This case describes the development and struggles of Opple Lighting (Opple), a leading Chinese company in the lighting industry. Opple explored and developed an e-commerce business in response to the threat of emerging e-commerce retail channels in the online lighting market. There were significant differences involved in running an e-commerce business versus a traditional (offline) sales business in this industry, and most of Opple's management team disapproved of the development of the e-commerce business division; they believed that e-commerce operations would inevitably cannibalize the existing offline business. How would the e-commerce business division gain the needed approval and support from the other business divisions? There were "hidden rules" behind the murky pricing practices in the traditional lighting industry, whereas e-commerce stressed price transparency. How could the e-commerce business be operated to avoid direct conflict with the offline sales channels? Traditional lighting products were characterized by a long product development cycle with a large-scale supply-chain distribution channel, whereas e-commerce lighting products emphasized small batches with rapid development and updates. How could the e-business departments resolve the challenges and conflicts in production, logistics, new product development, and distribution between traditional and e-commerce sales?
This case details how Opple grew its e-commerce business from zero to RMB 1.5 billion in five years and optimized its e-commerce supply chain by reorganizing its product development process, manufacturing, logistics, warehousing, marketing, and after-sales service. It also looks at how Opple adjusted organizational structure changes, encouraged innovation, overhauled talent management, and improved its performance management systems to eventually achieve rapid growth in sales performance. In 2017, sales revenues for three-commerce division were nearly 2.1 billion yuan, representing 25% of Opple's total revenue and making the e-commerce business a new growth engine for the company. That division also encouraged changes to Opple's culture, organization redesign, and incentive scheme, helping to drive rapid growth in the company's other businesses and – more importantly – providing the necessary incubation period for several other Opple businesses.
organizational structure adjustment
traditional enterprise transformation
This paper examines the length of time over which CEO performance is evaluated (the "performance period") in CEO performance-based equity awards (PBEAs). Departing from the primary emphasis of agency theory on moral hazard problems, we develop a model in which short performance periods are instrumental in sorting CEO talents. The model predicts that short performance periods are preferred when CEOs have low expected productivity or valuable alternative employment opportunities, and when firms face high operating uncertainty or high dispersion of managerial productivity. We find empirical support for these predictions in a sample of S&P 1500 industrial firms granting PBEAs to CEOs. We also document that CEO turnover is higher for underperforming CEOs with shorter performance periods, validating the sorting role of performance periods.
Australian Journal of Management
This study finds that stronger market control (measured as fewer anti-takeover provisions) and more effective boards (measured as boards that are more independent and for which independent directors have more outside directorships) are both associated with higher R&D valuation. Furthermore, stronger market control (more effective board governance) is associated with higher R&D valuation only in the presence of weaker board governance (market control). Taken together, the results are consistent with the interpretation that both the market for corporate control and effective boards mitigate agency conflicts arising from R&D investments and improve the market valuation of R&D. Furthermore, the two mechanisms act as substitutes in doing so.
market for corporate control
Journal of International Business Studies
Firms and governments operate in broad networks in which the home government and its diplomatic service are a critical node – or a “referral point” – between firms and potential partners in foreign locations. Thus diplomatic relations between countries matter for the choice of foreign investment location. Using a network perspective, we argue that the extent to which good diplomatic relations induce firms to invest in friendly host countries depends on their political connections to home governments. Those with stronger ties to home governments can better access and leverage intergovernmental diplomatic connections, thus benefiting potentially from enhanced access to information, reduced political risks, and increased legitimacy. Such ability of politically connected firms is more useful where weak institutional impartiality in the host country inhibits neutral treatment of foreign investors. Empirically, using overseas investment location decisions by Chinese firms, we find that the types of home government ties (i.e., whether they are organizational or personal and whether those relationships are with central or local goverments) and the impartiality of host institutions are both important contingencies affecting firms’ utilization of diplomatic relations. We discuss the implications of our study to research on network theory, political ties, and internationalization of emerging market firms.
foreign location choice
Review of Accounting and Finance
The purpose of this paper is to provide new evidence on the choice of performance measures used in dual-class firms to incentivize CEOs.
This paper uses coarsened exact matching and propensity score matching to match the dual-class firm sample with a control group of single-class firms. This study uses matching estimators to provide an analysis of how a dual-class structure affects the design of performance measures in performance-based stock awards. In addition, regression models are used to investigate the effect of a dual-class structure on performance measure choices.
This paper finds that market-based metrics are less likely to be used by dual-class firms relative to single-class firms. In addition, peer-based measures are much less common for dual-class than single-class firms. This study also finds that the length of the CEO’s performance evaluation period does not differ between dual-class and single-class firms.
This paper attempts to investigate the choice of performance measures to find out the extent to which the board of directors focuses CEO efforts on firms’ long-term versus short-term objectives.
The findings reveal the relationships between the dual-class stock structure and the contractual features of CEO performance-based stock awards, provide empirical evidence for the company’s compensation committee and provide implications for the evolving practices of performance measures regarding CEO stock compensation. The findings are also useful to regulators, compensation consultants and firms pursuing efficient design of executive compensation.
This paper is among the first to study the determinants of compensation contracts. Second, prior literature seldom controls for CEO stock ownership, but this study matches dual-class firms to a control group of single-class firms that are similar in terms of CEO stock ownership and other important firm characteristics. Finally, these findings suggest that dual-class firms shield their executives from short-term market pressures and design stock compensation contracts that deemphasize volatile stock prices.
CEO stock compensation