Category Archives: Original Article

Family Control, Political Risk and Employment Security: A Cross‐National Study

Posted on by

Abstract

Combining insights from the socioemotional wealth and institutional perspectives, we hypothesize that firms controlled by families offer greater job security to employees relative to non-family firms, and this positive employment effect is amplified in riskier institutional environments around the world. Using an unbalanced panel of 3181 listed firms from 33 countries over a 10-year period, we provide strong support for our hypotheses: family-controlled firms on average are less likely to reduce their workforce compared to their non-family counterparts, and this differential effect is magnified in weak institutional environments characterized by high political risk. These findings indicate that socioemotional wealth in family firms has a positive impact on employee welfare and that the use of a cross-country design serves to bridge discrepancies or inconsistencies in single country studies that have been done in the past. From a practical perspective we conclude that the beneficial role of socioemotional wealth on employment relations is more evident when it is needed the most, namely under a dysfunctional institutional environment.

Beyond the Feeling Individual: Insights from Sociology on Emotions and Embeddedness

Posted on by

Abstract

Organizational scholars have treated emotions mostly as an individual-level phenomenon, with limited theorisation of emotions as an important component in social embeddedness. In this review essay, we argue for the need for a toolkit to study emotions as an inherently social phenomenon. To do so, we apply insights from sociology that have been under-utilized in management and organization research. We focus on three sociological concepts: collective emotions and social bonds, emotional energy and moral batteries, and emotional capital. We then develop an integrative model of emotional embeddedness to emphasize that emotions are socially constructed and socially authorized. We end the paper by setting out a research agenda for more research in management and organization that is informed by these three concepts.

Defusing Digital Disruption Through Creative Accumulation: Technology‐Induced Innovation in Professional Service Firms

Posted on by

Abstract

How will digitalization change the future of work in professional service firms (PSFs)? And how can they adapt to new technology and avoid potential disruption? Building on an interview study in the Big Four auditing firms in Sweden, we contribute to research on the future of work in PSFs by unpacking the process through which PSFs expand their domain of expertise towards technology and complement competence-destroying innovations with competence-enhancing innovations. They do so by engaging in a process of ‘creative accumulation’ through ‘competence expansion’, consisting of three overlapping sub-processes – skill acquisition, skill dissemination, and skill integration – and intertwined cycles of service, process, and organizational innovation. We also contribute to the literature on innovation in PSFs by contradicting the view of PSFs as inert and technology-avert. Instead, we show how they proactively engage in both top-down and bottom-up technology-induced innovation to reshape their work and defuse the threat of digital disruption.

Penalty Zones in International Sustainability Standards: Where Improved Sustainability Doesn’t Pay

Posted on by

Abstract

Adopting an international sustainability standard (ISS) helps firms improve their sustainability performance. It also acts as a credible market ‘signal’ that legitimizes firms' latent sustainability practices while improving their market value. But how do these signals function when firms adopt multiple ISSs? We show that the relationships between firms' ISSs adoption and their market value and their sustainability performance appear positive. However, beyond a tipping point of 2 ISSs, firms' market gains decline, even though their sustainability performance continues to improve until a tipping point of 3 ISSs. Differing tipping points create a gap that we refer to as the ‘penalty zone’ – the place where market value declines, even though firms' actual sustainability performance continues to improve. The penalty zone arises because of imprecisions in market signals and serves as a significant barrier to firms wishing to further their sustainability agenda through additional ISS adoption.

Understanding the Link between Post‐Acquisition Resource Reconfiguration and Technology Out‐Licensing

Posted on by

Abstract

We develop a novel framework to explain how the unique properties of out-licensing enable R&D reconfiguration in the context of technology acquisitions. Out-licensing is an attractive R&D strategy following acquisitions as it expands opportunities for resource reconfiguration to outside the organization by using external partners while at the same time allowing firms to continue to benefit from the technology, both financially and strategically. We also propose that the positive relationship between technology acquisitions and out-licensing is weaker when firms cannot determine the full value potential of their R&D due to uncertainty or when they have high availability of short-term financial slack resources. Using a sample of bio-pharmaceutical firms, the result of a 2SLS fixed-effect regression that accounts for the potential endogeneity of technology acquisitions provides support for our theoretical framework.

Business Groups and Export Performance: The Role of Coordination Failures and Institutional Configurations

Posted on by

Abstract

We explore the nature of business groups (BGs) and their affiliates in emerging markets through the lens of the coordination failures associated with economic development. We propose that BGs develop distinct economic and political capabilities that provide affiliates with access to the complementary resources required for successful exporting. We further argue that these capabilities are context-specific, based on the market and political institutions of the home country. We propose that the BG advantage in supporting affiliate exporting increases as market institutions strengthen but is reduced (strengthened) as political systems become more democratic (autocratic). We apply Tobit estimation methods to a large sample of firms from emerging and developing countries at different stages of institutional development and find consistent evidence in favour of our hypotheses. We develop a framework to analyse alternative BG internationalization paths in a comparative institutional context.

Multiple‐Principal Demands and CEO Compliance in Emerging Market State‐Owned Enterprises

Posted on by

Abstract

This study addresses multiple-principal–agent power dynamics in state-owned enterprises (SOEs) in emerging markets. We investigate under what conditions agents (CEOs) accede to demands of government-linked principals. Our qualitative study in Indonesia advances agency theory by disaggregating and categorizing government-linked principals. We also examine three types of principals’ demands (commercial, social, and private) and five types of mechanisms influence agent responses with principals’ private demands (collusion among principals, career-ending threats by principals, plausible deniability through CSR, political ties as enabler, political ties as buffer). Based on our findings and on insights from the public administration literature, we develop a conceptual framework that advances multiple agency theory.

When Business Model Innovation Creates Value for Companies: A Meta‐Analysis on Institutional Contingencies

Posted on by

Abstract

Using a meta-analysis based on 147 primary studies from 27 countries, we synthesize extant knowledge on the relationship between business model innovation (BMI) and firm performance. Our results show that the positive BMI-firm performance relationship is robust across various conceptualizations of and measures for BMI. Building on prior research suggesting that not all companies benefit equally from engaging in BMI, we set out to study important institutional-level contingencies for the BMI-performance relationship. We build on the institution-based view as theoretical perspective and combine it with insights from the innovation literature to theorize that the magnitude of the positive effect of BMI on firm performance depends on institutional contingencies, specifically national culture and pro-market institutions, because these national institutions affect BMI-driven organizational learning processes. Specifically, we argue and show that the positive relationship between BMI and performance is weaker in countries characterized by high levels of masculinity and individualism, and stronger in countries characterized by high levels of customer orientation, economic freedom, and education. Besides the country-level contingencies, the inclusion of various control variables in our meta-analysis also reveals that, even if located in the same institutional environment, start-up firms benefit more from BMI than mature firms and that there are no observable differences regarding BMI benefits among different industries. Moreover, a nuanced analysis shows that the positive effect on performance is stronger when BMI rely on changes in cognitive schemas compared to BMI that are of more technical nature.

Reducing Symbolic Compliance: The Presence of Multiple Large Shareholders as an Internal Monitoring Mechanism

Posted on by

Abstract

We propose that in a context where corporate ownership is concentrated, the controlling shareholder of a firm tends to symbolically comply to regulatory requirements that aim to protect minority shareholders; yet the presence of multiple large shareholders can serve as an internal monitoring mechanism that can reduce symbolic compliance. We test this argument through examining firm responses to a regulatory requirement regarding independent accounting director appointments in China. Using data on China's listed non-state-owned enterprises, we find that the presence of multiple large shareholders decreases the likelihood of symbolic compliance, and this negative effect is stronger when noncontrolling large shareholders have low incentives to collude with the controlling shareholder. We also find that a firm engaging in symbolic compliance tends to have a greater level of tunnelling (by the largest shareholder) and earnings management. Our study contributes to the literature on symbolic management in an institutional setting where ownership is concentrated.

The Art of Phenomena Construction: A Framework for Coming Up with Research Phenomena beyond ‘the Usual Suspects’

Posted on by

Abstract

Despite the centrality of research phenomena, the process of their definition is often neglected and reduced to a simple choosing of pre-established subjects of interest. However, good research not only includes empirical work aimed at more or less ‘given as fact’ phenomena. It also involves phenomena construction: that is, the process of generating and establishing phenomena to investigate and theorize. We contend that phenomena construction is not separate from, but integral to, both the empirical and theorizing phases in research. As few phenomena are truly ‘given’ or straightforward to observe, good research calls for careful and creative construction of the phenomenon under investigation. We propose and elaborate a framework that enables researchers to generate and establish research phenomena beyond those currently available in their specific area of interest and, based on this, to produce more imaginative and impactful research.