Stereotypes are a central concern in society and in the workplace. Stereotypes are cognitions that drive what individuals know, believe, and expect from others as a result of their social identities. Stereotypes predict how individuals view and treat one another at work, often resulting in inaccurate generalizations about individuals based on their group membership. As such, it’s important to break down and combat the use of stereotypes in decision-making at work. If stereotypes can be overcome in the workplace, fairness and equity in organizations becomes more likely.
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Article
Stereotypes at Work
Katina Sawyer and Judith A. Clair
Article
Stock Repurchases: Antecedents, Outcome, and Implications
Abdul A. Rasheed, Jenny Gu, and Greg Bell
Since the early 1980s in the United States and the early 1990s in Europe and Asia, there has been a notable surge in the volume and frequency of share repurchases by companies. There are many different types of repurchases such as open-market repurchases, repurchase tender offers, privately negotiated repurchases, and accelerated share repurchases. Prior research on share repurchases has identified many different motivations identified in prior literature, such as undervaluation, tax advantages, flexibility, takeover defense, and optimal capital structure. In addition, prior research has identified a number of organizational characteristics that can cause a firm to repurchase their shares such as the compensation structure of the executives, managerial characteristics, and managerial entrenchment. A large number of empirical studies have investigated the factors that motivate repurchases and implications of repurchases for stockholders, creditors, executives, and the economy in general. The results of these studies suggest that any generalizations about the benefits of repurchases may be inappropriate and that both the positive and negative effects may be context specific. Stock buybacks are becoming common in countries other than the United States. Empirical research on repurchases in different countries suggests that the motivations, incentives, and effects of repurchases may vary based on not only firm-specific factors but also country-level institutional conditions. We identify several avenues for future research such as the potential for principal–principal conflicts, the implications of governance characteristics for repurchase decisions, different executions strategies, and application of new methodological tools.
Article
Strategic Decision-Making in Business
Bill Wooldridge and Birton Cowden
Scholarly interest in how managers make strategic decisions dates from the inception of the strategic management field and continues in the present. Although such decision-making was originally conceived as a completely rational, top-management process, contemporary thinking recognizes that strategies from across multiple organizational levels change within social and political contexts. Within this broad domain, multiple research streams address a wide variety of topics and issues. Prominent among these are, (1) the extent to which strategic decisions are formed through comprehensive analysis versus piecemeal decision-making, (2) how characteristics of top managers and the composition of top management teams affect strategic decision-making, (3) the role of politics, conflict, and consensus in strategy making, (4) how cognitive biases and heuristics influence the process, (5) when and how intuitive judgments can form the basis for effective decision-making, and (6) how managers at various organizational levels participate in the process. Research across these streams is both descriptive and normative, with a focus on contextual contingencies and relationships to firm performance. Taken as a whole this literature has significantly enhanced understanding of how strategies form within organizations. Contemporary work continues to provide new insights and demonstrates the continued value of this productive area of study.
Article
Strategic Empowerment in Human Resource Management
M. Taner Albayrak and Alper Ertürk
Empowerment is considered one of the best managerial approaches to foster employees’ effectiveness, creativity, commitment, performance, and other positive work-related attitudes and behaviors while providing an essential tool for leadership development and succession planning. Empowerment involves delegation of authority, sharing of information and resources, and allowing employees to participate in decision-making processes. Empowerment practices result in positive outcomes through psychological empowerment, which comprises meaning, impact, self-determination, and competence. However, empowerment should be exercised with care, and before doing so, leaders should understand their employees’ competences, willingness, and characteristics, as well as the organizational culture and industrial dynamics. With the increasing use of information and communication technologies, inevitable influence of globalization, and continuously changing dynamics of interconnectedness among industries, the business environment has become more volatile, uncertain, complex, and ambiguous (VUCA). In order to survive in this environment, companies try to increase diversity in their workforce to make the best use of a broad variety of skills, experiences, and opinions, thus boosting creativity and innovativeness, which makes leadership more difficult than ever.
With empowerment, the concept of delegation of power is important. Therefore, comparing the concept of personal empowerment with managerial empowerment helps in understanding that these concepts are different, although interconnected. Delegation of authority ensures that the manager transfers decision-making authority to subordinates under certain conditions. In delegation, authority is retained by the manager, who has the ultimate responsibility. On the other hand, in empowerment, authority is fully transferred to the person who is already doing the job, with all the rights and responsibilities to take the initiative as necessary.
Empowerment is also closely related but different from the concept of motivation. In motivation, decision-making authority and control stays with the manager. Empowerment, on the other hand, gives employees the opportunity to participate in management, solve problems, and participate in decision-making processes. In this context, the concepts of delegation of authority, motivation, participation in management, and job enrichment are the domain dimensions of personal empowerment, and thus they are interrelated, yet different.
It is important to create a common vision and to have common values in order to establish the empowerment process. Subordinates and supervisors need to trust each other, and empowerment needs to be seen as a philosophy, not a technique. It is necessary to create business conditions that enable the development of knowledge and skills in personnel empowerment. These conditions affect the perceptions and attitudes of the staff, such as, support, loyalty, identification, and trust. Empowering employees promotes organizational commitment, increases engagement, and reduces turnover intentions of key personnel. Because empowerment involves encouraging participation of subordinates in the decision-making process, it also helps to enhance the effectiveness of the decisions and reduce decision-making time. In the VUCA world, limited decision making could be a critical obstacle to establish and maintain sustainability in highly competitive business environments.
Article
Strategic Flexibility and Competitive Advantage
Kathryn Rudie Harrigan
Concerns regarding strategic flexibility arose from companies’ need to survive excess capacity and flagging sales in the face of previously unforeseen competitive conditions. Strategic flexibility became an organizational mandate for coping with changing competitive conditions and managers learned to plan for inevitable restructurings. They learned to reposition assets and capabilities to suit their firms’ new strategic aspirations by overcoming barriers to change. Core rigidities flared up in the form of legacy costs, regulatory constraints, political animosity, and social resistance to adjusting firms’ strategic postures; managers learned that their firms’ past strategic choices could later become barriers to adapting corporate strategy.
Managerial insights concerning how to modify firms’ resources changed the way in which they were subsequently regarded. Enterprises saw assets lose their relative productivity and value as mastery of specific knowledge become less germane to success. Managers recognized that their firms’ capabilities were mismatched to market or value-chain relationships. They struggled to adapt by overcoming barriers to change.
Flexibility problems were inevitable. Even if competitive conditions were not impacted by exogenous change forces, sustaining advantage in a steady-state competitive arena became difficult; sustaining advantage in dynamic arenas became nearly impossible. Confronted with the difficulties of changing strategic postures, market orientations, and overall cost competitiveness, managers embraced the need to combat organizational rigidity in all aspects of their firms’ operations. Strategic flexibility affected enterprise assets, capabilities, and potential relationships with other parties within firms’ value-creating ecosystems; the need for strategic flexibility influenced investment choices made to escape organizational rigidity, capability traps and other forms of previously unrecognized resource inflexibility.
Where entry barriers once protected a firm’s strategic posture, flexibility issues arose when the need for endogenous changes occurred. The temporary protection afforded by imitation barriers slowed an organization’s responsiveness to changing its strategy imperatives—making the firm rigid when adaptiveness was needed instead. A firm’s own inertia to change sometimes created mobility barriers that had to be overcome when hypercompetitive conditions arose in their traditional market arenas and forced firms to change how they competed.
Where exogenous changes drove competitive conditions to become more volatile, attainment of strategic flexibility mandated the need to downsize the scope of a firm’s activities, shut down facilities, prune product lines, reduce headcount, and eliminate redundancies—as typically occurred during an organizational turnaround—while simultaneously increasing the scope of external activities performed by an enterprise’s value-adding network of suppliers, distributors, value-added resellers, complementors, and alliance partners, among others. Such structural value-chain changes typically exacerbated pressures on the firm’s internal organization to search more broadly for value-adding innovations to renew products and processes to keep up with the accelerated pace of industry change. Exploratory processes of self-renewal forced confrontations with mobility or exit barriers that were long tolerated by firms in order to avoid coping with the painful process of their ultimate elimination. The sometimes surprising efforts by firms to avoid inflexibility included changes in the nature of firms’ asset investments, value-chain relationships, and human-resource practices. Strategic flexibility concerns often trumped the traditional strengths accorded to resource-based strategies.
Article
Strategic Groups in Business
Briance Mascarenhas and Megan Mascarenhas
A strategic group is defined as a set of firms within an industry pursuing a similar strategy. The strategic group concept emerged with much promise over 40 years ago. Research on strategic groups over time in a broad variety of settings has sought to clarify their theoretical and empirical properties. These research findings are gradually being translated into practical managerial guidance, so that the strategic group concept can be understood, operationalized, and used productively by managers.
Two main approaches exist for identifying strategic groups—a ground-up approach, using disaggregated data, and a top-down, using cognition. Once identified, managerial insights can be derived from clarifying a strategic group’s profile. Firm membership in a group helps to uncover immediate and more distant types of competitors. Group profitability differences reveal the more rewarding and less attractive areas within an industry, as well as identify the lower-return groups from where firm exits are likely to occur. Group dynamics reflect competitive and cooperative behavior within and between groups. Several promising areas for future research on strategic groups to improve understanding and practice of strategy.
Article
The Strategic Management of Technology and Innovation
Mark Dodgson
The strategic management of technology and innovation is an important contributor to organizational performance and competitiveness. It creates value, assists differentiation, enhances productivity, and guides creativity and initiative. In the face of uncertainty in operating environments, caused especially by rapid technological change, the strategic management of innovation configures capabilities and resources within organizations. These include the capability to search for innovations, select the most advantageous, and appropriate or capture their returns. It involves investing in sources of innovation, such as research and development (R&D) and collaboration with external partners, and using methods for effectively assessing their contributions.
Unstable and turbulent operating conditions can disrupt established organizational policies and practices and make planning difficult. As a result, strategies for technology and innovation are necessarily emergent rather than prescriptive, exploratory rather than determinable. Any advantages technology and innovation create are likely to be transitory.
The pressing need for greater environmental sustainability, increased focus on the social consequences of innovation, and the impact of new digital and data-rich technologies, add to the challenges of the strategic management of technology and innovation. To address these challenges, attention to physical and intellectual capital needs to be supplemented by greater concern for human, social, and natural capital, and to organizational culture and behavior. This requires the foundation of the strategic management of technology and innovation in the discipline of economics to be complemented by others, such as psychology, organizational behavior, and ethics.
Article
Strategic Planning in the Public Sector
John Bryson and Lauren Hamilton Edwards
Strategic planning has become a fairly routine and common practice at all levels of government in the United States and elsewhere. It can be part of the broader practice of strategic management that links planning with implementation. Strategic planning can be applied to organizations, collaborations, functions (e.g., transportation or health), and to places ranging from local to national to transnational. Research results are somewhat mixed, but they generally show a positive relationship between strategic planning and improved organizational performance. Much has been learned about public-sector strategic planning over the past several decades but there is much that is not known.
There are a variety of approaches to strategic planning. Some are comprehensive process-oriented approaches (i.e., public-sector variants of the Harvard Policy Model, logical incrementalism, stakeholder management, and strategic management systems). Others are more narrowly focused process approaches that are in effect strategies (i.e., strategic negotiations, strategic issues management, and strategic planning as a framework for innovation). Finally, there are content-oriented approaches (i.e., portfolio analyses and competitive forces analysis).
The research on public-sector strategic planning has pursued a number of themes. The first concerns what strategic planning “is” theoretically and practically. The approaches mentioned above may be thought of as generic—their ostensive aspect—but they must be applied contingently and sensitively in practice—their performative aspect. Scholars vary in whether they conceptualize strategic planning in a generic or performative way. A second theme concerns attempts to understand whether and how strategic planning “works.” Not surprisingly, how strategic planning is conceptualized and operationalized affects the answers. A third theme focuses on outcomes of strategic planning. The outcomes studied typically have been performance-related, such as efficiency and effectiveness, but some studies focus on intermediate outcomes, such as participation and learning, and a small number focus on a broader range of public values, such as transparency or equity. A final theme looks at what contributes to strategic planning success. Factors related to success include effective leadership, organizational capacity and resources, and participation, among others.
A substantial research agenda remains. Public-sector strategic planning is not a single thing, but many things, and can be conceptualized in a variety of ways. Useful findings have come from each of these different conceptualizations through use of a variety of methodologies. This more open approach to research should continue. Given the increasing ubiquity of strategic planning across the globe, the additional insights this research approach can yield into exactly what works best, in which situations, and why, is likely to be helpful for advancing public purposes.
Article
Structural Equation Modelling
Wayne Crawford and Esther Lamarre Jean
Structural equation modelling (SEM) is a family of models where multivariate techniques are used to examine simultaneously complex relationships among variables. The goal of SEM is to evaluate the extent to which proposed relationships reflect the actual pattern of relationships present in the data. SEM users employ specialized software to develop a model, which then generates a model-implied covariance matrix. The model-implied covariance matrix is based on the user-defined theoretical model and represents the user’s beliefs about relationships among the variables. Guided by the user’s predefined constraints, SEM software employs a combination of factor analysis and regression to generate a set of parameters (often through maximum likelihood [ML] estimation) to create the model-implied covariance matrix, which represents the relationships between variables included in the model. Structural equation modelling capitalizes on the benefits of both factor analysis and path analytic techniques to address complex research questions. Structural equation modelling consists of six basic steps: model specification; identification; estimation; evaluation of model fit; model modification; and reporting of results.
Conducting SEM analyses requires certain data considerations as data-related problems are often the reason for software failures. These considerations include sample size, data screening for multivariate normality, examining outliers and multicollinearity, and assessing missing data. Furthermore, three notable issues SEM users might encounter include common method variance, subjectivity and transparency, and alternative model testing. First, analyzing common method variance includes recognition of three types of variance: common variance (variance shared with the factor); specific variance (reliable variance not explained by common factors); and error variance (unreliable and inexplicable variation in the variable). Second, SEM still lacks clear guidelines for the modelling process which threatens replicability. Decisions are often subjective and based on the researcher’s preferences and knowledge of what is most appropriate for achieving the best overall model. Finally, reporting alternatives to the hypothesized model is another issue that SEM users should consider when analyzing structural equation models. When testing a hypothesized model, SEM users should consider alternative (nested) models derived from constraining or eliminating one or more paths in the hypothesized model. Alternative models offer several benefits; however, they should be driven and supported by existing theory. It is important for the researcher to clearly report and provide findings on the alternative model(s) tested.
Common model-specific issues are often experienced by users of SEM. Heywood cases, nonidentification, and nonpositive definite matrices are among the most common issues. Heywood cases arise when negative variances or squared multiple correlations greater than 1.0 are found in the results. The researcher could resolve this by considering a small plausible value that could be used to constrain the residual. Non-positive definite matrices result from linear dependencies and/or correlations greater than 1.0. To address this, researchers can attempt to ensure all indicator variables are independent, inspect output manually for negative residual variances, evaluate if sample size is appropriate, or re-specify the proposed model. When used properly, structural equation modelling is a powerful tool that allows for the simultaneous testing of complex models.
Article
Subsidiary Governance and Strategy in the Multinational Enterprise
Niall O'Riordan, Paul Ryan, and Ulf Andersson
Corporate governance is concerned with how firm performance may be affected by how the organization is governed. Corporate governance is a multifaceted concept that ranges in scholarly interest from the composition of boards to ownership and relational issues of power dependency, control, and decision-making within an organization. International business (IB) researchers have employed multiple theoretical lenses across institutional, resource dependency, and agency theories to examine corporate governance in the multinational enterprise (MNE). As the organizational form of the MNE shifted from hierarchical to heterarchical, and responsibility for sourcing market and innovation knowledge was increasingly devolved to competent subsidiaries, governance arrangements in the MNE came under increased scrutiny. Much IB research into corporate governance examined the balance of power within the MNE and how decision making is influenced by both headquarters (HQ) and its subsidiaries. A parent-subsidiary governance dilemma became apparent around the degree of freedom and control that HQ should leverage over its foreign subsidiaries to maximize the survival and performance of these economically, culturally, and politically dispersed units. Agency theory and resource dependence theory were to the fore in examining the parent-subsidiary dilemma around how control over decision-making scope and processes shaped subsidiary governance around the strategies and operations with the MNE governance architecture. In essence, subsidiary governance and strategy can be seen to represent two sides of the same coin.
Subsidiary governance and strategy become complex issues the minute we step outside the hierarchical domain and allow for subsidiaries to have a greater contributory role in the MNE. As a subsidiary is mandated to pursue certain activities in the environment where it has been located, it also is granted some autonomy to strategize around its assigned activities and responsibilities. Opportunities may surface through the embeddedness of its activities in the local environment and the resources this can provide to the subsidiary and MNE. Acting on these opportunities by taking initiatives can result in increased influence and an elevated role in terms of mandate gain and enlarged responsibilities. The issue of subsidiary governance first emerges in relation to how the subsidiary strategy is aligned or not aligned with HQ strategy.
Subsidiary managers can decide to solely perform their assigned mandate, or they can choose to generate a resource endowment that may help them become indispensable for HQ, but crucially to guarantee their own survival. The mechanisms available to subsidiaries to achieve this strategic aim are evidenced via initiative taking, seeking autonomy, increasing their role, appropriating power and influence, and embedding themselves in the local and internal environments. In this chapter we approach corporate governance from the perspective of the subsidiary (subsidiary governance) and examine the relationship between subsidiary governance and what we determine to be the prime elements of subsidiary strategy. We respectively define subsidiary governance as the gamut and interplay of control and operations around which management strategize and subsidiary strategy as a process of continuous, deliberate upgrading of knowledge and capabilities to thrive and survive. IB literature on MNE subsidiary governance and strategy to date is incomplete insofar as there are disparate steams of research that warrant integration into a grand theory of subsidiary governance and strategy.
Article
Survey Design
Don H. Kluemper
The use of surveys is prevalent in academic research in general, and particularly in business and management. As an example, self-report surveys alone are the most common data source in the social sciences. Survey design, however, involves a wide range of methodological decisions, each with its own strengths, limitations, and trade-offs. There are a broad set of issues associated with survey design, ranging from a breadth of strategic concerns to nuanced approaches associated with methodological and design alternatives. Further, decision points associated with survey design involve a series of trade-offs, as the strengths of a particular approach might come with inherent weaknesses. Surveys are couched within a broader scientific research process. First and foremost, the problem being studied should have sufficient impact, should be driven by a strong theoretical rationale, should employ rigorous research methods and design appropriate to test the theory, and should use appropriate analyses and employ best practices such that there is confidence in the scientific rigor of any given study and thus confidence in the results. Best practice requires balancing a range of methodological concerns and trade-offs that relate to the development of robust survey designs, including making causal inferences; internal, external, and ecological validity; common method variance; choice of data sources; multilevel issues; measure selection, modification, and development; appropriate use of control variables; conducting power analysis; and methods of administration. There are salient concerns regarding the administration of surveys, including increasing response rates as well as minimizing responses that are careless and/or reflect social desirability. Finally, decision points arise after surveys are administered, including missing data, organization of research materials, questionable research practices, and statistical considerations. A comprehensive understanding of this array of interrelated survey design issues associated with theory, study design, implementation, and analysis enhances scientific rigor.
Article
Sustainability in Business: Integrated Management of Value Creation and Disvalue Mitigation
Markus Beckmann and Stefan Schaltegger
Sustainable development is about meeting the needs of current and future generations while operating in the safe ecological space of planetary boundaries. Against this background, companies can contribute to sustainability in both positive and negative ways. In a world of scarce resources, the positive contribution of businesses is to create value for diverse stakeholders (i.e., goods in the actual sense of good services and things with value) without social shortfalls or ecological overshooting with regard to planetary boundaries. Yet, when value-creation processes cause negative social or ecological externalities, companies create disvalue for current or future stakeholders, thus undermining sustainable development. Sustainability in business therefore aims at the integrative management of value creation and disvalue mitigation. Various institutions, such as sustainability laws as well as quasi-regulatory and voluntary sustainability standards, aim at providing an enabling environment in this regard yet are often insufficient. Corporate sustainability therefore calls for proactive management. Neither value nor disvalue fall from heaven but are rather co-created or caused through the interaction with stakeholders. Transforming from unsustainability to sustainability thus requires transforming the underlying relational arrangements. Here, market and non-market stakeholder relations need to be distinguished. In markets, companies transact with customers, employees, suppliers, and financiers who typically have voluntary exchange relationships with the firm. As a result, stakeholders can use the exit option when the relationship causes them harm. Companies therefore need to know and respect their value-creation partners, their potential contributions, and above all their needs. Sustainability can influence these market relationships in two ways. First, as sustainability addresses environmental, social, and ethical issues that are otherwise often overlooked, sustainability can relate to specific goals and motivations that stakeholders pursue when they care about these matters. Second, sustainability can be linked to transaction-specific particularities. This can be the case when sustainability features lead to information asymmetries, higher transaction costs, or resource dependencies. Non-market relationships, however, can differ in that stakeholders are involuntarily affected by the firm. In many cases, such as environmental pollution, stakeholders like local communities experience disvalue but cannot simply walk away. From a sustainability perspective, giving voice to non-market stakeholders through dialogue and participation is therefore crucial to identify early-on potential issues where companies cause disvalue. Such a proactive dialogue does not necessarily present a constraint that limits value creation in the market. Giving a voice to non-market stakeholders can also help create innovations and mobilize valuable resources such as knowledge, legitimacy, and partnership. The key idea is to find solutions that create value not only for market stakeholders but also for a larger circle, including non-market stakeholders as well. Such stakeholder business cases for sustainability aim at the synergistic integration of value creation and disvalue mitigation.
Article
The Swiss Watch Industry
Pierre-Yves Donzé
The Swiss watch industry has enjoyed uncontested domination of the global market for more than two decades. Despite high costs and high wages, Switzerland is the home of most of the largest companies in this industry. Scholars in business history, economics, management studies, and other social sciences focused on four major issues to explain such success.
The first is product innovation, which has been viewed as one of the key determinants of competitiveness in the watch industry. Considerable attention has been focused on the development of electronic watches during the 1970s, as well as the emergence of new players in Japan and Hong Kong. Yet the rebirth of mechanical watches during the early 1990s as luxury accessories also can be characterized as a product innovation (in this case, linked to marketing strategy rather than pure technological innovation).
Second, brand management has been a key instrument in changing the identity of Swiss watches, repositioning them as a luxury business. Various strategies have been adopted since the early 1990s to add value to brands by using culture as a marketing resource.
Third, the evolution of the industry’s structure emphasizes a deep transformation during the 1980s, characterized by a shift from classical industrial districts to multinational enterprises. Concentration in Switzerland, as well as the relocation abroad of some production units through foreign direct investment (FDI) and independent suppliers, have enabled Swiss watch companies to control manufacturing costs and regain competitiveness against Japanese firms.Fourth, studying the institutional framework of the Swiss watch industry helps to explain why this activity was not fully relocated abroad, unlike most sectors in low-tech industries. The cartel that was in force from the 1920s to the early 1960s, and then the Swiss Made law of 1971, are two major institutions that shaped the watch industry.
Article
Technology Standardization in Innovation Management
Vadake Narayanan and Yamuna Baburaj
The profound impact of technology standards—specifications for interfacing or compatibility between different components or products to interact and function synergistically—dictates an understanding of their evolution, processes by which they come to be, and their impact on businesses, industries, and countries. Technology standards span almost every conceivable aspect of the existing business landscape, especially in dynamic industry sectors. Standardization, the processes by which standards emerge and diffuse, is a complex phenomenon encompassing various actors at multiple levels (firm, industry, institutions) that engage in a sociopolitical process of negotiation and collaboration to facilitate the coalescing of multiple stakeholder interests on a chosen standard. Standardization is multifaceted and emerges through various mechanisms, mainly involving one or more of committee-based (de jure) standards, market-based competitive battles (de facto standards), and institutional (government-based) processes, most involving collective action. Market-based processes give prominence to dominant or pioneering firms that introduce technology leveraging the power of large installed base and network externalities, many times tipping the market in favor of the technology format that was first to market. Nonetheless, markets may not tip, and several technology formats may continue to dominate the market, as in the video game market. Standard-setting organizations (SSOs) spearhead convergence around standards by bringing various entities together to derive the specifications for technical compatibility through consensus. The role of governments in the emergence and diffusion of standards varies by the country, region, and nature of the standard. Standards have facilitated innovation at the firm and industry levels and broadly enhanced trade between nations. Intellectual property, specifically standard-essential patents (SEPs), has attracted significant attention due to the strategic and economic benefits that accrue to owners of such patents as well as the challenges they create within SSOs.
Article
Testing and Interpreting Interaction Effects
Jeremy F. Dawson
Researchers often want to test whether the association between two or more variables depends on the value of a different variable. To do this, they usually test interactions, often in the form of moderated multiple regression (MMR) or its extensions. If there is an interaction effect, it means the relationship being tested does differ as the other variable (moderator) changes. While methods for determining whether an interaction exists are well established, less consensus exists about how to understand, or probe, these interactions. Many of the common methods (e.g., simple slope testing, regions of significance, use of Gardner et al.’s typology) have some reliance on post hoc significance testing, which is unhelpful much of the time, and also potentially misleading, sometimes resulting in contradictory findings. A recommended procedure for probing interaction effects involves a systematic description of the nature and size of interaction effects, considering the main effects (estimated after centering variables) as well as the size and direction of the interaction effect itself. Interaction effects can also be more usefully plotted by including both a greater range of moderator values and showing confidence bands.
Although two-way linear interactions are the most common in the literature, three-way interactions and nonlinear interactions are also often found. Again, methods for testing these interactions are well known, but procedures for understanding these more complex effects have received less attention—in part because of the greater complexity of what such interpretation involves. For three-way linear interactions, the slope difference test has become a standard form of interpretation and linking the findings with theory; however, this is also prone to some of the shortcomings described for post hoc probing of two-way effects. Descriptions of three-way interactions can be improved by using some of the same principles used for two-way interactions, as well as by the appropriate use of the slope difference test. For nonlinear effects, the complexity is greater still, and a different approach is needed to explain these effects more helpfully, focusing on describing the changing shape of the effects across values of the moderator(s). Some of these principles can also be carried forward into more complex models, such as multilevel modeling, structural equation modeling, and models that involve both mediation and moderation.
Article
The History, Development, and Contributions of the Work of Thorstein Veblen
Sean M. Haas
Thorstein Veblen was an American economist who lived from 1857 to 1929. He was born into a family of farmers in the state of Wisconsin. Veblen’s formal education was long and meandering, as he entered into Carleton College in 1877. He then moved to Johns Hopkins to begin a PhD in philosophy, which he then finished at Yale in 1884. After a 7-year hiatus, Veblen re-entered academia in 1890 as he enrolled in the doctoral program at Cornell. In 1891, Veblen moved to the University of Chicago, where he secured his first teaching position in 1892, but resigned in 1906. After departing Chicago, Veblen’s academic career remained sporadic. He taught at Stanford, the University of Missouri, and The New School for Social Research, each for a short period.
Veblen believed that classical economics was fundamentally flawed. He made many significant contributions to the field through his creation of institutional and evolutionary economics. Both perspectives involve the integration of Charles Darwin’s theory of evolution into economic analysis. Unlike many of his contemporaries, Veblen viewed Darwinian evolution as a philosophical basis of inquiry that could be applied to all complex systems. This formed the conceptual basis for his rejection of classical economic principles, which he viewed as teleological, or seeking the definition of natural laws. Just as Darwinian evolution had transformed the natural sciences, Veblen aimed to rehabilitate the field of economics.
Veblen published ten books and wrote over one hundred essays and articles during his academic career. Much of his eminence rests firmly on one of his earliest works, The Theory of the Leisure Class, which is largely a critique of capitalism and wealth inequality in American society. Veblen’s approach to economics was multidisciplinary. As such, his work contains a variety of influences, from philosophical pragmatism and Darwinian evolution to both American and European socialism, as well as psychology and anthropology. Veblen’s contributions to economics have generally been classified as heterodox, primarily because of their theoretical nature and Veblen’s lack of a systemic comprehensive theory as well as his harsh critique of American capitalism.
Both institutional and evolutionary economics have retained varying degrees of relevance in the decades since Veblen’s death. The original form of Veblen’s institutional economics exhibited a degree of favor in the academic discourse preceding the New Deal in the mid-1930s. However, institutional economics was further developed in the mid-1930s to the early 1960s, through second-generation institutionalists, such as Clarence Ayres, John Commons, and Wesley Mitchell. In the mid-1970s, new institutional economics was established to shift the field toward a new paradigm. Despite its historical roots in Veblen’s heterodox writings, the importance of institutions in analyzing economic development, and in formulating public policy, has been adopted by the modern mainstream economic discourse. The Association for Evolutionary Economics (AFEE) and the European Association for Evolutionary Political Economy (EAEPE) continue to bring together economists who perform research from evolutionary and institutional perspectives. The AFEE honors Veblen’s legacy and his contributions to the field through its annual Veblen-Commons Award for outstanding research.
Article
The Impact of Reinsurance
Niels Viggo Haueter
Reinsurance is perceived to have a stabilizing effect on the direct insurance industry and thereby on the economy overall. Yet, research into how exactly reinsurance impacts various areas is scarce. Traditionally, studying the impact of reinsurance used to be in the domain of actuaries; since the 1960s, they have tried to assess how different contract elements can provide what came to be called “optimal reinsurance.” In the 2010s, such research was intensified in developing countries with the aim to deploy reinsurance to support economic growth and security. Interest in reinsurance increased when the industry became more visible in the 1990s as the impact of natural catastrophes started being linked to a changing climate. Reinsurers emerged as spokespeople for climate-related issues, and the industry took a lead role in arguing in favor of implementing measures to reduce environmental deterioration. Reinsurers, it was argued, have a vested interest in managing the impact of natural catastrophes. This triggered discussions about the role of reinsurance overall and about how to assess its impact. In the wake of the financial crisis of 2007 and 2008, interest in reinsurance again surged, this time due to perceived systemic impacts.
Article
The Kaleidoscope Career Model
Sherry E. Sullivan and Shawn M. Carraher
The kaleidoscope career model (KCM) was developed by Mainiero and Sullivan in 2006 based on data from interviews, focus groups, and three surveys of over 3,000 professionals working in the United States. The metaphor of a kaleidoscope was used to describe how an individual’s career alters in response to alternating needs for authenticity, balance, and challenge within a changing internal and external life context. As a kaleidoscope produces changing patterns when its tube is rotated and its glass chips fall into new arrangements, the KCM describes how individuals change the pattern of their careers by rotating the varied aspects of their lives to arrange their work–nonwork roles and relationships in new ways. Individuals examine the choices and options available to create the best fit among various work demands, constraints, and opportunities given their personal values and interests.
The ABCs of the KCM are authenticity, balance, and challenge. Authenticity is an individual’s need to make choices that reflect their true self. People seek alignment between their values and their behaviors. Balance is an individual’s need to achieve an equilibrium between the work and nonwork aspects of life. Nonwork life aspects are defined broadly to include not only spouse/partners and children but also parents, siblings, elderly relatives, friends, the community, personal interests, and hobbies. Challenge is an individual’s need for stimulating work that is high in responsibility, control, and/or autonomy. Challenge includes career advancement, often measured as intrinsic or extrinsic success. All three parameters are always active throughout the life span, and all influence decision-making. One parameter, however, usually takes priority; this parameter has greater influence in shaping an individual’s career decisions or transitions at that point in time. Over an individual’s life, the three parameters shift, with one parameter moving to the foreground and intensifying in strength as it takes priority at that time. The other two parameters will lessen in intensity, receding into the background, but they remain active.
Article
The Personality Underpinnings of Strategic Leadership: The CEO, TMT, and Board of Directors
Bret Bradley, Sam Matthews, and Thomas Kelemen
“Strategic leadership” is the umbrella term used to describe the study of an organization’s top leaders—what they do, their interactions, and how they influence important organizational outcomes. The three major areas of focus within this field are the chief executive officer (CEO), the top management team (TMT), and the board of directors. Although each area has vibrant bodies of literature on important topics of inquiry, the integration of research findings, frameworks, and insights across the three areas remains underdeveloped. For example, the study of leader personality is a rich line of inquiry within the broader management literature, and all three areas are developing, albeit at different rates and with little integration across the three areas.
The work on CEO personality is the most developed, and the work on board personality is the least developed. CEOs personality traits that have been studied include the Big Five personality traits (conscientiousness, extraversion, agreeableness, openness to experience, and emotional stability), locus of control, core self-evaluations, narcissism, overconfidence, hubris, humility and regulatory focus (a person’s general approach to goals as either promotion focused or prevention focused). TMT personality traits that have been studied include the Big Five, trait positive affect, propensity to innovate, and competitive aggressiveness. Finally, board of directors’ personality traits that have been studied include only personality diversity.
Article
The Role of Board Leadership Structure in Firm Governance
Danuse Bement and Ryan Krause
Boards of directors are governing bodies that reside at the apex of the modern corporation. Boards monitor the behavior of firm management, provide managers access to knowledge, expertise, and external networks, and serve as advisors and sounding boards for the CEO. Board attributes such as board size and independence, director demographics, and firm ownership have all been studied as antecedents of effective board functioning and, ultimately, firm performance. Steady progress has been made toward understanding how boards influence firm outcomes, but several key questions about board leadership structure remain unresolved.
Research on board leadership structure encompasses the study of board chairs, lead independent directors, and board committees. Board chair research indicates that when held by competent individuals, this key leadership position has the potential to contribute to efficient board functioning and firm performance. Researchers have found conflicting evidence regarding CEO duality, the practice of the CEO also serving as the board chair. The effect of this phenomenon—once ubiquitous among U.S. boards—ranges widely based on circumstances such as board independence, CEO power, and/or environmental conditions. Progressively, however, potential negative consequences of CEO duality proposed by agency theory appear to be counterbalanced by other governance mechanisms and regulatory changes.
A popular mechanism for a compromise between the benefits of CEO duality and independent monitoring is to establish the role of a lead independent director. Although research on this role is in its early stage, results suggest that when implemented properly, the lead independent director can aid board monitoring without adding confusion to a unified chain of command. Board oversight committees, another key board leadership mechanism, improve directors’ access to information, enhance decision-making quality by allowing directors to focus on specialized topics outside of board meetings, and increase the speed of response to critical matters. Future research on the governance roles of boards, leadership configurations, and board committees is likely to explore theories beyond agency and resource dependence, as well as rely less on collecting archival data and more on finding creative ways to access rarely examined board interactions, such as board and committee meetings and executive sessions.
