Doubts about the conceptual and empirical status of context-free and firm-specific control expectancies: A reply to boone and de brabander

Boone and De Brabander (1993) contend mat Hodgkinson's (1992) strategic locus of control scale will not lead to interesting research results and that researchers should continue to adopt the well known Rotter (1966) I-E scale. Central to their argument is the assertion that responses to domain-specific control expectancy scales, such as the strategic locus of control scale, largely reflect actors' perceptions of their current circumstances, whereas responses to the I-E scale are a function of stable personality differences. In this reply the literature on the locus of control construct is briefly reviewed, in order to show that the accumulated empirical research evidence does not support the notion of generalized control expectancies as a simple unidimensional personality trait, but points overwhelmingly to the conclusion that control expectancies are more appropriately construed as a multidimensional, domain-specific, cognitive variable shaped by the combined effects of disposition, prior learning experiences, reinforcement histories and current circumstances. The rationale for the development of the strategic locus of control scale is further explained, in order to clarify a number of other misconceptions.     

Research notes and communications development and validation of the strategic locus of control scale

Previous studies investigating the role of locus of control beliefs in relation to strategy-making behavior, organizational structure, performance and environment have employed the well known Rotter (1966) I-E scale. Unfortunately, however, this scale is beset by a number of problems which render it unsuitable for studies of business organizations, namely, that the items comprising the scale lack context-specificity and its well known tendency to correlate with measures of social desirability response set. This paper describes the development of a new measure designed to overcome these limitations. The measure, intended specifically for investigating locus of control beliefs in relation to issues of strategic management, assesses the extent to which respondents regard their own and other organizations' strategic issues to be resolved by the systematic application of strategic management techniques (e.g. environmental analysis, strategic planning, etc) or through external environmental forces (e.g. the actions of powerful competitors, unforeseen chance events, etc) largely beyond the control of organizations. Data is presented from two samples which indicate that the measure demonstrates acceptable reliability and construct validity.     

Managing strategic change: The duality of CEO personality

Using the five factor model (FFM) of personality, we delineate two distinct roles of CEO personality in managing strategic change: initiating strategic change and determining the performance effects of strategic change implementation. Based on data from 120 small‐ and medium‐sized enterprises (SMEs) in Ecuador, we found that some FFM traits of CEOs influenced initiation only (extraversion and openness), others similarly influenced initiation and performance effects of implementation (emotional stability and agreeableness), and still others had opposing effects on initiation and effective implementation (conscientiousness). These results point to a dual role of CEO FFM of personality in managing strategic change, and they indicate the differences in CEO FFM traits needed to initiate strategic change and those needed to improve the performance effects of strategic change implementation. Copyright © 2013 John Wiley & Sons, Ltd.     

Once an outsider,always an outsider? CEO origin,strategic change,and firm performance

In this study, we examine how the relationship between the level of strategic change in the pattern of resource allocation and firm performance differs between firms led by outside CEOs and those led by inside CEOs. Based on longitudinal data on the tenure histories of 193 CEOs who left office between 1993 and 1998, we find that the level of strategic change has an inverted U‐shaped relationship with firm performance. As the level of change increases from slight to moderate, performance increases; as the level of change increases from moderate to great, performance declines. Further, we find that this inverted U‐shaped relationship differs between firms led by outside CEOs and those led by inside CEOs. That is, both the positive effect of strategic change on firm performance when the level of change is relatively low and the negative effect of strategic change on firm performance when the level of change is relatively high are more pronounced for outside CEOs than for inside CEOs. Supplementary analyses also suggest that this difference between outside and inside CEOs exists in later years but not in the early years of CEO tenure. Copyright © 2009 John Wiley & Sons, Ltd.     

The Legitimacy of Pay and Performance Comparisons: An Analysis of UK University Vice Chancellors Pay Awards

This article examines UK University Vice Chancellors (VC) pay awards. The empirical analysis, covering the period 1997–2002, evaluates the impact upon VC pay awards of university performance measures, internal pay comparisons and two external pay comparisons, that is, the pay of other VCs and the pay of chief executive officers (CEOs) leading comparable‐sized UK firms. For the total sample, we find no evidence that VC pay awards are related to any of the performance measures, although for the pre‐ and post‐1992 subsamples there is some evidence that pay awards are related to some ‘mission‐relevant’ performance measures. All the analyses show a positive relationship between changes in the proportion of other highly paid employees and VC pay awards, which suggests that internal pay comparisons play an important role in remuneration committee decision making. As anticipated, the two external pay benchmarks have very different effects upon VC pay awards; the pay received by other VCs produces a marked ‘mean reversion’ in pay levels while the pay of CEOs running comparable‐sized UK firms had a highly significant positive impact upon VC pay awards. Following the insights of institutional theory, we interpret this conservatism by university remuneration committees as stemming primarily from legitimation concerns rather than financial constraints.     

Narcissism,director selection,and risk‐taking spending

We explain why CEOs favor new directors who are similar in narcissistic tendency or have prior experience with other similarly narcissistic CEOs. Because powerful CEOs are more able to select such individuals onto their boards, CEO power is predicted to be positively associated with the above characteristics of new directors. These associations are expected to be stronger when a new director is more different from the CEO in salient demographic characteristics. Moreover, we explain why new directors favored by CEOs are more supportive of their decision making, strengthening the positive relationship between CEO narcissism and risk‐taking spending. Our findings provide considerable support for our theory. This study introduces personality theories to corporate governance research on director selection and to research on how triads influence dyadic relations. Copyright © 2014 John Wiley & Sons, Ltd.     

The influence of desire for control on monitoring decisions and performance outcomes in strategic alliances

Strategic alliances are fraught with risks, such as the uncontrolled disclosure of core knowledge via opportunistic learning. The usefulness of monitoring in policing opportunism notwithstanding, a contrasting view is that monitoring mechanisms can themselves manifest the dark side of strategic alliances. The present study argues that a novel dark personality trait—the focal firm's desire for control—may influence key decisions pertaining to how to monitor strategic alliances, which in turn can negatively impact performance outcomes. Our conceptual model was developed and tested, based on a survey of 404 strategic alliances. The results demonstrate that a focal firm's desire for control is positively associated with process monitoring as well as output monitoring. The firm's use of process monitoring to oversee the counterpart drives its performance outcomes only if there is a low level of information exchange between the alliance partners; as such, information exchange norms substitute for process monitoring. By contrast, the focal firm's use of outcome monitoring is negatively linked to performance unless complemented by a high level of information exchange. Key implications for alliance management and future research are derived from the findings.     

The CEO Performance Effect: Statistical Issues and a Complex Fit Perspective

How CEOs affect strategy and performance is important to strategic management research. We show that sophisticated statistical analysis alone is problematic for establishing the magnitude and causes of CEO impact on performance. We discuss three problem areas that substantially distort the measurement and sources of a CEO performance effect: (1) the nature of performance time series, (2) confounding and (3) the discovery of many interactions associated with the CEO performance effect. We show that the aggregate of empirical research implies complex interdependency as the driver of the CEO performance effect. This suggests a ‘fit’ model requiring new research approaches. Copyright © 2011 John Wiley & Sons, Ltd.     

Impact of Strategic Type on Success Measures for Product Development Projects*

Does the strategic type of firm affect which success measures should be used for product development (PD) projects? This paper theorizes that it should and finds that it does because the PD projects undertaken are usually an expression of the strategic type of the firm. The purpose of this research is to affirm a 1996 survey of members of the Product Development & Management Association (PDMA) that proposes that firms' PD performance measures should vary by their strategic type. Thus, for example, prospectors, the strategic type most likely to introduce new products to new markets, should place greater importance on PD success measures consistent with their characteristic strategies of changing product lines and early market entry. In contrast, defenders, the strategic type most likely to maintain stable product lines for existing markets, should place greater importance on PD success measures consistent with their characteristic strategies of stable product lines and market penetration. Analyzers, a hybrid type between prospectors and defenders, should prefer measures consistent with their characteristic strategies for improving products and being early followers in newer markets. To relate strategic types to specific success measures for PD projects, this paper proposes a model of the relationship based on the degree of project newness to the firm and then catalogs measures of PD project success and groups them according to degree of project newness. The research findings are based on survey responses from 222 individuals who are employed by financial service providers, who identified their firms by strategic type and rated the importance of PD success measures to their firms. The importance of 21 performance measures is compared by strategic type to find significant differences among prospectors, analyzers, and defenders. This research finds several significant relationships. prospectors, for example, attach greater importance to customer satisfaction, launch timeliness, and product return on investment, all of which may be characterized as relating to a higher degree of project newness to the firm. defenders and analyzers, on the other hand, attach more importance than prospectors to measures of unit volume, cost reduction, and margin goals, all of which relate to a lower degree of project newness to the firm. In short, because prospectors seek to introduce new products to new markets, they consider important those measures, which accord with greater product and market newness. The major conclusion of this paper is that strategic type affects the importance of project performance measures and that all firms should not use the same success measures. Firms should contextualize their success in PD projects based on their strategic type. This conclusion resonates with previous findings that strategy is a key determinant of PD success, though it is infrequently included in PD success studies. This paper, therefore, challenges the implicit assumption in the mainstream of PD success literature that success can be determined without regard to firm strategy.     

Difference in degrees: CEO characteristics and firm environmental disclosure

We contribute to the literature on firms' responses to institutional pressures and environmental information disclosure. We hypothesize that CEO characteristics such as education and tenure will influence firms' likelihood to voluntarily disclose environmental information. We test our hypotheses by examining firms' responses to the Carbon Disclosure Project (CDP) and find that firms led by newly appointed CEOs and CEOs with MBA degrees are more likely to respond to the CDP, while those led by lawyers are less likely to respond. Our results have implications for research on strategic responses to institutional pressures and corporate environmental performance. Copyright © 2013 John Wiley & Sons, Ltd.     

Independent director death and CEO acquisitiveness: Build an empire or pursue a quiet life?

Research summary : This study examines the relationship between an independent director's death and CEO acquisitiveness. Using a sample of large U.S. public firms, we find that CEOs who have experienced an independent director's death undertake fewer acquisitions in the post‐director death period, in particular fewer large acquisitions. Our findings are consistent with the prediction of posttraumatic growth theory that mortality awareness can induce CEOs to reevaluate their life priorities and reduce the importance of extrinsic goals in their decision making. This study contributes to the strategic leadership literature by highlighting the influence of the death of CEOs ' social peers on CEOs ' strategic decisions . Managerial summary : Does the death of CEOs ' social peers influence CEOs ' strategic decisions? We find that CEOs who have experienced an independent director's death engage in fewer acquisitions in the post‐director death period, in particular fewer large acquisitions. One likely explanation for our findings is that the death of an independent director may heighten CEOs ' mortality awareness, lead the CEOs to pursue a quieter life, and weaken their propensities for undertaking decisions (i.e., acquisitions) that increase their compensation and social status . Copyright © 2016 John Wiley & Sons, Ltd.     

Understanding the human side of openness: the fit between open innovation modes and CEO characteristics

In small- and medium-sized enterprises (SMEs), where typically the decision-making process is highly centralised, important decisions, such as open innovation (OI) adoption, will be strongly influenced by the characteristics of their Chief Executive Officers (CEOs). Pointing the attention to the strategic leadership and human elements, this paper sheds light on the micro-foundation of OI by emphasising the role that the personal traits of key individuals in innovation. OI adoption could result in the enactment of several OI modes – each representing an opportunity of potential change (of market, of technology or/and of the organisation) – and this paper attempts to examine the relationships between the CEO characteristics and each of the OI modes. Our analysis, using Korean SME data, shows that CEOs’ positive attitude, entrepreneurial orientation (EO), patience and education can play important roles in facilitating OI in SMEs. However, this paper also observed that the effects of CEO characteristics on OI adoption were differently configured according to the nature of each OI mode, for example, CEOs’ patience and EO had different impacts depending on the degree of uncertainty in the OI mode. This suggest that OI must be understood as a wide innovation spectrum, and, to increase opportunities for successful OI adoption, CEOs have to attempt to compensate for characteristics they may lack by recruiting appropriate complementary top managements. The research has practical implications for CEOs and policy makers who are interested in enhancing competitiveness of SMEs.     

Strategic decision speed and firm performance

This 4‐year study examines the effect of strategic decision speed upon subsequent firm performance and identifies environmental and organizational characteristics that relate to decision speed. We draw upon strategic decision‐making theory and organization theory to propose that strategic decision speed mediates the relation between environmental and organizational characteristics and performance. Measures of business environment, organization structure, strategic decision speed, and firm performance (growth and profitability) were collected from 318 CEOs from 1996 to 2000. Structural equation modeling confirmed that fast strategic decision‐making predicts subsequent firm growth and profit and mediates the relation of dynamism, munificence, centralization, and formalization with firm performance. Copyright © 2003 John Wiley & Sons, Ltd.     

The increasing role of subsidiary boards in MNCs: An empirical study

Little research has been done to date on the role of subsidiary boards (SBs) in MNCs. A two-phase survey research design has yielded responses from 90 subsidiaries in 36 MNCs based in Europe, North America, and Japan. The sample provides evidence that: (1) SBs are perceived to be in transition from lesser to greater proactivity, and (2) MNCs with parent headquarters in North America, Europe, and Japan perceive the usefulness of these boards in different ways. The results indicate an increasingly active use of these boards in selective advisory and strategic roles. Some recommendations are presented for CEOs, chairmen, and subsidiary directors who are interested in designing their SBs to take better advantage of already legally mandated, but often underutilized, structures. SBs are not a panacea for resolving tensions between parents and subsidiaries and for monitoring changes in host country environments; however, they can provide added strategic governance for subsidiaries.     

The impact of CEO core self‐evaluation on the firm's entrepreneurial orientation

Although much has been attributed to a CEO's personality, one particularly intriguing, and as yet unexplored, investigation is its impact on the firm's entrepreneurial orientation. Additionally, despite calls from the upper‐echelon literature, CEO personality research has been hobbled by the absence of a unifying construct that captures core dimensions of personality, and by the difficulty in obtaining such intimate assessments from executives. Building on recent advances in personality research, in particular the identification and validation of the core self‐evaluation construct that captures the core facets of an executive's sense of self‐potency, we develop and test a model of the impact of CEO core self‐evaluation on entrepreneurial orientation. Then, consistent with upper echelons and personality theory, we specify the contingent role of environmental dynamism. Using multisource data from a sample of CEOs and their top management teams from 129 firms, including a time‐lagged assessment of the firm's entrepreneurial orientation, we find evidence to suggest that CEOs whose personalities reflect higher core self‐evaluations have a stronger positive influence on their firms' entrepreneurial orientation. In addition, we find that this influence is particularly strong in firms facing dynamic environments, but negligible in stable environments. Copyright © 2009 John Wiley & Sons, Ltd.     

When the glass is half full and half empty: CEOs' ambivalent interpretations of strategic issues

Organizational scholars have highlighted the importance of interpretive ambivalence for mindfulness, creativity, and strategic change. Ambivalence occurs when an issue is seen simultaneously as positive and negative. We examine organizational factors that influence the propensity of organizational leaders to evaluate a new strategic issue ambivalently. Data come from a survey of 220 German CEOs confronted with the enlargement of the European Union. We find that CEOs of firms with a more ambidextrous strategic orientation and a moderate sense of organizational control over their environment are most likely to be ambivalent about this issue. Our findings affirm the prevalence of interpretive ambivalence at the executive level and suggest ways for organizations to promote or prevent ambivalence in strategic sensemaking. Copyright © 2010 John Wiley & Sons, Ltd.     

CEOs’ Transformational Leadership and Product Innovation Performance: The Roles of Corporate Entrepreneurship and Technology Orientation

Product innovation is an important research topic that has stimulated significant interest among management scholars and practitioners. Leadership has been suggested to be a critical factor affecting product innovation. Numerous studies have documented that transformational leadership positively influences product innovation performance, which is conceptualized as the degree to which a new product and/or service has achieved its market share, sales, rates of asset return, rates of investment return, and profit objectives. However, there is a lack of studies examining the specific means through which transformational leadership influences product innovation performance at the firm level. Therefore, this study aimed to investigate the processes through which such effect is achieved and to determine whether corporate entrepreneurship and technology orientation as intervening factors influence this effect. To test the hypotheses, data were collected from 151 matched top management team (TMT) members and chief executive officers (CEOs) from Chinese manufacturing firms. Two separate questionnaires were used to collect the data. TMT members’ questionnaire included measures of CEO's transformational leadership, whereas CEOs’ questionnaire included questions about corporate entrepreneurship, technology orientation, and product innovation performance. Hierarchical linear regression was used to test the hypothesized effects. The results of the analysis provided the support for the fully mediating role of corporate entrepreneurship on the relationship between CEOs' transformational leadership and product innovation performance. In addition, technology orientation was found to significantly moderate the CEOs' transformational leadership–corporate entrepreneurship linkage. Furthermore, the mediated moderation effect of corporate entrepreneurship on the relationships among CEOs’ transformational leadership, technology orientation, and product innovation performance was significantly supported. By studying leadership among CEOs, this study contributes to the research by elucidating the mechanisms through which transformational leadership influences product innovation performance. The mediating role of corporate entrepreneurship encourages managers to improve their leadership style so as to enhance the development of corporate entrepreneurship and innovation practices. The findings also show that technology orientation provides the conditions for the smooth translation of the CEO's transformational leadership into actual entrepreneurial activities. Hence, firms should prioritize technology orientation to optimize the implementation of transformational leadership so as to emphasize innovation and new venture creation.     

Earthquake or glacier? How CEO charisma manifests in firm strategy over time

Numerous studies have focused on CEO charisma as an antecedent to firm performance, but this literature has largely overlooked the possibility that charisma manifests in more proximal strategic initiatives that (unlike performance) are largely under the CEO's control. In this study, we integrate perspectives from the upper echelons and charismatic leadership literatures to argue that CEO charisma influences year‐over‐year strategic change, the degree to which strategies deviate from industry central tendencies, and the degree of emphasis on corporate social responsibility. We also theorize that, depending on the outcome in question, the effects of charisma can become both amplified and diminished as CEO tenure advances. Employing a novel data collection approach for a sample of 113 S&P 500 CEOs, we find broad support for our theory. Copyright © 2014 John Wiley & Sons, Ltd.     

SBU strategy and performance: The moderating effects of the corporate-SBU relationship

This study suggests that the link between an SBU strategy and performance is moderated by the SBU's relationship with corporate management. Information processing arguments suggest that this relationship, typically characterized by general measures of centralization, has been inappropriately conceptualized in prior research. An alternative view, one that considers which decisions and activities should be controlled by the individual SBU, is proposed and tested. The results of a study of 496 SBUs indicate that SBU performance is enhanced when: (1) SBUs with an external strategic orientation control environmental monitoring activities and strategic decision analysis, and (2) SBUs with an intraorganizational orientation control those activities relating to operations. Weaker SBU performance is associated with SBU control over those functions and activities not central to the SBU's business strategy. Therefore, it is suggested that the corporate-SBU relationship can either facilitate or inhibit the implementation of the SBU's intended strategy.     

CEO career horizon,corporate governance,and real options: The role of economic short‐termism

Research Summary: Combining studies on real options theory and economic short‐termism, we propose that, depending on CEOs’ career horizons, CEOs have heterogeneous interests in strategic flexibility, and thus, have different incentives to make real options investments. We argue that compared to CEOs with longer career horizons, CEOs with shorter career horizons will be less inclined to make real options investments because they may not fully reap the rewards during their tenure. In addition, we argue that long‐term incentives and institutional ownership will mitigate the relationship between CEOs’ career horizons and real options investments. U.S. public firms as an empirical setting produced consistent evidence for our predictions. Our study is the first to theoretically explain and empirically show that a CEO's self‐seeking behavior will impact real options investments. Managerial Summary: This article helps to explain how a CEO's self seeking‐behavior may shape a firm's real option investment, which could result in different level of strategic flexibility. We argue that CEOs with short career horizons have less time to exercise their firms’ real options, which should lower the investments in the firms’ real options portfolios relative to CEOs with long career horizons. We study a sample of U.S. public firms and find strong evidence that a CEO's expected tenure in the firm is positively related to the real options investments at the firm level. We find that this agency issue can be mitigated by adopting appropriate corporate governance mechanisms such as long‐term incentives and institutional investors.