Chap 3 Organizational Resources and Competitive Advantage
Write a reflection about something you found interesting and post your reflection to the forum.
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Human resources hold excellent potential for sustainable competitive advantage. Possible sources of advantage include excellent human resources, superior top managers, or an excellent system of corporate governances. Managers serve as agents for the shareholders. When they act in their own interests at the expense of the shareholders, an agency problem exists.
Agency problems happen in large companies like Novell Inc., Exxon Mobile, IBM and Time Warner. CEOs’ high salaries reduce the amount of earnings available to the shareholders. CEO compensation packages for the large US companies typically reach into the millions of dollars annually. Since research and development expenditures reduce current earnings and often do not provide financial benefits for many years, CEOs who are compensated based on profitability levels have a built-in incentive not to approve research projects. Bad performance CEOs tend to use ‘reorganization’ or ‘restructuring’ of the company to cut thousands of jobs to show the ‘earnings’ of the company and hence get a big bonus. I think this is very immoral.
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