organisational controls are tied to the potential for myopia through time models. The time models are socially constructed mental models on time.

Design/methodology/approach – The study is implemented as interpretive with approaches relying on social constructionism and Foucauldian analysis. The data consists of 42 interviews and archival data gathered in three companies in the financial services industry in Finland; one shareholder value oriented listed company, one mutual company and one coalition of independent savings banks.

Findings – Shareholder value oriented, listed company executives focus on a present-based time model, whereby present efficiency and effectiveness are experienced as the base for future success. The time models of the actors in the non-listed company are more flexible and variant than those of listed company executives. In non-listed companies, executives and managers construct and follow past-, present-, and/or future-based time models and their associated rationalities. In the past-based model, it is assumed that the past is the base on which it is possible to build the present and/or the future. In the future-based model, it is considered that future plans are the base on which present actions should be determined. Subject positions in a listed company are tied to present action, unlike those in a non-listed company, which are tied to inaction. The emphasis on action explains the wide popularity and diffusion of shareholder value. Myopia is redefined to be a disproportionate concern for business matters which do not contribute to the long-term success of the focal company. It is shown that prior studies have considered myopia as being predominantly related to a present-based time model, whereas this study considers also the other models. Organisational control systems that focus on only one measure tend to highlight the myopic tendencies of that measure. In this regard, share price is shown to be connected with the present-based time model and reinforce its potential myopic tendencies. The paradox of simultaneous short and long time orientation of share price that has been revealed by the previous literature is partly resolved; share price is shown to be constructed as long-term by company executives and as short-term by outsiders who criticise the present-based time model. In the study, company culture is shown to be tied to the past-based time model, and the Balanced Scorecard, along with cybernetic systems more generally, to the future-based time model.

Research limitations/implications – Time models form a subject of future research.

Practical implications – In order to decrease myopia, organisational control systems need to be balanced, and designed according to the relevant context.

Originality/value – The research studies time from the perspective of actors, not only outside commentators.

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Management Accounting

University/institution – Turku School of Economics

Full postal address – Rehtorinpellonkatu 3, 20500 Turku, Finland

Telephone/Fax –+358 40 574 3064

E-mail – terhi.chakhovich@utu.fi

Dr Sc. Terhi ChakhovichPosition/department or school – Assistant Professor/ Department of Accounting and Finance