Is it a ‘home run’ for vertical integration? Organizational Form in Professional Baseball

At first glance, the organizational form of major league and minor league baseball teams may appear straightforward–minor league teams provide training and experience for players, which provides major league teams with a strong recruitment pool. However, a recent paper published in the Journal of Sports Economics by F. Andrew Hanssen, James W. Meehan Jr., and Thomas J. Miceli, entitled “Explaining Changes in Organizational Form: The Case of Professional Baseball,” the authors suggest that the relationship between major league and minor league baseball teams is more dynamic than previously thought.

The abstract for the paper:

In this articleCurrent Issue Cover, we investigate changes over time in the organization of the relationship between Major League Baseball and minor league baseball teams. We develop a model in which a minor league team serves two functions: talent development and local entertainment. The model predicts different modes of organizing the relationship between majors and minors based on the value of these parameters. We then develop a discursive history. Consistent with the model’s predictions, we find that when the value of minor league baseball’s training function was low but the value of its entertainment function was high, major and minor league franchises operated independently, engaging in arms’-length transactions. However, as the training function became more important and the local entertainment function less important, formal agreements ceded control of minor league functions to major league franchises. Finally, as the value of local entertainment rose once again in the late 20th century, the two roles were split, with control of local functions accruing to local ownership and training functions to major league teams. This analysis helps shed light on factors that influence the boundaries of the firm.

 

Notes on the Origin of “The Normalization of Corruption”

[Wjmie’re pleased to welcome back J.S. Nelson, Senior Fellow at the Zicklin Center for Business Ethics Research at Wharton, and an Advisor in the Center for Entrepreneurial Studies at the Stanford Graduate School of Business. Nelson recently published an article in the Journal of Management Inquiry entitled “The Normalization of Corruption.” Notes from Nelson:]

My forthcoming article on “The Normalization of Corruption” in the November 2016 issue of the Journal of Management Inquiry started in a fairly unusual way. I am an attorney—a former prosecutor and commercial litigator—who has taught in business schools for nearly ten years. My work focuses on both entrepreneurship and business ethics.

But the differences between law and business still surprise me. At the 2016 Western Academy of Management meeting in Portland, a group of us were lingering over the end of breakfast at a conference table. As we described what we were working on, and I mentioned my articles about the incentives for wrongdoing within organizations leading to the 2007-08 financial crisis and scandals since, someone at the table stopped me mid-stream. “What are you doing sitting here? You need to be in the session happening now on corruption,” she told me. I protested that I didn’t work on corruption. For lawyers, corruption is the paying of bribes to government officials. But the management, finance, and organizational behavior people at the table envisioned corruption much more broadly—they saw corruption as the misuse of organizational resources by anyone who hijacks the proper purpose of the corporation. Yes, under this definition, the financial crisisthe VW emissions scandal, and today’s headlines about fraud at Wells Fargo are all corruption.

So I ran over to the room where the corruption symposium was mid-stride. And, lo and behold, a defense lawyer spoke to the crowd about white collar crime. Other people described the loss of positive “voice” that they had seen in corporate scandals. I was writing the Oxford University Press’s book on Business Ethics. These people were speaking my language. As the session drew to a close, I raised my hand to make a comment about the sorry state of the law and how middle management is often where the details of large scandals originate in order to protect top executives who don’t want to ask the questions that they should while on the job.

My comment and question drew Paul Hirsch’s attention. Paul is, as you know, the James L. Allen Professor of Strategy & Organizations in the Kellogg School of Management at Northwestern University. He is also passionate about new ideas and what we can do about corruption in this country. We sat down for an impromptu talk perched at a small table outside the meeting room to compare notes about how decisions in the courts are helping to fuel the patterns of corruption that we both study. We talked about the work that I was doing on the prevalence of corruption industry-by-industry, and how behavioral ethics helped explain the tipping points beyond which corruption became a norm.

Paul looked at me hard. I could tell he was coming to a decision. “Okay, do it,” he said. “Write this up for me as a guest editor of the issue—let’s put this in the Journal of Management Inquiry’s special issue on Corruption.” I protested—I came from a different discipline, the deadline was two weeks away, I had other publishing commitments, it just wasn’t possible. But Paul had seen the links between my work and his field. We cared about the same things. He knew that the management community needed to hear from additional perspectives, and he knew that the synergies would be worth pursuing.

And he was exactly right. The “Normalization of Corruption” article wrote itself.  The management material told part of the story, and the additional keys were in law and behavioral ethics. There is a pronounced cycle: the fact that misconduct is perceived by individuals to be so widespread has led to a normalization of corruption within companies and industries. The contribution of the law—and this part is particularly vicious—is that the normalization of corruption, in turn, helps to defeat attempts to prosecute the misconduct and to prevent its spread. Normalizing corruption tells individuals not only that it is acceptable to cheat, but that cheating is the behavior now expected of them and for which they will be rewarded.

So read the paper. Let me know what you think. Lawyers don’t usually talk about cultures and norms, and business professors don’t usually talk about doctrine and cases. But it’s time to put the pieces together. These synergies are shaping the world we live in, and—unless we have the conversations that we need to change that world—they are reciprocally creating the normalization of corruption.

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The Normalization of Corruption and Wells Fargo’s 2 Million False Accounts

14040090880_7ba42ec582_z[We’re pleased to welcome J.S. Nelson, Senior Fellow at the Zicklin Center for Business Ethics Research at Wharton, and an Advisor in the Center for Entrepreneurial Studies at the Stanford Graduate School of Business. Nelson recently published an article in the Journal of Management Inquiry entitled “The Normalization of Corruption.” From Nelson:]

My paper in the Journal of Management Inquiry’s upcoming special issue on corruption describes how corruption becomes a new norm across individuals, companies, and then industries. Entitled “The Normalization of Corruption,” the paper relies on findings from law, organizational behavior, and surveys of the workplace to describe the norm in terms of behavioral ethics, how it reproduces, and how it grows.

The discussion focuses on how the normalization of corruption is built by individuals, spreads to companies, and then to industries. It further describes how the very normalization of the corruption protects individuals singled out for their misconduct from punishment by the legal system.

The specific examples in the paper are taken from the financial industry and the 2015-16 Volkswagen emissions scandal. This week’s headlines about widespread fraud at Wells Fargo follow the same patterns: cheating became the norm at Wells Fargo because of intense pressure from top executives; those top executives deny personal responsibility; and the legal system gives us few options to prosecute them for behavior that is otherwise widespread. Systemic fraud ensues.  Wells Fargo created over 2 million unauthorized accounts for customers, charged at least $1.5 million in unwarranted fees for those sham accounts, and over 5,300 employees were involved.

Similar to the social pressures that fueled the 2007-08 financial crisis, managers inside Wells Fargo pushed their employees to lie, cheat, steal, and to bend the rules in any imaginable way to satisfy sales goals and make profit. Employees were told to sign up their mothers, siblings, and friends; instructed to hunt for sales at bus stops and retirement homes;and often targeted elderly clients and people who did not speak English well.When employees protested that “This doesn’t make sense” and “Where are you getting these sales goals?”managers would answer, “No, you can do it”or “You’re negative”or “Oh, you’re not a team player.”Ethical employees who reported to hotlines and through the chain of command were fired for insubordination. Wells Fargo human resources personnel admit that the bank had a playbook for watching any employees who reported and then finding ways to fire them for another reason.

Now the bank faces the growing threat of a private class action lawsuit by ethical employees who were fired, and two top executives will have parts of their pay clawed back by the company’s disgraced board. But the rest of the legal system appears paralyzed to effectively enforce consequences on key individuals.

How did we arrive at this point of broadly corrupt norms? And more importantly, how do we turn around a system that has normalized corruption? The “Normalization of Corruption” JMI paper delves into these questions with immediate application for today.

[Please look for the follow-up entry this week on the origin of the paper, “The Normalization of Corruption.”]

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*Wells Fargo Image attributed to Mike Mozart (CC).

Paradox and Dialectics: What can we learn from combining these perspectives?

OSS_LoRes

[We are pleased to welcome Trish Reay, Editor-in-Chief of Organization Studies.]

Managing organizational contradictions is an increasingly popular topic for both academics and practitioners. The work world is filled with contradictory tensions such as autonomy vs control, where managerial responses must respect the opposing elements (e.g. autonomy and control) rather than focus on one at the expense of the other. In Integrating Dialectical and Paradox Perspectives on Managing Contradictions in Organizations authors Timothy Hargrave and Andrew Van de Ven take the view that paradox and dialectics provide different yet equally and simultaneously valid lenses for understanding such organizational contradictions. Drawing on both perspectives, they develop a theoretically grounded process model to: (1) focus on the management of organizational contradictions within a broader social context, (2) depict managers as both accepting of and resisting the contradictory elements, (3) identify two managerial approaches – assimilation and mutual adjustment, and (4) explain how tensions between contradictory elements can be both reproduced and transformed.

I particularly recommend this article because Hargrave & Van de Ven not only provide a thoughtful and helpful comparison of the paradox, dialectical and integrated approaches, but they also develop a series of provocative implications for paradox and dialectics researchers. As the authors note, their integrated model holds excellent potential for much needed attention to conflict, power, politics, institutions and the unintended consequences that impact managerial strategies regarding organizational contradictions. If you are interested in paradox or dialectics, this is really a ‘must read’ article!

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Who Does Referral-Based Hiring Help Most, and How?

9323706832_efbf0759ba_zReferral-based hiring is a commonplace practice for modern organizations, which holds considerable benefits for employees hired based upon a referral, including greater chances for upward mobility within the company. A recent paper published in ILR Review entitled “Lasting Effects? Referrals and Career Mobility of Demographic Groups in Organizations,” further studies the benefits of referral based hiring, and finds that the positive impact does not effect different demographic groups equally. Rather, authors Jennifer Merluzzi and Adina Sterling find that referral-based hiring provides the biggest increase in promotional opportunities for racial minorities. The abstract for the paper:

While prior research has suggested that network-based hiring in the form of referrals can lead to better career outcomes, few studies have tested whether such career advantages differ across demographic groups. Using archival data from a single organization for nearly 16,000 employees over an 11-year period, the authors examine the effect of hiring by referrals on the number of promotions employees receive and Current Issue Coverthe differences in this effect across demographic groups. Drawing on theories of referral-based hiring, inequality, and career mobility, they argue that referral-based hiring provides unique promotion advantages for minorities compared to those hired without a referral. Consistent with this argument, they find that referrals are positively associated with promotions for one minority group, blacks, even after controlling for individual and regional labor market differences. The authors explore the possible mechanism for this finding, with initial evidence pointing to referrals providing a signal of quality for black employees. These results suggest refinement to prior research that attests that referral-based hiring disadvantages racial minorities.

You can read “Lasting Effects? Referrals and Career Mobility of Demographic Groups in Organizations” from ILR Review free for the next two weeks by clicking here. Want to stay current on all of the latest research from ILR Review? Click here to sign up for e-alerts!

*Image attributed to Cydcor (CC)

Learning to Lead: A Comparison of Women’s and General Leadership Development Programs

6109345368_004befc070_z[We’re pleased to welcome Keimei Sugiyama of Case Western Reserve University. Keimei recently published an article in Journal of Management Education with co-authors Kevin V. Cavanagh, Chantal van Esch, Diana Bilimoria, and Cara Brown entitled “Inclusive Leadership Development: Drawing from Pedagogies of Women’s and General Leadership Development Programs.” From Keimei:]

The importance of leadership development training focused on women has been well understood given the challenges of overcoming gender biases, stereotypes and unwritten rules that affect women in their leadership identity transition.  Yet there have also been shifts in how we think about the important qualities of leaders such that general programs include enhancing competence in self-awareness and emotional and social skills, making the work of leadership not just about meeting business demands but also about meeting the interpersonal needs of an increasingly globalized and diverse workforce.  If this is the case, then does there continue to be a need for women-focused programs or has our very understanding of leadership shifted enough to include women?

In this context, we were inspired to compare general and women’s leadership development programs in order to explore the following questions:

  • Are general and women’s leadership development programs becoming more similar or do they remain distinct in assumptions of what “leadership” is?
  • How do these assumptions affect how relating to others is addressed in developing as a leader?
  • How do these assumptions address the leadership identity transition of understanding both self and others to develop leadership capabilities?

What we found was that although General Leadership Development Programs JME(GLDPs) and Women’s Leadership Development Program (WLDPs) shared similar themes of leadership development, there was a stark contrast in what each type of program emphasized.  GLDPs were more likely to reflect assumptions of a leader as an independent self, separate from others, and manifested in more agentic and transactional leadership approaches.  WLDPs were more likely to reflect assumptions of a leader as a relational self, learning through connecting with others, and approaching the transition to leadership as relational and identity-based.  Given these contrasts and the challenges that continue to face women in the transition to leadership, we concluded that WLDPs do continue to offer significant value in supporting the advancement of women in leadership.

What surprised us in this study is that despite acknowledgement of the global context of the increasingly diverse workforce, both types of programs in their descriptions did not directly highlight how leadership involves being inclusive of multiple diverse identities and intersectionality (e.g., being a woman of color). We suggest that highlighting the importance of inclusive leadership that both values uniqueness and creates belonging for diverse multiple identities is important for any leadership development program.

We also developed a model that integrates pedagogies implicit in both types of programs to suggest a framework for inclusive leadership development. We anticipate that this framework will be helpful in better balancing and promoting more inclusive approaches to leadership in both types of programs. We also hope that this model helps to expand the research on inclusive leadership and informs new pathways for leaders to be developed in ways that value and enhance all their meaningful identities.

The abstract for the paper:

Trends in extant literature suggest that more relational and identity-based leadership approaches are necessary for leadership that can harness the benefits of the diverse and globalized workforces of today and the future. In this study, we compared general leadership development programs (GLDPs) and women’s leadership development programs (WLDPs) to understand to what extent program descriptions addressed inclusive leadership—leadership that draws on relational skills to value both the uniqueness and belonging needs of diverse identities to create business effectiveness for the long term. GLDPs predominantly reflected pedagogical assumptions of separate knowing, development of the autonomous self, and masculine leadership approaches of agentic and transactional leadership. In contrast, pedagogical assumptions of connected knowing, development of the relational self, and relational and identity-based leadership approaches were more prevalent in WLDPs. These findings suggest that WLDPs continue to offer significant value to supporting women leaders in their advancement, yet both WLDPs and GLDPs can do more to be inclusive of additional diverse identities to better develop leaders of the future who can lead with inclusive behaviors. We suggest a pedagogical framework for inclusive leadership development that may better balance and promote synergies between achieving business priorities and relating to others and their diverse identities.

You can read “Inclusive Leadership Development: Drawing from Pedagogies of Women’s and General Leadership Development Programs” from Journal of Management Education free for the next two weeks by clicking here. Want to be the first to know about the latest research published by Journal of Management EducationClick here to sign up for e-alerts!

*Image attributed to aiesecgermany (CC)

Time for Some Course Corrections in Organizations

Blake Ashforth

 

[We’re pleased to welcome Blake Ashforth of Arizona State University, Tempe. Blake recently published an article entitled “Exploring Identity and Identification in Organizations: Time for Some Course Corrections,” published in Journal of Leadership & Organizational Studies. From Blake:]

  • What inspired you to be interested in this topic?

When individuals identify with their occupations and organizations, good things generally happen. They tend to perform more effectively, make decisions with the organization’s best interests in mind, and are better organizational citizens. However, after hundreds of studies on identity and identification in the workplace, I think it’s time for some course corrections. Specifically, I argue that we’ve drifted away from the core aspect of identification – that is, the definition of oneself in terms of a target – treating identification as just another attitudinal variable; that the most important target of identification is not the organization per se, but the occupation, relationships, and groups or teams; that there is an important dark side to identification; and that we need to consider perspectives of identity beyond social identity theory/self-categorization theory.

How do you see this study influencing future research and/or practice?

Identity and identification have been vital concepts in organizational studies for decades. My hope is that these “course corrections” will help keep these concepts as vital and generative in the future as they have been in the past.

 


An excerpt from the article:

JLO

Identity and identification remain very popular constructs for organizational scholars, regularly generating a bounty of provocative research. To help maintain the generativity of these root constructs, I suggest four “course corrections” for our explorations, namely, focusing more on (1) the core aspect of identification, that is, the definition of self in terms of a target; (2) other targets of identification aside from the organization; (3) the dark side of identification; and (4) perspectives of identity beyond social identity theory/self-categorization theory.

You can read the article “Exploring Identity and Identification in Organizations: Time for Some Course Corrections” from the Journal of Leadership & Organizational Studies free for the next two weeks by clicking here.

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