Maintaining or Altering the Status Quo in the Nonmarket Arena: Theory and Evidence from Government Contract Disputes

2023 | Organization Science | Citations: 0

Authors: Abdurakhmonov, Mirzokhidjon; Hasija, Dinesh; Ridge, Jason W.; Hill, Aaron D.

Abstract: We develop a theory that considers important differences in competition in the p ... Expand

Abstract: We develop a theory that considers important differences in competition in the political arena based on whether firms are attempting to maintain or alter the status quo. Particularly, we argue that although investing resources and time to build relationships with politicians and government officials fosters trust, solidarity, and reciprocity, likely producing desired outcomes for both firms attempting to maintain the status quo and those trying to alter it, such relationships are more strongly positive for firms maintaining the status quo. As the effectiveness of relational strategies may differ based on firms’ political strategies and firm characteristics, we then theorize that the effects of a more relational approach on ”winning” these desired outcomes for firms seeking to maintain or alter the status quo will be moderated by (1) prior targeting in the political arena where the competition unfolds and (2) a firm’s social reputation. Specifically, we argue that knowledge and relationships from prior targeting in a political domain where competition unfolds, and a firm’s better social reputation will strengthen the effect of a more relational approach on securing desired outcomes for both firms seeking to maintain and alter the status quo. We expect the moderating effect for a firm’s targeting and social reputation will be stronger for firms seeking to maintain the status quo compared with firms seeking to alter the status quo. Our study contributes to corporate political activity literature and notably to the research on political markets by advancing a more nuanced but realistic understanding of interfirm rivalry for governmental outcomes. Collapse

Topics: resource allocation database system competitive advantage legal context anonymity

Methods: theory development statistical hypothesis test chi squared test cluster analysis Compustat

Theories: resource based view of the firm

On Predicting ESG Ratings Using Dynamic Company Networks

2023 | ACM Transactions on Management Information Systems | Citations: 0

Authors: Ang, Gary; Guo, Zhiling; Lim, Ee-Peng

Abstract: Environmental, social and governance (ESG) considerations play an increasingly i ... Expand

Abstract: Environmental, social and governance (ESG) considerations play an increasingly important role due to the growing focus on sustainability globally. Entities, such as banks and investors, utilize ESG ratings of companies issued by specialized rating agencies to evaluate ESG risks of companies. The process of assigning ESG ratings by human analysts is however laborious and time intensive. Developing methods to predict ESG ratings could alleviate such challenges, allow ESG ratings to be generated in a more timely manner, cover more companies, and be more accessible. Most works study the effects of ESG ratings on target variables such as stock prices or financial fundamentals of companies, but few works study how different types of company information can be utilized to predict ESG ratings. Previous works also largely focus on using only the financial information of individual companies to predict ESG ratings, leaving out the different types of inter-company relationship networks. Such inter-company relationship networks are typically dynamic, i.e., they evolve across time. In this paper, we focus on utilizing dynamic inter-company relationships for ESG ratings prediction, and examine the relative importance of different financial and dynamic network information in this prediction task. Our analysis shows that utilizing dynamic inter-company network information, based on common director, common investor and news event-based knowledge graph relationships, can significantly improve ESG rating prediction performance. Robustness checks over different time-periods and different number of time-steps in the future further validate these insights. Collapse

Topics: shapley additive explanation knowledge graph database system missing data network effect

Methods: machine learning econometric modeling longitudinal research Granger causality robustness check

A Study for Sustainable IT: Management Effects of On-Premises and On-Demand IT on Carbon Intensity

2023 | International Conference on Information Systems | Citations: 0

Authors: Alghamdi, Majed; Aghakhani, Navid; Park, Jiyong; Oh, On-Ook

Abstract: Reducing the level of carbon intensity -i.e., the level of carbon emission -is ... Expand

Abstract: Reducing the level of carbon intensity -i.e., the level of carbon emission -is an important issue in cooperate IT management. Drawing upon the belief-action-outcome (BAO) framework, this study examines the impact of two different IT resources -i.e., onpremises IT (OPIT) and on-demand IT (ODIT) -on a firm's carbon intensity. Also, we examine the moderating impact of green management strategies -i.e., environmental board oversight and environmental management incentives -on the effect of OPIT and ODIT on a firm's carbon intensity. Using panel data with a sample of 3074 observations collected from 864 firms from 2016 to 2019, we find that OPIT usage is positively associated with carbon intensity, whereas ODIT usage is negatively associated with carbon intensity. In addition, we find that, while environmental board oversight mitigates the positive direct impact of OPIT on carbon intensity, environmental management incentives reinforce the negative direct impact of ODIT on carbon intensity. Collapse

Topics: strategic management green IS environmental sustainability database system corporate governance

Methods: longitudinal research Compustat descriptive statistic Breusch-Pagan test

Theories: theory of economic growth

Caught in an Expectations Trap: Risks of Giving Securities Analysts What They Expect

2023 | Organization Science | Citations: 0

Authors: Bascle, Guilhem; Jung, Jiwook

Abstract: Although recent research shows that there is mounting pressure on firms to achie ... Expand

Abstract: Although recent research shows that there is mounting pressure on firms to achieve earnings expectations of securities analysts, firms are far from being passive conformers; many firms proactively manage such pressure, particularly with earnings management tools. Yet why does the pressure to meet analyst expectations persist despite firms’ efforts to reduce it? To address the question, we develop an intertemporal model of the mutually reinforcing relationships between analyst expectations and firms’ strategic response, combining the behavioral theory of the firm and the concept of expectations trap. We argue that firms’ efforts to meet analyst expectations strengthen their salience as a predominant performance benchmark and, in doing so, ironically put them under greater pressure from analysts in three sequentially related steps—escalating future earnings expectations, imposing more severe penalties for failure to meet heightened expectations, and generating compensatory action for missed expectations. Our analysis, using data on more than 700 of the largest listed U.S. firms between 1986 and 2015, supports our arguments. Our study expands the scope of the behavioral theory of the firm, by demonstrating the increasing importance of performance feedback based on analyst expectations. Our study also contributes to the research on earnings pressure, by illuminating why the pressure persists despite firms’ efforts to reduce or evade it, and finally to the literature on strategic management of external expectations, by elaborating its unintended, long-term consequences. Supplemental Material: The e-companion is available at https://doi.org/10.1287/orsc.2021.1569. Collapse

Topics: strategic management organizational productivity Generally Accepted Accounting Principles IS downsizing accounting

Methods: longitudinal research statistical hypothesis test Compustat descriptive statistic robustness check

Theories: behavioral theory of the firm institutional theory

Attention to Digital Innovation: Exploring the Impact of a Chief Information Officer in the Top Management Team

2023 | Management Information Systems Quarterly | Citations: 0

Authors: Bendig, David; Wagner, Robin; Piening, Erk; Foege, Johann

Abstract: We draw on the attention-based view of the firm to examine whether and when the ... Expand

Abstract: We draw on the attention-based view of the firm to examine whether and when the presence of a CIO in the TMT has a positive effect on both firms' ideated digital innovation (IDI) (i.e., the intensity of firms' digital patenting activity) and commercialized digital innovation (CDI) (i.e., the digital sophistication of firms' new products). Building on the idea that attention processes are context dependent, we also explore the moderating roles of CEO characteristics (IT background and role tenure) as well as environmental characteristics (the industry's IT attention). We analyze data from a cross-industry panel of U.S. S&P 500 firms over eight years that includes up to 2,852 firm-year observations. The results indicate that CIO presence in the TMT is positively related to a firm's IDI and CDI. Furthermore, they show that the organizational context related to CEO characteristics moderates the CIO-CDI relationship and that the environmental context related to the industry's IT attention moderates the CIO-IDI relationship. Our research contributes to the information systems literature by providing robust evidence that CIO presence in the TMT positively influences a firm's digital innovation outcomes, showing how internal and external boundary conditions affect the work of CIOs, and elaborating the role of managerial attention as an underlying mechanism explaining digital innovation. Collapse

Topics: Chief Information Officer innovation management digital innovation research and development IT investment

Methods: regression analysis method theory development instrumental variables estimation Compustat descriptive statistic

Navigating the Paradox of IT Novelty and Strategic Conformity: The Moderating Role of Industry Dynamism

2023 | International Conference on Information Systems | Citations: 0

Authors: Chaturvedi, Devina; Kathuria, Abhishek; Andrade, Mariana; Saldanha, Terence

Abstract: Although achieving strategic distinctiveness is critical for firms in dynamic i ... Expand

Abstract: Although achieving strategic distinctiveness is critical for firms in dynamic industries, where the competitive landscape and market conditions frequently change, there is a paucity of research on the impact of information technology (IT) on a firm's strategic conformity (or distinctiveness). Motivated by the importance of strategic conformity and emergence of novel technologies, we draw on institutional theory and hypothesize that IT Novelty positively impacts strategic conformity. Second, drawing on resource-based view, we hypothesize that market dynamism and competitive dynamism negatively moderate the effect of IT Novelty on strategic conformity. Third, we hypothesize that the moderating impact is stronger for market dynamism than competitive dynamism. We find support for our hypotheses using a fifteen-year dataset from over 300 U.S. manufacturing firms. Our study contributes to theory and managerial practice by combining institutional and resource-based view perspectives to examine how IT Novelty shapes a firm's strategic conformity, particularly in dynamic industry conditions. Collapse

Topics: database system decision making artificial intelligence internet of things mobile system

Methods: longitudinal research autocorrelation analysis hierarchical linear modeling robustness check regression analysis method

Theories: resource based view of the firm institutional theory

Conversation Analytics: Can Machines Read between the Lines in Real-Time Strategic Conversations?

2023 | HICSS | Citations: 0

Authors: Chen, Y.; Rui, H.; Whinston, A.

Abstract: Strategic conversations involve one party with an informational advantage and t ... Expand

Abstract: Strategic conversations involve one party with an informational advantage and the other with an interest in the information. This paper proposes machinelearning based measures to quantify the degrees of evasiveness and incoherence of the informed party during real-time strategic conversations. The specific empirical context is the questions and answers (Q&A) part of earnings conference calls during which managers endure high pressure as they face analysts' scrutinizing questions. Being reluctant to disclose adverse information, managers may resort to evasive answers and sometimes respond less coherently due to increased cognitive load. Using data from the earnings calls of the S&P 500 companies from 2006 to 2018, we show that the proposed measures predict worse nextquarter earnings. Moreover, the stock market perceives incoherence as a negative signal. This paper contributes methodologically by developing two novel machinepowered measures to automatically evaluate behavioral cues during real-time strategic conversations. The proposed analytical tools are particularly beneficial to resource-constrained and informationally disadvantaged parties such as retail investors who may not be able to effectively trade on signals buried deep in unstructured conversational data. Collapse

Topics: database system artificial intelligence electronic finance missing data accounting

Methods: computational algorithm BERT deep learning machine learning next sentence prediction

Theories: theory of economic growth

A Rising Tide Lifts All Boats: The Effects of Common Ownership on Corporate Social Responsibility

2023 | Organization Science | Citations: 0

Authors: DesJardine, Mark R.; Grewal, Jody; Viswanathan, Kala

Abstract: Common owners face an incredible investment challenge: managing systematic risk. ... Expand

Abstract: Common owners face an incredible investment challenge: managing systematic risk. Because common owners hold shares in multiple firms across an industry, an action (or inaction) by one firm that affects industry peers is felt more severely by common owners than by non-common owners. Research has largely focused on common owners’ role in orchestrating competitive dynamics among their portfolio firms, with almost no empirical investigation of how common owners manage systematic risk. Drawing on research showing that one firm’s corporate social responsibility (CSR) can produce positive spillovers for peer firms and that its irresponsibility can harm its peers, we argue that common owners increase firms’ CSR to produce spillovers that reduce systematic risk and multiply their investment returns. Consistent with our theory, we find that common ownership is positively associated with firm CSR. Unpacking that relationship, we find that increases in CSR are driven by common owners with long-term orientations and are concentrated in stakeholder sensitive industries, in which CSR spillovers are most economically impactful. We also find that common owners focus their efforts on financially material CSR over financially immaterial CSR. We use a natural experiment with a quasi-exogenous shock to rule out alternative explanations. Our study contributes to literatures on the antecedents of CSR and outcomes of common ownership, providing a new perspective on how common owners shape corporate strategic behavior. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2022.1620. Collapse

Topics: Chief Information Officer accounting corporate governance corporate social responsibility database system

Methods: descriptive statistic longitudinal research theory development difference in differences experimental group

The Downside of Displaying Agentic Values: Evidence from Shareholder Activism

2023 | Organization Science | Citations: 0

Authors: DesJardine, Mark R.; Shi, Wei

Abstract: Activist shareholders face a challenging task in preemptively identifying execut ... Expand

Abstract: Activist shareholders face a challenging task in preemptively identifying executives who they perceive might destroy shareholder value—before harm is done. We develop a framework where activist shareholders resolve this problem by forming attributions about executives’ intentions based on their displays of agentic values, which reflect independence and control. For activist shareholders, a strong display of independence can evoke concerns that an executive will act without the regulation of shareholder input, and a strong display of control can create concerns an executive will engineer governance provisions to their own benefit. As such, we hypothesize that above-average agentic value displays by CEOs increase the likelihood firms are targeted by shareholder activists. Extending our theory, we argue the positive effect that agentic value displays have on attracting shareholder activism is stronger when CEOs permit higher spending on corporate and stakeholder investment, both of which can exacerbate shareholder harm when executed poorly. We also posit that activism campaigns driven by CEOs’ agentic value displays will largely come from activist shareholders seeking to exert their own control over agentic-speaking CEOs. Using data on shareholder activism campaigns at US-based companies from 2003–2018, we find support for our hypotheses. We discuss multiple theoretical implications for research on corporate governance, stakeholder management, and investor relations. Collapse

Topics: corporate governance research and development accounting database system Netflix

Methods: descriptive statistic theory development instrumental variables estimation robustness check statistical hypothesis test

Theories: big five model attribution theory behavioral economics

Effect of Technology Shock on Firm Commitment to IT Investment Plans

2023 | Americas Conference on Information Systems | Citations: 0

Authors: Diaz Campo, Maria; Shoja, Amin; Marakas, George

Abstract: With technology increasingly being at the forefront of value generation for fir ... Expand

Abstract: With technology increasingly being at the forefront of value generation for firms, organizations turn their attention to procuring IT assets as they leverage their resources strategically to derive value from their investments. While past efforts have traditionally focused on evaluating IT investments' impact on firm value and performance, recent work has sought to understand organizations' IT investment choices and, saliently, their commitment to IT investment plans by evaluating firms' realized IT spending in light of past investment plans. Acknowledging that organizations' engagement in real earnings management has been recognized as a driver of commitment to IT investment plans, we propose an extension of recent work by evaluating the effect of macroeconomic forces on this relationship, namely, technology shocks. We aim to shed light on the impact of emerging technologies on organizations' IT investment choices and increase our understanding of their commitment to investment plans by considering external forces. Collapse

Topics: IT investment productivity information technology infrastructure technological change accounting

Methods: Compustat longitudinal research

Theories: organizational behavior theory