Firm-level Outcomes Research Articles

Fuzzy Profiles

Person-centered approaches to organizational scholarship can provide critical insights into how sets of related constructs uniquely combine to predict outcomes. Within micro topics, scholars have begun to embrace the use of latent profile analysis (LPA), identifying constellations of constructs related to organizational commitment, turnover intentions, emotional labor, recovery, and well-being, to name a few. Conversely, macro scholars have utilized fuzzy set qualitative comparative analysis (fsQCA) to examine numerous phenomena, such as acquisitions and business strategies, as configurations of explanatory conditions associated with firm-level outcomes. What remains unclear, however, is the extent to which these two approaches deliver similar versus unique insights when applied to the same topic. In this paper, we offer an overview of the ways these two methods converge and diverge, and provide an empirical demonstration by applying both LPA and fsQCA to examine a multidimensional personality construct—core self-evaluations (CSE)—in relation to job satisfaction. In so doing, we offer guidance for scholars who are either choosing between these two methods, or are seeking to use the two methods in a complementary, theory-building manner.

High -performance work practices and employee attitudes: Evidence from hotel industry in Sri Lanka

In this contemporary world, most of the organizations understand the importance of managing human resources effectively and efficiently to become successful. Many Previous researches have established a significant relationship between High performance Human resource (HR) practices and firm level and individual level outcomes. Few studies have considered the important role of employee perceived HR practices and outcome of high performance HR practices and its mediating roles. To address the recent growing interest in the literature for an investigation of this nature, this study was conducted investigating the relationship between high-performance work practices and employee attitudes in the hotel industry of Sri Lanka. Questionnaire was used to collect the data. Initially discussion was conducted with 200 employees who voluntarily participated in this study from Hotel sector, finally 175 participants agreed to fill out the questionnaire. Of the selected sample 150 questionnaires was complete and usable for this study. Correlation and regression analysis was performed to test the hypothesized relationship. Results of the study showed that high -Performance work practices positively related with intention to remain with organization, further study found positive relationship between employees’ perceptions of high-performance work practices and affective commitment; furthermore, study found that affective commitment mediated the relationship between high performance work practices and intention to remain with organization. On the basis of these findings, managerial implications of the study and future research direction were highlighted.

Job-related diversity: the comprehensiveness and speed of board decision-making processes—an upper echelons approach

Strategic decision-making processes influence firm-level outcomes. Using the theory of upper echelons, this study investigates how diversity in directors’ skills, knowledge, and industry experience influence board decision-making processes that may impact overall strategic decision-making processes. Such diversity has been commonly accepted to be a ‘double-edged sword’—enhancing comprehensiveness but hindering the speed of decision-making. On the contrary, we used an existing large survey database to show that directors’ diverse educational background, functional background, and industry experience (job-related diversity) have a positive effect on comprehensiveness as well as the speed of board decision-making. In addition, our results indicate that board processes (directors’ use of their knowledge and skills) play an important role by transmitting the positive effects of diversity. The study is in a tradition of exploring how boards may influence firms’ strategic decision-making processes. Our findings provide additional arguments for adding job-related diversity to boards of directors.

Is this the end? Investigating firm and individual level outcomes post-failure

Research into entrepreneurial failure is increasing in prevalence. However, treatment of failure has tended to be at one level of analysis (firm or individual) and generally assumed a level of finality, marking the end of the firm, an opportunity, or, in some cases, entrepreneurial careers. In this paper, we interview 257 failed entrepreneurs and examine individual and firm level outcomes of entrepreneurial failure. Our results show that there are substantial levels of variance in regards to what happens to the firm and the entrepreneur post-bankruptcy. We discuss implications for future theorizing and research questions about entrepreneurial failure.

East meets west—Corporate governance in Asian emerging markets: A literature review and research agenda

This review examines how corporate governance mechanisms in the Asian emerging markets (AEMs) context affect firm-level outcomes. Literature about characteristics of the main corporate governance actors (boards and owners), their effects on firm-level outcomes, and contingency factors in AEMs offers interesting first insights. I synthetize these results and develop a research agenda that proposes how AEM corporate governance research should extend (but not ignore) agency theory, how AEM research about firm effects of corporate governance could take a stakeholder-oriented perspective, and how research could utilize the AEM institutional context to model contingency factors and extend our theoretical understanding of corporate governance.

The Economic Effects of Cyber Security Failures on Firms: Evidence from Publicly Reported Data Breaches

We estimate the association between data breaches and firm-level outcomes using newly assembled data on the universe of reported data breaches between 2005 and 2016. First, we document several new facts about the incidence of data breaches. Second, using cross-sectional variation and controlling for time-varying observable firm inputs, we find that a 10% rise in breaches is associated with approximately a 0.2% decline in firm productivity. However, we also find large heterogeneity depending on the type of breach (e.g., theft of a company laptop). Third, we characterize a major limitation with publicly reported breach data, namely a sample selection problem that creates non-classical measurement error. While our results suggest that breaches do have a negative effect on firm financial outcomes, our results also point out the inadequacy of publicly reported breach data for causal inference.

Firms’ Adjustments to Employment Protection Legislation: Evidence from South Korea

The authors examine the impact of employment protection legislation on firm-level outcomes such as employment and profitability in South Korea. The 2007 Act on the Protection of Temporary Workers restricted the use of specific types of temporary contracts to a period of two years. Exploiting the fact that the impact of the reforms was greater for establishments that intensively used the affected temporary workers, the authors apply a difference-in-differences framework. Their results show that businesses responded to the Act by reducing the use of temporary contracts protected by the reforms and partially substituting them with permanent and other unprotected temporary contracts. As a result, the reform decreased overall employment level of establishments. Furthermore, the authors find that the newly introduced regulations had a limited negative impact on firms’ profitability. Evidence suggests that establishments also improved their capital intensity and their labor productivity in response to the labor reform.

The Effect of Acquisitions on Product Innovativeness, Quality and Sales Performance

Previous work has mostly looked at how acquisitions affect firm-level outcomes. This paper investigates how acquisitions affect product-level outcomes in the context of the console video game industry. We model the effect of acquisitions on video games' innovativeness, quality, and sales performance in a simultaneous equation modeling framework. We control for endogenous partner selection by implementing a two-sided matching framework. We jointly estimate these models using Bayesian MCMC algorithms on a dataset of 5,916 video games released in the UK from 2002 to 2010. We find that video game publishers acquire developers for their product development capabilities and to secure access to their hit properties. Prior alliances and geographic proximity between firms also predict acquisitions. We further find that publishers fail to leverage developers' capabilities for ongoing innovation as product innovativeness decreased post-acquisition. Lastly, acquisitions create value through enhanced inter-firm coordination resulting in higher quality products and increased sales performance.

Customer Satisfaction, Loyalty Behaviors, and Firm-Financial Performance: What 30 Years of Research Tells Us

The authors synthesize research on the relationship between customer satisfaction (CS) and customer- and firm-level outcomes in a meta-analytic framework. Overall, the results point to positive associations between CS and customer behaviors, financial performance, and shareholder value. However, the magnitude of the relationship between CS and firm-level outcomes is smaller than that between CS and customer-level outcomes. Moderator analysis shows substantial variability in the effect sizes reported across customer-level studies, which can be partially attributed to contextual factors and measurement characteristics. The authors conclude with a discussion of the theoretical and managerial implications of these effects and propose future research directions. Although strength of the association with CS differs across customer behaviors, research has rarely examined multiple customer outcomes simultaneously. In addition, there is an opportunity to specify mechanisms that drive the differences in effect sizes across contexts. Finally, the results reveal that the still-emerging literature on the impact of CS on financial performance would benefit from a systematic investigation of moderators and the means through which CS affects firm performance.

The Path to Independence: Board Cohesion, Cognitive Conflict, and Information Sharing

ABSTRACTCorporate boards in America are dominated currently by outside directors because of the belief that they are more effective at monitoring management. There continues to be debate, however, concerning whether regulators should dictate board composition using input-based attributes of directors such as outside status. Opponents contend that board independence is best established through applying voluntary best practices to board processes. In this research, we study board processes and examine how the group task cohesion that is determined by directors' social similarity affects outside directors' reports that the CEO influences their beliefs, a key element of director independence. We propose that the degree of social similarity (similarity as to backgrounds) between outside directors and other directors is positively related to the degree of commitment directors have toward the board's tasks. We show that this task commitment (cohesion) has a positive effect on directors' efforts to obtain and receive information from the firm and CEO. Additional analyses show that the effect of information sharing on the level of CEO influence of outside directors depends on the presence of cognitive conflict—constructive discussion among directors regarding differing viewpoints—between the outside directors and the inside directors. We test our hypotheses using a survey, which was developed based on in-depth field interviews, and the archival data on directors' attributes as well as firm-level outcomes. Results support the hypotheses, and have implications for regulators and boards.

Learning bad habits across generations: How negative imprints affect human resource management in the family firm

Organizational learning can be a key shared value that perpetuates the family's and the family firm's culture across generations. Imprinting theory helps to explain the impact that lessons learned and transmitted can have on the development of human resources in the family firm. However, the results of imprinting may not necessarily be positive, particularly when imprinting manifests itself in negative processes and expectations. Whereas imprinting and organizational learning are often associated with a “positive halo effect,” they have the potential to result in negative behaviors and deleterious firm-level outcomes. Employing imprinting theory as a framework, we highlight the potential dark side of imprinting within the family firm context and how it can damage human resource efforts and threaten company performance and firm survival. Finally, we suggest how bad habits may be broken and replaced with more effective routines so as to ensure the family firm's continuity and success.

Effects of federal socioeconomic contracting preferences

The 8(a) business development program supports small disadvantaged U.S. federal contractors through benefits such as set-aside and sole-source contracts, management and technical assistance, and mentor-protege relationships with established firms. This study examines the effectiveness of the 8(a) program at producing positive firm-level outcomes by comparing 8(a) firms with those participating in other preferential contracting programs with different benefits. The average 8(a) program participant performs well relative to baseline firms that do not receive contracting preferences; however, these effects are driven directly by funding and not by broader stimulation of sound business practices as intended by program designers. Program participants perform similarly to service-disabled veteran-owned businesses, which benefit from comparable contract preferences but none of the mentorship, administrative support and management assistance offered to 8(a) firms. While growing at similar rates, 8(a) firms are substantially more likely to go out of business than firms in this comparison group.

Will the real R&D employees please stand up? Effects of tax breaks on firm-level outcomes

This paper evaluates the effect of tax incentives for research and development (R&D) on R&D spending and employment of R&D staff in a quasi-experimental setting. To do this, I exploit an exogenous reform in UK R&D tax policy, which changed the definition of an SME from firms with fewer than 250 employees to those with fewer than 500 employees. I use the UK Business Enterprise Research and Development Survey (BERD), for which companies do not have an incentive to relabel their ordinary employees or spending as R&D. I find that R&D tax incentives help to increase R&D spending at the company level; this translates to a user cost elasticity between −0.88 and −1.18. Further, the additional R&D generated through the tax relief can be attributed entirely to an increase in the number of R&D employees in the companies’ workforce. Together, these results challenge a common narrative on the role of R&D tax incentives.

Agent and stewardship behavior: How do they differ?

AbstractThe purpose of this study is examine how agency theory and stewardship theory lead to different firm-level outcomes on an array of different outcomes. Based on these differences, we argue for the development of an agent–steward measurement scale, which will help researchers classify chief executive officers (CEOs) along an agent–steward continuum. This, in turn, will spur research to predict and test CEO behaviors and firm-level outcomes. Agency theory suggests CEOs take advantage of their powerful positions to maximize their personal economic utility, whereas stewardship theory suggests CEOs are motivated through intrinsic awards and will balance their interests with those of other stakeholders. We use these theories to examine possible differences in CEO behaviors. This is important because different CEO behaviors might lead to differing impacts on important firm-level outcomes. This paper reviews the relevant agency and stewardship literatures, then offers propositions regarding CEO behaviors from agent and steward perspectives.

The Effect of Acquisitions on Product Innovativeness, Quality, and Sales Performance: Evidence from the Console Video Game Industry (2002-2010)

Previous work has mostly looked at how acquisitions affect firm-level outcomes. This paper investigates how acquisitions affect product-level outcomes in the context of the console video game industry. We model the effect of acquisitions on video games' innovativeness, quality, and sales performance in a Structural Equation Modeling framework. We control for endogenous partner selection by implementing a two-sided matching framework. We jointly estimate these models using a Bayesian MCMC algorithm on a dataset of 5,916 video games released in the UK from 2002 to 2010. We find that video game publishers acquire developers for their product development capabilities and to secure access to hit properties. Prior alliances and geographic proximity between firms also predict acquisitions. We further find that publishers fail to leverage developers' capabilities for ongoing innovation as product innovativeness decreased post-acquisition. Lastly, acquisitions create value through enhanced inter-firm coordination resulting in higher quality products and increased sales performance.

Tie heterogeneity in networks of interlocking directorates: a cost\u2013benefit approach to firms\u2019 tie choice

This conceptual paper investigates the creation of interlocking directorate ties focusing on firms’ choice between sent, received, and undirected board interlocks. Drawing on a framework on the benefits of board interlocks stemming from resource dependence theory, we synthesize prior research on the consequences of interlocks and demonstrate that each type of interlock goes along with unique knowledge-based, social influence-related, and institutional benefits and costs. We frame tie choice as a strategic decision based on a cost–benefit analysis and suggest that the tie-specific benefits and costs lead to the three types of ties not being equal alternatives. Appealing to specific motives for tie creation, these benefits and costs influence firms’ choice between the three types of interlocks. Our synthesis and cost–benefit analysis contribute to prior research by shedding light on the role of tie heterogeneity as a driver of tie creation as opposed to a factor causing firm-level outcomes. By focusing on content of ties, we extend the typically purely structural research on interlocking directorate networks. We suggest directions for future research and discuss possibilities to empirically validate our propositions on how tie-specific opportunities and constraints will affect tie choice.

How can competitiveness be achieved in post-crisis Europe: deregulating employment relations or enhancing high performance work practices?

The recent Eurozone crisis has reinvigorated neoliberal policies and brought to the fore an academic and policy debate over the deregulation of employment relations’ institutions ‘in the name of competitiveness’. In the context of this debate, we ask the following question: have firms with employment relations institutions been less able to improve productivity during the crisis? We consider this question by examining data from the European Company Survey. We also look into different models of capitalism to gauge whether there are context-specific institutional effects that may mediate firm-level outcomes. Contrary to the dominant neoliberal discourse, we do not find any strong evidence that employment relations institutions are negatively associated with productivity increases. Instead, we find that certain high performance work practices are positively and significantly associated with productivity increases across EU-15 and in particular institutional contexts. Taken together these results challenge the neoliberal ‘low road’ policies that are focused on dismantling employment relations institutions and suggest shifting the attention towards context-sensitive ‘high road’ policies and practices.

Corporate Governance and the Rise of Integrating Corporate Social Responsibility Criteria in Executive Compensation: Antecedents and Outcomes

This study examines the antecedents and consequences of integrating corporate social responsibility (CSR) criteria in executive compensation, a relatively recent practice in corporate governance. Using a novel database of CSR contracting, we find that CSR contracting is more prevalent in emission-intensive industries and has become more prevalent over time. When we examine the impact of CSR contracting on firm-level outcomes, we find that the adoption of CSR contracting leads to i) a reduction in managerial short-termism; ii) an increase in firm value; iii) an increase in social and environmental performance (especially with respect to the environment and communities); iv) a reduction in emissions; and v) an increase in green innovations. These findings are consistent with our theoretical arguments highlighting a new form of agency conflict — the misalignment between shareholders' and managers' preferences for stakeholder engagement — and suggesting that CSR contracting enhances corporate governance.

Attentional Congruence and Interfirm Dynamics: A Study of Post-Acquisition Integration in High-Tech Industries

Drawing from the attention-based view of firm (ABV), we develop the notion of attentional congruence, or the degree of similarity in managerial attention at the dyadic level, between acquirer and target. We also and examine the impact of attentional congruence on the firm-level outcomes. Based on a sample of 190 acquisitions deals in high-tech industries, we show that attentional congruence between two firms has a non-linear effect on post-acquisition innovativeness of the merged firm. In addition, we also examine the moderating effects that impact upon attentional congruence such as of strategic complementarity and that of disparity in firm size. This study goes beyond prior work which has demonstrated that managerial attention drives firm behavior — to show that managerial attentional also critically affects the dynamics between firms.

Emergence of cultural intelligence and global mindset capital: a multilevel model

Purpose The purpose of this paper is to establish under which conditions researchers should use the constructs cultural intelligence (CQ) and global mindset (GM). The authors further seek to understand the process through which these constructs emerge to a higher level and link unit-level knowledge, skills and abilities (KSAs) capital to pertinent firm-level outcomes. Design/methodology/approach This paper is a conceptual study with a multilevel model. Findings This paper differentiates two similar lines of research occurring concordantly on the CQ and GM constructs. Next, the authors develop a multilevel model to better understand the process through which CQ and GM emerge at higher levels and their underlying mechanisms. Finally, this paper adds meaning to the firm-level KSAs by linking firm-level KSAs capital to pertinent firm-level outcomes. Research limitations/implications The conclusion implies that researchers should use CQ when the context is focused on interpersonal outcomes and GM when focused on strategic outcomes. The multilevel model is a useful tool for scholars to select which rubric to use in future studies that have international managers as the subjects. The authors argue that if the scholar is interested in an individual’s ability to craft policy and implement strategy, then GM may be more parsimonious than CQ. On the other hand, if the focus is on leadership, human resources or any other relationship dependent outcome, then CQ will provide a more robust measure. Practical implications For practitioners, this study provides a useful tool for managers to improve individual-level commitment by selecting and training individuals high in CQ. On the other hand, if the desired outcome is firm-level sales or performance, the focus should be on targeting individuals high in GM. Originality/value This is the first theoretical paper to examine how CQ and GM emerge to the firm level and describe when to use each measure.