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

Privacy Regulation and Its Unintended Consequence on Consumption Behaviors: Evidence From CCPA

2023 | International Conference on Information Systems | Citations: 0

Authors: Bae, Donghwa; Mayya, Raveesh; Nian, Tingting

Abstract: This study explores the unintended consequences of data protection regulations ... Expand

Abstract: This study explores the unintended consequences of data protection regulations on consumer behavior. Specifically, we examine the California Consumer Privacy Act, which restricts companies from collecting Californians' personal information. Privacy regulations may limit firms' ability to suggest products aligned with consumers' taste predicted from data, potentially influencing subsequent consumer behavior. These regulations especially pose a challenge to digital platforms, as their success hinges on seamless data flow between firms and consumers. Using a difference-in-differences approach with transaction data, we find that post-CCPA, Californians reduce purchase by 4.1%, increase returns by 2.9%. Moreover, we find that Californians spend more time online and visit more webpages, potentially indicating increased search efforts. Mechanism analysis suggests that firms under CCPA proactively alter their data collection strategy to reduce the liability. These results reveal the complex interplay between privacy regulation and consumer behavior, highlighting the need for a nuanced understanding of the trade-offs between privacy protection and economic outcomes. Collapse

Topics: information privacy law legal context consumer behavior advertising management website

Methods: experimental group longitudinal research natural experiment archival research difference in differences

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

Economic Impacts of Platform-Endorsed Quality Certification: Evidence from Airbnb

2023 | Management Information Systems Quarterly | Citations: 0

Authors: Dewan, Sanjeev; Kim, Jooho; Nian, Tingting

Abstract: We contribute to the emerging literature on quality certification by digital pl ... Expand

Abstract: We contribute to the emerging literature on quality certification by digital platforms by studying the launch of the Airbnb Plus service, wherein the platform inspects properties and provides a badge that presumably signals the quality of the property and the reliability of the host. Our identification strategy relies on the fact that the Airbnb Plus service was launched in different cities at different times, and listings within the cities received the certification at different times. Using a staggered difference-in-differences estimation strategy in conjunction with suitable matching methods, we found that the Airbnb Plus certification increased the weekly booking rate of Plus listings by about 6.8% on average (direct effect). We also found some evidence that non-Plus listings saw a temporary decline in booking rate when one or more nearby properties received a Plus certification (externality effect). The net impact of the Airbnb Plus service on the platform itself was an annual increase in revenue of about $37,500 for the average 2-kilometer zone in a U.S. city that included one or more Plus listings, as compared to matched zones without any Plus listings (local platform effect). We performed additional analyses, including a randomized experiment, to demonstrate the robustness of our findings. Overall, our results suggest that platform-endorsed quality certification has significant economic impacts-not just on the listings that receive the certification but on other listings on the platform as well as on the platform itself. Collapse

Topics: Airbnb website sharing platform peer-to-peer model Google+

Methods: experimental group experiment propensity score method product review robustness check

Someone Else to Blame: The Effectiveness of Egocentric and Alter-Centric Impression Management Tactics in the U.S. Food Retail Industry

2023 | Organization Science | Citations: 0

Authors: Diestre, Luis; Montauti, Martina; Pinto de Sousa, Helena

Abstract: We investigate the effectiveness of two types of impression management tactics i ... Expand

Abstract: We investigate the effectiveness of two types of impression management tactics implemented around negative attributes: egocentric (claiming the absence or low presence of a negative attribute in a focal organization) and alter-centric tactics (claiming the greater presence of a negative attribute in an organization’s competitor). We claim that the effectiveness of each tactic depends on the risk of audiences’ skepticism, which stems from the incongruence between the information conveyed in the tactic and audiences’ default expectations about the presence of the attribute among members of a given market segment. Audiences expect a conspicuous presence of the attribute, we propose, the more stakeholders contest a market segment for that very attribute. Thus, we advance that egocentric (alter-centric) tactics are less likely to be effective for contested (uncontested) attributes because the information conveyed in such tactics clashes with audiences’ default expectations, triggering skepticism. We find support for our predictions looking at the impact of nutrient content claims on product sales in the U.S. food retail industry between 2006 and 2015. Funding: H. Pinto de Sousa acknowledges the support, in the form of a research scholarship, granted by the Portuguese Foundation for Science and Technology (Fundação para a Ciência e Tecnologia), under the European Social Fund and the Human Capital Operational Program (Programa Operacional Capital Humano) funding program [Grant SFRH/BD/128536/2017]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2022.1612. Collapse

Topics: database system marketing management Twitter social influence sensemaking

Methods: experimental group survey descriptive statistic statistical hypothesis test probit regression

Promise not fulfilled: FinTech, data privacy, and the GDPR

2023 | Electronic Markets | Citations: 0

Authors: Dorfleitner, Gregor; Hornuf, Lars; Kreppmeier, Julia

Abstract: This article analyzes how the General Data Protection Regulation (GDPR) has affe ... Expand

Abstract: This article analyzes how the General Data Protection Regulation (GDPR) has affected the privacy practices of FinTech firms. We study the content of 276 privacy statements respectively before and after the GDPR became binding. Using text analysis methods, we find that the readability of the privacy statements has decreased. The texts of privacy statements have become longer and use more standardized language, resulting in worse user comprehension. This calls into question whether the GDPR has achieved its original goal—the protection of natural persons regarding the transparent processing of personal data. We also link the content of the privacy statements to FinTech-specific determinants. Before the GDPR became binding, more external investors and a higher legal capital were related to a higher quantity of data processed and more transparency, but not thereafter. Finally, we document mimicking behavior among FinTech industry peers with regard to the data processed and transparency. Collapse

Topics: legal context General Data Protection Regulation privacy electronic finance website

Methods: parametric test paired t-test descriptive statistic Student's t-test qualitative content analysis

Theories: privacy calculus theory

Executives’ Prior Employment Ties to Interlocking Directors and Interfirm Mobility

2023 | Organization Science | Citations: 0

Authors: Harrison, Joseph S.; Boivie, Steven; Withers, Michael C.

Abstract: This paper explores how executives’ prior employment ties to interlocking direct ... Expand

Abstract: This paper explores how executives’ prior employment ties to interlocking directors, or those who hold additional board seats or executive positions at outside firms, influence individual executive interfirm mobility. As organizational boundary spanners, interlocking directors may be able to influence executive outcomes both within and outside of executives’ current firms. But given natural constraints on internal promotion for executives, we suggest most executives will tend to leverage ties to interlocking directors to access external opportunities, as manifested by movement to outside firms. Analysis of interfirm mobility among a sample of Standard & Poor’s 1500 executives between 2000 and 2014 offer support for this idea. We find a positive association between individual executives’ prior employment ties to interlocking directors and their hazard of movement to outside firms, including to the other firms where these directors serve. At the same time, we argue and find that the strength of this latter relationship will further depend on directors’ competing motivations owing to their specific positions in the focal and interlocking firms. Whereas holding a lead position on the focal firm’s board (i.e., as chairperson or lead independent director) weakens this relationship, holding the position of chief executive officer in the interlocking firm strengthens it. Our theory and findings highlight the unique and important role of interlocking directors in executive interfirm mobility and, in doing so, contribute novel insights regarding how ties to boundary spanners can influence individual outcomes for those to whom they are linked. Supplemental Material: The e-companion is available at https://doi.org/10.1287/orsc.2022.1638. Collapse

Topics: IT career database system boundary spanning corporate governance organizational productivity

Methods: theory development statistical hypothesis test descriptive statistic Compustat regression analysis method

Numerological Heuristics and Credit Risk in Peer-to-Peer Lending

2023 | Information Systems Research | Citations: 0

Authors: Hu, Maggie Rong; Li, Xiaoyang; Shi, Yang; Zhang, Xiaoquan (Michael)

Abstract: Heuristics are mental shortcuts that have ubiquitous influences on decision maki ... Expand

Abstract: Heuristics are mental shortcuts that have ubiquitous influences on decision making. We investigate whether and how different heuristics have distinct effects in the context of peer-to-peer (P2P) lending. Drawing on theories on the roles that heuristics play in decision making, we conjecture that when borrowers use different heuristics based on distinct motives to set their loan amounts, their funding success and repayment performance also differ. Using detailed P2P lending data from a Chinese P2P lending platform, we examine two important numerological heuristics, the round-number heuristic and the lucky-number heuristic, which are observable in over 80% of the submitted loan amounts. We find that round-number loans are less likely to get funded and exhibit poor repayment performance after being funded, whereas lucky-number loans exhibit the opposite pattern. These findings, which we attribute to the different motives behind the borrowers’ heuristic choices, challenge the conventional understanding that generally treats all heuristics as behavioral biases. Our results are robust to various identification strategies, including coarsened exact matching and instrumental variable estimation. Our paper sheds new light on the heterogeneity of heuristics and their distinctive implications for the credit market. History: Sam Ransbotham, Senior Editor; Tianshu Sun, Associate Editor. Funding: This work was supported by the Research Grants Council, University Grants Committee [Grants GRF 14500521, GRF 14501320, GRF 165052947, TRS:T31-604/18-N]. Supplemental Material: The internet appendices are available at https://doi.org/10.1287/isre.2023.1202. Collapse

Topics: crowdsourcing internet technology peer-to-peer lending peer-to-peer model decision making

Methods: instrumental variables estimation machine learning Student's t-test parametric test survival analysis

Theories: theory of bounded rationality

Crowdfunding from friends: Tie strength and embeddedness

2023 | Decision Support Systems | Citations: 0

Authors: Kim, Yongsuk; Koh, Tat Koon

Abstract: Crowdfunding is a useful channel for new or inexperienced “rookie” entrepreneurs ... Expand

Abstract: Crowdfunding is a useful channel for new or inexperienced “rookie” entrepreneurs to solicit funding for their projects. This study examines the individual funding decisions arising from the heterogeneity in the tie strength and embeddedness of the dyadic relationships between social media friends and rookie project initiators (PIs). Using integrated crowdfunding-social media data, we find that friends’ funding likelihood increases with a stronger tie or greater embeddedness, whereas friends’ funding amount only increases with greater embedd­ edness. We further find early evidence that the effect of tie strength on the friend’s funding decision is sensitive to the evaluation of project success potential, whereas that of embeddedness is less so. Moreover, embeddedness, but not tie strength, contributes to the project’s funding success. The findings run counter to the prevailing view of strong ties in crowdfunding while shedding new light on the persistently supportive role of embedded ties. Collapse

Topics: crowdfunding crowdsourcing social media social network

Methods: theory development descriptive statistic robustness check probit regression archival research

M&A Negotiations: Role of Negotiation Process, Ownership and Advisors on Deal Completion

2023 | Group Decision and Negotiation | Citations: 0

Authors: Kumar, Deepak; Sengupta, Keya; Bhattacharya, Mousumi

Abstract: Mergers and acquisition deals are uncertain, with completion likelihood changing ... Expand

Abstract: Mergers and acquisition deals are uncertain, with completion likelihood changing throughout the negotiation process. During negotiations, the firms process new information to modify their choices. This study aims to examine the dynamic nature of the M&A negotiation process. The study uses a sample of 983 worldwide unsolicited deals from 1999 to 2019 and classifies M&A deal outcomes using logistic regression, decision tree, and random forest classifiers. Ownership considerations and advisors are essential elements of the negotiation. Ownership sought has the potential to impact the deal's complexity and exercisable control. Prior ownership may either help gain information or recover due diligence costs. The advisors may assist the firms in the available information's financial and legal due diligence. Prior research lacks the negotiation period’s dynamism and gives mixed results for the impact of ownership and the role of advisors. We uniquely identify a non-linear inverted U-shaped relationship between the negotiation period and completion likelihood. The results prove that prior ownership, over the negotiation period, serves the dual objective of assisting deal completion and acting as a substitute for the termination fee. The acquirer and target advisors help with the completion of the deal. The varying effects for ownership and advisors over the negotiation process help explain the conflicting results in previous studies. The evolving negotiating circumstances play an important role in affecting the outcome. Our work shows the importance of temporal characteristics and the dynamic nature of decision-making during the M&A negotiation process and encourages further studies exploring processual theories. Collapse

Topics: logistics management decision making database system mergers and acquisition missing data

Methods: logistic regression random forest classification decision tree classification statistical hypothesis test machine learning

Theories: lemon market theory