Skip to main content
SpringerLink
Log in

Experiences of Embedding Long-Term Thinking in an Environment of Short-Termism and Sub-par Business Performance: Investing in Intangibles for Sustainable Growth

  • Original Paper
  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

This paper presents a case study of the South African operation of a logistics company, operating in a context of short-termism and under-performance. Frustration with managing in this context, and concern that this environment might erode the customer value proposition, prompted an exploration of the question: “How can the business prioritise its investment in intangibles to support sustainable growth in an environment of short-termism and sub-par business performance?” The study followed an inductive grounded theory approach and began with an exploration of the system of short-termism as it was being experienced by the management team. This evolved in an iterative process to include an exploration of the customer value proposition, the organisation’s capabilities and the system of investment in intangibles. Data were collected over a period of 6 months, across a series of four stages as the management team grappled with the short-term financial objectives imposed on them. The data categories were used to develop 214 propositions across all stages. Through the four stages, four artefacts were developed from the propositions (1) a causal loop diagram of the system of short-termism; (2) a documented value proposition; (3) an assessment of the health of the business’ capitals; and (4) a multi-year intangibles investment programme. The findings indicate that a focus on investment in intangible assets can play a vital role in stimulating sustainable value creation in an environment of historically poor returns on investment and pressure for short-term financial results. It is suggested that investment in intangibles can be introduced as a multi-year capabilities investment plan. The study succeeded in getting investment in intangibles approved and the implication is that long-term decision-making can co-exist in an environment of short-termism and low growth.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8
Fig. 9
Fig. 10
Fig. 11

Similar content being viewed by others

References

  • Adams, C., Coulson, A. B., Emmelkamp, T., Greveling, R., Kluth, G., & Nugent, M. (2013). Capitals: Background paper for IR. International Integrated Reporting Council.

  • Anderson, K., & Mcadam, R. (2004). A critique of benchmarking and performance measurement: Lead or lag? Benchmarking: An International Journal, 11(5), 465–483.

    Article  Google Scholar 

  • Aspara, J., Pajunen, K., Tikkanen, H., & Tainio, R. (2014). Explaining corporate short-termism: Self-reinforcing processes and biases among investors, the media and corporate managers. Socio-Economic Review, 12(4), 667–693. https://doi.org/10.1093/ser/mwu019.

    Article  Google Scholar 

  • Bartlett, A., & Preston, D. (2000). Can ethical behaviour really exist in business? Journal of Business Ethics, 23(2), 199–209. https://doi.org/10.1023/A:1006037107565.

    Article  Google Scholar 

  • Barton, D. (2011). Capitalism for the long term. Harvard Business Review, 89(3), 84–91.

    Google Scholar 

  • Bhojraj, S., & Libby, R. (2005). Capital market pressure, disclosure frequency-induced earnings/cash flow conflict, and managerial myopia. Accounting Review, 80(1), 1–20.

    Article  Google Scholar 

  • Bick, G. N. C. (2012). Measuring and managing return on marketing investment. In Du Plessis, Jooste & Strydom (Eds.), Marketing management (6th edn., pp. 635–657). Cape Town: Juta.

    Google Scholar 

  • Bridle, P. (2010). Where have the long-term leaders gone? Industrial and Commercial Training, 42(3), 156–159.

    Article  Google Scholar 

  • Buytendijk, F., Hatch, T., & Micheli, P. (2010). Scenario-based strategy maps. Business Horizons, 53(4), 335–347.

    Article  Google Scholar 

  • Call, A. C., Chen, S., Miao, B., & Tong, Y. H. (2014). Short-term earnings guidance and accrual-based earnings management. Review of Accounting Studies, 19(2), 955–987. https://doi.org/10.1007/s11142-013-9270-7.

    Article  Google Scholar 

  • Chandler, J. A., Zachary, M. A., Brigham, K. H., & Payne, G. T. (2016). Long-term orientation: Reviewing the past and identifying future opportunities for family business research. New York: The Routledge Companion to Family Business.

    Google Scholar 

  • Charmaz, K. (2006). Constructing grounded theory: A practical guide through qualitative research. London: Sage Publications Ltd.

    Google Scholar 

  • Charmaz, K., & Belgrave, L. (2012). Qualitative interviewing and grounded theory analysis. In J. Gubrium, et al. (Eds.), The SAGE handbook of interview research: The complexity of the craft (2, pp. 347–365). Los Angeles: SAGE.

    Google Scholar 

  • Chen, J., Zhu, Z., & Xie, H. Y. (2004). Measuring intellectual capital: A new model and empirical study. Journal of Intellectual Capital, 5(1), 195–212.

    Article  Google Scholar 

  • Connelly, B. L., Tihanyi, L., Certo, S. T., & Hitt, M. A. (2010). Marching to the beat of different drummers: The influence of institutional owners on competitive actions. Academy of Management Journal, 53(4), 723–742.

    Article  Google Scholar 

  • Corbin, J., & Strauss, A. (1990). Grounded theory research: Procedures, canons, and evaluative criteria. Qualitative Sociology, 13, 3–21.

    Article  Google Scholar 

  • Cui, J., Jo, H., Na, H., & Velasquez, M. G. (2015). Workforce diversity and religiosity. Journal of Business Ethics, 128(4), 743–767. https://doi.org/10.1007/s10551-013-1984-8.

    Article  Google Scholar 

  • Demirag, I. (1995). Short-term performance pressures: Is there a consensus view? The European Journal of Finance, 1(1), 41–56. https://doi.org/10.1080/13518479500000007.

    Article  Google Scholar 

  • Ding, S., Jia, C., & Wu, Z. (2016). Mutual fund activism and market regulation during the pre-IFRS Period: The case of earnings informativeness in China from an ethical perspective. Journal of Business Ethics, 138(4), 765–785. https://doi.org/10.1007/s10551-015-2797-8.

    Article  Google Scholar 

  • Drucker, P. F. (1986). The changed world economy. New York: Council on Foreign Relations.

    Book  Google Scholar 

  • Ernstberger, J., Link, B., & Vogler, O. (2011). The real business effect of quarterly reporting. Working Paper, Ruhr-University Bochum.

  • Fassin, Y. (2005). The reasons behind non-ethical behaviour in business and entrepreneurship. Journal of Business Ethics, 60(3), 265–279. https://doi.org/10.1007/s10551-005-0134-3.

    Article  Google Scholar 

  • Fichter, R. (2016). Do the right thing! Developing ethical behavior in financial institutions. Journal of Business Ethics. https://doi.org/10.1007/s10551-016-3275-7.

  • Fusso, N. (2012). A systems thinking review for solving short-termism. Management Research Review, 36(8), 805–822.

    Article  Google Scholar 

  • Gates, S., & Langevin, P. (2010). Human capital measures, strategy, and performance: HR managers’ perceptions. Accounting, Auditing & Accountability Journal, 23(1), 111.

    Article  Google Scholar 

  • Gigler, F., Kanodia, C., Sapra, H., & Venugopalan, R. (2014). How frequent financial reporting can cause managerial short-termism: An analysis of the costs and benefits of increasing reporting frequency. Journal of Accounting Research, 52(2), 357–387. https://doi.org/10.1111/1475-679X.12043.

    Article  Google Scholar 

  • Glaser, B. (2017). Discovery of grounded theory: Strategies for qualitative research. New York: Routledge.

    Book  Google Scholar 

  • Graafland, J. J. (2009). Do markets crowd out virtues? an Aristotelian framework. Journal of Business Ethics, 91(1), 1–19. https://doi.org/10.1007/s10551-009-0072-6.

    Article  Google Scholar 

  • Hahn, T., Pinkse, J., Preuss, L., & Figge, F. (2015). Tensions in corporate sustainability: Towards an integrative framework. Journal of Business Ethics, 127(2), 297–316. https://doi.org/10.1007/s10551-014-2047-5.

    Article  Google Scholar 

  • Hansen, E. G., & Schaltegger, S. (2016). The sustainability balanced scorecard: A systematic review of architectures. Journal of Business Ethics, 133(2), 193–221. https://doi.org/10.1007/s10551-014-2340-3.

    Article  Google Scholar 

  • Hendry, J., & Seidl, D. (2003). The structure and significance of strategic episodes: Social systems theory and the routine practices of strategic change. Journal of Management Studies, 4(January), 1–38.

    Google Scholar 

  • Himick, D., & Audousset-Coulier, S. (2016). Responsible investing of pension assets: Links between framing and practices for evaluation. Journal of Business Ethics, 136(3), 539–556. https://doi.org/10.1007/s10551-014-2530-z.

    Article  Google Scholar 

  • Hirshleifer, D. (1993). Managerial reputation and corporate investment decisions. Financial Management, 22(2), 145–160.

    Article  Google Scholar 

  • Hoebeke, L. (2000). Making work systems better. Bierbeek: Wiley.

    Google Scholar 

  • Jacobs, M. T. (1991). Short-term America: The causes and cures of our business myopia. Boston: Harvard Business School Press.

    Google Scholar 

  • Kahneman, D. (2012). Thinking, fast and slow. New York: Farrar, Straus and Giroux, 2011).

  • Kaplan, R. S., & Norton, D. P. (2004). The strategy map: Guide to aligning intangible assets. Strategy & Leadership, 32(5), 10–17.

    Article  Google Scholar 

  • Kayo, E. K.: 2002, Capital structure and risk of tangible and intangible-intensive companies: A contribution of studying of firm valuation. PhD Dissertation, University of Sao Paulo.

  • Kim, Y., Su, L. (Nancy), & Zhu, X. (Kevin) (2017). Does the cessation of quarterly earnings guidance reduce investors’ short-termism? Review of Accounting Studies, 22(2), 715–752. https://doi.org/10.1007/s11142-017-9397-z.

    Article  Google Scholar 

  • Koslowski, P. (2000). The limits of shareholder value. Journal of Business Ethics, 27(1), 137–148. https://doi.org/10.1023/A:1006438000855.

    Article  Google Scholar 

  • Kristandl, G., & Bontis, N. (2007). Constructing a definition for intangibles using the resource based view of the firm. Management decision, 45(9), 1510–1524.

    Article  Google Scholar 

  • Latham, S., & Braun, M. (2010). Does short-termism influence firm innovation? An examination of S&P 500 Firms, 1990–2003. Journal of Managerial Issues, 22(3), 368–382.

    Google Scholar 

  • Laverty, K. J. (1996). Economic short-termism: The debate, the unresolved issues, and the implications for management practice and research. Academy of Management Review, 21(3), 825–860.

    Google Scholar 

  • Laverty, K. J. (2004). Managerial myopia or systemic short-termism? Management Decision, 42(8), 949–962. https://doi.org/10.1108/00251740410555443.

    Article  Google Scholar 

  • Leavy, B. (2011). Roger Martin explores three big ideas: Customer capitalism, integrative thinking and design thinking. Strategy & Leadership, 39(4), 19–26.

    Article  Google Scholar 

  • Lin, G. T. R., & Tang, J. Y. H. (2009). Appraising intangible assets from the viewpoint of value drivers. Journal of Business Ethics, 88, 679–689. https://doi.org/10.1007/s10551-008-9974-y.

    Article  Google Scholar 

  • Lumpkin, G. T., & Brigham, K. H. (2011). Long-term orientation and temporal choice in family firms. Entrepreneurship Theory and Practice, 35(6), 1149–1169.

    Article  Google Scholar 

  • Lydenberg, S. (2014). Reason, Rationality, and Fiduciary Duty. Journal of Business Ethics, 119(3), 365–380. https://doi.org/10.1007/s10551-013-1632-3.

    Article  Google Scholar 

  • Malmi, T., & Brown, D. (2008). Management control systems as a package—Opportunities, challenges and research directions. Management Control Systems as a Package, 19(4), 287–300.

    Google Scholar 

  • Marginson, D., & Mcaulay, L. (2008). Exploring the debate on short-termism: A theoretical and empirical analysis. Strategic Management Journal, 29(3), 273–292.

    Article  Google Scholar 

  • Marginson, D., Mcaulay, L., Roush, M., & van Zijl, T. (2010). Performance measures and short-termism: An exploratory study. Accounting & Business Research, 40(4), 353–370.

    Article  Google Scholar 

  • Martin, R. (2011). Fixing the game: Bubbles, crashes and what capitalism can learn from the NFL. In Fixing the game: Bubbles, crashes and what capitalism can learn from the NFL. Boston: Harvard Business Review Press.

    Google Scholar 

  • Martin, R. L. (2009). The design of business: Why design thinking is the next competitive advantage. Boston: Harvard Business Press.

    Google Scholar 

  • Martins, J., & Alves, S. (2011). The impact of intangible assets on financial and governance policies: A literature review. Portuguese Journal of Management Studies, XV(1), 87–108.

    Google Scholar 

  • Mizik, N. (2010). The theory and practice of myopic management. Journal of Marketing Research, XLVII(August), 594–611.

  • Moldoveanu, M. C., & Martin, R. L. (2011). The future of the MBA: Designing the thinker of the future. The Future of the MBA: Designing the Thinker of the Future. https://doi.org/10.1093/acprof:oso/9780195340143.001.0001.

  • Nevins, J. L., O’Bearden, W. O., & Money, B. (2007). Ethical values and long-term orientation. Journal of Business Ethics, 71(3), 261–274.

    Article  Google Scholar 

  • Prince, R. A., & Rogers, B. (2012). What is a thought leader? Forbes.

  • Rahmandad, H., Henderson, R., & Repenning, N. P. (2016). Making the numbers? “Short termism” and the puzzle of only occasional disaster. Management Science.

  • Rappaport, A. (2011). Intangible capital: Putting knowledge to work in the 21st-century organization. Accounting Review, 86(6), 2185–2186.

    Article  Google Scholar 

  • Rieg, R. (2015). Dynamics of value-based management: Does shareholder value cause short-termism? Journal of Management Control, 26(2–3), 193–224. https://doi.org/10.1007/s00187-015-0211-4.

    Article  Google Scholar 

  • Robbins, N. B., & Heiberger, R. M. (2011). Plotting Likert and Other Rating Scales. In: Proceedings of the Joint Statistical Meetings (October 2005), pp. 1058–1066.

  • Roe, M. J. (2013). Corporate short-termism—In the boardroom and in the courtroom. The Business Lwayer, 68(4), 977–1006. Retrieved from http://www.jstor.org/stable/23526790.

  • Samuel, C. (2000). Does shareholder myopia lead to managerial myopia? A first look. Applied Financial Economics, 10(5), 493–505.

    Article  Google Scholar 

  • Scarborough, J. (1995). The ethical implications of short-termism: Leadership failure in the executive suite. International Journal of Value-Based Management, 8(1), 25–37. https://doi.org/10.1007/BF00896547.

    Article  Google Scholar 

  • Schörger, D., & Sewchurran, K. (2015). Towards an interpretive measurement framework to assess the levels of integrated and integrative thinking within organisations. Risk Governance and Control: Financial Markets and Institutions, 15(3), 44–66.

    Google Scholar 

  • Schultze, U., & Avital, M. (2011). Designing interviews to generate rich data for information systems research. Information and Organization, 21(1), 1–16.

    Article  Google Scholar 

  • Sedgwick, P. (1991). A response to Richard Evans. Journal of Business Ethics, 10(11), 877–879. https://doi.org/10.1007/BF00383706.

    Article  Google Scholar 

  • Sewchurran, K., Philipp, F., Baets, W., & Mcdonogh, J. (2016). Could more thoughtful practice of complexity, design thinking and values-based organising address some of the limitations of current management and organising paradigms? International Journal of Complexity in Leadership and Management, 3(3), 169–181.

    Article  Google Scholar 

  • Sison, A. J. G., Ferrero, I., & Guitián, G. (2017). Characterizing virtues in finance. Journal of Business Ethics. https://doi.org/10.1007/s10551-017-3596-1.

  • Slawinski, N., Pinkse, J., Busch, T., & Banerjee, S. B. (2017). The role of short-termism and uncertainty avoidance in organizational inaction on climate change: A multi-level framework. Business & Society, 56(2), 253–282. https://doi.org/10.1177/0007650315576136.

    Article  Google Scholar 

  • Souder, D., & Bromiley, P. (2012). Explaining temporal orientation: Evidence from the durability of firms’ capital investments. Strategic Management Journal, 33(5), 550–569.

    Article  Google Scholar 

  • Strauss, A., & Corbin, J. M. (1990). Basics of qualitative research: Grounded theory procedures and techniques. Thousand Oaks: Sage Publications, Inc.

    Google Scholar 

  • Thanassoulis, J. (2013). Industry Structure, Executive Pay, and Short-Termism Short-Termism. Management Science, 59(2), 402–419.

    Article  Google Scholar 

  • The International Integrated Reporting Council. (2013). The international Integrated Reporting framework. The International <IR> Framework, 37.

  • Treacy, M., & Wiersema, F. (1993). Customer intimacy and other value disciplines. Harvard Business Review, 71(1), 84–93.

    Google Scholar 

  • van der Heijden, K. (2001). Back to basics: Exploring the business idea. Strategy & Leadership, 29(2), 13–18.

    Article  Google Scholar 

  • Wagner, M. (2013). “Green” human resource benefits: Do they matter as determinants of environmental management system implementation? Journal of Business Ethics, 114(3), 443–456. https://doi.org/10.1007/s10551-012-1356-9.

    Article  Google Scholar 

  • Winter, S. G. (2003). Understanding dynamic capabilities. Strategic Management Journal, 24(10), 991–995.

    Article  Google Scholar 

  • Yearworth, M., & White, L. (2013). The uses of qualitative data in multimethodology: Developing causal loop diagrams during the coding process. European Journal of Operational Research, 231(1), 151–161.

    Article  Google Scholar 

  • Zardkoohi, A., Harrison, J. S., & Josefy, M. A. (2017). Conflict and confluence: The multidimensionality of opportunism in principal–agent relationships. Journal of Business Ethics, 146(2), 405–417. https://doi.org/10.1007/s10551-015-2887-7.

    Article  Google Scholar 

  • Zellweger, T. (2007). Time horizon, costs of equity capital, and generic investment strategies of firms. Family Business Review, 20(1), 1–15.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Graduate School of Business, University of Cape Town, 9 Portswood Road, Green Point, Cape Town, 8005, South Africa

    Kosheek Sewchurran, Johan Dekker & Jennifer McDonogh

Authors
  1. Kosheek Sewchurran
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Johan Dekker
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Jennifer McDonogh
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Kosheek Sewchurran.

Appendices

Appendix 1: Propositions from Stage 1: Understanding Short-Termism as a System

Table 1 illustrates a sample of a log of propositions that was collected from a broader set of observations in the work environment, in the period from 15 April 2015 to 10 June 2015. The log indicates the observation, its relevance to the concern variable of “level of short-termism applied by executives”, whether the data operate as a restrainer or driver on the concern variable, and a proposition. Most of the propositions were based on observations in meetings, whilst some were based on reflections and memos written after specific events.

The selected observations and reflective data formed part of an initial coding process in which data were converted into propositions (Table 8 in this Appendix). We then undertook a phase of selective or focused coding to generate the most significant and most frequent variables driving or restraining the level of short-termism among executives. Table 9 in this Appendix illustrates the sample of propositions and how they were coded.

Table 8 Proposition log for concern variable: level of short-termism applied by executives
Full size table
Table 9 Selective coding: propositions coded into variable
Full size table

Appendix 2: Investment in Intangible Assets

See Table 10.

Table 10 Proposition log for concern variable: level of investment in intangible assets
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Sewchurran, K., Dekker, J. & McDonogh, J. Experiences of Embedding Long-Term Thinking in an Environment of Short-Termism and Sub-par Business Performance: Investing in Intangibles for Sustainable Growth. J Bus Ethics 157, 997–1041 (2019). https://doi.org/10.1007/s10551-018-3959-2

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-018-3959-2

Keywords

Search

Navigation