Category Archives: Original Article

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.

Living the Janus Face: The Promise and Perils of Role‐Distancing for Middle Managers

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Abstract

Middle managers often find themselves in a challenging position: They have to impress different audiences in somewhat incompatible ways and represent and enact managerial ideals and expectations that may be detrimental to their work identities. This study explores role distancing as an alluring coping strategy. Role distancing – acts that express separateness between the individual and the enacted role – may enable the professional to do management and give an impressive managerial performance, without becoming a manager. This may seem like the perfect strategy to impress others while escaping identity struggles. Or maybe not. In this study we take a closer look at role distancing among a group of middle managers in higher education and focus on one manager, Manny, in particular over a period of time. We find that what first seemed to be a promising strategy applauded by a backstage audience, turns into a problem in need of its own solution, as backstage also becomes a frontstage. The paper contributes to theory about middle managers, role distancing in professional work and front−/backstage acting.

Enhancing corporate governance quality through mergers and acquisitions

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Abstract

This study examines whether the pre-deal target-bidder firm governance gap affects the bidder's postdeal change in governance quality. We estimate cross-sectional regressions using mergers and acquisitions from 2004 to 2016. We find that the bidder's firm-level governance improves for acquisitions where the target's governance quality is better than that of the bidder preacquisition. We attribute the results to reverse portability, suggesting that the predeal governance gap creates space for governance transfer, and bidders can adopt better governance of targets after the acquisition. Board independence, audit committee independence, CEO-Chairman separation, stock compensation, and equal treatment of minority shareholders serve as potential channels to demonstrate the bidder's higher governance after the acquisition. Our findings also reveal that bidders with governance improvement are also associated with higher operating performance. We extend the portability theory of Ellis et al. (2017) and suggest that governance can also travel from targets to bidders through mergers and acquisitions.

Tax avoidance and debt maturity in SMEs

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Abstract

We investigate how tax avoidance affects the maturity structure of debt in firms where tax avoidance costs are presumably low, namely SMEs. Previous research has shown that creditors of listed tax-avoiding companies impose shorter maturities to more frequently reassess the tax avoidance risks in debt contracts. Using a sample of 110,690 firm-year observations of Spanish SMEs over the period 2007–2020, we examine the relationship between tax avoidance and debt maturity and the channels driving this relationship. We find that tax-avoiding SMEs show a longer debt maturity. This effect is stronger for SMEs with higher profitability, lower earnings management incentives, and higher reliability of financial reporting. We also find that tax avoidance reduces leverage and short-term debt, increases future cash flows, and decreases future cash flow volatility. Overall, these findings suggest that, unlike large firms, SMEs use cash tax savings to reduce leverage and short-term debt in their financial structure and that tax avoidance is positively valued by their lenders.

Being Aware of Death: How and when Mortality Cues Incite Leader Expediency Versus Servant Leadership Behaviour

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Abstract

The COVID-19 crisis has been associated with existential concerns regarding mortality. These concerns, described as ‘mortality cues’, can influence people's emotions, behaviours, and the quality of leadership in organizations. Using the contingency model of death awareness (CMDA; Grant and Wade-Benzoni, 2009), we provide new evidence on how mortality cues can incite negative and positive leadership behaviours via two forms of death awareness: death anxiety and death reflection. Specifically, we theorize that mortality cues can increase leader death anxiety, giving rise to leader expediency (a leader's use of unethical practices to expedite work for self-serving purposes); however, mortality cues can also facilitate leader death reflection and, consequently, servant leadership behaviour. We further suggest that leaders’ responses to mortality cues depend on their psychological capital (PsyCap), such that leaders with high (vs. low) PsyCap respond to mortality cues with less expediency (via death anxiety) and more servant leader behaviours (via death reflection). We support our hypotheses through three separate studies using an experiment, time-lagged data from healthcare workers, and daily diary data from non-healthcare professionals. We conclude that mortality cues have a double-edged influence on leadership behaviour. We also discuss the theoretical and practical implications of the findings.

How Companies Restrain Means–Ends Decoupling: A Comparative Case Study of CSR Implementation

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Abstract

We use the concept of means–ends decoupling to examine why companies continue to be major contributors to environmental and social problems despite committing increasingly to corporate social responsibility (CSR). Specifically, we ask: How do companies restrain (versus fail to restrain) means–ends decoupling? We answer this question through a comparative case study of four multinational companies with different levels of means–ends decoupling. Based on interviews and secondary data, we inductively identify two distinct approaches to CSR implementation: experimental vs. consistency-oriented CSR implementation. Experimental CSR implementation means that companies (1) produce CSR knowledge about what is happening in specific CSR contexts and use this knowledge to (2) adapt CSR practices to local circumstances – an interplay that restrains means–ends decoupling. Consistency-oriented CSR implementation lacks this interplay between knowledge production and practice adaptation, which fosters means–ends decoupling. Our model of experimental versus consistency-oriented CSR implementation advances two streams of research. First, we advance research on means–ends decoupling by highlighting the importance of experimentation for restraining means–ends decoupling. Second, we advance research on the impact of CSR activities by questioning the widespread assumption that consistency should be at the heart of CSR implementation.

The sensitivity of risk premiums to the elasticity of intertemporal substitution

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Abstract

This paper incorporates reference-dependent preferences  into a consumption-based asset pricing model featuring Epstein–Zin utility. Three relevant results emerge from this extension. First, agents prefer the late resolution of uncertainty in recursive utility. Second, the late resolution of uncertainty helps replicate the downward-sloping term structure of market excess return. Third, the intertemporal substitution elasticity is more sensitive to asset prices through increasing precautionary saving motivations. A closed-form solution for the proposed model largely explains (i) high, volatile, and countercyclical equity premiums; (ii) low risk-free rates; and (iii) the downward-sloping term structure of equity premiums and variance ratios.

Environmental Context and Organizational Aspiration Determination

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This research develops an attention-based, environment-inclusive model of organizational aspiration determination. The behavioural view embraces that organizations determine aspirations based on three reference points: past aspiration, past performance, and social reference group performance. We build hypotheses to explain how environmental munificence, dynamism, and complexity shape organizational attention allocation among these three reference points. Using data on US publicly traded firms (2006–16), we find that organizations, when determining sales aspirations, allocate (1) more attention to past aspiration and social reference group performance but less attention to past performance in more munificent environments; (2) more attention to past performance and social reference group performance but less attention to past aspiration in more dynamic environments; and (3) more attention to past performance but less attention to past aspiration and social reference group performance in more complex environments. Overall, we contribute to aspiration research by explicitly theorizing a previously understudied contingency, using direct aspiration measures from a wide range of industries, and providing evidence that organizations’ attention allocation rules are regulated by the external environment when determining aspirations.

Emotional Expression between CEO and Chairperson as a Micro‐Foundation of Organizational Capabilities: An Exploratory Mixed Methods Study

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The work relationships between CEOs and Chairpersons are key to the functioning of the firm. This study uses survey and interview data to explore how these work relationships serve as a micro-foundation for an organization's communication climate. Survey data suggested that CEO-Chairperson relationships can be characterized by emotional carrying capacity (ECC; constructively expressing more positive and negative emotions). The survey-based model further demonstrated that CEOs and Chairpersons perceive their ECC to positively predict organizational communication climate and, in turn, knowledge creation capabilities. The latter, in turn, are positively associated with firm performance. CEO-Chairperson dyadic interview data supplemented the associations identified in our survey model. Interviewees identified specific mechanisms behind the associations in the survey model, such as the strategic sharing of positive and negative emotions. Our mixed-methods approach provides initial evidence for the importance of emotional expression and management as micro-relational foundations that underpin firm-level capabilities and performance.