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4.3. SAMPLE AND MEASUREMENT 99 of RPE do not require that peer performance affects the performance target explicitly, but they can, for example, play a role in establishing an implicit performance standard or norm for the performance evaluation. This measure asks to what extent the respondent perceives that the performance of his peers is a point of reference for his superior when evaluating the respondent’s performance. Additionally, the question differentiates between situations where the evaluated business unit performs substantially better versus substantially worse than its peers. This dinstinction controls for potential asymmetries in peer comparison. Throughout the sample, the asymmetries do not seem to be of great influence; the three settings (neutral/better/worse) lead to an internally consistent scale, as presented in table 4.3. Table 4.3: Items for RPE-Use (Q1) Item description Component loadings a. Peer performance point of reference 0.868 b. Substantially better 0.923 c. Substantially worse 0.902 Percentage variance explained 80.6% Cronbach’s alpha 0.879 Information Asymmetry(*) Information asymmetry is measured with a seven-item measure, largely based on Dunk (1993). There are two differences from Dunk’s original instrument. First, the wording has been altered to fit better with the specific context of business unit managers. Second, one question was added to differentiate between knowledge about internal versus external factors that might influence the business unit performance (following Kruis 2008). All items load onto one factor. Overall, the construct for information asymmetry shows good internal reliability. Information asymmetry was calculated by averaging the scores on all items. Table 4.4 summarizes the construction of the information asymmetry variable. Goal Ambiguity(*) Goal ambiguity measures the extent to which firms clearly formulate their objectives. Goal ambiguity is measured with a multi-item construct, evaluated by four questionnaire items. As summarized in table 4.5, the items refer to how clear and specific the goals are defined, and how easily they can be communicated. The Cronbach’s alpha of the four items together is rather low at a value of 0.630, and cannot be improved by deletion of one of the items, as is shown in table 4.5. However, factor analysis shows that the four questions load onto one component, with all component loadings well above 0.500. Based on the adequate component loadings, I combine the items into one measure, labelled goal ambiguity.
100 CHAPTER 4. OPPORTUNISM MITIGATION EFFECTIVENESS Table 4.4: Items for Information Asymmetry (Q16) Item description Component loadings a. Information about the activities undertaken 0.818 b. Familiarity with the input/output relations 0.834 c. Certainty about the performance potential 0.851 d. Familiarity with the technical aspects of the work 0.711 e. The impact of internal factors on the managers activities 0.697 f. The impact of external factors on the managers activities 0.610 g. Understanding of the achievements of the business unit 0.791 Percentage variance explained 58.3% Cronbach’s alpha 0.875 Measurability of Outputs(*) Measurability of outputs refers to the extent to which firms are able to measure the desired results of the business unit in a goal consistent way. Measurability of outputs is a construct evaluated by four questionnaire items, asking about the objective measurability of the outputs, including aspects of completeness and goal consistency of the output measurement. The items load onto one factor with a scale reliability of 0.74. The items and the corresponding statistics as summarized in table 4.6. Decentralization of Decision Rights Following Abernethy et al. (2004) I measure the level of decentralization of decision rights by using a modified version of the instrument developed by Gordon & Narayanan (1984). The questionnaire asks the respondents to indicate their level of influence relative to their superior on five decision areas: strategy, investments, marketing, operations, and human resource management. As summarized in table 4.7, factor analysis and the Cronbach’s alpha support the incorporation of all five items into a single unidimensional construct. Control Variables(*) This study controls for business unit & firm size, as well as for sector effects. This paragraph presents the measures for these control variables.
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Relative Performance Evaluation in
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NYENRODE BUSINESS UNIVERSITEIT Rela
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Table of Contents Preface 1 General
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Preface Why do people make things h
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2 CHAPTER 1. GENERAL INTRODUCTION I
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4 CHAPTER 1. GENERAL INTRODUCTION o
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8 CHAPTER 1. GENERAL INTRODUCTION F
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10 CHAPTER 1. GENERAL INTRODUCTION
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Chapter 2 The Use of Relative Perfo
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2.1. INTRODUCTION 15 is not a promi
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2.2. THEORETICAL BACKGROUND 17 The
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2.2. THEORETICAL BACKGROUND 19 Sinc
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2.2. THEORETICAL BACKGROUND 21 who
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2.2. THEORETICAL BACKGROUND 23 suff
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2.3. SAMPLE AND MEASUREMENT 25 2.2.
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2.3. SAMPLE AND MEASUREMENT 27 2.3.
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2.3. SAMPLE AND MEASUREMENT 29 can
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2.3. SAMPLE AND MEASUREMENT 31 Comp
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2.3. SAMPLE AND MEASUREMENT 33 this
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2.3. SAMPLE AND MEASUREMENT 35 Emph
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2.4. ANALYSES 37 2.4 Analyses This
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2.4. ANALYSES 39 Table 2.8: RPE use
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2.4. ANALYSES 41 2.4.2 Correlations
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2.4. ANALYSES 43 Concerning the con
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2.4. ANALYSES 45 Table 2.13: Result
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2.4. ANALYSES 47 Table 2.15: Summar
Page 58 and 59: 2.5. CONCLUSIONS AND DISCUSSION 49
Page 62 and 63: 2.6. CONTRACTIBILITY MIMIC MODEL (A
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Page 66 and 67: 2.7. ANALYSES FOR FOR-PROFIT BUS (A
Page 68 and 69: Chapter 3 Does Relative Performance
Page 70 and 71: 3.1. INTRODUCTION 61 Holmstrom’s
Page 72 and 73: 3.2. DEVELOPMENT OF THE MODEL 63 3.
Page 74 and 75: 3.2. DEVELOPMENT OF THE MODEL 65 RP
Page 76 and 77: 3.3. SAMPLE AND MEASUREMENT 67 3.3
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Page 80 and 81: 3.3. SAMPLE AND MEASUREMENT 71 Tabl
Page 82 and 83: 3.3. SAMPLE AND MEASUREMENT 73 Tabl
Page 84 and 85: 3.4. ANALYSES 75 3.4 Analyses This
Page 86 and 87: 3.4. ANALYSES 77 Table 3.9: Pearson
Page 88 and 89: 3.4. ANALYSES 79 Table 3.10: Result
Page 90 and 91: 3.4. ANALYSES 81 Table 3.11: Result
Page 92 and 93: 3.4. ANALYSES 83 Larcker & Rusticus
Page 96 and 97: Chapter 4 Does Relative Performance
Page 98 and 99: 4.1. INTRODUCTION 89 Moreover, chap
Page 100 and 101: 4.2. DEVELOPMENT OF THE MODEL 91 is
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Page 104 and 105: 4.3. SAMPLE AND MEASUREMENT 95 4.3
Page 106 and 107: 4.3. SAMPLE AND MEASUREMENT 97 To i
Page 110 and 111: 4.3. SAMPLE AND MEASUREMENT 101 Tab
Page 112 and 113: 4.4. ANALYSES 103 Table 4.8: Items
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Page 116 and 117: 4.4. ANALYSES 107 The model does sh
Page 118 and 119: 4.4. ANALYSES 109 RPE and RFMO. Mor
Page 120 and 121: 4.4. ANALYSES 111 room for manageri
Page 126 and 127: Chapter 5 Conclusion 5.1 Summary, C
Page 128 and 129: 5.1. SUMMARY, CONCLUSIONS AND DISCU
Page 134 and 135: 5.2. IMPLICATIONS FOR PRACTICE 125
Page 136 and 137: 5.3. LIMITATIONS AND SUGGESTIONS FO
Page 138 and 139: Appendix Overview of Questionnaire
Page 140 and 141: Q5 How often do the following thing
Page 142 and 143: Q14 When serving your clients, how
Page 144 and 145: Q23 Please indicate whether you agr
Page 146 and 147: Noise Q34 NOISE (primary measure) P
Page 148 and 149: References 1. Abernethy, M.A., Bouw
Page 150 and 151: 26. Diamantopoulos, A. & Siguaw, J.
Page 152 and 153: 52. Himmelberg, C.P. & Hubbard R.G.
Page 154: 83. Towry, K. 2003. ‘Control in a
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Biography Hilco van Elten (1979) ho
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