Are Founder-Led Firms Less Susceptible to Managerial Myopia?

[We’re pleased to welcome authors Charlotte L. Schuster of Technical University of Dresden, Alexander T. Nicolai of the University of Oldenburg, and
Jeffrey G. Covin of Indiana University. They recently published an article in Entrepreneurship Theory and Practice entitled “Are Founder-Led Firms Less Susceptible to Managerial Myopia?,” which is currently free to read for a limited time. Below, they briefly write about the motivation and impact of their research.

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What motivated you to pursue this research?

“Over the last two decades, critical concern among academics and practitioners increased that managers act myopically. This criticism refers to managers sacrificing a company’s long-term for its’ short-term goals – often expressed in cutting R&D expenses to meet earnings targets. Among the most cited reasons for managerial myopia in management research are short decision horizons of opportunistic managers. While existing research in different disciplines mainly focused on “professional” managers and CEOs of publicly listed companies, it is not clear whether myopic management practices also apply to founder-CEOs. Founders might differ inherently from salaried managers in terms of passion and intrinsic motivation, incentive structure, and duration in the company. This motivated us to analyze empirically whether founder-CEOs who built up a company and accompanied it from its early stage through and beyond the company’s IPO are, indeed, less susceptible to managerial myopia than nonfounder-CEOs.”

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

“Several recent events suggested that managerial myopia is prevalent among very big companies. For instance, the German Automotive Manufacturer Volkswagen gained negative publicity with the systematic manipulation of emission values on the test stand. By risking an immense image loss in the long run and the payment of high conversion and compensation costs to customers in the medium term, the company preferred to save R&D expenses in the short term and, thus, forewent the process of developing a better technology.

In contrast to professional managers, founders often claim to be long-term oriented. They seem to be more interested in demonstrating and pursuing a long-term vision for the company than committing to short-term earnings goals. For example, Jeff Bezos, founder and CEO of Amazon.com took losses for years and withstood the capital market pressure to make quick profits in order to realize his vision of building up the company. In a similar vein, Elon Musk, founder and CEO off Tesla Motors and SpaceX, is known for trying to win support for his views – ignoring the earnings expectations of the capital market.
Such contradicting company examples further motivated us to explore the investment behavior of founder- versus nonfounder-led firms in the context of short-term earnings goals.”

In what ways is your research innovative, and how do you think it will impact the field?

“Our study is the first to examine the phenomenon of managerial myopia in the context of founder- versus nonfounder-led firms. We leverage insights drawn from agency theory and stewardship theory as bases for explaining both a specific myopic earnings management practice as well as the influence of CEO founder status on the likelihood of this practice occurring. Specifically, our study contributes to knowledge based on corporate governance and entrepreneurship research that employs stewardship theory to explain the behavior of individuals who place their firms’ interests above their own self-interests. While we did not find a negative relationship between stock ownership and myopic R&D cuts as agency theory would suggest, our results document the influence of founder status as a factor associated with CEOs being good stewards of their firms’ assets, congruent with the stewardship theory position regarding founder-CEOs’ behavior. Our empirical results shed light on how firms can benefit from founder management and illuminate the financial conditions under which potentially detrimental earnings management practices may surface. Thus, our study contributes to a growing understanding of how and why founder management can well serve a firm’s long-term interests.”

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Family Firms and the Choice Between Wholly Owned Subsidiaries and Joint Ventures

[We’re pleased to welcome authors Maria Cristina Sestu of the University of Pavia and Antonio Majocchi of the University of Pavia. They recently published an article in Entrepreneurship Theory and Practice entitled “Family Firms and the Choice Between Wholly Owned Subsidiaries and Joint Ventures: A Transaction Costs Perspective,” which is currently free to read for a limited time. Below, They briefly describe the motivation and impact of their research.

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What motivated you to pursue this research?

Recent entry mode research has largely ignored the ownership characteristics of the MNCs. We investigate the entry mode decisions of family and non-family firms and explore the role of family involvement on both the MNC side and the local partner side. We contend that the mixed results produced to date are a consequence of a lack of attention to family or non-family involvement on both sides in general and on the local firm side in particular. In the paper, we address why and how family involvement affects entry strategy.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

Recent official data show that the value of cross border M&A and partial acquisitions deals in Italy reached a new high making the Italian companies the most targeted by foreign acquisitions in the EU along with France and just after the UK. A number of these acquisitions by family and non-family MNCs targeted iconic brands owned by family firms such as Loro Piana, Valentino, Pomellato and Krizia. Commenting the acquisitions on the news the managers involved on the deals often highlight the relevance of being a family firm. This suggests us that the family nature of both the target and the investing companies were still an underdeveloped issue in the management literature and convince us to further investigate the topic.

In what ways is your research innovative, and how do you think it will impact the field?

The intuition that studying the differences between the entry mode policies of family and non-family firms was a promising field of research proved right. We show that whether the investor and target are a family firm or not has an impact on the entry mode choice as family control is relevant on both sides of the transaction. We prove that future research in the field would be more fruitful if corporate governance characteristics were taken into account. We also show that family involvement generates some firm specific asset that affects family firm policies. In this way we contribute to the development of the theory of family firms.

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Rest, Zest, and My Innovative Best: Sleep and Mood as Drivers of Entrepreneurs’ Innovative Behavior

[We’re pleased to welcome authors Amanda J. Williamson of the University of Sheffield, Martina Battisti of the University of Portsmouth, Michael Leatherbee of Pontificia Universidad Católica de Chile, and J. Jeffrey Gish of the University of Oregon, Eugene. They recently published an article in Entrepreneurship Theory and Practice entitled “Rest, Zest, and My Innovative Best: Sleep and Mood as Drivers of Entrepreneurs’ Innovative Behavior,” which is currently free to read for a limited time. Below, they briefly write about the motivation and impact of their research, and speak about their research in a short video abstract.

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What motivated you to pursue this research?

We noticed that sleep is commonly undervalued by early-stage entrepreneurs, and realized that we know very little about what impact poor sleep quality has on entrepreneurially-relevant outcomes.

While the quality of our sleep is broadly declining, entrepreneurs in particular are under pressure to be “on” constantly. Recent studies indicate that early stage entrepreneurs feel that they need to be contactable and to work long hours in order to perform. Adding insult to injury, we noticed that entrepreneurial camps are often designed in a manner that encourage poor sleep, and that our media often celebrate poorly rested entrepreneurs as dedicated heroes.

This worried us, as evidence indicates that poor sleep can be dangerous. The long-term effects of poor sleep are evident in terms of our personal health, and the short-term effects are noticeable for our cognitive functioning. We started to wonder whether poor sleep could therefore be harmful for start-up performance, and if so, whether we might find an entrepreneurially motivated reason for entrepreneurs to prioritize their sleep. As innovative behavior is at the heart of effectively creating a venture, we thought it would be a great place to start exploring this topic empirically.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

We felt that the time was right for this research. While there is a growing interest in entrepreneurial well-being, entrepreneurial sleep has received limited attention to date. We hoped our research could help trigger an emerging conversation and provide empirical evidence on the important role that sleep plays for entrepreneurial wellbeing and entrepreneurship more generally.

What advice would you give to new scholars and incoming researchers in this particular field of study?

To date, only a handful of studies have explored sleep in the context of entrepreneurship and entrepreneurial behavior, thus we have barely scratched the surface on what could be a very promising line of research in the field. We encourage scholars to explore the topic further. Some of the many questions that remain open include:
1. What role do naps have on entrepreneurs’ performance?
2. What influence do circadian rhythms have on the dynamics of entrepreneurial teams and daily fluctuations in entrepreneurial performance? When is it good or bad to have diversity in circadian rhythms within an entrepreneurial team?
3. Are there interventions that are particularly effective for improving entrepreneurs’ sleep?
4. Are there any entrepreneurial sleep impairment trends? For example, are particular entrepreneurial events and stages in the entrepreneurial process related to poor sleep? Is sleep impairment similar according to venture types or within teams? How does sleep compare between entrepreneurs and non-entrepreneurs?
5. How does sleep impairment impact upon other aspects of entrepreneurial performance? For example, on how entrepreneurial pitches are delivered and evaluated?
6. What are the effects of entrepreneurs’ sleep for the longer-term performance of the individual, team, and startup?
7. When does it pay to sacrifice sleep in entrepreneurship?

 

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New Scriptologies of Organization Studies

[We’re pleased to welcome author Dr. Carl Rhodes of the University of Technology Sydney. He recently published an article in Management Learning entitled “Sense-ational organization theory! Practices of democratic scriptology,” which is currently free to read for a limited time. Below, Dr. Rhodes briefly describes his research and its significance to the present:]

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I was motivated to write this paper out of a long standing concern with the somewhat restrictive textual politics that is present in the field of organization studies. As with many other sites of the social sciences, this is a politics where those of us who work in it either consciously or inadvertently feel the pressure to write our work in a disembodied fashion that imagines what we are doing is simply offering an objective account of research and/or theorising.

While this approach to academic writing has long been dominant, so have challenges to it. The paper is published in a special issue edited by Sarah Gilmore, Nancy Harding, Jenny Helin and Alison Pullen that sought to “break out of the constraints of scientific writing in order to better develop insights and understanding about management and the world of work, and how to communicate those ideas”.

My response to this call was to do a review of the use of alternative and experimental modes of writing in organization studies from the 1980s onwards, beginning when scholars like John Van Maanen claimed that our writing could free itself up to be impressionistic and fragmented, and Barbara Czarniawska was exploring organization studies as a literary genre. In conceiving of the paper my idea was to describe the alternative alternatives that had been published over past 40 years or so as well as to explore how they relate to the politics of knowledge that still marginalises forms of poetic, artistic, unruly and creative writing in favour of colder scientific genres.

To offer a way of explaining this, the paper proposes the notion of ‘scriptology’ as a counterpoint to ‘methodology’. Just as a methodology provides an explanation and justification of the methods with which research conducted, a scriptology would do the same thing for the form in which research is written. The problem is, of course, that scriptology is largely taken for granted such that the dominance of masculine-rational scientific writing is taken for granted to the level of virtual domination.

I try to consider organization studies as an aesthetic phenomenon that contains competing claims of what forms of writing ‘count’ as knowledge. This focus on aesthetics is meant to attest to a ‘democraticization’ of knowledge, to the extent that people strive to create freedoms that enable different knowledges to enter in to the realm of what makes sense to our field.

While the paper reviews a range of historical examples of non-conventional writing, it also shows that in recent years the most productive and provocative of these have come from feminine and feminist writing. This amounts to the beginning of an aesthetic revolution that channels important political contestations over the gendered character of the inscription of research. This has been done not just in the name of stylistic pluralism but by considering the relationship of writing to forms of oppression and discrimination based on sex, gender and sexuality.

The scriptologies that have been developed in this emerging tradition criticize the masculinity of dominant mode of writing. More productively they emphasize and exemplify fluidity, plurality, reflexivity, embodiment, affectivity, non-sameness, and multiplicity of identities and relations as pivotal to the possibilities of feminine writing.

My intended contribution is limited to attesting to the work of others as manifest in a range of examples of feminine and feminist scriptologies. These include, inter alia, Brigitte Biehl-Missal practice of ‘feminine creation’, Briony Lipton’s ‘creative academic fiction’, Ajnesh Prasad’s rearticulation of Donna Haraway’s ‘cyborg writing, and Janet Sayers’ ‘feminist dogwriting’ and ‘meat-writing’.

The emerging sense that this writing portends is not about justification of different research genres so as to broaden forms of expression and extend knowledge, but rather it is about shifting and destabilizing the very meaning of what we might take knowledge to be. While the article explores the development and value such non-conventional writing in organization studies, I can only conclude by saying that reading the original works would promise to be more illustrative than relying on my exegesis.

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Scientific Contributions of Within-Person Research in Management

[Authors Brian W. McCormick of Northern Illinois University, Cody J. Reeves of Brigham Young University, Patrick E. Downes of Rutgers University, Ning Li, of the University of Iowa, and Remus Ilies of National University of Singapore recently published an article in the Journal of Management entitled “Scientific Contributions of Within-Person Research in Management: Making the Juice Worth the Squeeze.” Check out their video abstract!

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Does a Community of Practice Aid Recently Displaced Workers?

[We’re pleased to welcome authors Dr. David Gray of the University of Greenwich and Dr. Yiannis Gabriel of the University of Bath. They recently published an article in Management Learning entitled “A community of practice or a working psychological group? Group dynamics in core and peripheral community participation,” which is currently free to read for a limited time. Below, Dr. Gray briefly describes their research and its significance to the present:]

mlqb_48_3.coverIn this article, we describe the Silver Academy, a project involving over 100 unemployed and self-employed managers over the age of 50, who came together with the purpose of sharing knowledge and experience in starting up their own businesses. The starting point for the study was whether this group of demoralized managers who had recently experienced traumatic redundancies from highly paid and prestigious jobs could function as a community of practice – whether, in other words, they could function as a community not only supporting each other emotionally but sharing knowledge, skills and networks in radically restarting their lives outside the corporate world. During the project we noted that the Academy successfully matched the notion of a community of practice, in that participants built mutual relationships, shared engagement in activities and came to regard themselves as a ‘forum’, ‘support network’ and a ‘community of interest’. However, applying Bion’s (1961) theory of groups, our study challenges the homogenous and consensual notion of a community of practice, illustrating how, through unconscious group processes, some group members exhibited work-group mentality and the capacity for realistic hard work (and leadership), while others were caught in a basic-assumption mentality, prone to feelings of anxiety, guilt and depression, or in the words of one participant becoming ‘a group of lost souls’. As a longitudinal, three year study, in contrast to the more commonly undertaken cross-sectional studies, ours reveals many of the intricate dynamics, fissures, splits and conflicts in a community of practice that tend to go unreported.

We believe that our research has considerable value at a time of great dislocations in employment patterns, when automation and artificial intelligence will draw increasing numbers of people (including professionals and managers) to situations similar to those facing the members of the Silver Academy. Forming communities of practice aimed at sharing knowledge may be a first step towards discovering new meaningful work opportunities and restoring their careers. The success of such communities of practice, however, will depend on the extent to which they will manage to channel their energy and creativity to productive ends while managing collective and individual anxieties.

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Call for Editor: World Futures Review

World Futures Review invites applications for the Editorship of the Journal.

spwfr_9_1_72ppiRGB_150pixwWorld Futures Review (WFR) is the top forum for all who are professionally involved in exploring trends and alternatives for society. This dynamic quarterly publication offers valuable insight on the theoretical, research and practical issues confronting those interested in futures research. Along with interviews with leading futures practitioners, WFR publishes important new foresight literature.

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