Who Controls the Controller? People Reaction to Social Control Agent's Decisions about Organizational Misconduct

Social control agents (SCAs) discipline organizations and draw the line between appropriate organizational behaviour and misconduct. While prior research focuses on the SCA-organization relationship, we theorize how a key audience (people) interacts with an SCA depending on its decisions to sanction or not organizational misconduct. Building on sociological and organizational research on social norms and their enforcement, we expect that people are more likely to agree with an SCA that sanctions a behaviour that violates rule-based as opposed to value-based norms. Violations of rule-based norms generate more agreement because such norms are less ambiguous and ascertaining when they are violated is easier to establish. As people agree more with SCA decisions to sanction rule-based violations, we expect that the propensity of people to resort to the SCA increases. We find support for our hypotheses with a survey, a series of experiments, and the analysis of complete data on complaints by UK citizens to the Advertising Standards Authority – the UK SCA on advertising – over the period 2007–10. Our paper contributes to research in organizational misconduct by showing how SCAs are both an evaluating entity and an evaluated one and by shedding light on how people co-determine what an acceptable or unacceptable behaviour is. Our paper uniquely links macro- and micro-level studies on corporate misconduct, putting centre stage that SCA's authority essentially depends on a key audience's agreement with the SCAs' underlying norms that underpin their decisions.     

Why bad feelings predict good behaviours: The role of positive and negative anticipated emotions on consumer ethical decision making

Research suggests that emotions can greatly influence consumer decision making and behaviours. Notwithstanding, our understanding of the role of anticipated emotions in what is an inherently complex deliberation process—that of consumer ethics—is still quite limited. The present study thus aims to address this gap, in two key ways: first, by measuring the influence of positive and negative anticipated emotions at each stage of the consumer ethical decision making process; and second by describing the specific emotions that most affect each component of the consumer ethical deliberation process and assessing their relative weight in predicting decisions involving ethical issues. Through the examination of 603 ethical situations and using multiple regression analysis, the findings indicate that anticipated emotions can account for up to 59% of the variance in consumer decisions involving ethics. Anticipating the experience of negative emotions as a result of carrying out an unethical behaviour was the affective component found to most influence consumer ethical deliberation process; and anticipated guilt was the discrete emotion exerting the greatest effect on consumer decision making in ethical situations. The findings indicate that more than feeling good, consumers avoid feeling bad; such that ethically favourable decisions emerge to prevent experiencing negative emotions in the future.     

Implementing radical innovation in the business: the role of transition modes in large firms

Extensive research has emphasized the relevance and importance of separating explorative from exploitative activities within firms. Recently, several scholars have argued that, in order to be successful, the outcomes of such structurally separated explorative activities need to be integrated in the operational business units of the firm. Nevertheless, detailed research on how such integration can be realized is lacking. Based on in‐depth case studies of seven large multinational, technology intensive companies, we find five transition modes on how interfaces between radical innovation units and operational business are managed effectively as a means to implement radical innovation on a company level: (1) external validating; (2) liaison channeling; (3) showcasing innovation; (4) network building; and (5) integrative innovation planning.     

Anomalous waiting times in high-frequency financial data

In high-frequency financial data not only returns, but also waiting times between consecutive trades are random variables. Therefore, it is possible to apply continuous-time random walks (CTRWs) as phenomenological models of the high-frequency price dynamics. An empirical analysis performed on the 30 DJIA stocks shows that the waiting-time survival probability for high-frequency data is non-exponential. This fact imposes constraints on agent-based models of financial markets.     

Diversity is strategy: the effect of R&D team diversity on innovative performance

Diversity in the workplace has attracted significant interest in organisations that want to attract and retain talented employees. Breakthrough innovation requires a wider knowledge base, and organisations increasingly rely on multidisciplinary R&D teams to identify scientific developments that bridge gaps and reduce time to market. However, research on the performance implications of R&D team diversity remains limited and the empirical evidence inconsistent. This paper investigates the impact of surface and deep-level diversity on R&D teams’ innovative performance and how diversity dimensions interact to drive innovation. We find supportive evidence that R&D team characteristics influence innovation outcomes, confirming our hypothesising that diversity is a valuable strategy for an organisation to pursue as it provides greater cognitive ability. Each diversity facet however has its own distinct effects depending on the novelty of innovation and industry. Yet, diversity is not solely positive and excessive heterogeneity could be detrimental to R&D team performance. Our findings suggest that high diversity in gender or skills in cognitively diverse teams might be negative attributes to take into consideration. Senior managers and organisations should therefore consider the appropriate mix of capabilities to benefit from creativity in diverse R&D teams and avoid possible conflict and distrust associated with diversity.     

Future-oriented higher education: Which key competencies should be fostered through university teaching and learning?

Universities play an important role in shaping the future of the world society in terms of sustainable development by generating new knowledge as well as contributing to the development of appropriate competencies and raising sustainability awareness. During the last years, many universities have undertaken activities for implementing Higher Education for Sustainable Development (HESD). Many have asked which key competencies are most relevant for sustainable development and hence should be developed in future-oriented higher education. Different approaches for the selection of sustainability key competencies have been developed, but there is little international agreement in the debate around the most important key competencies. Consequently, this paper asks which individual key competencies are crucial for understanding central challenges facing the world society and for facilitating its development towards a more sustainable future, and thus identifies those competencies which should be fostered through university teaching and learning. The empirical design of the study is related to a Delphi study in which ‘sustainability key competencies’ are defined by selected experts from Europe (Germany, Great Britain) and Latin America (Chile, Ecuador, Mexico). The results show that twelve key competencies crucial for sustainable development can be identified; the most relevant ones are those for systemic thinking, anticipatory thinking and critical thinking.     

Investors’ distraction and strategic repricing decisions

In this paper I analyze investors’ reactions to changes in the expense ratios of equity mutual funds. I show that investment flows’ response to fees cannot be fully explained by looking at investors’ performance sensitivity. While performance sensitivity monotonically increases with past performance, price sensitivity does not: investors who buy top past performers seem to be “distracted” by the fund’s previous return and pay relatively little attention to the expense ratios. Moreover price sensitivity increases with fund visibility while performance sensitivity decreases, and while looking at data from 1986 to 2006 no discernible trend can be observed in the average performance sensitivity, price sensitivity strongly increases due to the dramatic increase in the availability of mutual funds’ information for retail investors. Finally I show that investment companies strategically time their repricing decisions in order to exploit time variations in price and performance sensitivities, and that fund governance quality affects the degree to which investment companies engage in this opportunistic behavior.     

Bank profitability during recessions

This paper contributes to the literature on the relation between bank profitability and economic activity. When allowing for stronger co-movement of bank profit with economic activity during deep recessions, we find a much larger impact of output growth on bank profitability than commonly found in the literature. Among the different components of bank profit, loan losses are the main driver of this result. We also find long-term interest rates in previous years to be important determinants of bank profit in times of high economic growth. Our findings are robust to the use of aggregate or individual bank data.     

Efficient egalitarian equivalent allocations over a single good

This paper studies efficient and egalitarian allocations over a single heterogeneous and infinitely divisible good. We prove the existence of such allocations using only measure-theoretic arguments. Under the additional assumption of complete information, we identify a sufficient condition on agents’ preferences that makes it possible to apply the Pazner–Schmeidler rule for uniquely selecting an efficient egalitarian equivalent allocation. Finally, we exhibit a simple procedure that implements the Pazner–Schmeidler selection in a subgame-perfect equilibrium. We thank Gabrielle Demange, William Thomson, two referees and seminar audiences at Boston, Palermo and Rochester University for their comments. Financial support from MIUR is acknowledged.