Metamorphic effects of power as reflected in espoused organisational values: Implications for corporate governance

Abstract

Corporate governance concerns the monitoring and control of senior executive behaviour. Implicit in these concerns is recognition that top managers, as organisations' major powerholders, can abuse their positions in the pursuit of selfish goals that disadvantage shareholders and other stakeholders. A theory that suggests that power can influence the cognitions of powerholders is Kipnis' (1976) metamorphic theory of power. We study predictions derived from Kipnis' theory of power by relating the power of organisations' top dyads (i.e., their chief executive officer and chairman), which is measured through demographic characteristics, to the values and concerns expressed in organisations' documents, such as annual reports and mission statements. Top dyads' power, and hence their exposure to potential metamorphic effects, is assessed by five proxy variables such as tenure within the top job and organisational insider versus outsider status, while values are measured by counting word frequencies in organisational documents. The sample consists of 64 large Australian organisations that are studied over the 3 years 1986-1988. We find that top-dyad characteristics and values expressed in organisational documents are associated, and that the associations broadly conform to predictions derived from the metamorphic theory of power. Implications for corporate governance and potential improvements in the study design are discussed.