External Ties Research Articles

Does the board reward the top manager's social capital? Evidence from Taiwan

Although there has been a considerable amount of research investigating the determinants of manager compensation, relatively few studies have considered the question of whether the board values a top manager's social capital. Using a large sample of pooled data of the firms listed on the Taiwan Stock Exchange (TSE) in 2001 and 2002, this study examines the association between a top manager's social capital, defined as external directorship ties held by the top manager, and his or her compensation after controlling for other potential factors that may affect the level of manager compensation. The empirical results show that the top manager's social capital is an important determinant of the top manager's pay level. Moreover, this study also finds that electronics firms and firms in traditional industries value different attributes of the top manager's social capital.

When is more better? The impact of business scale and scope on long‐term business survival, while controlling for profitability

AbstractEmpirical research shows that larger businesses tend to survive longer than smaller companies. Little research, though, shows whether size confers survival advantages in addition to the survival benefits of baseline profitability. Moreover, no prior research attempts to disentangle the benefits of organizational capital that accrue from greater scale from those that arise from greater business scope. Thus, we lack a conceptual understanding of the underlying benefits of business size for long‐term survival. We expect business scale and business scope to reflect organizational capital that offers survival benefits, where we conceptualize scale in terms of annual sales revenue and scope in terms of product line breadth and sub‐sector participation within a related business context. We first argue that greater business scale and business scope each enhance long‐term survival, independent of baseline profitability, owing to greater availability of financial resources, organizational routines, and external ties. We then argue that the benefits of scale are greatest for multi‐product businesses, stemming from positive interactive effects of breadth and depth. We find support for these hypotheses with data from 618 firms that operated in the U.S. medical sector between 1978 and 1995. Copyright © 2007 John Wiley & Sons, Ltd.

Top Executives' Directorate Networks and Business Value Creation: Vertical vs. Horizontal Ties

Technology and globalization are making networks of relationships (or so-called social capital in the intellectual capital literature) a decisive business asset. Historically, the prevailing assumption has been that managerial value is embodied in the human capital (including experience, judgment, knowledge, skills, and expertise) that managers bring to the firm. Yet recent studies suggest this assumption is incomplete, as executives' extra-organizational networks also affect organizational strategy and performance through fostering the co-operation and risk-sharing among firms that promote innovation and flexible responses to change in a global economy. While there is growing evidence supporting the importance of social capital, objective evidence on the linkages between external networks and business value creation that uses publicly available data in analysis is still lacking. In light of this, the object of this research is to explore, using objective secondary data, whether top executives' external directorate networks can lead to the creation of business value and if so, what kinds (vertical vs. horizontal ties) are effective? Using a sample of information electronics firms in Taiwan, this study relates top executives' directorate networks to two aspects of business value creation: increased customer benefits and reduced organizational costs. We find that firms with better-horizontally-networked executives create more business value of increased customer benefits, while firms with better-vertically-networked top executives create more business value of reduced organizational costs. For other countries intending to develop their high-tech industries, our results provide evidence on what kind of directorate network (vertical or horizontal) is most associated with particular business values, which provides insights into Taiwan's practices in network organizing and management that can serve as a referable model to build firms' networks. This study adds credence to the notion that top executives' external ties can be seen as value drivers that provide competitive advantage to information electronics firms. For accountants, it is suggested that assessing the quality of an executive's external directorate networks and the potential contribution of this valuable resource to the creation of business value is possible. For instance, the network centrality measures used in this study to assess the quality of an executive's social capital could be used to broaden balanced scorecard type business performance measurement systems. Furthermore, qualitative measures of top executive relationship networks can be used by external analysts and investors to learn to what extent firms are capable of leveraging relationships with other firms, and thereby better predict future firm performance and value.

Repairs to River Trent navigation locks 1981–2002

A series of repairs to three large concrete locks on the River Trent navigation was carried out between 1981 and 2002, involving works to counter the effects of degrading Mercia Mudstone foundation material and unsatisfactory stability of the structures. The current paper describes the history of the locks and the problems which developed, the assessments and investigation undertaken to determine the failure modes and the development of appropriate repair strategies. Significant factors included closure of the navigation, dewatering arrangements and temporary load cases, the preservation of existing stability and the effects of difficult site access. Construction activities are also briefly described. The projects originated from emergency works following a near failure at Stoke Lock (1981–1983), reactive works following monitoring at Newark Nether Lock (1993/1994) and preventative works identified through an asset inspection process at Cromwell Lock (2001/2002). The 1981–1983 works involved external sheet pile anchors and ties and a reinforced concrete trough section built in the lock chamber together with major temporary works. At Newark Nether, mini-piling was installed through the lock walls to improve stability prior to replacement of the lock floor, avoiding many of the temporary works needed at Stoke Lock. The Cromwell Lock works were similar to Nether Lock but utilised vertical mini-piling and an underfloor drainage system in a refinement of earlier designs. Use was made of British Waterways' own temporary works equipment where available.

The multiple pathways of high performing groups: the interaction of social networks and group processes

AbstractThis study examines how both strong and weak relationship groups (groups with numerous, intense internal friendship ties and few, less intense internal friendship ties respectively) achieve high performance when utilizing strategies that capitalize on the strengths and minimizing the weaknesses associated with their internal social structure. We examine the interactions of groups' internal friendship networks with their external network structures (external ties) and internal intragroup conflict (constructive controversy). The results of a study using survey, archival and interview data on 35 groups of MBA students indicated that internal friendship networks interacted with constructive controversy and external networks to determine when groups would achieve superior performance. High performing strong relationship groups engaged in greater constructive controversy than low performing strong relationship groups, while constructive controversy appeared to have minimal effect on the performance of weak relationship groups. High performing weak relationship groups had fewer external bridging ties to other groups when compared to low performing weak relationship groups, while external bridging ties appeared to have minimal effect on the performance of strong relationship groups. Copyright © 2006 John Wiley & Sons, Ltd.

Social Yet Creative: The Role Of Social Relationships In Facilitating Individual Creativity

Integrating creativity and social network theories, I explore the direct and interactive effects of relationship strength, network position, and external ties on individual creative contributions. ...

Founders' Characteristics, Venture Capital Syndication and Governance in Entrepreneurial IPOs

Using a unique sample of 444 entrepreneurial IPOs in the UK and France this paper examines links between founders' characteristics, venture capital (VC) syndication and the development of effective boards in entrepreneurial firms. It argues that VC-backed IPOs suffer from two sets of agency problems which are related to principal-agent and principal-principal relationships between the founders and members of the VC syndicate. The empirical evidence shows that there is a curvilinear relationship between the intensity of founders' external ties and VC syndication. Founders' retained share ownership is negatively associated with VC syndication. We also find that in syndicated IPOs there is a higher involvement of passive private equity firms and “business angels” investing alongside VC firms, both in terms of their number and equity presence. VC-syndicated IPOs have more independent boards than IPOs with no VC involvement. Board independence is negatively associated with founders' retained equity. These results are consistent with the assumption that board independence is used to mitigate agency costs associated with VC involvement in IPO firms. Our findings also identify significant differences in governance characteristics between the UK and France. While French IPOs have less independent boards, they involve more VC backing in general and syndicated VC funding in particular, than UK IPOs.

Local clusters in global value chains: exploring dynamic linkages between Germany and Pakistan

Recent research has underlined the importance of external linkages for industrial clusters. Suppliers and buyers within a global value chain offer important external ties for cluster-based producers not only in terms of the distribution of physical goods, but also for knowledge flows and innovation. Globalization has intensified such value chain links, connecting geographically dispersed producers to global markets. Yet, there is limited research on how local clusters enter global chains or on ties between clusters in the developed and developing world. This study addresses this gap. It uses the case of the global surgical instrument industry to analyse connections and differences between the industry's leading production clusters in Germany and Pakistan. Global standards, low-cost competition, and advances in medical technology raise challenges for both clusters. The paper explores the responses to these challenges. It distinguishes between knowledge and production links to illustrate differentiation in each cluster, diverging trajectories and continuing ties.

Foreign direct investment in industrial research and development: A study of German MNCs

This paper reports on the international research and development (R&D) investments of German multinational corporations (MNCs). Based on a detailed empirical survey of laboratory sites established by 49 German MNCs, we examine (i) the level and pace of R&D internationalization, (ii) the motivations and mandates of overseas R&D laboratories, as well as (iii) the strength of the laboratories’ internal and external ties. Participating firms account for about 46% of all German enterprises with international R&D activities and approximately 66% of the nation's privately funded R&D expenditures in 1999. The findings indicate that the timing and organization of German owned overseas R&D investments more closely resemble Japanese or French than US or Swedish firms. Furthermore, in line with prior studies, German MNCs increasingly invest in international R&D for resource as opposed to market-seeking motives. The paper also finds significant differences with regard to the laboratory's mission and its geographical location on one hand, and its internal and external embeddedness, on the other.

Southeast Asia in the Sino‑ U.S. Strategic Balance

Introduction Throughout much of the post-Gold War period, the dynamics of the Sino-U.S. relationship have been a critical factor in Southeast Asian states' foreign policies. Southeast Asia has traditionally been a site of great power competition for regional dominance, due to its strategic location as a bridge between continental and maritime Asia. To manage this competition and to enhance their own subregional autonomy, the member states of the Association of Southeast Asian Nations (ASEAN) engaged in a number of regional institution building initiatives during the early 1990s. This institutionalist agenda led to speculation that ASEAN could become the hub of a nascent regional security community. (1) Following the 1997 Asian financial crisis, however, the prospect that ASEAN could act as an autonomous entity to mitigate Sino-U.S. geopolitical pressures seemed increasingly tenuous. Weakened by political and economic instability, intra-regional disputes and a simultaneous expansion of its membership, ASEAN has come to question its own identity. This has only further undermined ASEAN-led regional security initiatives such as the ASEAN Regional Forum (ARF). More frequently, Southeast Asian states have favoured bilateralism and have looked to external powers to realize their security interests. (2) These changing subregional dynamics have, in turn, prompted renewed efforts by China and the United States to cultivate influence within Southeast Asia. China's attempts to gain support for its new security concept and US efforts to secure additional access and infrastructure agreements along the East Asian littoral are illustrative. To some extent, Sino-U.S. geopolitical competition has been modified by strategic cooperation resulting from the war on terror. Yet China still remains wary of U.S. attempts to engage Southeast Asia in countering global terrorism. (3) These trends have, in turn, compelled analysts to reconceptualize the Southeast Asian security landscape in a balance of power context. Principal among these exponents is Robert Ross. In his article Geography of Peace, Ross argues that as the two most geopolitically dominant regional actors, China and the United States preside over their own separate but complementary spheres of regional influence. He asserts that continental Southeast Asian states have aligned with China and maritime Southeast Asian states have aligned with the United States. (4) The geographic position of China and the United States, and the evolution of their interests and military capabilities accordingly, make it unlikely that either country would seek to project power into the other's respective sphere. Ross therefore postulates that the emerging bipolar structure is likely to be a stable and enduring one. This portrayal of Sino-U.S. relations has been acknowledged by recent literature on Asia-Pacific security. (5) However, Ross' depiction of how Southeast Asian states respond to this relationship has been subject much less to theoretical analysis. One contending school that has emerged argues that ASEAN states have adjusted to great power geopolitical competition by pursuing a strategy rather than by aligning with either China or the United States. Gaye Christofferson specifically seeks to refute Ross' argument by asserting that the Southeast Asian states maintain a position of equidistance between the great powers. She attributes this to the ASEAN states' general distrust of great powers and their desire to maintain the delicate Sino-U.S. regional balance. (6) In making this case, however, Christofferson fails to account for exactly how the Southeast Asian states overcome Sino-U.S. geopolitical pressures and under what conditions hedging prevails. These weaknesses are, to some extent, addressed by Avery Goldstein and Amitav Acharya. Both analysts place greater emphasis on the smaller Southeast Asian states maintaining closer external ties with one power while engaging the opposing power. …

Effects of Social Capital and Power on Surviving Transformational Change: The Case of Initial Public Offerings

We examined how social capital and the power of venture capitalists and founderCEOs affect IPO firm survival. Using data from 218 U.S. initial public offerings conducted in 1992, we found that average management team tenure and an IPO deal’s network embeddedness decreased the likelihood of failure during a firm’s first five years as a public entity. Founder-CEO presence at the time of an IPO interacted with CEO ownership to decrease the likelihood of failure, and CEO ownership and venture capitalist ownership concentration also decreased that likelihood. Evolutionary perspectives on organizations are often accompanied by the presumption that organizations face an increased risk of failure early in their lives owing to liabilities of newness (Aldrich, 1999; Stinchcombe, 1965). As organizational goals and patterns of activity become routinized over time, increased reliability in performance and accountability for actions taken enhance a firm’s survival chances (Hannan & Freeman, 1984). This process, however, also generates strong inertial pressures that not only discourage organizational change, but also, because of the potential for disruption to existing internal and external routines, make change hazardous. Research findings suggest that even in older, better-established firms, significant transformational events during their life cycles can effectively “reset the clock” and reintroduce risks associated with the liability of newness as firms struggle to adapt strategies, internal operational and administrative processes, and/or external ties and relationships (Amburgey, Kelly, & Barnett, 1993). Thus, transformational change in organizational operations decreases efficiency and increases failure rates, at least in the short term, as resources and attention are diverted from normal, routinized operating functions to processes involving adaptation and reorientation (Haveman, 1992).

EFFECTS OF SOCIAL CAPITAL AND POWER ON SURVIVING TRANSFORMATIONAL CHANGE: THE CASE OF INITIAL PUBLIC OFFERINGS.

We examined how social capital and the power of venture capitalists and founderCEOs affect IPO firm survival. Using data from 218 U.S. initial public offerings conducted in 1992, we found that average management team tenure and an IPO deal’s network embeddedness decreased the likelihood of failure during a firm’s first five years as a public entity. Founder-CEO presence at the time of an IPO interacted with CEO ownership to decrease the likelihood of failure, and CEO ownership and venture capitalist ownership concentration also decreased that likelihood. Evolutionary perspectives on organizations are often accompanied by the presumption that organizations face an increased risk of failure early in their lives owing to liabilities of newness (Aldrich, 1999; Stinchcombe, 1965). As organizational goals and patterns of activity become routinized over time, increased reliability in performance and accountability for actions taken enhance a firm’s survival chances (Hannan & Freeman, 1984). This process, however, also generates strong inertial pressures that not only discourage organizational change, but also, because of the potential for disruption to existing internal and external routines, make change hazardous. Research findings suggest that even in older, better-established firms, significant transformational events during their life cycles can effectively “reset the clock” and reintroduce risks associated with the liability of newness as firms struggle to adapt strategies, internal operational and administrative processes, and/or external ties and relationships (Amburgey, Kelly, & Barnett, 1993). Thus, transformational change in organizational operations decreases efficiency and increases failure rates, at least in the short term, as resources and attention are diverted from normal, routinized operating functions to processes involving adaptation and reorientation (Haveman, 1992).

From Promiscuity to Living Together to Making the Decision to Break Up or Make a Lasting Commitment

Although public administration was “born” and “reared” as a child of politics and constitutional democracy, the coherence of its central purposes later eroded into disparate fragments in a set of “promiscuous” relationships. But now the field has become accustomed to a casual mode in which a loose collection of sub-fields and competing worldviews “live together.” This invites leaving behind our intellectual origins and easy flirting with passing trends and alternative partners. Even while maintaining multiple external ties, the field should now seek to advance to an “adult” form of lasting commitment to a reaffirmed set of core values.

PRESTIGIOUS EXECUTIVES, DIRECTORS AND BACKERS OF IPOs: ENDURING ADVANTAGE OR FADING GLOSS?

Even though there is consistent evidence that the enlistment of prestigious allies, or what are known as prestigious backers, helps to push up the initial valuation of an initial public offering (IPO), at least two fundamental questions remain: What causes prestigious backers to sign on? And does their value extend at all beyond initially impressing the market? Drawing on concepts from interorganizational relations and upper-echelons theory, this article argues that, to the extent the officers and directors of an IPO themselves have prestigious external ties, the greater their ability to enlist prestigious backers, specifically prestigious venture capital firms and prestigious underwriters. Namely, prestigious backers attach meaning and value to indicators of prestige when making their decisions about whom to back and are drawn to offerings that have upper-echelons who match their own stature. We expect that an IPO that commences with prestigious upper-echelons figures will enjoy an upward spiral of benefits that will extend well beyond the valuation of the IPO itself, to affect post-IPO performance. A more skeptical view would be that prestigious upper-echelons and prestigious backers provide mere gloss for an IPO, buoying the market's initial reaction but providing little subsequent benefits.

Getting Off to a Good Start: The Effects of Upper Echelon Affiliations on Underwriter Prestige

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.

Alliance Protection

Couples in which one or both members have experienced childhood sexual abuse may be at risk for relational problems. Women with active memories of childhood sexual abuse were interviewed in this multiple method study. Analysis revealed key findings including valuing relational bonds, managing stressful conditions within the relational context, meeting self-preservation needs, and maintaining external ties. These themes were identified as strategies to protect the relationship, which unfolded as a process of alliance protection. Implications for practice include the importance of relationship therapy for women remembering childhood sexual abuse, the necessity for family professionals working with these couples to have knowledge of trauma theory, and the usefulness of the concept of alliance protection for working effectively with traumatized couples.

SOCIAL MOVEMENT THEORY AND THE EVOLUTION OF NEW ORGANIZATIONAL FORMS.

New organizational forms face formidable obstacles in that new roles have to be learned, external ties to supporters are often lacking, and they often must rely on social relations among strangers. Consequently, new organizations suffer from a liability of newness and often fail. But, some new organizational forms survive and grow. In part, this occurs because some new organizational populations have superior technology or simply contain organizations that fit the existing environmental contingencies. Often, however, these organizations overcome substantial obstacles through collective strategies that bear an uncanny resemblance to tactics and strategies adopted by organizations that spearhead social movements. Like social movements, a key task for participants in emerging industries is to gain cognitive and sociopolitical legitimacy. In attempting to achieve this legitimacy, interactions between firms often take on a social movement like character. Cooperation rather than competition is the norm as founders attempt to mobilize resources through collective action such as the formation of trade associations and mutual benefit societies. In this paper, we will focus on two aspects of social movements that seem to influence the emergence of new organizational forms: (a) the structure of opportunities and constraints that promote or retard the mobilization of resources and (b) the generation of collective action frames.

Social Capital and Communities of Place1

Abstract This paper develops a framework for examining the questions: Does social capital make a difference for well being in communities of place? How might rural sociologists utilize social capital to further well being in communities? The author reviews social capital literature, contrasting rational choice and embeddedness perspectives. Opting for a marriage between embeddedness and conflict theory, he introduces entrepreneurial social infrastructure (ESI) as an alternative to social capital. ESI adds to social capital the notions of equality, inclusion, and agency. Research results are presented which support the embeddedness approach: community‐level action (the community field) is not simply an aggregation of individual or organizational actions within the community; social capital and ESI contribute jointly and independently to community action. Examining economic development as a form of collective action, the author concludes�the following: a) ESI contributes to economic development, and b) inclusiveness (internal solidarity) is more closely related to community self‐development while industrial recruitment is better predicted by strong external ties.

An Early Classic Center in the Puuc Region

AbstractA comprehensive site survey and excavation program took place in 1995 and 1996 at the Maya center of Chac II (Chac) located within the Puuc hills region of Yucatan, Mexico. This work presents a body of evidence in support of the idea that Chac was an important center beginning in the Early Classic period (a.d.300–600) that experienced significant foreign contacts. In addition, multifaceted data from surface, soil, architectural, and excavated contexts are addressing major questions pertaining to architectural and ceramic chronologies, the founding of the Puuc stoneworking tradition, site activity areas, and patterns of land use. Furthermore, dating indicates that Chac predated Sayil and that the two sites have a close geographical relationship. Also, terrace agriculture appears to have been widespread at Chac, contrasting greatly with Sayil where intensive gardening was widely practiced. In light of the new information from Chac, we argue that the traditional models of Puuc origins are inadequate. Investigations at a major Early Classic site in the heart of the Puuc region suggests that the region's rise was indigenous coupled with external ties to foreign groups reaching to central Mexico. The site of Chac is thus taking on strategic importance for understanding the origins of Puuc civilization, providing a rare opportunity to study a Maya center that was on the brink of urbanism in one of the most urban ancient Maya areas. These new data are helping to elucidate the nature of Maya urbanism in the Puuc region and establish the kinds of cultural links that existed between the northern Maya Lowlands and the rest of Mesoamerica during the Classic period.

The External Ties of Top Executives: Implications for Strategic Choice and Performance

We are grateful to Eric Abrahamson, Ron Burt, Eric Leifer, Aneil Mishra, and Bob Yavitz for their contributions on earlier drafts of this manuscript. The paper has also benefited from the constructive comments of Associate Editor Mark Mizruchi and three anonymous ASO reviewers. We examine the extent to which executives' boundary spanning relations inside and outside their industry affect organizational strategy and performance. We posit that the informational and social influences of external ties will be reflected in the degree to which the organization's strategy conforms to or deviates from the central tendencies of its industry and that the alignment of executives' external ties with the firm's strategy will be beneficial to firm performance. Using a multiyear sample of firms in the branded foods and computer industries, we find that executives' intraindustry ties are related to strategic conformity, that extraindustry ties are associated with the adoption of deviant strategies, and that alignment of executives' external ties with the informational requirements of the firm's strategy enhances organizational performance. Our results also show that a unique or differentiated strategy is not universally advantageous and that the benefits accruing from strategic conformity are especially strong in the more uncertain computer industry.'