Environmental Jolts Research Articles

The effect of executive personality on strategic assessment of an environmental jolt

Upper Echelons Theory is the subject of active and ongoing research. Yet the validity of one of its foundational relationships, that executive characteristics affect their interpretations, has been implicitly assumed rather than empirically tested. Such lack is no doubt due to the difficulty in assessing the internal thought processes of top managers. In this paper, we start to open this black box, taking advantage of computerized textual analysis to identify CEO personalities and relate them to differing ways these executives may interpret their environment. We test how the Big 5 personality traits relate to the level of urgency and certainty CEOs resulting from their assessment of an environmental jolt, namely the financial crisis of 2008. We find mostly strong support for our ten predicted relationships, thus contributing to research into upper echelons theory, strategic issue diagnosis, environmental jolts and “grand challenges.”

Who would have thought: A forward-looking approach on sensemaking theory

In this paper, we add to our understanding of forward-looking strategy and explore how an organization makes sense of what to do when everything that was known no longer makes sense. We contribute to theory of future-oriented sensemaking as it relates to an organization’s reactions to an environmental jolt. We propose three unique potential reactions to environmental – stagnant, survivalist entrepreneurship, and transformational innovation, and how each influence the organization’s performance. Future research is discussed.

The Challenge of Developing Global Leaders While Adapting to Global Environmental Jolts

The Challenge of Developing Global Leaders While Adapting to Global Environmental Jolts

The (COVID-19) pandemic and the new world (dis)order

The COVID-19 pandemic produced a significant environmental jolt that has altered the trajectories of economies and institutions and the strategies of MNEs. We examine the pandemic effects on countries’ political and regulatory institutions, the interplay between their formal and informal institutions and the resulting environmental uncertainty. These changes are transforming the global landscape, MNEs’ raison d’être and their international strategies. MNEs are having to change or develop new country- and firm-specific advantages, refashion their FDI, focus supply chain networks, and emphasize regional strategies and localization. Although these strategies may help them to bound uncertainty, they produce other forms of risk. A new economic order is likely to arise along with transformed MNEs.

Did the environmental jolt matter? Corporate entrepreneurship and firm financial performance in Egypt

PurposeEvidence suggests that corporate entrepreneurship (CE), namely, innovativeness, risk-taking and corporate venturing, enhances a firm’s performance. However, the study of CE in developing markets – particularly in Egypt – is still new and undeveloped. The literature stresses the importance of incorporating environmental factors into the study of CE. Therefore, the purpose of this study is to examine the relationship between CE, environmental jolts (unexpected abrupt environmental events such as the Arab Spring) and the firm’s financial performance. Based on the periods before and after the series of anti-government protests known as the Arab Spring, this paper argues that after an environmental jolt, CE will negatively affect financial performance.Design/methodology/approachThis study analyzes and correlates CE, environmental jolts and firm performance in Egypt for a period over 10 years (from 2007 through 2016) using a sample of 94 manufacturing firms listed on the Egyptian Stock Exchange. Data were manually collected through archival/secondary data using financial and accounting information from the annual reports released by the firms. These reports were downloaded from the firms’ webpages and the Egyptian Exchange website.FindingsThe main results of this paper indicate that environmental factors play a role in the effect of CE on firm performance. Using the 2011 Arab Spring as a quasi-natural experiment, this paper finds that CE’s effect on firm performance is higher pre-jolt and lower post-jolt.Practical implicationsThis study provides useful implications for managers and practitioners. Firms need to find new ways of allocating their resources to help provide innovative products and to have a competitive advantage. Although innovation, risk-taking and corporate venturing may have a delayed impact on a firm’s financial performance, managers should evaluate the implications and the success of CE activities in the long-term, not from a short-term perspective.Originality/valueBuilding upon the existing literature, this is the first paper to investigate the effect of CE on a firm’s financial performance in Egypt during the Arab Spring. The manufacturing firms listed on the Egyptian Exchange were analyzed in a quasi-natural experiment, taking into account the moderating role of an environmental jolt, namely, the Arab Spring.

Dynamic capabilities and high-tech entrepreneurial ventures’ performance in the aftermath of an environmental jolt

This paper contributes to studies on dynamic capabilities (DCs) by showing that a neglected environmental contingency – i.e. the occurrence of a jolt – shapes the DCs–performance relationship. We focus on high-tech entrepreneurial ventures because these are the firms that jolts affect most; in so doing, we also advance the understanding of DCs in the entrepreneurship field. We argue that, in the aftermath of an environmental jolt, the high-tech entrepreneurial ventures that use internationalization and new product development capabilities to modify their resource configuration and regain environmental fit enjoy better performance. Econometric estimates on a sample of 340 Italian high-tech entrepreneurial ventures confronting the consequences of the global economic crisis that began in 2008 confirm that separately using these two DCs has a positive performance effect. This effect is stronger for relatively smaller ventures. Interestingly, despite synergies should arise from the combined use of the two DCs, we do not detect any superadditive effects.

Past Performance, Organizational Aspiration, and Organizational Performance: The Moderating Effect of Environmental Jolts

Previous research has implied that past performance and organizational aspiration may have an important effect on the sustainable growth of organizational performance. Under the conditions of environmental jolts, their relationships are more complicated to discern. However, few studies have undertaken this investigation. Using data from 183 U.S. firms, this study proposes and tests a theoretical model of the relationships between past performance, organizational aspiration, and organizational performance at different environmental jolt levels. Through hierarchical regression analysis, the empirical findings suggest that low levels of environmental jolt weaken the positive relationship between organizational aspiration and organizational performance, while high levels of environmental jolt magnify the positive influence of past performance on organizational performance. Most importantly, the empirical findings reveal that at low levels of environmental jolt, past performance has no effect on organizational performance, while organizational aspiration has no effect on organizational performance when the level of environmental jolt is high. These interesting findings provide some implications for managers and enrich the theory of sustainable development.

Legitimacy and Environmental Jolts: Reflections from Bottled Water

Legitimacy and Environmental Jolts: Reflections from Bottled Water

Starting Small: How Icewine Diffused in the Mature Canadian Wine Field

AbstractHow do small players' product innovations initially diffuse within a mature organizational field? This paper studies endogenous and exogenous factors that facilitate the spread of a product innovation—icewine—introduced by small players within the Canadian wine field. Using data from 1985 to 2000, I find support for my hypotheses that environmental jolts, theorization of small players' innovations by small players within the media, and innovation recognition by authorities in other more prestigious fields increased the extent to which icewine has been diffused within the field. Specifically, my study sheds light on how small players can initiate change within mature fields with the support of other institutional players.

Effectuations, social bricolage and causation in the response to a natural disaster

This research uses the experience of residents and a local neighborhood association in Brazil before, during, and after a major natural disaster to examine entrepreneurial action in response to a major environmental jolt. When the community of Corrego d’Antas was hit by deadly mudslides in January of 2011, residents responded over time with combinations of different varieties of effectuation, social bricolage, and gradually more causation, supporting grassroots recovery efforts. We deepen inquiry into the intersection between entrepreneurship and disaster recovery using a temporal approach, involving alternate templates and more inductive analyses. Our results include new concepts, such as diseffectuation and extended effectuation, and a deeper understanding of the relation between effectuation and bricolage that may prove useful for the study of entrepreneurial action during crises and recuperation. We close with modest propositions connecting disaster recovery and entrepreneurship.

Opportunity or Threat? Organizational Aspiration Determination in an Environmental Jolt

Organizational aspiration determination has long been discussed in conventional behavioral theory and has been widely used in subsequent empirical research. However, prior work is largely limited to the context of stable or incrementally changing environments and overlooks the role of managerial cognition in the process of determining aspirations. Extending the behavioral work of aspirations, we address two questions: first, whether the three reference points proposed by conventional behavioral theory are salient aspiration antecedents in the context of an environmental jolt; second, how organization’s opportunity and threat orientation during an environmental jolt shape its attention allocation among different reference points when determining aspirations. Using a sample of U.S. public firms during the global financial crisis in 2007-2009, we find that organizations use past aspiration and past performance when determining aspirations during a jolt. Whilst more opportunity-oriented organizations focus more attention on past aspiration and less attention on past performance, more threat-oriented organizations focus less attention on past aspiration. Our work has important implications to decision makers responsible for setting organizational goals.

Gun Politics & Policymaking under Uncertainty:The Jolt of Marauding Terrorist Firearm Attacks

Recent marauding terrorist firearm attacks have acted as an environmental jolt, mobilizing policymakers worldwide to consider changes in policing strategies that are likely to shape public safety, governance, society, businesses, communities, and other organizations, impacting the lives of individuals in society. This article uses a mixed-methods study to highlight the key philosophical, ethical and fiscal questions embedded within this policy debate, in particular, whether to arm all London Metropolitan Police Service officers with guns. Through this exploration, the paper takes up the 2018 Academy of Management theme to contribute to a safer, more inclusive society by joining the dialogue in organization studies about decision-making during times of uncertainty and makes theoretical extensions by linking environmental jolt and bounded rationality theory with current political debates about an ‘Americanisation’ of UK policies.

Uncovering the Relationship Between Organizational Crisis and Innovation Speed

This article develops a conceptual model for studying the dual effect of the organizational crisis on innovation speed. Based on the original source of organizational crisis (exogenous vs. endogenous) and the type of perceived threat (realistic vs. latent), we categorize four types of organizational crisis, including environmental jolts related crisis, internal jolts related crisis, industrial revolution related crisis, and proactively constructed crisis. In developing the conceptual model, we integrate the predictions of the behavioral theory of the firm and the threat-rigidity hypothesis with regard to the allocation of organizational attention between survival and aspiration goals when confronted with each type of crisis. We also examine the moderating effect of high vs. low discretion organizational slack on these relationships. Our model extends current theory of organizational crisis and innovation speed.

Exploring the Strategic Inclinations of Japanese Environmental NPOs in Post-Fukushima Japan

Following Sine and David’s research on the potential of environmental jolts shifting the status quo in U.S. energy policy, we focus on the potential for environmental non-profit organizations in Japan to shift the status quo through institutional entrepreneurial efforts following the environmental jolt from the Fukushima nuclear power catastrophe. We evaluate the institutionalization of energy policy in Japan both pre- and post-Fukushima as the context for examining the potential for change in Japan’s energy policy. We utilize mixed qualitative and quantitative research methods to evaluate the attitudes and strategic inclinations of privately funded Japanese environmental non-profit organizations. Following Dreiling and Wolf’s model of material–organizational dependencies versus ideological motivations of non-profit organizations, we develop a typology to identify which, if any, segments of environmental Japanese non-profit organizations might pursue institutional entrepreneurial (Levy and Scully) opportunities in support of renewable energy policy.

Strategic adaptation to environmental jolts: an analysis of corporate resilience in the property development sector in Dubai

Strategic adaptation to environmental jolts: an analysis of corporate resilience in the property development sector in Dubai

Strategic adaptation to environmental jolts: an analysis of corporate resilience in the property development sector in Dubai

This paper contributes to the literature on the contingent nature of strategic adaptation to environmental jolts in the context of the real estate industry in UAE. We selected the representative case of Emaar Properties to estimate how the evolving dynamics in the UAE real estate sector over the 2000-2015 period affect the exercise of managerial discretion and the development of corporate resilience. The emphasis was placed on two external discontinuities, namely the 2008-2009 financial crisis and the 2013 announcement of Dubai as the host city of World Expo 2020. By altering its portfolio of investments across countries and industry segments, the company mitigated the impact of the global recession and benefited from the market improvement triggered by the World Expo 2020 news. The strategic choices of the top management reflect how, in times of environmental turbulence, Emaar was geared toward achieving tighter external alignment to balance its risks and opportunities.

Creating opportunities in the face of an environmental jolt: exploring turnaround strategizing practices within large Irish construction contractors

Firms that face organizational decline choreographed from an environmental jolt must seek new ways of creating opportunities in order to successfully turnaround. As such, the identification of pertinent turnaround strategies becomes increasingly important for senior management. Within the strategy-as-practice scholarly, there have been recent calls to move beyond empirical “isolationism” and to connect with other larger social phenomena; while across the turnaround literature there have been calls to explore the process and micro-structure of turnaround strategies in cyclical environments. To address this research gap, the purpose of the study is to adopt a tall ontology by blending the strategy-as-practice lens with the organizational decline and turnaround lens. By drawing on five exploratory case studies of large Irish construction contractors, the central objective is thus to explore firms’ turnaround strategizing practices during an environmental jolt. In order to advance our tall ontology, we developed a turnaround strategizing process model (and propositions) that integrates our findings, and which offers the fundamental building blocks of a new blended theory. We find that successful turnaround attempts entail the simultaneous interaction of non-aggressive cost retrenchment actions and non-extensive internationalization. The case studies further suggest that during a prolonged environmental jolt, cost retrenchment is more often a long-term strategy. Lastly, the findings provide valuable support for practitioners in developing a successful turnaround response, and in aiding the selection and timing of operational and strategic actions.

Founder human capital and new technology venture R&D search intensity: the moderating role of an environmental jolt

We argue that founder human capital—formal education, same-industry work experience, and prior entrepreneurial experience—will be positively related to the research and development (R&D) search intensity of new technology ventures. In addition, these positive relationships will be strengthened when new technology ventures face an environmental jolt, such as the Great Recession. An empirical analysis of longitudinal data on new technology ventures in the manufacturing industry from the Kauffman Firm Survey (KFS) broadly supports our hypotheses. The results show that all dimensions of founder human capital increase new technology ventures’ R&D search intensity, and the positive effect of same-industry work experience becomes stronger during the Great Recession. However, in contrast to our expectation, the positive effect of prior entrepreneurial experience is weaker during the Great Recession, not stronger. Furthermore, we do not find support for our hypothesis that the positive relationship between founders’ formal education and new technology ventures’ R&D search intensity is stronger during the Great Recession. These seemly contradictory results suggest that although the different dimensions of founder human capital are all positively related to new technology ventures’ R&D search intensity, they exert divergent impacts on it when confronting an environmental jolt. As such, our study extends the situational and institutional determinants of R&D search intensity by focusing on founders’ human capital and provides deeper insights by considering environmental conditions. By shifting the focus from established firms to new ventures, our study also enriches the understanding of new technology ventures’ innovative activities.

Environmental Jolts and Organizational Resilience

In this study, we investigate how proximity can be a source of organizational resilience. Building on the research on the steeling effect, which shows that exposure to threats can increase the capacity for recovery, we develop an understanding of why US firms responded more positively to the 9/11 attacks than the non-US firms. Using the data on global alliance activity in the oil industry prior and subsequent to the 9/11 terrorist attacks, we find that while there was a general decrease in alliance activity throughout the world, the decrease was significantly smaller for US firms compared to non-U.S. firms. In the presence of slack, US firms paid greater attention to competence development and increased the number of alliances, and non-US firms prioritized stability that limited the number of alliances. This difference in perspectives led to a geographical confinement of alliance activity leading to US firms partnering more frequently with firms from the US and non-US firms preferring non-US partners. Our study shows that proximity to an environmental jolt can be a valuable source of organizational resilience. Beyond recovery, it can affect the nature of relationships such that resilient firms seek others that are also resilient. This explains why resilience does not diffuse easily but remains a localized effect.

Multiple recipes for success – A configurational examination of business portfolio restructurings

This explorative empirical study investigates which sets of portfolio restructuring design characteristics, contingent on individual firm and industry characteristics, lead to successful business portfolio transformations. We draw on insights from the strategic change, strategic fit, and organizational turnaround literature and develop a contingency model for transformation success. To allow for complex configurations, we employ a set-theoretic approach based on fuzzy set qualitative comparative analysis (fsQCA). Our findings suggest that there is no single best strategy for restructuring a portfolio. Rather, there are multiple pathways to success in portfolio transformation, depending on a firm's competitive posture and industry environment. In particular, our results highlight the pivotal influence of prior firm performance and environmental jolts on the design of successful business portfolio restructuring (BPR) strategies.