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