Category Archives: Journal of Management Studies

Corporate Political Activities and the SEC’s Oversight Role in the IPO Process

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Abstract

We study how a regulator (Securities and Exchanges Commission; SEC) responds to IPOs that have a higher political profile. We find that IPOs with issuers (intermediaries) that actively pursue political strategies receive more (less) SEC comment letters than IPOs without such actors. Cross-sectional analysis reveals that the IPO's political environment moderates the relationship between social pressure for more corporate transparency and SEC scrutiny. Additional tests indicate that the political activities of issuers (intermediaries) contribute to a less (more) efficient IPO process. Overall, our findings suggest that politically active intermediaries have stronger incentives to accurately portray the IPO financial reporting environment than politically active issuers because they have greater reputational and political capital at stake; quite simply, the former have more to lose. We draw out the implications for theory, in terms of agency and reputation.

Can Corporate Social Responsibility Lead to Social License? A Sentiment and Emotion Analysis

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Abstract

The term social license (SL) refers to the acceptance or approval by a community of a company's presence. It is generally assumed in the literature that effective corporate social responsibility (CSR) actions will lead to an SL. In this study we examine the CSR-SL relationship at the local community level and establish boundary conditions on the effectiveness of local CSR in creating an SL. Using consent-based micro-social contract theory, we theorize that commitment to local CSR improves the level to which a local community grants an SL to a multinational corporation (MNC), but the impact is moderated by the global legitimacy of the parent company, the nature of institutions in the host country, and the degree of polarization within the focal community. Based on 3696 articles regarding 43 global mining MNCs operating in 523 local communities between 2008 and 2020, we use natural language processing and sentiment analysis to evaluate the degree to which a local community grants an SL. Our empirical evidence indicates that local CSR does positively influence the granting of an SL, but the effect is reduced when there is strong rule of law or high community polarization and increased when the focal firm has strong global legitimacy.

Negative Incentives and Regulatory Capture: Noncompliance with Price Ceilings on Essential Medicines in India

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Abstract

Nonmarket scholars have paid limited attention to noncompliance as an alternative strategy to capture regulators; yet noncompliance is particularly consequential given its potentially significant negative externalities. We exploit rich data on price ceilings introduced in India in 2013 on 255 essential medicines to test whether noncompliance by other firms drives the focal firm's noncompliance decision. Our results indicate that noncompliance by other firms, particularly those with larger products in the market, is positively associated with a focal firm's noncompliance. The focal firm's scope and sales positively moderate this relationship. Overall, our study indicates that firms are more likely conclude that the potential benefits of regulatory capture using negative incentives outweigh the potential financial and social costs in the presence of a greater number of firms that are already noncompliant. As such, our study draws attention to negative incentives as an important yet largely overlooked nonmarket strategy.

Social Entrepreneurs as Ecosystem Catalysts: The Dynamics of Forming and Withdrawing from a Self‐Sustaining Ecosystem

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Abstract

Creating a long-lasting impact is one of the defining goals of social entrepreneurship. Yet, social entrepreneurs often face a dilemma between sustaining their organization and offering a permanent fix to a social problem. We question the assumption that organizational permanence and growth are intrinsically desirable for social entrepreneurs and propose an alternative, an inductively grounded model of ecosystem leadership, which we term ecosystem catalysis. Through a single case study of social entrepreneurs addressing the lack of access to diarrhoea treatment in Zambia, we conceptualize ecosystem catalysis as a process through which an organization forms an ecosystem around a new value proposition while gradually making itself redundant, ultimately withdrawing from the ecosystem without compromising its functioning. Our work contributes to ecosystem literature by contrasting the key aims and mechanisms of an ecosystem catalyst to those of an orchestrator and identifying the conditions under which catalysing may be a better choice than orchestrating an ecosystem. We contribute to social entrepreneurship literature by decoupling social impact from organizational growth and permanence and presenting a more dynamic model of social impact resulting from distributed contributions in ecosystems.

Voice Work, Upward Influence during Change ‘When Time is of the Essence’

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Abstract

This paper explores when and how middle managers (MMs) convey voice to the top during strategic change, when they do not have the time for lengthy persuasive upward influence tactics such as issue-selling. I investigate this phenomenon through a 33-month study of a risk management team in a large bank as it tried to overhaul its risk management systems and culture, after catastrophic money laundering scandals. I make three contributions. First, I complement the issue-selling literature by theorizing voice work as the purposeful efforts made by middle and lower managers to pass challenges from the bottom to the top during change. These efforts are grouped into three sets of moves: relational, reflexive and skip level. Second, I contribute to the voice literature by explaining when MMs decide to speak up through relational moves (balancing and integrating) and how they shape their voice message through reflexive moves (preparing and refining). Lastly, I refine our understanding of skip level voice by defining skip level moves (overriding and reinforcing), introducing nuance into how lower managers’ voice can strengthen or destabilize MMs. Voice work ultimately enriches our processual understanding of voice as a dynamic phenomenon worked on by multiple layers of management. Theory is built by amalgamating literatures on voice and on MMs’ upward influence, and by analysing them through the sociological lens of work.

How Deep‐Level and Surface‐Level Board Diversity, Formal and Informal Social Structures Affect Innovation

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Abstract

Despite a growing interest in understanding how board diversity shapes firms’ innovation, findings about the impact of board diversity have remained mixed. In this paper, we conceptualize board diversity as two forms – deep-level and surface-level – and find that these two forms of board diversity have opposing effects on a firm's innovation. We also theorize how formal and informal social structures can strengthen the positive effect of deep-level diversity yet simultaneously weaken the negative impact of surface-level diversity. We test our hypotheses with a panel of 42,432 firm-year observations from 2000 to 2019. Our paper contributes to the literature on boards and innovation by highlighting and differentiating the mechanisms through which board diversity affects innovation, as well as showing how formal and informal structures can moderate the effects of board diversity.

Cross‐Sector Partnership Research at Theoretical Interstices: Integrating and Advancing Theory across Phases

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Abstract

Cross-sector partnerships (XSPs) are embraced by policymakers and practitioners to address complex social and environmental challenges that no single sector can tackle alone. However, extant research on XSPs has primarily focused on isolated phases and singular theoretical perspectives. In our paper, we synthesize XSP research in the public policy and management fields to deliver a comprehensive and coherent understanding of XSPs’ different phases and theoretical perspectives – the XSP ‘theoretical topology’. We introduce two approaches for theoretical enrichment: informing and interacting. We emphasize the significance of ‘theoretical interstices’ as undominated spaces for new knowledge exploration. Through our integrative cross-phase, cross-theoretical approach, we address fundamental yet open questions on XSP effectiveness, value, and impact. Our work challenges existing understandings and opens new research possibilities; offers implications for practitioners; and informs current policy debates on mandating XSPs and on the role of ‘big data’ – powered algorithms in the XSP landscape.