We investigate the economic role of proxy advisors (PAs) in the context of mandatory “say on pay” votes, a novel and complex item requiring significant firm-specific analysis. PAs are more likely to issue an Against recommendation at firms with poor performance and higher levels of CEO pay and do not appear to follow a “one-size-fits-all” approach. PAs’ recommendations are the key determinant of voting outcome but the sensitivity of shareholder votes to these recommendations varies with the institutional ownership structure, and the rationale behind the recommendation, suggesting that at least some shareholders do not blindly follow these recommendations. More than half of the firms respond to the adverse shareholder vote triggered by a negative recommendation by engaging with investors and making changes to their compensation plan. However, we find no market reaction to the announcement of such changes, even when material enough to result in a favorable recommendation and vote the following year. Our findings suggest that, rather than identifying and promoting superior compensation practices, PAs' key economic role is processing a substantial amount of executive pay information on behalf of institutional investors, hence reducing their cost of making informed voting decisions. Our findings contribute to the literature on shareholder voting and the related policy debate.
Lean development is a promising approach in new product development (NPD). However, despite the successful application of lean thinking and its principles to manufacturing, the adoption of the lean approach to product development is a quite novel undertaking. In this paper, we develop and test hypotheses pertaining to the elimination of waste, which is one of the major objectives of lean management. In particular, our study focuses on the question: What management factors are enablers for the elimination of waste in the context of NPD? We identified: 1) employee training; 2) coaching; 3) constructive failure treatment as effective means. Furthermore, implications for management practice are considered. Testing our hypotheses, we refer to data from 108 firms in the automotive supplier industry in German-speaking countries, i.e., Germany, Austria, Switzerland and Liechtenstein.
The alliance literature has recognized distance between partners' knowledge as important for innovation. However, theoretical reasoning as well as empirical results differ concerning the relationship of partners' knowledge base distance and innovation performance. We assume that the mixed results are caused by neglecting the role of relevant knowledge types. In this study, we examine the effect of technological and managerial knowledge distance on collaborative innovation performance. We examined 53 collaborative development projects and we find an inverse U-shaped relationship between technological knowledge distance and innovation performance, explained by the knowledge-based view and absorptive capacity. Our results also reveal that a short managerial knowledge distance is beneficial for innovation, which can be explained by transaction cost theory. Overall, our research helps to better explain knowledge distance's effect on collaborative innovation performance.
