E
E Prefix for “electronic,” as in E-BUSINESS, E-COMMERCE, e-banking, e-learning, e-mail. Takes hyphen, although wider use will bring elimination of the hyphen.
Early adopter Company that is quick to recognize the potential of innovative technologies and procedures.
Early retirement Cessation of work before reaching the mandatory retirement age, either voluntarily or as part of a company’s DOWNSIZING.
Earnings per share Company’s consolidated profits divided by the number of ordinary shares, used as a measure of performance.
Easterlin, Richard (1926–) Professor of Economics at the University of Southern California. He is known for his “Easterlin paradox,” which states that happiness at the national level does not increase with wealth once basic needs are met. He is also known for the “Easterlin hypothesis,” which states the positive relationship between income and fertility is dependent on income relative to aspirations.
Easterlin paradox Theory proposed by economics professor RICHARD EASTERLIN that increasing wealth does not produce corresponding growth in happiness.
EBIT Earnings before interest and taxes
EBITDA Earnings before interest, taxes, depreciation, and amortization
E-business Electronic direct marketing using the Internet. Also termed E-COMMERCE.
Echo-chamber effect Limiting effect of junior staff parroting the ideas of senior management uncritically.
Eclectic paradigm Model developed by international business expert JOHN HARRY DUNNING to explain variations in the scope of foreign direct investment.
Ecocentric management Ecologically aware management approach that treats environmental issues as a core concern rather than as a peripheral one.
E-commerce Electronic commerce or Web-based commercial transactions.
Econometrics Branch of economics specializing in studies of quantitative relationships between economic variables.
Economic appraisal Method of capital budgeting that uses discounted cash-flow techniques to identify preferred investments. In addition to cash flow, it factors in anticipated economic benefits and annual costs over the lifetime of a project.
Economic batch quantity (EBQ) Optimum size of a production batch to justify production costs.
Economic benefits Inventory of material and financial benefits accruing from a project as a measure of its rationale. For example, the construction of a new road may mean a reduction of driving time, fewer accidents, and lower insurance costs as its economic benefits.
Economic costs Inventory of material and financial costs to be offset by ECONOMIC BENEFITS. For example, the construction of a new road may mean budgetary deficits, cost of subsidies, and costs of interruptions in services during construction.
Economic efficiency Theory that no one can be made better off without at the same time somebody’s becoming proportionately worse off.
Economic growth Expansion of an economy in terms of output and income, usually measured as GROSS NATIONAL PRODUCT and GROSS DOMESTIC PRODUCT per capita.
Economic man In economic theory, a person who makes right, informed, and rational decisions in regard to individual economic activities and thus maximizes their ECONOMIC BENEFITS.
Economic and Monetary Union of the European Union Group consisting of the 17 members of Eurozone and 10 non-Euro states. These are states that have demonstrated successful economic convergence by maintaining limited deviation against the Euro.
Economic sanctions In international relations, a tactic by which a more powerful nation or group of nations imposes on a less powerful nation an embargo or restrictions on imports and exports, as well as financial transactions and travel; done as a means of applying pressure on the less powerful nation to either act or desist from acting in a certain manner.
Economic theory of the firm Belief that the only external duty of a company is to its shareholders and its only function is to make profits.
Economic union Common market or trading bloc of neighboring countries or countries with strong affinities.
Economies of scale Reduction in the average cost of production and concomitant unit costs that accompany an increase in output. Economies of scale may lead to a cycle in which prices go down and sales go up, resulting in a gain in market share. For the economies of scale to be effective, costs must remain stationary. Economies of scale can be internal or external: internal economies may be plant related or organizational; external economies are benefits experienced through improved infrastructure and the location of ancillary industries. Economies of scale provide a competitive edge over new entrants, who must operate at a cost disadvantage.
Economies of scope Increase in costs incurred as a company diversifies its products and services to serve a broader market.
Edutainment Education + entertainment, a term used in the media industries.
EEO EQUAL EMPLOYMENT OPPORTUNITY
Efficiency 1. Technical efficiency is the ability of an organization to produce maximum output with minimum inputs. 2. Economic efficiency or productive efficiency is the ability of an organization to produce and distribute at the lowest possible cost, regardless of its production costs. 3. Allocative efficiency derives from the rational, timely, and productive allocation of resources. 4. X-efficiency is the extent of market exploitation by the company; it has three main components: intraplant motivational efficiency, external motivational efficiency, and nonmarket input efficiency.
Efficient market hypothesis In management finance, a principle that market yield is conditioned by the availability of and access to the right information; formulated by economist EUGENE FAMA.
EFT Electronic funds transfer
EFTA European Free Trade Association, a former common market.
Egoistic need Individual needs for job satisfaction other than remuneration.
Eight-hundred-pound gorilla Crucial player in a situation whom everybody ignores for fear that he or she may create further complications or prove too difficult to manage.
Eighty-twenty split Developed by VILFREDO PARETO, the principle that only 20% of all business activities contribute to its profits and that 80% are dead weight. The principle also applies to personnel, advertising, and inventory. See also PARETO RULE.
Elasticity Sensitivity of one variable to another. The common use of elasticity is in regard to price, when an increase in costs leads to a decline in demand.
Electronic data interchange Electronic exchange of structured information, such as invoices, between different organizations using industry standards.
Eleemosynary Charitable, not-for-profit work engaged in by quasi-public corporations.
Elvis year Successful year for a product or company, when it reaches the peak of sales.
Embargo Interdiction of trade with certain countries, or in certain commodities, or in information in certain sectors, as a form of political punishment and ostracism.
Emergent change Approach to organizational change in a complex organization operating in a volatile, unstable, or uncertain environment. Its conceptual core are the interlinked ideas of KAIZEN, a Japanese term for continuous improvement, and a learning culture that encourages continuous relearning by managers.
Emerson efficiency plan Employment compensation plan in which workers are paid a minimum salary and given financial incentives to increase production.
Emory, Frederick Edmund (1925–1997) Australian psychologist who contributed to the development of theories of INDUSTRIAL DEMOCRACY.
Emoticon Expressive symbols used in Internet communications, such as 
for a smile.
Emotional capital Shared experiences, values, and aspirations among employees, seen as a morale builder.
Emotional intelligence (EQ) Ability to control emotions and articulate them, and to respond appropriately; seen as a sign of maturity.
Emotional labor Work of managing one’s emotions in the course of dealings with customers or employees.
Empire building Pursuit of power through dominance in a field of endeavor; in business, the acquisition of more corporations.
Employee Person who works under the direction of another in return for wages or salary. Employees have legal protections, unlike independent contractors.
Employee buyout Transaction by which employees buy up all or most of a company’s outstanding shares.
Employee empowerment In human resources, motivational strategy to reengineer organization structures by channeling more responsibility to employees. Empowerment gives more personal satisfaction and fulfillment, and in some cases may lead to greater monetary rewards and enhanced prospects for promotion. It also helps to identify and develop hidden talents and abilities.
Employee evaluation Formal assessment of an employee’s professional performance and conduct as measured by certain objective and fair criteria, with the goal of establishing eligibility for promotion.
Employee participation Right of an employee to buy shares in the company (employee stock option plan) and thus gain membership in the governing councils and boards, and be able to express opinions on matters pertaining to company policies and programs.
Employee wellness In human resources, management attempts to address employee problems like alcoholism, divorce, smoking, poor nutrition, lack of exercise, obesity, and stress, which affect performance and efficiency in the workplace.
Employment agency Private business engaged in introducing suitable candidates to employers in return for a fee (usually a percentage of the initial salary) or to provide temporary staff who work at hourly rates. Employment agencies that specialize in filling managerial and executive positions are known as HEADHUNTERS.
EMS European Monetary System.
Endogenous Relating to factors or influences within an organization; opposite is EXOGENOUS.
Engels, Friedrich (1820–1895) German-born associate of Karl Marx. He worked with Marx on his Communist Manifesto and supported him financially to write Das Kapital. His major works included The Condition of the Working Class in England (1844), Socialism, Utopian and Scientific (1880), and The Origin of the Family, Private Property and State (1884).
Engels’s law Developed by economic theorist Friedrich Engels, the principle that the lower the household income, the greater the proportion of income spent on food.
English disease Supposed predilection of English labor unions to strike to gain their demands rather than to negotiate.
Engross To purchase a large quantity of a good so as to obtain a monopoly on its resale at prohibitive prices.
Enlightened marketing Five layers of efficient marketing, including consumer-oriented marketing, innovation marketing, value marketing, sense-of-mission marketing, and societal marketing.
Enterprise culture Economy that favors initiative, innovation, private enterprise, and personal responsibility.
Enterprise resource planning Strategic approach that integrates all the business activities and processes throughout an organization, including project management, supplier management, product data management, and scheduling in a seamless, real-time program to streamline operations, eliminate overlaps, and save money.
Enterprise zone Geographical area set aside by a government exclusively for private-sector activity and granted exemption from certain fees and taxes, as well as statutory controls.
Entitlement Right to stipulated benefits, as determined by prior laws and agreements and as earned over time. Often applied to social programs.
Entrapment In business, the resource limitations that inhibit growth and innovation.
Entrepot trade Trade that passes through a certain port or airport on its way to another destination, and that makes use of its warehouse and customs facilities or uses them for re-export. Some of the world’s major entrepot trade centers are Rotterdam, Singapore, and Hong Kong.
Entreprenerd Blend of the words entrepreneur and nerd, slang for an Internet startup capitalist.
Entrepreneur Someone who starts his or her own business from scratch. Also, someone who invests capital in the development of a new company and assumes the accompanying risks in the hope of realizing profits. Entrepreneurs are the building blocks of capitalism.
Entrepreneurship Process of identifying opportunities and marshaling resources so as to create new products and services for which there is a felt need, in anticipation of subsequent profits.
Entropy In information theory, the degree of openness to change and the lack of rigidity in an organization and its structure.
Environment costs Expenses associated with compliance with environmental legislation, including appraisal costs, prevention costs, internal failure costs, and external failure costs.
Environmental audit Financial review of the impact of any development or activity on the immediate environment, both short and long term. Its purpose is to ensure that the development or activity is in full compliance with prevailing legal requirements and environmental laws. Areas covered by the audit include energy usage, wastage, recycling, conservation, and pollution. Also termed green audit. See also SOCIAL AUDIT.
Environmental ethics Application of principles of honor, dignity, conservation, and preservation of the natural world and its ecosystems, especially as they apply to pollution, resource depletion, animal exploitation, waste disposal, erosion, loss of species, and climate change. It replaces an anthropocentric ethic with a holistic one, in which all species are given equal weight.
Envy ratio Ratio of the number of shares available to individuals to the number of shares available to institutions.
Ephemeralization From futurist writer Buckminister Fuller, the theory of increasing the rate of a product’s obsolescence in order to increase the recycling of its constituent materials.
Equal Employment Opportunity (EEO) Legislation that prohibits discrimination based on religion, gender, race, or color in hiring, promotion, and firing.
Equal pay Legislation that bars discrimination based on gender, race, religion, or color as it relates to compensation or salary; the legislation stipulates that equal pay must be guaranteed for work of equal value.
Equilibrium price Price that reflects a balance of SUPPLY AND DEMAND.
Equity 1. Beneficial interest in a property comprising its value less its liabilities. 2. System of law developed parallel to COMMON LAW in which the focus is on fair performance rather than on damages.
Equity Theory Theory that attempts to explain relative satisfaction in terms of perceptions of fairness or unfairness in the distribution of resources in society. It was first developed by J. Stacey Adams, a psychologist. The structure of equity in the workplace is based on the ratio of inputs to outputs.
Equivalent mean investment period Period of time between the commencement of a project and its breakeven point.
Ergonomics Discipline that merges physiology, physiognomy, and psychology to design work environments for optimal efficiency and safety. Ergonomics has particular application to emerging technology by defining the workplace and the use of computers. It studies the physiological, psychological, and engineering design aspects of a job, especially as affecting fatigue and safety, and governs the placement of tools and instruments on the basis of ease-of-use, intuition, and posture.
ERG theory EXISTENCE, RELATEDNESS, AND GROWTH THEORY
Escalation of commitment Increasing commitment to a project that is falling apart. This stance is generally adopted to save face after a project has misfired, in an attempt to recover some of the lost investment or reputation. Often termed throwing the helve after the hatchet or throwing good money after bad. Also called creeping commitment.
Escalator clause Contract paragraph that permits adjustment of prices or wages in accordance with certain accepted indexes of productivity, increased cost of living, or greater material costs.
Escape clause Wording in a treaty or agreement that permits one or both parties to opt out of meeting an obligation or to suspend portions of the agreement if they become too onerous or impractical to enforce.
ESOP Employee share ownership plan.
E-tailer Retailer operating through Internet sales. See also E-BUSINESS.
Ethical behavior Application of moral and ethical imperatives to the conduct of business and adherence to principles of behavior and standards to judge outcomes. In its elementary form, it is the compliance of business to the laws governing business transactions, and in its societal form, it is the focus on public welfare underlying business decisions. A company’s codes of ethics spell out the ethical imperatives of its operations and personnel.
Ethical investment Socially responsible investment in a company in terms of its goals and strategies as distinguished from investment driven solely by profit motive.
Ethnic marketing Marketing directed at an ethnic minority community and that focuses on culturally relevant products and services, often using the language of that community.
Etzioni, Amitai (born Werner Falk) (1929–) Israeli-American sociologist and intellectual. His principal contribution to sociology was his theory of communitarianism, which sought to create a common ground between liberalism and conservatism. He is the author of 24 books of which the most influential were The Spirit of Community: The Reinvention of American Society (1993) and A Responsive Society (1991).
Etzioni model Organizational theory developed by sociologist AMITAI ETZIONI, who classified organizations in terms of the kinds of power they wielded, such as coercive (prisons and army), utilitarian (business), normative (schools), and mixed.
EUREX Largest futures and options market in the world dealing primarily with European derivatives. It is run by Deutsche Borse AG and SWX Swiss Exchange.
Euro Currency used by the members and institutions of the European Union as the official currency of the Eurozone, which consists of the 17 members of the European Union: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. It is the world’s second largest reserve currency and the second most traded currency after the U.S. dollar.
European Central Bank (ECB) Central bank for the Euro System.
European Community (EC) See EUROPEAN UNION.
European Monetary System (EMS) European Monetary System.
European Union Supranational community of 27 European nations with common economic, political, and social bonds; created in 1993, from the EUROPEAN COMMUNITY. The original 12 nations—Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom—were joined by Austria, Sweden, and Finland in 1995; by Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia in 2004; and by Bulgaria and Romania in 2007. The union has a constitutional framework with a parliament and an executive, known as the European Commission, as well as a judicial arm known as the European Court of Justice. Monetary cooperation is under the auspices of the EUROPEAN ECONOMIC AND MONETARY UNION, which oversees the European Monetary System and regulates and stabilizes the currency exchange rate.
Eurozone The 13 member countries of the European Union that have adopted the EURO as their national currency: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia, and Spain.
Eustress Positive impact of stress, as stimulation and excitement gained in meeting a tough challenge and enhanced performance; opposite of distress.
Evaluation of training Assessment of the effectiveness of a training program, as follows: (1) what the trainees think of the program; (2) what they learned from the program; (3) what new behavioral traits or skills have been imparted; and (4) what are the overall benefits from the program.
Evergreen fund Mutual fund that provides capital for new companies and acts as the midwife for new ventures.
Evolutionary economics Study of economics that incorporates biological dynamics and considers the corporation as a biological organism.
Evolutionary management Management style that adapts itself to change and incorporates new protocols in response to emerging needs and opportunities.
Ex ante (Latin, “before the event”) Relating to a budget based on anticipated calculations that are later revised on the basis of actual figures.
Ex gratia (Latin, “by favor”) Payment or favor made out of gratitude, moral obligation, or voluntary acknowledgment of a service, rather than because of legal right or liability.
Ex post facto (Latin, “after the event”). Label for financial data generated after payments have been made.
Exception principle Belief that managers should concentrate on problems that are the exceptions to the rules and let subordinates handle routine matters.
Exchange 1. Trade in goods, stocks, shares, commodities, currencies, or other financial instruments. 2. Place where such trade takes place.
Exchange control Restriction on the sale and purchase of foreign currencies or bonds.
Exclusive territory Geographical area assigned exclusively to a distributor or retailer.
Executive compensation Remuneration of principal company officers, including base salary, bonuses, long-term incentives, benefits, and perquisites.
Executive director Working director who is also a full-time employee of a company, generally in charge of a department.
Executive search Process of identifying suitable candidates for senior positions, done by recruiting agents or consultants known as HEADHUNTERS.
Exercise In law, the right to carry out a transaction based on previously agreed-upon terms.
Exercise price Price at which a specified security can be purchased in a call option or sold in a put option.
Existence, relatedness, and growth theory (ERG) Developed by American psychologist CLAYTON P. ALDERFER, a theory of workplace motivation involving a hierarchy of three motivational drivers: existence needs (physical and material), relatedness needs (relating with peers), and growth needs (desire to be creative and productive and for recognition). The theory is applicable to multiple environments, as in home, office, and society.
Existential culture In business, a corporate culture in which the organization exists to serve the individual rather than vice versa; coined by business guru CHARLES HANDY.
Exit interview In human resources, the interview conducted with employees before they leave the organization.
Exit strategy In finance, a plan by an investor to dispose of assets in an orderly fashion. Also termed harvest strategy.
Exogenous Relating to factors or influences that are external to the organization and therefore outside its control.
Expectancy theory In human resources, a theory of motivation that people perform better in accordance with the value they place on the outcome and their expectations of benefit or gain.
Expected monetary value In decision making, statistical term for the sum of outcomes in monetary terms multiplied by their respective possibilities.
Expected value In decision making, statistical term for the sum of possible quantitative outcomes in quantitative terms multiplied by their probabilities.
Expense account 1. Heading for each item of expenditure in an accounting system. 2. Amount paid to executives for out-of-pocket expenses when on business travel.
Experience curve Statistical curve that illustrates the inverse relationship between costs of production and employee experience. Costs go down as personnel gain more experience.
Expert system Tool of artificial intelligence that captures the expertise of knowledge workers and makes it accessible to nonexperts.
Explicit costs Direct cost outlays, such as for raw materials and labor.
Exploitative leadership Authoritarian leadership that looks upon employees as means for reaching their own ends.
Exploratory focus group In marketing, a group of representative users and customers who aid in pilot-testing a product by defining its problems, asking questions, generating hypotheses, and suggesting new ideas.
Exponential smoothing Statistical technique used in quantitative forecasting whereby more weight is assigned to the more recent data when charting trends.
Extended market mix In marketing, the 6 Ps: price, place, promotion, physical evidence, people, process.
External environment Institutions outside the business environment that have a strong influence on the conduct of business, such as government, nonprofits, trade unions, and political parties.
External growth Growth in the size of a business by means of merger, takeover, or joint ventures, rather than through internal growth. Typically, external growth accompanies can increase in market share through HORIZONTAL INTEGRATION or VERTICAL INTEGRATION. The benefits of external growth are often offset by the clash of cultures when disparate companies are brought together and by the organizational changes and costs of implementing such mergers.
Externality Cost or benefit to a company that is not matched or compensated by proportionate financial reward. For example, a new housing development may increase the number of residences and purchasing power of the neighborhood, but it may result in overcrowding on roadways, increased pollution, and more demand for social services. Some other types of external costs are pollution on public waterways and the impact of built-up land on wildlife. EXTERNALITIES also impinge on individual rights and groups in public settings.
Also called spillover costs, external costs are borne not by the company initiating a project but by third parties and thus are subject to legal remedies. Also, they are sometimes self-correcting and sometimes carry benefits as well as damages. Beneficial EXTERNALITIES include the beautification of a neighborhood or an increase in property values following a new roadway.
Extinguish In business, to settle or terminate an obligation.
Extraordinary Relating to an exceptional event or account unrelated to the normal activities of a company, such as a meeting or resolution, or costs and expenditures.
Eyebrow management Communication by management whereby an idea is summarily dismissed by facial expression without giving a reason.