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Management literature on how interorganizational relationships influence firm performance has emphasized the importance of connections, positions, and cliques. We advance this literature by examining how network communities (membership in cohesive network structures) shape the performance of venture capital (VC) firms. We propose that community insiders affiliated with at least one network community will outperform outsiders. We also explicate the conditions under which the advantages of network community affiliations are likely to be muted. Specifically, we argue for the potential diseconomies of network community affiliations and the possibility of a substitutive relationship between network communities and institutional development. Leveraging recent advances in community-detection technology and longitudinal data on VC firms in China, we find support for our theoretical arguments. Analysis of mechanisms underlying our theoretical arguments reveals that the value of community affiliations comes from indirect connections within network communities. By integrating social network and institutional perspectives, this study highlights not only the promises but also the limits of relying on network community affiliations. [ABSTRACT FROM AUTHOR]

Although there is previous research on textual analysis in accounting, little is understood about the effects of the tone and sentiments of the text disclosed in annual report filings (10-K) on the investor assessment of the future performance of the firm. This study inks the tone and sentiments of the text disclosed in the corporate annual reports and expectations regarding the future performance of the firm. We focus on two specific sections of 10-K filings the risk factor disclosures (Item 1A) and the management's discussion (Item 7) filling a gap in the accounting literature. There are two competing predictions regarding how the tone and sentiments of the text could impact the investor assessment about the future performance of the firm. First, the tone and sentiments of the text in Items 1A and 7 may have an effect on the investor assessment of the future performance of the firm. Second, only the tone and sentiments of Item 7 may have an effect on the investor assessment, given the fact that Item 1A only discusses the general risk factors that are present and not necessarily any specific risk factors to the firm. We find that only the tone and sentiments of the text in Item 7 has an effect on the investor assessment of the firm. This result helps explain the channels through which the tone and sentiments of the text impacts the future performance. [ABSTRACT FROM AUTHOR]

Despite the prevalence of teams in research, there is a lack of a good understanding of how their size and diversity affects their performance. We develop a theoretical framework that distinguishes two dimensions of research performance for an academic paper: impact (i.e., subsequent citations) and prestige (i.e., ranking of the journal where research is published). We propose that, while larger teams will enhance linearly the impact of research, they will affect its prestige in a nonlinear fashion. We further contend that these effects will be moderated by knowledge and international diversity of the teams. We test these hypotheses using bibliometric data between 1990 and 2020 on more than 1.4 million papers and 18 million citation counts across 22 subfields in management. Our results confirm significant benefits for research impact from both team size and diversity, but also highlight drawbacks when teams become very large and heterogeneous. Moreover, we find a nonlinear positive effect of team size on research prestige that can be offset only by high levels of knowledge diversity. These findings are robust to a variety of proxies, controls, and estimation techniques, including instrumental variables and propensity score matching. We discuss practical implications for stimulating research performance in business schools. [ABSTRACT FROM AUTHOR]

This paper examines how physical climate exposure affects firm performance and global supply chains. We document that heat at supplier locations reduces the operating income of suppliers and their customers. Further, customers respond to perceived changes in suppliers' exposure: when suppliers' realized exposure exceeds ex ante expectations, customers are 7% more likely to terminate supplier relationships. Consistent with experience-based learning, this effect increases with signal strength and repetition and decreases with country-level climate adaptation. Subsequent replacement suppliers show a lower expected and realized but similar projected heat exposure. We find similar results for suppliers' exposure to floods. [ABSTRACT FROM AUTHOR]

The recent COVID-19 pandemic created an unpredictable environment regarding the safety operations of sport and recreation organizations. This study was designed to examine how safety climate and organizational innovativeness could promote preferred organizational behavior outcomes in college campus sport and recreation centers. A total of 227 sport and recreation employees were recruited through the National Intramural and Recreational Sports Association. With the collected data, we employed structural equation modeling to assess the research hypotheses. The results indicated that safety climate and innovativeness positively influenced job engagement, therefore leading to enhanced safety compliance and employee innovativeness, which ultimately resulted in higher levels of organizational performance. Peer safety compliance was also found to be a moderator in the relationship between job engagement and safety compliance. In this study, the authors offer new insights into sport organizational performance by emphasizing safety and innovation. [ABSTRACT FROM AUTHOR]

The Internet of Things has received enormous attention. Despite the lucrative potential, this study tries to look beyond the hype to understand how IoT impacts firm performance. Based on the information processing theory, we intend to explore how IoT influences the financial performance of firms. Firms, which realise the urgent need to adopt IoT might encounter a diverse set of challenges, like whether adoption will be profitable, the level of commitment they should devote, and whether to adopt as a first or second-mover. We want to comprehend such adoption challenges on the Indian manufacturing firm's financial performance. This study uses panel data from BSE 500 listed manufacturing firms and conducts multivariate analysis to understand the relationship between the IoT implementation proxies: IoT adoption, first-mover advantage, and firm performance in the light of IoT commitment and experts. The result indicates that IoT implementation has an insignificant effect on manufacturing firm performance. Meanwhile, the consideration of IoT commitment and experts jointly can enable a manufacturing firm to reap significantly positive financial outcomes. In other words, the IoT commitment and expertise positively moderate the relationship. The finding is useful to the decision-makers to address the firm-level adjustment before the mere introduction of IoT. [ABSTRACT FROM AUTHOR]

This article explores the effects of open innovation on innovation performance in military bureaucracies. While the understanding of how bureaucratic organizations can benefit from open innovation is still limited, this study discovered that open innovation can have a negative effect on innovation performance. However, leveraging an innovative culture can lead to improved innovation performance in organizations characterized by high levels of structure and hierarchy, especially those where secrecy and security are of vital importance. [ABSTRACT FROM AUTHOR]

Economic crises have profound effects on societies, motivating many individuals to launch their own firms in order to make a living. Although these firms created "out of necessity" possess few resources besides their founder's human capital, the role that this critical endowment plays in establishing a successful firm during a crisis is unclear, as existing knowledge offers diverging predictions about the value of general and specific human capital. We argue that this debate remains unresolved because we lack a holistic understanding of how each human capital type influences performance when founding conditions vary, and aim to reconcile the contrasting claims by considering how "hard" a crisis hits a given industry. Analyzing data collected from 500 founders who created firms in Greece during the Great Recession, combined with data from the Greek Statistical Office, we find that general human capital provides the greatest benefits, on average, during a crisis; yet specific human capital is more valuable in both the most favorable and the most unfavorable industry contexts. These results reveal how the value of human capital in entrepreneurship is contingent on founding conditions, and call into question existing notions of what it means to be resilient in a crisis. [ABSTRACT FROM AUTHOR]

Startup accelerators, which aim to improve the set of choices representing a startup's entry strategy, have become increasingly influential in both regional development and the strategies of individual startups. This article explores an accelerator's impact on startup performance and whether that impact varies substantially by features of the startup's founding environment. Leveraging data from a leading startup accelerator, I use a regression discontinuity framework to hold startup quality constant so that I can compare the performance of admitted startups to those that do not make the cut, and I examine whether any observed performance differentials are driven by accelerator admission and by characteristics of the startup's earlier environment. I find evidence that startups from better pre-accelerator environments experience stronger gains from accelerator admission. I also find evidence of home bias, as local startups have a stronger treatment effect. These results provide evidence of ecosystem effects whereby the impact of one organizational sponsor in an ecosystem is strongly moderated by other features in the ecosystem. The findings help to explain the concentration of accelerator programs in already successful entrepreneurial ecosystems and reveal how such programs may interact with founding environments to complement resource abundance or magnify prior resource inequalities. [ABSTRACT FROM AUTHOR]

As organizations strive for more flexibility, decentralized decision‐making has been at the core of many modern HR approaches. Yet, on a company‐wide scale, it remains unclear whether decentralized decision‐making structures improve organizational performance. Our study aims to illuminate prior ambiguous evidence by examining an employee‐level mechanism underlying the organizational‐level relationship between decentralization and performance, and scrutinizing the critical role of formal leaders for empowering employees in decentralized structures. Integrating the perspective of organizational structure as opportunities and constraints with social information processing theory, we argue that transferring decision‐making authority to lower organizational levels positively affects employees' emergent leadership, but only to the extent that direct supervisors engage in empowering leadership and guide employees' behaviors in decentralized structures. Our predictions are supported by a multilevel, multisource field study of 5807 individuals across 144 companies. We further find that emergent leadership yields a positive effect on organizational performance. By developing a multilevel model that explicates both an employee‐level mechanism and a contingency of the decentralization–organizational performance link, our study enriches understanding of the key role that formal leaders play for achieving the strategic goals of decentralized decision‐making in organizations. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We build a novel comprehensive data set of new product trademarks as an output measure of product development innovation. We show that risk-taking incentives in CEO compensation motivate this type of innovation and that this innovation improves firm performance. Using an exogenous shock to executive compensation, we find that reductions in stock option compensation cause reductions in new product development. We also find that firms undertaking new product development experience increases in future cash flow from operations and return on assets. These findings suggest the importance of product development innovation to firms and new trademarks as a novel innovation measure. [ABSTRACT FROM AUTHOR]

Amid the escalating environmental crises and economic disparities, Circular Economy (CE) has garnered recognition as a pragmatic mechanism for achieving Sustainable Development Goals (SDGs). In response, several supply chain organisations are integrating CE strategies into their business operations and production processes. Despite these developments and since the introduction of Business Charter for Sustainable Development by the International Chamber of Commerce in 1991, the academic corpus comprehensively connecting CE research themes, catalysts, deterrents, practices with the SDGs has remained limited. To bridge this gap, we present a systematic literature review (SLR) of CE research in operations, supply chain and production management encompassing a time span of 31 years (January 1991 – June 2022), by sourcing, screening, and analysing articles obtained from multiple research databases. Our thematic coding analysis generated ten research themes, and subsequently linking them with relevant SDGs. Additionally, we interweaved CE catalysts and deterrents, establishing a connection with the SDGs. This is further enriched with CE strategies aimed at equipping business practitioners to enhance sustainable business performance and contributing to specific SDGs. Lastly, we delineate CE knowledge data management and priority actions frameworks to aid organisations to enhance employee capability and actively leverage digital technologies for implementing CE strategies. [ABSTRACT FROM AUTHOR]

Problemistic search literature has long sought to understand which responses firms adopt when addressing performance shortfalls. Studies have typically considered certain responses and focused on established decision rules to examine search directions, thereby, implicitly assuming that all responses considered are workable solutions to performance shortfalls. Conversely, we argue that variations in decision-makers' beliefs about the effectiveness of particular responses in improving firm performance play an important role. These beliefs, alongside evidence supporting them, determine which specific responses firms adopt. To test this argument, we focus on two types of search solutions represented by research and development (R&D) intensity and philanthropic donation intensity. Based on 2009–2018 data collected from publicly listed Chinese firms, we find that, when decision-makers agree on the effectiveness of R&D, the positive relationship between performance shortfalls and R&D intensity strengthens; whereas when they agree on the effectiveness of corporate social responsibility (CSR), the negative relationship between performance shortfalls and donation intensity weakens. The effects of shared beliefs on the effectiveness of R&D and CSR are stronger when they are supported by relevant evidence—that is, when there is a stronger correlation between R&D or CSR on the one hand and firm performance on the other. [ABSTRACT FROM AUTHOR]

Although allocating resources (e.g., pay) between different job groups is a critical strategic decision, relevant research is limited. Focusing on the form of pay allocation across job groups, we consider the organizational consequences of between-group pay dispersion (BGPD). Building on the multiple social comparison literature, we propose that employees construe both large and small BGPD as fair when it is aligned with the size of explained within-group pay dispersion (WGPD). We also propose that the interaction effect of BGPD and WGPD on the distributive justice climate be extended to organizational performance via intergroup helping and employee stability (voluntary turnover rates). We present supportive evidence of the hypotheses using two multiwave studies (Study 1: 205 retail stores located in China and comprising 4,234 employees, 1,899 group leaders, and 303 senior managers, featuring objective pay data; Study 2: 123 bank branches of a large state-owned bank in China) and a supplementary qualitative study. [ABSTRACT FROM AUTHOR]

We develop an approach that combines the estimation of monthly firm-level expected returns with an assignment of firms to (possibly) latent groups, both based on observable characteristics, using machine learning principles with linear models. The best-performing methods are flexible two-stage sparse models that capture group-membership predictive relationships. Portfolios formed to exploit such group-varying predictions based on a parsimonious set of characteristics deliver economically meaningful returns with low turnover. We propose statistical tests based on nonparametric bootstrapping for our results, and detail how different characteristics may matter for different groups of firms, making comparisons to the existing literature. [ABSTRACT FROM AUTHOR]

This article examines the impact of business-to-business (B2B) buying groups on buyer–supplier relationships. The authors outline two distinct initiatives—monitoring and community building—through which buying groups govern buyer–supplier exchange and impact supplier performance toward buyers. Two boundary conditions are identified for the performance efficacy of the buying group's governance efforts: the buyer's own governance of the supplier and the dependence relations among the focal parties. Analyses using two-wave primary data collected from the U.S. health care sector and replications using secondary outcomes indicate support for the proposed framework. The authors conduct a conjoint experiment to further enhance the generalizability of the findings and report that a buying group's monitoring of suppliers enhances supplier performance both by itself and with increasing supplier monitoring by the buyer firm. Further, the supplier's dependence on the buying group and the buyer's dependence on the supplier both sharpen the efficacy of the buying group's monitoring program. However, the performance effects of community building are weakened as the buyer–supplier relationship becomes stronger and as the buyer grows more dependent on the supplier. The authors thus uncover novel interplays between B2B buying groups and B2B dyads and document their consequences for firm performance. [ABSTRACT FROM AUTHOR]

Understanding effective marketing decision-making is key to driving business performance. However, knowledge of marketing decision-making by microbusiness owners is limited. Moreover, little is known about how microbusiness owners make marketing decisions under crisis conditions. This article explores entrepreneurial marketing decision-making by women microbusiness owners during the COVID-19 pandemic, through qualitative interviews with providers of children's activities, who migrated their services online during lockdown. Findings shed light on their marketing decision-making by highlighting transitions between causation and effectuation approaches and identifying key resources leveraged in effectuation decision-making. We also observe how distinct principles of effectuation may be combined to make effective marketing decisions. In addition, we discern interactions within networks and membership of communities of practice as collective influences on women microbusiness owners' entrepreneurial marketing decision-making. [ABSTRACT FROM AUTHOR]

This paper is one of the first attempts at empirically identifying organizational capabilities—in this work concerning Italian firms. Together, it proposes new evidence on the link between capabilities and economic performances. To this aim, we employ the Indagine Multiscopo del Censimento Permanente delle Imprese (IMCPI), a survey carried out by the Italian Statistical Office (ISTAT) in 2019, covering the three-year period 2016–2018, addressing a wide range of organizational characteristics including various organizational routines, human resource management (HRM), internationalization strategies, and many others. Our contribution is threefold: first, we aim at detecting what practices and combinations of them result in underlying different capabilities; second, we propose a taxonomy of the production system, both at firm- and sector-level based on the mapping of such capabilities; and third, we study the performance outcomes of different capability taxa in terms of productivity growth. [ABSTRACT FROM AUTHOR]

A central idea in the behavioral theory of the firm is that when an organization's performance falls below aspirations, a search for solutions is triggered. While this aspiration-based model has dominated the empirical literature, it is only one of two Carnegie School accounts of how firms use performance feedback to regulate behavior. We call the second account the belief-based model. This model focuses on the characteristics of the choice alternatives faced by firms and the challenges inherent in evaluating them. Using a computational approach, we demonstrate that the predictions of the belief-based model may explain instances where search increases, rather than decreases, as performance improves. This behavioral pattern, both above and below the aspiration, is prevalent in empirical research but not well accounted for using the aspiration-based model alone. We then develop the integrated discovery and evaluation of alternatives (IDEA) model of problemistic search, which integrates the two models and identifies the organizational and environmental factors that induce one or the other constituent submodels. We highlight the implications for empirical research on performance feedback and extensions to account for additional theoretical constructs, such as affect and politics. [ABSTRACT FROM AUTHOR]

In markets, individuals use three main evaluation modes to categorize and subsequently value organizations based on received organizational cues: prototype-based, exemplar-based, and goal-based evaluation. Starting with the premise that individual audience members use prototype-based evaluation as a default evaluation mode when receiving expected organizational cues, this paper derives a theory that connects unexpected organizational cues with an individual audience member's likelihood of switching from prototype-based evaluation to either exemplar-based or goal-based evaluation. Individual audience members' switches between modes, which we refer to as evaluation-mode heterogeneity, lead to changes in their valuation of typical organizations relative to atypical organizations. Our proposed theory has important consequences for research on valuation in markets accounting for apparently conflicting findings in prior studies, and on optimal distinctiveness. [ABSTRACT FROM AUTHOR]

The H-1B visa program allows companies to hire skilled foreign workers. Before 2014, the vast majority of these visas were allocated on a first-come-first-served basis. Since then, the program has been severely oversubscribed and all cap-subject visas have been allocated through lotteries. The authors merged Compustat data with administrative firm-level data on the universe of approved petitions for H-1B visas. Using difference-in-differences and matching estimators, this article finds that the switch in the visa allocation system negatively affected the growth of companies that used the H-1B program. Results indicate that these effects are quantitatively large and that their magnitudes grow over time. [ABSTRACT FROM AUTHOR]

We examine the impact of the Sarbanes–Oxley Act of 2002 (SOX) and the global economic crisis of 2008 on revenue generation patterns of public accounting and law firms. Using a sample of firm-year observations from both industries, we show that since the enactment of SOX, public accounting firms have significantly increased leveraging of partner time and decreased charge-out rates to boost their revenue per partner. While law firms also exhibit an increase in revenue per partner in the post-SOX era, their increase is rooted in higher average charge-out rates and lower leveraging. During the crisis, the public accounting industry was insulated by the relatively inelastic nature of its services. By contrast, law firms suffered a decline in demand for their services, which reduced their revenue generation by reducing their charge-out rates. We also consider cross-sectional variations within each industry and find significant differences across firms in the impact of SOX and the economic crisis. Notably, large firms in both industries were more significantly impacted by SOX and the Big 4 accounting firms were adversely impacted during the crisis. Our study sheds light on the revenue generation and human resource consequences of two significant macroeconomic events for two professional service industries that serve as watchdogs in our capital markets. [ABSTRACT FROM AUTHOR]

We investigate whether board-interlocked firms via an audit committee (AC) board member exhibit correlated non-audit service (NAS) purchases, and whether financial reporting quality and future firm performance vary with the amount of correlated NAS purchases from the AC interlock. We find that AC interlocked firms have positively correlated total NAS and three NAS subtypes—Tax, Assurance, and Other—in the overall sample period from 2000 to 2016, and in each of the subperiods pre- and post-SOX (Sarbanes–Oxley Act). Firms with a larger NAS component that is explained by the AC interlock tend to exhibit lower financial reporting quality. We also find evidence that firms with higher AC interlocked NAS purchases are associated with lower future performance, although this association exists only in the pre-SOX period. Overall, the evidence suggests that greater NAS purchases among AC interlocked firms can have a detrimental effect on financial reporting quality and auditor independence. While these detrimental effects are concentrated in the pre-SOX period when there were less restrictions on NAS purchases, we find some evidence that the association with lower financial reporting quality persists in the post-SOX period. [ABSTRACT FROM AUTHOR]

How do organizations reconcile the cross-pressures of conformity and differentiation? Existing research predominantly conceptualizes identity as something an organization has by virtue of the products or services it offers. Drawing on constructivist theories, we argue that organizational members' interactions with external audiences also dynamically produce identity. We call the extent to which such interactions diverge from audience expectations performative atypicality. Applying a novel deep-learning method to conversational text in over 90,000 earnings calls, we find that performative atypicality leads to an evaluation premium by securities analysts, paradoxically resulting in a negative earnings surprise. Moreover, performances that correspond to those of celebrated innovators are received with higher enthusiasm. Our findings suggest that firms that conform to categorical expectations while being performatively atypical can navigate the conflicting demands of similarity and uniqueness, especially if they hew to popular notions of being different. [ABSTRACT FROM AUTHOR]

Research on women in leadership positions has largely focused on the board or top management team (TMT) leadership level, showing that increased female representation at these levels can benefit organizational performance. However, the strategic implications of female representation at middle management have been largely neglected. The current study addresses this issue in relation to High Performance Work System (HPWS) improvement and organizational performance (profitability). By analyzing the multi‐wave (2009, 2011, and 2013) Workplace Panel Survey (WPS) data collected from 1101 organizations in South Korea, we found a gender diversity advantage at middle management; that is, a higher level of gender diversity of middle management translated into a higher level of organizational performance due to HPWS improvement. However, this advantage appeared only in the presence of a high level of subordinates' gender diversity. Our findings have important implications for gender diversity and strategic human resource management. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Factors display strong cross-sectional momentum that subsumes momentum in industries and other portfolio characteristics. The profits of all these momentum strategies—based on factors, industries, and other characteristics—significantly correlate with each other and therefore likely emanate from the same source. If factors display momentum, so will any set of portfolios with cross-sectional variation in factor loadings. Consistent with factors being at the root of momentum, we find that momentum in industry-neutral factors explains industry momentum, but industry momentum explains none of the factor momentum. Cross-sectional factor momentum concentrates in the first few highest-eigenvalue factors and is distinct from time-series factor momentum. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]

We present a theoretical framework to address the inherent endogeneity problem in entry-timing research by distinguishing the concept of "first-mover benefits" (FMB) from "first-mover advantages" (FMA)—the former being a counterfactual and (usually) unobserved pure treatment effect, and the latter being an actual observed combination of treatment and selection effects. They differ in the baseline to which the first mover's performance is compared—either to the follower's actual performance (for FMA) or to the first mover's hypothetical performance if it had been a follower (for FMB). We consider the implications of this distinction for entry-order choices, and our formal economic model analyzes this distinction to make predictions about biases arising from using FMA as a proxy to estimate FMB, and also about how FMA, FMB, and their difference are affected by interfirm asymmetries in resources and information. [ABSTRACT FROM AUTHOR]

We investigate whether firms limit the volume of financial items in annual reports (including the financial statements and footnotes) to obfuscate poor future firm performance, and how investors react to this reduced volume. We estimate abnormal volume to capture managers' discretion over reporting in the 10-K and find that abnormally low volume predicts poor future earnings. This relation is more pronounced in firms where the market has difficulty in detecting managerial intervention in the disclosure process. We also find that abnormally low volume predicts negative future returns, suggesting that managers benefit from disclosing fewer financial items by delaying the incorporation of bad news into stock prices. Further corroborating our results, we find that the volume is abnormally low when there exist strong managerial incentives to withhold bad news and manipulate investor perceptions upward. Overall, our evidence is consistent with the notion that managers attempt to obfuscate poor future performance and inflate current stock prices by disclosing fewer financial items in the 10-K. [ABSTRACT FROM AUTHOR]