Knowledge that Transforms

Many organizations have professional employees on fixed-term and ongoing employment contracts. While hiring employees on fixed-term contracts offers organizations operational flexibility and other benefits, it also brings about challenges in the form of relatively lower goal alignment and ability of these employees, thus creating the need for management controls. At the same time, given the costs and constraints of designing and implementing a control system, we expect that the planned use of fixed-term workers would be affected by the type of control environment that organizations are willing or able to create. Hence, this study investigates whether an organization's choice of its control environment and its use of fixed-term professional employees are interdependent (i.e., made jointly). Using surveys from different sources and archival data from the education sector, we find that some types of controls (i.e., action controls and organizational culture) and the organization's choice of using fixed-term employees are interdependent, while other controls (i.e., employee selection practices and results control) are independent of this choice. We also find that the interdependence between the choice of using fixed-term employees and the control environment is generally weaker when organizations use fixed-term contracts as an implicit screening mechanism for ongoing employment. Finally, in additional analysis, we find evidence that the interdependence between controls and the use of fixed-term employees is primarily due to concerns related to goal alignment rather than ability.

Broker-dealers traditionally charge their clients for the provision of investment research with a composite fee that bundles payments for research with other variable fees, such as those for trade executions. Due to regulatory changes in Europe, US broker-dealers temporarily allowed some of their clients to pay an explicit fee for the provision of investment research. Drawing on the sunk cost literature, I examine how transaction cost unbundling influences investors’ reliance on investment research. Results from 16 experimental markets indicate that investors place greater weight on costly forecasts under a system of unbundled payments compared to bundled payments, but only if transaction costs are sufficiently high, which is consistent with the dynamics of a sunk cost fallacy. I find marginal evidence that the enhanced focus on the forecast further inhibits investors' learning, as reflected in a slower reduction of price errors over time. These results are important since investors worldwide are increasingly paying explicit charges for investment research, a trend reinforced by a recent SEC policy change.

Previous studies of macroeconomic accounting have focused on the conceptual and political development of national accounts and how such theoretical concepts generate economic reality. By turning focus to the calculative practices of macroeconomic accounting, studying the Norwegian Quarterly National Accounts (QNA), the present work underlines that the national economy is not only constituted in the political discourse of growth and within international classifications, but also within the everyday processes of calculating the numbers. It shows how the QNA team struggles to adhere to the formal classifications and find reliable empirical accounts that matches them. In such situations, epistemic strategies are employed to handle the “gaps” and misalignments between the formal classifications and the everyday calculative practice. By theorizing the validation and support of weak numbers within a calculative culture shaped by the handling of second-order measurements and interrupted representations, the present study contributes to an emerging accounting literature on interrupted and hyperreal representations.

This study investigates, via two experiments, the effects of target transparency, which reflects employees' knowledge about each other's targets in an organization, on managers' target setting decisions. We also investigate whether this effect depends on the need for help among employees. We predict and find that target transparency and need for help interact to influence managers' target setting decisions. Target transparency increases target levels when the need for help is low, but not when it is high. Further, target transparency leads managers to differentiate less between individual employee targets. This reduction is greater when the need for help is high than when it is low. Additional analyses support our theory by revealing that managers strategically set targets in a way that is consistent with an intention to motivate both effort at the individual level and help among employees when such are needed. Our results help explain anecdotal evidence of why companies that value help among employees often make targets transparent throughout the entire organization.

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