Society has long considered entrepreneurs a distinct breed of people characterized by their unique willingness to act on opportunities. And yet, our recent understanding of entrepreneurship has greatly evolved to show entrepreneurs reflect a diverse and eclectic group who, though unique, emerge among all ethnicities, personalities, and walks of life. Simply, anyone can “become an entrepreneur” or “act entrepreneurially.” Entrepreneurial identity reflects the study of who entrepreneurs are and what they do. Identities can emerge through individuals’ distinct personal experiences, common roles, or shared social groups. And although identity matters for all individuals, it is especially important to entrepreneurs because they, in large part, shape organizations. The founder’s identity influences the mission, values, and strategic direction of new ventures. Even long after the founders are gone, the imprint of their identity on the organization often endures. Therefore, the study of entrepreneurial identity is critical not only to the entrepreneurs themselves but has a profound and lasting impact on most organizations, shaping how and why organizational members engage in their work.
61-80 of 232 Results
Article
Entrepreneurial opportunity represents individuals taking action to introduce new products, services, or ways of organizing. The opportunity concept has interdisciplinary appeal and in the field of entrepreneurship it has been elevated to a defining feature, representing bedrock in entrepreneurship research. Hence, researchers have investigated the emergence and pursuit of opportunity and it has become a topic of lively debate, stemming from competing theoretical approaches designed to represent the phenomenon. Insights gleaned from these discussions and related empirical studies highlight the opportunity concept as a valuable umbrella construct that meaningfully integrates key elements of the entrepreneurial journey. It coherently ties, for example, cognitive attention and belief formation to entrepreneurial action in ways that account for the various elements that influence entrepreneurs’ contemplations of bringing forward something new. This is a generative process that encapsulates entrepreneurs initially coming up with opportunity ideas and then evaluating those ideas for viability. The beliefs generated in the evaluation of opportunity ideas drive entrepreneurial action. There are a host of elements that influence this process and by capturing them, researchers have codified entrepreneurial opportunity as a phenomenon that involves the integration of entrepreneurs’ motivations and goals with the ideas and concepts they generate, and the actions they deploy to bring their concepts to fruition. This understanding presents intriguing arenas for future research, such as work that takes an adaptive and multiple opportunity perspective along with studies that address time and timing as embedded in entrepreneurial opportunity.
Article
Robert Garrett and Lauren Zettel
Given that entrepreneurs regularly face challenges in the process of starting a new venture, their ability to adapt and respond to adversity is of great interest to entrepreneurship researchers. Hence, entrepreneurship scholars have begun to build on and extend the idea of individual-level, psychological resilience in the domain of entrepreneurship. Entrepreneurial resilience includes the processes entrepreneurs utilize to develop and deploy their capabilities in order to adapt and respond to adversity encountered in their role as an entrepreneur. Entrepreneurial resilience may be conceptualized as a set of capabilities, as a process, and as an outcome. The idea of entrepreneurial resilience as a set of capabilities implies that resilience is comprised of certain psychological and behavioral capacities or tendencies that allow an entrepreneur to overcome adversity. Entrepreneurial resilience as a process is the demonstration of those capabilities in action and is exhibited as entrepreneurs encounter and then recover from a stressor. Finally, entrepreneurial resilience as an outcome is often conceptualized as a lack of negative outcomes from an adverse or stressful event.
Research in entrepreneurship has begun to explore each of these conceptualizations of resilience. Importantly, resilience capabilities have been connected with a greater likelihood of venture survival. Additionally, research has demonstrated that entrepreneurial action may be an important tool that individuals use to overcome persistent adversity. Future research is needed to clarify how entrepreneurs both develop and deploy their capabilities and resources to achieve positive outcomes in the face of challenges. The remaining questions related to the nature of entrepreneurial resilience make this domain a promising field for continuing scholarship.
Article
Michael Morris
Poverty is more than a lack of money or an inability to afford basic necessities. It is an experience that is multidimensional and includes challenges related to literacy, health, food security, housing, transportation, safety, fatigue, underemployment, limited social networks, and limited access to many opportunities available to those in other income categories. Poverty is a pernicious global problem with unacceptably high levels persisting in spite of trillions of dollars of annual spending by governments and other organizations. While this kind of investment represents a critical lifeline to many individuals and families, it is not moving enough of them out of poverty. As a result, there is a need to explore alternative solutions and approaches. Entrepreneurship, or the creation of businesses, by those experiencing poverty is one potential pathway to a better life. Yet it is a pathway about which we understand relatively little. While the poverty–entrepreneurship interface has received growing attention from scholars over the past few years, very little theoretical or conceptual work has been done. More critically, there is scant empirical evidence on such basic questions as the rate of business creation by those in poverty, success and sustainability rates, key success factors, the role of institutions and entrepreneurial ecosystems in venture outcomes, and much more. The unique difficulties faced by these entrepreneurs can be captured through the liability of poorness, a concept which includes gaps in five types of literacy, a scarcity or short-term orientation, severe nonbusiness distractions, and the lack of any safety net. As a result, the ventures that are created tend to be survival businesses that are labor intensive, with low margins, little differentiation, no bargaining power with suppliers or customers, lack of equipment and technology, and limited capacity. These are fragile enterprises, suggesting the priority may not simply be fostering higher levels of start-up activity among the poor, but interventions that enable them to become sustainable. A beginning point in realizing the potential of entrepreneurship as a poverty alleviation tool is the development of new insights on expanding opportunity horizons of these individuals, helping them escape the commodity trap, rethinking resourcing and microcredit, and assisting with adoption of the entrepreneurial mindset.
Article
Devashish Pujari and Anna Sadovnikova
Though concern for environmental issues dates back to the 1960s, research and practice in the field of sustainability innovation gained significant attention from academia, practitioners, and NGOs in the early 1990s, and has evolved rapidly to become mainstream. Organizations are changing their business practices so as to become more sustainable, in response to pressure from internal and external stakeholders. Sustainability innovation broadly relates to the creation of products, processes, technologies, capabilities, or even whole business models that require fewer resources to produce and consume, and also support the environment and communities, while simultaneously providing value to consumers and being financially rewarding for businesses. Sustainability innovation is a way of thinking about how to sustain a firm’s growth while sustainably managing depleting natural resources like raw materials, water, and energy, as well as preventing pollution and unethical business practices wherever the firm operates.
Sustainability innovation represents a very diverse and dynamic area of scholarship contributing to a wide range of disciplines, including but not limited to general management, strategy, marketing, supply chain and operations management, accounting, and financial disciplines. As addressing sustainability is a complex undertaking, sustainability innovation strategies can be varied in nature and scope depending upon the firm’s capabilities. They may range from incremental green product introductions to radical innovations leading to changes in the way business is conducted while balancing all three pillars of sustainability—economic, environmental, and social outcomes. Sustainability innovation strategies often require deep structural transformations in organizations, supply chains, industry networks, and communities. Such transformations can be hard to implement and are sometimes resisted by those affected. Importantly, as sustainability concerns continue to increase globally, innovation provides a significant approach to managing the human, social, and economic dimensions of this profound society-wide transformation. Therefore, a thorough assessment of the current state of thinking in sustainability innovation research is a necessary starting point from which to improve society’s ability to achieve triple bottom line for current and future generations.
Article
Alain Klarsfeld and Gaëlle Cachat-Rosset
Equality is a concept open to many interpretations in the legal domain, with equality as equal treatment dominating the scene in the bureaucratic nation-state. But there are many possibilities offered by legal instruments to go beyond strict equality of treatment, in order to ensure equality of opportunity (a somehow nebulous concept) and equality of outcomes. Legislation can be sorted along a continuum, from the most discriminatory ones (“negative discrimination laws”) such as laws that prescribe prison sentences for people accused of being in same-sex relationships, to the most protective ones, labeled as “mandated outcome laws” (i.e., laws that prescribe quotas for designated groups) through “legal vacuum” (when laws neither discriminate nor protect), “restricted equal treatment” (when data collection by employers to monitor progress is forbidden or restricted), “equal treatment” (treating everyone the same with no consideration for outcomes), “encouraged progress” (when data collection to monitor progress on specific outcomes is mandatory for employers), and mandated progress (when goals have to be fixed and reached within a defined time frame on specified outcomes). Specific countries’ national legislation testify that some countries moved gradually along the continuum by introducing laws of increasing mandate, while (a few) others introduced outcome mandates directly and early on, as part of their core legal foundations. The public sector tends to be more protective than the private sector. A major hurdle in most countries is the enforcement of equality laws, mostly relying on individuals initiating litigation.
Article
Daniel G. Arce and Mary C. Gentile
Giving Voice to Values (GVV) is a rehearsal and case-based approach to business ethics education that is designed to develop moral competence and that emphasizes self-assessment, peer coaching and prescriptive ethics. It is built on the premise that many businesspeople want to act on their values but lack the know-how and experience for doing so. The focus is on action rather than developing ethical awareness or analytical constructs for determining what is right and the epistemology behind knowing that it is right, while acknowledging that existing and well-established approaches to these questions are also important. The GVV rubric for acting on one’s values is based upon the following three questions: (1) What’s at stake? (2) What are the reasons and rationalizations you are trying to counter? and (3) What levers can be used to influence those who disagree? Taken together, the answers to these questions constitute a script for constructing a persuasive argument for effecting values-based change and an action plan for implementation. This approach is based on the idea, supported by research and experience, that pre-scripting and “rehearsal” can encourage action.
GVV is meant to be complementary to traditional approaches to business ethics that focus on the methodology of moral judgment. GVV cases are post-decision-making in that they begin with a presumed right answer and students are invited to engage in the “GVV Thought Experiment,” answering the questions: “What if you were going to act on this values-based position? How could you be effective?” This implies a shift in focus towards values-based action in ways that recognize the pressures of the business world. As a consequence of this shift, GVV addresses fundamental questions about what, to whom, and how business ethics is taught. The answers to these questions have led to widespread adoption of GVV in business schools, universities, corporations, and beyond.
Article
Rolv Petter Amdam
Executive education, defined as consisting of short, intensive, non-degree programs offered by university business schools to attract people who are in or close to top executive positions, is a vital part of modern management education. The rationale behind executive education is different from that of the degree programs in business schools. While business schools enroll students to degree programs based on previous exams, degrees, or entry tests, executive education typically recruits participants based on their positions—or expected positions—in the corporate hierarchy. While degree programs grade their students and award them degrees, executive education typically offers courses that do not have exams or lead to any degree.
Executive education expanded rapidly in the United States and globally after Harvard Business School launched its Advanced Management Program in 1945. In 1970, around 50 university business schools in the United States and business schools in at least 43 countries offered intense executive education programs lasting from three to 18 weeks. During the 1970s, business schools that offered executive education organized themselves into an association, first in the United States and later globally. From the 1980s, executive education experienced competition from the corporate universities organized by corporations. This led the business schools to expand executive education in two directions: open programs that organized potential executives from a mixed group of companies, and tailor-made programs designed for individual companies.
Despite being an essential part of the activities of business schools, few scholars have conducted research into executive education. Extant studies have been dominated by a focus on executive education in the context of the rigor-and-relevance debate that has accompanied the development of management education since the early 1990s. Other topics that are touched upon in research concern the content of courses, the appropriate pedagogical methods, and the effect of executive education on personal development. The situation paves the way for some exciting new research topics. Among these are the role of executive education in creating, maintaining, and changing the business elite, the effect of executive education on socializing participants for managerial positions, and women and executive education.
Article
Felice B. Klein, Kevin McSweeney, Cynthia E. Devers, Gerry McNamara, and Spenser Blosser
Scholars have devoted significant attention to understanding the determinants and consequences of executive compensation. Yet, one form of compensation, executive severance agreements, has flown under the radar. Severance agreements specify the expected payments and benefits promised executives, upon voluntary or involuntary termination. Although these agreements are popular among executives, critics continually question their worth. Yet severance agreements potentially offer three important (but less readily recognized) strategic benefits. First, severance agreements are viewed as a means of mitigating the potential risks associated with job changes; thus, they can serve as a recruitment tool to attract top executive talent. Second, because severance agreements guarantee executives previously specified compensation in the event of termination, they can help limit the downside risk naturally risk-averse executives face, facilitating executive-shareholder interest alignment. Third, severance agreements can aid in firm exit, as executives and directors are likely to be more open to termination, in the presence of adequate protection against the downside.
Severance agreements can contain provisions for ten possible termination events. Three events refer to change in control (CIC), which occurs under a change in ownership. These are (1) CIC without termination, (2) CIC with termination without cause, and (3) CIC with termination for cause. Cause is generally defined by events such as felony, fraud, embezzlement, neglect of duties, or violation of noncompete provisions. Additional events include (4) voluntary retirement, (5) resignation without good reason, (6) voluntary termination for good reason, (7) involuntary termination without cause, (8) involuntary termination with cause, (9) death, and (10) disability. Voluntary retirement and resignation without good reason occurs when CEOs either retire or leave under their own volition, and voluntary termination with good reason occurs in response to changes in employment terms (e.g., relocation of headquarters). Involuntary termination refers to termination due to any reason not listed above and is often triggered by unsatisfactory performance.
Although some prior work has addressed the antecedents, consequences, and moderators of severance, the findings from this literature remain unclear, as many of the results are mixed. Future severance scholars have the opportunity to further clarify these relationships by addressing how severance agreements can help firms attract, align the interests of, and facilitate the exit of executives.
Article
Joel Koopman and Nikolaos Dimotakis
Experience sampling is a method aimed primarily at examining within-individual covariation of transient phenomena utilizing repeated measures. It can be applied to test nuanced predictions of extant theories and can provide insights that are otherwise difficult to obtain. It does so by examining the phenomena of interest close to where they occur and thus avoiding issues with recall and similar concerns. Data collected through the experience sampling method (ESM) can, alternatively, be utilized to collect highly reliable data to investigate between-individual phenomena.
A number of decisions need to be made when designing an ESM study. Study duration and intensity (that is, total days of measurement and total assessments per day) represent a tradeoff between data richness and participant fatigue that needs to be carefully weighed. Other scheduling options need to be considered, such as triggered versus scheduled surveys. Researchers also need to be aware of the generally high potential cost of this approach, as well as the monetary and nonmonetary resources required.
The intensity of this method also requires special consideration of the sample and the context. Proper screening is invaluable; ensuring that participants and their context is applicable and appropriate to the design is an important first step. The next step is ensuring that the surveys are planned in a compatible way to the sample, and that the surveys are designed to appropriately and rigorously collect data that can be used to accomplish the aims of the study at hand.
Furthermore, ESM data typically requires proper consideration in regards to how the data will be analyzed and how results will be interpreted. Proper attention to analytic approaches (typically multilevel) is required. Finally, when interpreting results from ESM data, one must not forget that these effects typically represent processes that occur continuously across individuals’ working lives—effect sizes thus need to be considered with this in mind.
Article
D. Christopher Kayes and Anna B. Kayes
Experiential learning describes the process of learning that results from gathering and processing information through direct engagement with the world. In contrast to behavioral approaches to learning, which describe learning as behavioral changes that result from the influence of external factors such as rewards and punishments, learning from experience places the learner at the center of the learning process. Experiential learning has conceptual roots in John Dewey’s pragmatism. One of the most influential approaches to experiential learning in management and management education is David Kolb’s experiential learning theory (ELT) and the learning cycle that describes learning as a four-phase process of direct experience, reflection, abstract thinking, and experimentation.
Experiential learning has been influential in management education as well as adult education because it addresses a number of concerns with traditional education and emphasizes the role of the learner in the learning process. It has been adopted by over 30 disciplines across higher education and has been extensively applied to management, organizations, and leadership development. The popularity of the experiential learning approach is due to many factors, including the growing discontent with traditional education, the desire to create more inclusive and active learning environments, and a recognition of the role that individual differences plays in learning. A renewed interest in experiential learning has brought about new and expanded conceptualizations of what it means to learn from experience. Variations on experiential learning include critical approaches to learning, brain science, and dual-processing approaches.
While the term “experiential learning” is used by scholars to describe a specific philosophy or theory of learning, it often refers to many management education activities, including the use of experiences outside the classroom such as study abroad, internships, and service learning. Experiential learning also includes educational “experiential” learning activities inside the classroom. Within organizations, experiential learning provides an underlying conceptual framework for popular learning and leadership development programs such as emotional intelligence, strengths-based approaches, and appreciative inquiry.
There is a growing recognition that experiential learning is the basis for many management practices such as strategy creation, research and development, and decision-making. Applications of experiential learning and education in management include simulations and exercises, learning style and educator roles, learning as a source of resilience, learning attitudes and other learning-based experiences, learning flexibility, cross-cultural factors, and team learning.
Emerging research interest is also found in the relationship between experiential learning and expertise, intuition, mastery, and professional and career development, decision-making, and judgment in organizations.
Article
Heiko Breitsohl
Conducting credible and trustworthy research to inform managerial decisions is arguably the primary goal of business and management research. Research design, particularly the various types of experimental designs available, are important building blocks for advancing toward this goal. Key criteria for evaluating research studies are internal validity (the ability to demonstrate causality), statistical conclusion validity (drawing correct conclusions from data), construct validity (the extent to which a study captures the phenomenon of interest), and external validity (the generalizability of results to other contexts). Perhaps most important, internal validity depends on the research design’s ability to establish that the hypothesized cause and outcome are correlated, that variation in them occurs in the correct temporal order, and that alternative explanations of that relationship can be ruled out.
Research designs vary greatly, especially in their internal validity. Generally, experiments offer the strongest causal inference, because the causal variables of interest are manipulated by the researchers, and because random assignment makes subjects comparable, such that the sources of variation in the variables of interest can be well identified. Natural experiments can exhibit similar internal validity to the extent that researchers are able to exploit exogenous events creating (quasi-)randomized interventions. When randomization is not available, quasi-experiments aim at approximating experiments by making subjects as comparable as possible based on the best available information. Finally, non-experiments, which are often the only option in business and management research, can still offer useful insights, particularly when changes in the variables of interest can be modeled by adopting longitudinal designs.
Article
Alex Bitektine, Jeff Lucas, Oliver Schilke, and Brad Aeon
Experiments randomly assign actors (e.g., people, groups, and organizations) to different conditions and assess the effects on a dependent variable. Random assignment allows for the control of extraneous factors and the isolation of causal effects, making experiments especially valuable for testing theorized processes. Although experiments have long remained underused in organizational theory and management research, the popularity of experimental methods has seen rapid growth in the 21st century.
Gatekeepers sometimes criticize experiments for lacking generalizability, citing their artificial settings or non-representative samples. To address this criticism, a distinction is drawn between an applied research logic and a fundamental research logic. In an applied research logic, experimentalists design a study with the goal of generalizing findings to specific settings or populations. In a fundamental research logic, by contrast, experimentalists seek to design studies relevant to a theory or a fundamental mechanism rather than to specific contexts. Accordingly, the issue of generalizability does not so much boil down to whether an experiment is generalizable, but rather whether the research design matches the research logic of the study. If the goal is to test theory (i.e., a fundamental research logic), then asking the question of whether the experiment generalizes to certain settings and populations is largely irrelevant.
Article
Jennifer S. Leigh and Amy Kenworthy
Over the last three decades, service-learning has become a well-known experiential learning pedagogy in both management education and higher education more broadly. This popularity is observed in the increasing number of peer-reviewed publications on service-learning in management and business education journals, and on management education topics within higher education journals focused on civic engagement and community-based teaching and learning. In this field of study, it is known that service-learning can result in positive outcomes for students, faculty, and community members. In particular, for students, positive results are related to mastery of course content and group process skills like teamwork and communication, leadership, and diversity awareness. Despite the rise in scholarship, service-learning instructors still face several challenges in the area of best practice standards, fostering deep and cohesive partnerships, and managing institutional pressures that disincentivize engaged teaching practices. With constantly evolving challenges in management education, continued research is needed to understand a variety of service-learning facets such as platforms (face-to-face, hybrid, and virtual learning), populations (graduate vs. undergraduate populations and adult vs. traditional college-age learners), measurement (how to assess university-community partnerships and faculty instruction), and which institutional policies and procedures can enable and reward community-engaged teaching and learning approach.
Article
G. Tyge Payne and Curt Moore
Corporate governance research has a long and varied history, having evolved from a broad number of scholarly disciplines, including sociology, law, finance, and management. Across these various disciplines, it is maintained that governance is essential to corporate success, as it provides strategic and ethical guidance to the company. While research has largely focused on internal mechanisms through which governance is enacted (such as ownership arrangements, board structures, managerial rewards and incentives, etc.), external forces and mechanisms are increasingly important to modern businesses. External corporate governance mechanisms emanate from outside the organization and support forces that promote governance structures, processes, and practices by top executives and board directors. Institutions, industries, markets, networks, and strong individual external stakeholders all work to influence corporate governance decisions and behaviors both directly and indirectly. The external forces induce mechanisms that influence desirable behaviors or intervene when internal mechanisms are compromised or ineffective.
Recent literature on external governance mechanisms can help scholars and practitioners develop a better understanding of this important area of inquiry, and future research should consider three broad suggestions to move the field forward: differentiating between forces and mechanisms; recognizing unique stakeholders, boundaries, and levels of analysis; and improving empirical designs to better recognize and understand what factors matter in instituting governance adjustments and behavior changes.
Article
Per Davidsson, Jan Recker, and Frederik von Briel
“External enabler” (EE) denotes nontrivial changes to the business environment—such as new technology, regulatory change, demographic and sociocultural trends, macroeconomic swings, and changes to the natural environment—that enable entrepreneurial pursuits. The EE framework was developed to increase knowledge accumulation in entrepreneurship and strategy research regarding the influence of environmental factors on entrepreneurial endeavors. The framework provides detailed structure and carefully defined terminology to describe, analyze, and explain the influence of changes in the business environment on entrepreneurial pursuits. EE characteristics specify the environmental changes’ range of impact in terms of spatial, sectoral, sociocultural, and temporal scope as well as the degree of suddenness and predictability of their onset. EE mechanisms specify the types of benefits individual ventures may derive from EEs. Among others, these include cost saving, resource provision, making possible new or improved products/services, and demand expansion. EE roles situate these (anticipated) mechanisms in entrepreneurial processes as triggering and/or shaping and/or outcome-enhancing. EE’s influence is conceived of as mediated by entrepreneurial agency that—in addition to agent characteristics—is contingent on the opacity (difficulty to identify) and agency-intensity (difficulty to exploit) of EE mechanisms, with the ensuing enablement being variously fortuitous or resulting from strategic deliberation.
Article
Yijie Min, Yanlong Zhang, and Sun Hyun Park
Family firms can either be “born” or “made.” Although previous studies suggest that most of the family firms in the US context are “born,” family firms can be “made” by the founder’s decision to invite family members to the management. We conceptualize this process of family firm emergence as familization, during which lone-founders’ family influence increases as more family members are appointed to director and/or executive positions. Transition from lone-founder-control to family-control is often accompanied by significant changes in governance structure, strategic decisions, and firm performance. This work documents the pervasiveness and heterogeneity of the familization process and proposes an analytical framework covering four research areas associated with the phenomenon: the antecedents that motivate founders to choose the familization path, the familization process involving internal and external firm constituents, the consequences of familization decision, and the potential moderators of the familization impact. To better understand these theoretical perspectives, an explorative empirical investigation is conducted based on a sample of Chinese-listed firms that experienced familization. Familization cases in other Asian emerging economies were also discussed in comparison with the family firms in Western economies.
Article
Frank Hoy
Family business is a multidisciplinary subject area of critical importance to practitioners. The global volume of family business owners and managers is enormous. The firms are significant components of national economies. Yet they are often underappreciated and have been under-represented in business and economic research. Scholars have the potential for contributing to the survival and prosperity of these firms. The boundaries of the field are ill-defined. Family business scholars are seeking recognition from their colleagues. Opportunities for future research are unlimited.
Article
Keith Murnighan* and Dora Lau
Group faultlines are hypothetical dividing lines that may split a group into subgroups based on one or more attributes. An example of a strong faultline is a group of two young female Asians and two senior male Caucasians. Members’ alignment of age, sex, and ethnicity facilitates the formation of two homogeneous subgroups. On the other hand, when a group consists of a young female Asian, a young male Caucasian, a senior female Caucasian, and a senior male Asian, the group faultline is considered weak because subgroups, regardless of how they are formed, are diverse.
As a relatively new form of group compositional pattern, the group faultline is associated with subgroup formation, and these subgroups, rather than the whole group, can easily become the focus of attention. When members strive to obtain more resources and protect their subgroups, between-subgroup conflict, behavioral disintegration, lack of trust, lack of willingness to share information, and communication challenges are likely. As a result, group performance is often negatively affected, and sometimes groups may even be dissolved. These results were repeatedly found in studies of experimental groups, ad-hoc project groups, organizational teams, top management teams, global virtual teams, family businesses, international joint ventures, and strategic alliances.
Article
Carrie Leana
Financial precarity—the persistent worry about money and not having enough of it—is widespread, even in developed economies. It is a particular affliction of the poor, but it describes many people across the income distribution. Financial precarity is harmful not just to the individuals who experience it but also to the organizations in which they work. For individuals, financial precarity can negatively affect cognitive functioning, emotional stability, and social functioning. It is also associated with worse physical and psychological health, as well as depressed performance, both on and off the job. For employers, there are direct costs in the form of decreases in performance at work, as well as indirect costs in the form of increased absenteeism and health care costs. Private-sector companies are taking notice and have initiated a variety of programs to address employee financial precarity, including enhancing wages and offering financial assistance programs such as financial counseling, incentivized savings plans, and enhancements to retirement plans. Many of these programs have not been subjected to rigorous analysis (e.g., incentivized savings programs), and for some, there is little evidence of their effectiveness (e.g., financial literacy programs). Other programs (e.g., opt-out retirement plans) have a strong track record of success. Overall, private-sector employers are increasing their investments in employee financial wellness, which is a positive step in terms of providing needed supports to employees.
