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Past research rooted in the Behavioral Theory of the Firm has extensively examined the impact of performance feedback on organizational change and risk taking, finding robust effects that performance shortfalls enhance the risk taking of firms. We argue that the strength of this effect is likely to be contingent on the attributes of the firm’s top management team. To enhance our understanding of which firms are more likely to be sensitive to performance cues, we draw on the Upper Echelon Theory to theorize that key structural attributes of the top management team—tenure and gender diversity, size, and pay disparity—affect how top executives interpret poor performance and act upon it through engagement in strategic risk taking. Results show that top management teams with greater tenure diversity, smaller size, and smaller pay disparity among members engage in more strategic risk taking following performance shortfalls.

This study contributes simultaneously to research on women board members and competitive dynamics by investigating two unresolved research questions: What is the effect of female directors on the firm’s competitive repertoire? Under what conditions is this effect more pronounced? Leveraging the “Awareness-Motivation-Capability” (AMC) framework, we predict that having women on the board of directors should impact the complexity, heterogeneity, and volume of the firm’s competitive moves. Relying upon a sample of U.S. pharmaceutical firms for the years 2000 to 2017, we find that adding female directors on the board positively affects the complexity and volume of a firm’s competitive moves, but negatively impacts the heterogeneity of competitive actions. In addition, the presence of a female CEO moderates these effects, leading to more complex competitive actions and increased volume. Thus, our study lends a greater understanding of how female board members influence competitive dynamics and shape the strategic direction of the firm.

This study integrates research on managerial discretion within the behavioral theory of the firm to examine how four CEO psychological traits serving as antecedents of managerial discretion— ambiguity tolerance, cognitive complexity, locus of control, and commitment to the status quo—moderate firm responses to poor performance. Using CEOs’ responses to questionnaires, CEO ambiguity tolerance is found to positively moderate the relationship between negative attainment discrepancy and strategic change when performance is slightly below aspirations, defined as average market return for the firm’s industry. Further, CEOs with greater cognitive complexity are found to engage in more strategic change when performance is farther below aspirations. Thus, this study begins to unpack the role of CEOs’ cognitive makeup on firm responses to performance shortfalls.

In this meta-analytic review, we examine the entry timing-firm performance relationship as it has been studied in international business research. In addition, we present several moderating factors that strengthen or weaken that relationship. We find that early entry bears financial advantages in international markets, but those advantages depend on country of entry and origin, industry context, performance measurement, type of entry and time period. We conclude with a discussion of avenues for future research.

Current research on organizational speed has been disjointed, which has left organizational speed as an underdeveloped area of study. In this essay, we expand the view of organizational speed as a ...

Competitive aggressiveness has been at the center of competitive dynamics literature for decades, however there is no consensus as to its primary drivers and performance consequences. Thus, we present the results of a meta-analysis of the antecedents to and consequences of competitive aggressiveness using three aggressiveness components—competitive volume, complexity, and heterogeneity. Leveraging the awareness, motivation, capability framework as a guide of the drivers of competitive aggressiveness, we find that greater organizational size and age, lower slack resources and prior performance, greater market growth, lower market concentration, and more heterogeneous top management teams lead to more aggressive actions. In addition, we found that among the different components of aggressiveness competitive volume improved operating performance.

A growing literature suggests that deliberate, cognitive effort is necessary for learning to occur in the context of complex strategic activities. However, given increasing pressure for short-term results, it remains unclear what motivates management to actually invest such effort in learning, which benefits performance primarily in the longer term. To help fill this gap in our understanding of the motivational mechanisms behind organizational learning, we theorize whether and how corporate governance mechanisms push management toward more effective learning from its firm’s acquisition experience. Using data on U.S. firms’ acquisitions from 1996 through 2012, we find considerable support for our arguments.

The importance of board committees – specialized subgroups that exist to perform many of the board's most critical functions, such as setting executive compensation, identifying potential board members, and overseeing financial reporting – has grown over time due to increased legal requirements and greater complexity of the environment in which firms operate. This has resulted in a large body of work examining board committees across the accounting, finance, and management disciplines. However, this research has developed rather independently within each discipline, preventing scholars and practitioners from developing a comprehensive understanding of board committees. To address this issue, we conduct a comprehensive review of the literature that: 1) summarizes and synthesizes antecedents and outcomes associated with board committees in publicly‐traded firms in English common law countries; and 2) offers a critical analysis of existing research, providing recommendations for advancements and new directions in board committee research.

In this study we introduce a justice perspective to examining the result of bargaining between CEOs and boards over the allocation of firm residuals that ultimately determines CEO compensation. Framing CEO pay as the result of bargaining between CEOs and boards focuses attention on the power of CEOs to increase their share of firm residuals in the form of increased compensation, and the diligence of boards of directors to constrain CEO opportunism. Framing this negotiation through a theory of justice offers an alternative perspective to the search for pay-performance sensitivity. We predict and find that as board diligence in controlling opportunism declines and CEO power increases, CEOs are increasingly able to capture a larger portion of firm residuals relative to shareholders. This finding supports critics who charge that CEO pay violates norms of distributive and procedural justice.

Drawing on resource dependence theory and group diversity research, this paper examines how board gender and racial diversity impact corporate divestitures. We argue that due to the diverse experiences, knowledge, and perspectives that female and racial minority directors bring to the boardroom, it is more difficult and time-consuming for the board to reach a consensus and pursue a common course of action. Consistent with this argument, our results indicate that board gender and racial diversity lead to longer divestiture completion times and a lower divestiture rate. Additionally, we argue that due to their cognitive heterogeneity, diverse boards likely exchange a greater variety of information, engage in more thorough discussions, and implement greater oversight of divestitures, leading to more positive divestitures returns. Offering mixed support for this argument, we found that while gender diversity increased divestiture returns, racial diversity was associated with lower divestiture returns.

Acquisition experience is commonly viewed as an important determinant of subsequent acquisition success. Yet, empirical evidence suggests that acquisition experience may not be positively associated with acquisition performance and could even hurt performance. In this article, we highlight specific practices that facilitate and impede learning from acquisitions and draw implications for managers. In particular, we suggest that managers (1) expand time between acquisitions, (2) implement strong governance mechanisms and top management team diversity, (3) use similar-context experience, (4) avoid herding behavior in acquisitions, and (5) minimize blind reliance on financial advisors to effectively transfer prior acquisition experience into acquisition success.

Corporate divestitures have been identified as important strategic actions with a positive impact on firm performance. Yet, what is still missing in the strategic management literature is an integrative framework that quantitatively synthesizes the relative impact of various antecedents to divestitures, and theoretically reconciles the multitude of theories underlying divestiture research. To fill this gap, the author conducts a meta-analysis (based on a sample of 35 studies) and develops four broad categories of determinants: corporate governance; firm strategy; performance; and industry environment. Evidence is found that divestitures are driven mainly by prior divestment experience, structural factors (firm size and firm diversification) and weak unit performance. In addition, the relative predictive validity of several theoretical perspectives on divestment decisions is assessed.

Prior research has shown that a CEO political orientation influences the social-value oriented decision making of the firm. We extend this inquiry by showing that political orientation influences t...

CEO successions represent critical junctures for firms. Although extant research explores the performance consequences resulting from different succession types, what remains underexplored is what happens when the firm rehires a former CEO (e.g., a “boomerang CEO”). Using a sample of over 6,000 CEO tenures, we examine the performance consequences of former CEOs who return to the firm. Our results suggest that these boomerang CEOs perform significantly worse than other CEOs, and that this effect is especially strong for firms in dynamic industries and when the boomerang CEO is a founder. Thus, the irony is that rehired CEOs may drag organizations backward instead of pushing them forward. Collectively, our findings contribute to the upper echelons and experience literatures.

International marketing research, in most cases, involves at least two levels (e.g., firms within countries) that make the hierarchical linear modeling (HLM) a suitable data analysis technique. Due to its robustness, the use of HLM in the international business (IB) research has increased substantially over the last decade. However there is still a lack of standardization in the fundamental issues that hinders the wide spread use of HLM. This study provides unified approach to HLM use in IB research by providing standards for appropriate use of HLM. To achieve this goal, a detailed analysis of the method's use in 42 IB studies is provided and these studies are compared with 104 non-international studies to determine where IB research stands in terms of HLM use. Finally this study focuses on the good HLM practices and offers suggestions designed to maximize the effective use of HLM and potential in international business studies.

Research in strategic management has shown that the timing of firm participation in a merger wave matters, as early movers have been shown to outperform later ones. However, while the consequences of the timing of action within a merger wave have been assessed, the causes that drive these timing effects remain unknown. We draw on the competitive dynamics perspective to investigate firm-level factors that influence the large-scale strategic behavior of leading or following within industry merger waves. We develop hypotheses based on the competitive dynamics argument that the awareness-motivation-capability of firms will influence the timing of competitive action. Consistent with this perspective, we show that a firm's strategic orientation, its structure, and its resource base influence the timing of firm entry in merger waves. Copyright © 2012 John Wiley & Sons, Ltd.

Past research in the Behavioral Theory of the Firm has extensively examined the impact of performance feedback on organizational search and risk taking. Yet, those studies have overlooked a key pos...

International marketing research, in most cases, involves at least two levels (e.g. firms within countries) that make the Hierarchical Linear Modeling (HLM) a suitable data analysis technique. Due to its robustness, the use of HLM in the International Business (IB) research has increased substantially over the last decade. However there is still a lack of standardization in the fundamental issues that hinders the wide spread use of HLM. This study provides unified approach to HLM use in IB research by providing standards for appropriate use of HLM. To achieve this goal, a detailed analysis of the method’s use in 42 IB studies is provided and these studies are compared with 104 non-international studies to determine where IB research stands in terms of HLM use. Finally this study focuses on the good HLM practices and offers suggestions designed to maximize the effective use of HLM and potential in international business studies.

This study makes a twofold contribution, to the growing research on female representation on boards and competitive dynamics literature, by examining how female representation on the board impacts ...

A growing body of research shows that a considerable degree of deliberate, cognitive effort is necessary for fruitful organizational learning to occur in the context of complex strategic activities...

The entry timing literature and its primary theoretical framework, first mover advantages (FMA), are pervasive areas of study, yet their attention to the global marketplace has primarily been limit...

We develop and test a theoretical model on the impact of female directors on corporate divestitures. Drawing on self-categorization theory and team diversity research, we posit that the presence of...

Much research suggests that organizational experience plays a key role in improving outcomes. Yet, it is largely unclear how that experience should be best accumulated. We use data on repeated acqu...

In this study we focus on an often-overlooked but critical component of the Behavioral Theory of the Firm (BTOF) – the role of human agency. Thus, we aim to examine and provide richer understanding...

Research focusing on corporate divestitures has identified them as important strategic actions which have a positive impact on firm performance. Yet, what is still missing in the strategic manageme...

We hypothesize and find strong empirical support for the notion that in exchange for higher risk bearing CEOs realize greater returns than shareholders across all market cycles. That is, CEOs hedge the risk of equity-based contingent pay by structuring the awards of this pay, thus insulating CEO equity-based pay from negative stock price fluctuations. In addition, we find that CEOs are more able to hedge against the risk of contingent pay when the potential for opportunism is strongest. We conceptualize the potential for agent opportunism as when CEO structural power is high, directors have weak stakes in the firm, and there is weak diligence by the board. However, in contrast to viewing CEO excess returns as an outright agency cost to shareholders, we find that those returns might serve as a motivational tool and encourage risk-averse CEOs to better serve the interests of shareholders. Our results highlight the need to recognize the multi-level nature of board oversight through the full board as well as ...