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

Industry Norms as Predictors of IT Outsourcing Behaviors

2021 | International Journal of Information Management | Citations: 0

Authors: Prawesh, Shankar; Chari, Kaushal; Agrawal, Manish

Abstract: How do firm-specific factors impact strategic IT decisions such as IT outsourcin ... Expand

Abstract: How do firm-specific factors impact strategic IT decisions such as IT outsourcing? Do non-financial factors in­ fluence these decisions? Whereas prior IT outsourcing research has focused primarily on normative, economic drivers of IT outsourcing, we find evidence of firm-specific non-financial factors influencing IT outsourcing decisions. We focus on the social influence perspective and use IT outsourcing decisions as exemplars of strategic IT decisions. Using a data sample of 77 outsourcing contracts from the automotive industry from 1995 to 2010, we find that even after controlling for financial factors, industry average levels of outsourcing can be used to distinguish strategic outsourcing behaviors of firms for IT enabled services. Firms with above-average levels of IT outsourcing tended to further increase outsourcing, a behavior consistent with perceived Red Queen competitive pressures. Firms with below-average levels of IT outsourcing showed no measurable trends of either increasing or decreasing outsourcing levels. This suggests that firm-specific factors influence IT outsourcing decisions and deviations from non-financial industry norms can indicate how firms make strategic IT decisions. Collapse

Topics: outsourcing social influence database system information technology capability accounting

Methods: regression analysis method robust regression nonparametric test descriptive statistic LexisNexis

Theories: resource based view of the firm

The Effect of CIO Virtues on CIO Role Effectiveness

2019 | HICSS | Citations: 0

Authors: Chatterjee, Sutirtha; Sarker, Suprateek; Gregory, Gregory D; Lowry, Paul Benjamin

Abstract: This paper aims to contribute to the concept of ethical CIO leadership through a ... Expand

Abstract: This paper aims to contribute to the concept of ethical CIO leadership through a distinctive focus on virtue ethics. Our research investigates the theoretical significance of CIO virtues on two CIO capabilities and their corresponding influence on the CIO’s role effectiveness in organizations. Collapse

Topics: Chief Information Officer database system missing data personality IT manager

Methods: theory development survey chi squared test company material literature study

Pursuing the New While Sustaining the Current: Incumbent Strategies and Firm Value During the Nascent Period of Industry Change

2019 | Organization Science | Citations: 3

Authors: Eklund, John; Kapoor, Rahul

Abstract: This study considers the nascent period of industry change when the prevalent bu ... Expand

Abstract: This study considers the nascent period of industry change when the prevalent business model is being threatened by a new model, but there is significant uncertainty with respect to whether and when the new model will dominate. We focus on the challenge of incumbents pursuing both models simultaneously during the nascent period, and the implications on their firms’ valuations. Our theory is premised on the adjustment costs incurred by incumbents associated with the sharing of resources across business models and the conflict between managers vying for limited resources. While firms’ assets and competitive environments are key drivers of their value, we argue that they also impact adjustment costs. Evidence from the U.S. electric utility industry, which is undergoing a change from a centralized to a decentralized model, offers strong support for our arguments. The greater the level of incumbents’ assets that are specific to the existing model, and the greater the level of competition that they face, the lower are their firms’ valuations when investing in the new model relative to when investing in the existing model. Hence, ironically, those incumbents potentially most threatened by the change seem to be least rewarded for their efforts to renew themselves. However, pursuing the new model via alliances can help mitigate adjustment costs. The study uncovers the challenges that incumbents face as they pursue the new model in tandem with the existing dominant model, and helps explain why some incumbents may successfully navigate the changing industry landscape while others may stumble. Collapse

Topics: business model organizational value database system legal context resource allocation

Methods: theory development regression analysis method descriptive statistic robustness check Compustat

Future-Time Framing: The Effect of Language on Corporate Future Orientation

2018 | Organization Science | Citations: 0

Authors: Liang, Hao; Marquis, Christopher; Renneboog, Luc; Sun, Sunny Li

Abstract: We examine how international variation in corporate future-oriented behavior, su ... Expand

Abstract: We examine how international variation in corporate future-oriented behavior, such as corporate social responsibility and research and development investment, could partially stem from characteristics of the languages spoken at firms. We develop a future-time framing perspective rooted in the literatures on organizational categorization and framing. Our theory and hypotheses focus on how companies with working languages that obligatorily separate the future tense and the present tense engage less in future-oriented behaviors, and this effect is attenuated by exposure to multilingual environments. The results based on a large global sample of firms from 39 countries support our theory, highlighting the importance of language in affecting organizational behavior around the world. The online appendix is available at https://doi.org/10.1287/orsc.2018.1217. Collapse

Topics: research and development decision making corporate social responsibility database system innovation management

Methods: robustness check theory development descriptive statistic FactSet qualitative coding

Theories: organizational behavior theory cognitive theory dominant logic