Trustworthiness

The initial public offering (IPO) is one of the most critical events in the lifetime of a young firm. Prior research has shown that firms tend to have successful IPOs if they go public with the endorsement of a prestigious lead underwriter. This paper examines the antecedents to receiving endorsement by a prestigious underwriter and links this to the experience base of a firm's upper echelon. We theorize that the amount and type of upper echelon experience serve as important symbols of a young firm's legitimacy to critical outsiders. We introduce a typology of upper echelon experience that distinguishes between upper echelon upstream, horizontal, and downstream employment-based affiliations and suggest that these different types of upper echelon affiliations allay different types of endorser concerns regarding firm legitimacy, affecting the endorsement process. Further, we theorize that the relationships between upper echelon experience and investment bank prestige will be moderated by technological uncertainty. We test our assertions on a comprehensive sample of public and private biotechnology firms that were founded between 1961 and 1994 and that went public between 1979 and 1996. Analyses of the five-year career histories of the over 3,200 executives and directors that make up the upper echelons of these firms show that firms with upper echelons with affiliations with prominent downstream organizations (i.e., pharmaceutical and/or healthcare companies) and with prominent horizontal organizations (i.e., biotechnology companies) are more likely to attract the endorsement of a prestigious investment bank. We also find that the greater the range of upper echelon affiliations across the categories of upstream, horizontal, and downstream affiliations, the more prestigious the firm's lead underwriter. We also find that these latter results are moderated by technological uncertainty. The present research has implications for the study of organizational legitimacy, interorganizational endorsements, and entrepreneurship.

Integrity

The popular and professional press is filled with discussions of major changes on the organizational landscape, including organizational design experiments at entrepreneurial firms as well as at major corporations, the slashing of corporate staffs, the downsizing, delayering and revitalization of firms, the emerging electronic organization, mergers and acquisitions, failures of high reliability organizations, and time-based competition. Each of these issues has been associated with the redesign of organizations, yet these redesigns seem far removed from academic research, and they do not typically utilize the academic body of knowledge. Although the field has progressed enormously in new methods and insights during a century of research, it seems to us that organization studies have been a source of recurrent disappointment for practitioners and academics alike (Bedian 1989; Cummings 1983; Luthans 1986; Slocum 1984). For example, Miner (1984) analyzed 32 established organizational science theories and concluded that with the exception of theories of motivation there is no relationship between usefulness and validity. Is the field of organization studies irrelevant? Organizations have become the dominant institution on the social landscape. Yet the body of knowledge published in academic journals has practically no audience in business or government. Unlike a field such as economics, research on organizations has not typically focused on problems relevant to business and government organizations, and the real world of organizations has not drawn on the work undertaken by organizational scientists. From colleagues within our field and in allied disciplines, we hear complaints that manuscripts espousing radical ideas, or topics outside the mainstream, are difficult to publish. Reviewers for established journals seem to value papers whose theses are anchored in established theories or that use "legitimate" methods, thus implicitly creating a publication barrier for research that falls outside mainstream topics or methods. Moreover, we observe that scholars with interests in organizations span many disciplines and fields of inquiry such as anthropology, economics, history, information science, communication theory, artificial intelligence, systems theory, psychology, sociology, political science, policy sciences, as well as organization behavior, strategic management and organization theory. We sense that a new discipline of organization science is evolving and we envision that a new journal can become a forum for a discipline defined more broadly. The purpose of this essay is to discuss these issues and the need for reorienting research away from incremental, footnote-on-footnote research as the norm for the field. Although current research approches have made solid contributions, they do not

EUGENE FAMA and Michael Jensen's treatment of the "Separation of Ownership and Control" is both insightful and informative. It deepens our understanding of corporate control, and the analysis of residual claimants usefully extends the economics of internal organization to include partnerships, mutuals, nonprofits, and the like. The basic argument is this: specialized governance structures arise in response to the efficiency needs of each type of organization. This is an important argument and one with which I broadly concur. They couple this, however, with a strong suggestion that these structures have reached a high degree of refinement-on which account there is not now, if indeed there ever has been, an organization control problem with which scholars and others are legitimately concerned. On this point I have grave doubts. My discussion of the paper addresses three issues: What is the relation, if any, of the hierarchical organization of the firm to economic performance? What relation, if any, does residual claimant status have to the composition and character of the board of directors? And is there now or has there ever been a corporate control problem? I deal with each of these issues in order.

ABSENT fiat, the form of organization that survives in an activity is the one that delivers the product demanded by customers at the lowest price while covering costs.1 Our goal is to explain the survival of organizations characterized by separation of "ownership" and "control"-a problem that has bothered students of corporations from Adam Smith to Berle and Means and Jensen and Meckling.2 In more precise language, we are concerned with the survival of organizations in which important decision agents do not bear a substantial share of the wealth effects of their decisions. We argue that the separation of decision and risk-bearing functions observed in large corporations is common to other organizations such as large professional partnerships, financial mutuals, and nonprofits. We contend that separation of decision and risk-bearing functions survives in these organizations in part because of the benefits of specialization of

What happens to the wealth of shareholders of firms producing defective products? Our answer-for producers of drugs and autos that were recalled from the market-is that the shareholders bear large losses. They are substantially greater than the costs directly emanating from the recall-for example, costs of destroying or repairing defective products. In fact, they are plausibly larger than all the costs attributable specifically to the recalled product; the losses spill over to the firm's "goodwill." They also spill over to competitors. This negative externality may even be larger in the aggregate than the losses to the producer of the recalled product.

Examinant les approches cognitive et non-cognitive de la confiance dans le domaine de la theorie politique contemporaine, l'A. souligne la pertinence de la seconde pour le gouvernement, ainsi que l'importance d'un sens de la securite concernant la bienveillance, le caractere consciencieux et la reciprocite des acteurs politiques dans la vie publique moderne

Social and economic activities, like religion, entertainment, education, research, and the production of other goods and services, are carried on by different types of organizations, for example, corporations, proprietorships, partnerships, mutuals and nonprofits. There is competition among organizational forms for survival. The form of organization that survives in an activity is the one that delivers the product demanded by customers at the lowest price while covering costs. The characteristics of residual claims are important both in distinguishing organizations from one another and in explaining the survival of organizational forms in specific activities. This paper develops a set of propositions that explaim the special features of the residual claims of different organizational forms as efficient approaches to controlling agency problems. © M. C. Jensen and E. F. Fama, 1983 Michael C. Jensen, Foundations of Organizational Strategy Chapter 6, Harvard University Press, 1998. Journal of Law & Economics, Vol XXVI (June 1983) This document is available on the Social Science Research Network (SSRN) Electronic Library at: http://papers.ssrn.com/sol3/paper.taf?ABSTRACT_ID=94032 AGENCY PROBLEMS AND RESIDUAL CLAIMS

The Effect of Big Five Personality Traits on Leader Member Exchange and Organization Citizenship Behavior in Khyber Pakhtunkhwa Universities

: If organization theory finds it useful to draw upon some of the ideas that have emerged in cognitive psychology, it will be advantageous to borrow also the terminology used in discussing these ideas. Without working toward a higher level of consistency in terminology than prevails in organization theory today, it will be difficult or impossible to cumulate and assemble into a coherent structure the knowledge we are gaining from individual case studies and experiments. We will be continually reinventing wheels. That is a luxury we cannot afford. The happy band of researchers on organization theory is sufficiently small to be kept fully occupied discovering and verifying the theory just once. (Author) (kr)

Economists have recently grown interested in doing research on research or R & D, as it is called in industrial circles. Several studies have tested Schumpeter's hoary hypothesis that large firms are responsible for most industrial inventive activity.1 Few of these studies, however, suggest why this hypothesis is apparently valid for some industries and not for others. And statistical studies going beyond this question, to try to relate R & D expenditures to firm profit expectations and the availability of funds as in other investment decisions, are rare (Mansfield, 1964; Mueller, 1967). This paper reports the results of an empirical investigation into the determinants of research expenditures in three industries-drugs, chemicals, and petroleum refining. These industries have three advantages for such a study: (1) they are among the leaders in total R & D expenditures; (2) most activity is concentrated in an appreciable number of large or moderately large firms; and (3) government support of research work is relatively small, so that decisions are more closely analogous to ordinary

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Agency Problems, Auditing, and the Theory of the Firm: Some EvidenceAuthor(s): Ross L. Watts and Jerold L. ZimmermanSource: Journal of Law and Economics, Vol. 26, No. 3, (Oct., 1983), pp. 613-633Published by: The University of Chicago PressStable URL: http://www.jstor.org/stable/725039Accessed: 29/06/2008 23:14

Since the proxy fights of the 1950s, commentators have debated the welfare implications of corporate takeovers. Although observers such as Manne (1965), Jensen and Meckling (1976), Fama (1980), and Jensen and Ruback (1983) argue that the market for corporate control promotes efficiency and enhances wealth, some critics, such as managers of firms subject to hostile takeover attempts, contend that takeovers destroy firm value. The critics frequently assert that takeover pressure forces managers to sacrifice profitable, but slowyielding, long-term investments in favor of less productive short-term investments that offer immediate returns. While the evidence supporting takeover-induced shortsightedness is largely anecdotal, a recent paper by Stein (1988) develops a formal

This study aimed to establish the degree of correlation of workplace spirituality and work engagement among the faculty of the Senior High School (SHS) of San Beda University–Manila. The correlational design was utilized to ascertain if there is a relationship existing between workplace spirituality (independent variable) and work engagement (dependent variable). The workplace components presented in the study are meaningful work, a sense of community, and alignment with organizational values. Work engagement was studied based on vigor, dedication, and absorption. Data were obtained through questionnaires that were sent to target respondents. The findings of the study established that there is a positive correlation between workplace spirituality and work engagement. The paper concluded with several implications and recommendations that will strengthen the workplace spirituality of faculty members that will benefit both the employee and the organization. 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