RESEARCH FRAMEWORK

Operational definition and measurement

• Variables Descriptions/Measures
• ROA Return on assets is measured at reporting segments by product or by
region. The operating profit of a segment is divided by the total assets
of the segment at the end of a fiscal year
• GROWTH IN EMPLOYMENT This is the degree of organizational growth in terms of the number of
employees in a segment. As the number of employees is observable
only at the corporate level, the number of employees in a segment is estimated from
that of a company on a pro rata basis, specifically in proportion to a segment’s sales
against the total sales. Then, the growth is computed as ln(#Employeest)
−ln(#Employeest-1).
• GROWTH IN SALES The degree of organizational growth in sales of a segment
• VACANCY Natural log of the number of total dismissals of executives in a
segment in the following year
• SALES Natural log of net sales of a reporting segment
• LEVEL An executive’s hierarchical rank title is converted into a
numerical value. Its value increases with the rank: 1 is for the lowest and 5, the highest. In
the dataset, seven ranks are identified. However, there are only five to six (varying over
time) people in the top two ranks. The top three ranks (see Table 1) are collapsed into a single
level for analysis purposes.
• EXECUTIVE JOBS The number of executives at a rank in a reporting segment
• AGE Natural log of an executive’s age computed as the reporting
year minus the birth year
• TENURE Tenure is the number of years since the last rank promotion.
• EDUCATION Education is the numerical value for an executive’s final degree: (1)
bachelor or lower, (2) masters, and (3) doctorate.
• DISCIPLINE Indicators for an executive’s occupational discipline,
namely, (1) administration, (2) marketing or sales, and (3) engineering or research
• INTER-SEGMENT TRANSFER The relative frequency (in percent) of internal transfers (outgoing) from
a segment to another divided by the number of executives in the segment

• INTRA-SEGMENT TRANSFER The relative frequency (in percent) of internal transfers made within a
segment divided by the number of executives in the segment