Institutional Theory Needs to Rethink its Neglect of Morality

[We’re pleased to welcome authors Geoff Moore of Durham University, UK and Gina Grandy of the University of Regina, Saskatchewan, Canada. They recently published an article in the Journal of Management Inquiry entitled “Bringing Morality Back in: Institutional Theory and MacIntyre.” From Moore and Grandy:]

We have had an interest for many years in the work of the moral philosopher Alasdair MacIntyre and the ways in which, despite his highly critical approach to capitalism and corporate management, his work can be used to explain and explore what a virtue-based understanding of organizations means in both theory and practice. In particular, his distinctions between practices and institutions, and between two types of goods (internal and external) which are pursued by organizationJMI_72ppiRGB_powerpoint.jpgs has led to a series of papers exploring the implications of this approach. In this endeavour, we have been encouraged by a steady stream of articles, both theoretical and practical, which have explored this understanding of practices and organizations in such diverse settings as circuses, jazz, investment advising, banking, health and beauty retailing, and pharmaceuticals.

At the same time, we have noted the potential links with Institutional Theory and in particular its notions of logics and legitimacy and wanted to explore these links in greater depth. We were also concerned that new Institutional Theory lacks a positive account or morality and felt that this could be addressed by integrating it with MacIntyre’s work.

An empirical project involving an ecumenical study of churches in the north east of England led to some findings which we felt could be best explained by just such an integration of Institutional Theory and MacIntyre’s work. In particular, consistent throughout the empirical evidence was practitioners’ concern with the telos (overall purpose) of their organizations and the core practices of their faith, and their concern for the legitimacy of their organizations both to internal and external audiences, and hence of the moral nature of organizational life.

We argue that these findings can be generalized to any practice-based organization and conclude that ignoring or underplaying the moral dimension will give, at best, a diminished account of organizational life. Hence, we argue that Institutional Theory needs to rethink its neglect of morality and we suggest several implications for Institutional Theory as a result. We hope this might lead to further studies which follow up our lead and so to the bringing of morality back in to Institutional Theory. We also hope that a wider recognition of the moral dimension as an essential component in organizational life will impact practitioners and lead to organizations fulfilling their potential for the common good.

Don’t forget to sign up for email alerts through JMI’s homepage.

Experimental Research Designs For Entrepreneurship: Pros and Cons

[We’re pleased to welcome authors Sharon Simmons of the University of Missouri Kansas City, Alice Wieland of  the University of Nevada, and Dan Hsu of Appalachian State University, who recently published an article in Organizational Research Methods entitled “Designing Entrepreneurship Experiments: A Review, Typology, and Research Agenda.” From Simmons, Wieland, and Hsu:]

  • ORM_72ppiRGB_powerpoint.jpgWhat inspired you to be interested in this topic?

Dr. Simmons: Our inspiration for the project came from our individual interests in the experimental research methodology and our growing awareness of the difficulties that emerging entrepreneurship scholars in the field were having getting their experiment papers accepted at elite entrepreneurship journals. Each of the coauthors have different backgrounds that shaped our learning journeys leading up to the conceptualization of the article.  We believe that our diverse backgrounds and different challenges of learning about the appropriate sample and research designs allowed us to write the article in a way that will be understood by a broad audience with different levels of experience and understanding of experimental methods.

Dr. Wieland: My motivation for this paper came from the frustration of sending in experimental papers on entrepreneurship and getting reviews from entrepreneurship researchers who didn’t understand the method – they couldn’t fairly evaluate the manuscripts – both from a design perspective and the related statistical analysis. Much of entrepreneurship research is related to psychological phenomena, therefore, it is essential that using the best methods in psychological research should also be applied, and understood by entrepreneurship researchers.

Dr. Hsu: I shared the similar concerns with Dr. Wieland. Many entrepreneurship scholars were not familiar with the experimental method and rejected a paper using experiments because it lacked external validity – the experimental scenarios/conditions were not real. As we advocated in the paper, the external validity is never the goal of experiments. Instead, the purpose of experiments is to test causality, a critical component of many important relationships in entrepreneurship, including mediation effects. In fact, mediation effects can not be rigorously tested without using the experimental method.

  • Were there findings that were surprising to you?

Dr. Simmons: To prepare the article we conducted a survey of current entrepreneurship experiments.  What we found surprising is that the researchers were able to tap into different stakeholders of the entrepreneurship process to participate in the experiments.  There is a general perception in the field that experienced individuals such as venture capitalists, mentors, angel investors, CEOs are difficult to pull away from their everyday functions to engage in an experiment.  We were happy to see a good representation of these stakeholders participating in entrepreneurship experiments.

Dr. Wieland: Since this is a methodological review, there were not specific “findings” related to the work. However, what was interesting to me were the different techniques used for experimental designs noted in the review of published studies which combined a field sample with random assignment to address the weaknesses of both approaches.

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

Dr. Simmons: We hope that the care that we put into providing practical examples and the typology will ease the uncertainty of scholars that are new to the experimental method.  The entrepreneurship field is at a level of maturity that calls for studies with the scientific rigor to both test and advance theories of the relationships that scholars to date have done a fine job of bringing to the forefront. While we title the article, Designing Experiments for Entrepreneurship Research, we see this study impacting the broader management literature as well.

Dr. Wieland: We hope to provide a guide that will be useful for entrepreneurship researchers who are new to using experimental methods.

 

Don’t forget to sign up for email alerts so you never miss a newly published article. 

Call for Papers: Financial Markets and the Transition to a Low-Carbon Economy

                                                          Call for Papers
OrO&E_Mar_2013_vol26_no1_72ppiRGB_powerpoint.jpgganization & Environment- Special Issue
Financial Markets and the Transition to a Low-Carbon Economy

Submissions Due: April 28, 2017

Guest Editors
Céline Louche, Audencia Business School
Timo Busch, University of Hamburg
Patricia Crifo, University Paris X, Ecole Polytechnique
Alfred Marcus, Carlson School of Management, University of Minnesota

 

This special issue of Organization & Environment seeks to advance an emerging field of research on the financial sector and the transition to a low-carbon economy.

The COP 21 in November 2015 in Paris has intensified the reciprocal influences between the financial world and issues around climate change. Even the 2°C threshold has been discussed, and it is now acknowledged that “efforts [should be pursued] to limit the temperature increase to 1.5°C above pre-industrial levels” (UNFCCC, 2015). One of the main efforts consists in a cumulative investment of $53 trillion in energy supply and energy efficiency over the period from 2014 to 2035 (International Energy Agency, 2014). This consists not only in a shift from fossil fuels to renewable energy investments but also in much more investments in energy efficiency.

If the objectives in terms of carbon emissions and technologies deployment to keep the global average rise in temperature below 2°C are well defined (International Energy Agency, 2014; Meinshausen et al., 2009)—even if some space remains for alternative scenarios regarding specific technologies like Nuclear or Carbon Capture and Storage—the process to get there is not yet clear.

Governments can stimulate these changes notably through regulations. However, governmental actions might represent a long and cumbersome process. One may also question the feasibility to see widespread and significant actions from policy makers, which might not be enough to meet the ambitious climate objectives. If strong climate change–related regulatory actions seems to be emerging, investors already face substantial financial risks to see their assets become stranded in the context of a transition to a low-carbon economy (Ansar, Caldecott, & Tilbury, 2013; Leaton, 2013). This already calls for new ways of integrating climate change–related financial risk for investors.

If immediate and effective action cannot be expected to come from policy makers, financial markets could step in and play a significant role in the transition to a low-carbon economy. Indeed, they have the ability to massively redirect capital toward players that positively contribute to a climate-resilient economy, be it through dedicated financial instruments or the allocation choices investors make. Many indicators show that there is already a strong interaction between financial markets and the issues around climate change. Voluntary initiatives have emerged from the financial sector, like the Montreal Pledge or the Portfolio Decarbonization Coalition. New institutions addressing the need for climate-related data have emerged like CDP (Carbon Disclosure Project) and divestment or divest/invest campaigns such as the Fossil Free Campaign lead by 350.org. Financial services providers are also starting to handle the question by designing so-called “low-carbon” or “carbon-efficient” financial products. The regulatory body is also acknowledging the potential role of the financial market. As an illustration, in May 2015, France passed a new law—the French legislation on climate reporting for investors1—requiring mandatory ESG and climate policy reporting to all asset owners on a “comply or explain” basis. Another example is the Financial Stability Board’s Climate Disclosure Taskforce founded by Michael Bloomberg, whose objective is to give recommendations on what and how information should be disclosed by companies to better inform investors, lenders, and insurers about climate-related financial risk (Task Force on Climate-Related Financial Disclosures, 2016).

With or without regulation, the financial markets will play a crucial role in the transition toward the low-carbon society of the future. In addition to disclosure and portfolio adjustment issues, the financial sector can drive all other sectors’ transitions by discriminating the access to funding in the banking, insurance, and capital markets as a function of firms’ sustainability performance. However, the lack of research in this area is prevalent and many questions remain to be explored. Given the urgency of the climate change problem, further contributions in this area are both timely and needed.

Despite many initiatives to assess the performance of corporates regarding climate change, it appears that it is still extremely difficult to assess the contribution of a financial portfolio or an investment strategy to the energy transition. The indicators available to measure the alignment of the financial sector with those needs are far from clear and harmonized. Some work has already been done on the potential roles the financial sector can play for sustainability (Busch, Bauer, & Orlitzky, 2015) and on the ability of a given investment strategy to “hedge against climate risk” based on lower scopes 1 and 2 carbon intensity (Andersson, Bolton, & Samama, 2014; Schoenmaker & van Tilburg, 2016). Also, there is very little research on the potential contribution of financing streams to climate change mitigation and the transition to a low-carbon economy.

This Special Issue therefore addresses the variety of ways in which financial markets are already paving this way ahead and could or should do in future. Contributions to the Special Issue may cover (but are not limited to) the following research questions:

  • Which are the key stakeholders in the financial industry`s value chain for fostering a low-carbon economy? What are their barriers/motivations for accelerated action?
  • What is the potential leverage of different asset classes for financing of the energy transition?
  • What is the impact of current low-carbon investment practices regarding their contribution to climate change mitigation? Which challenges remain?
  • Which new institutions are required/likely to emerge for fostering the energy transition through financial markets?
  • What is the capacity of nonregularity initiatives like CDP or divesting movement in influencing the financial markets to engage in the transition to a low-carbon economy?
  • What is the financial relevance of climate effective investment strategies? Can current assessment tools fully capture related risks?
  • Are long-term climate goals coherent with short-term and/or long-term financial strategies?
  • What are the main drivers for low-carbon strategies in financial markets: regulatory pressure, underestimated risks, underestimated opportunities, and/or new social movements?
  • What are emerging practices in low-carbon finance, including the suitability and inclusivity of methodologies, tools, and metrics? What theories are emerging from those emerging practices?
  • What are the behavioral impediments of investors, asset managers, investor advisers, and other financial market actors to the development and adoption of low-carbon investment practices?
  • What are the enabling and hindering factors influencing financial institutions’ capacity to change and adapt their portfolio allocations, as well as their internal decision processes leading to pricing and capital access choices related to clients’ environmental performance?
  • Authors should submit their full manuscripts through ScholarOne Manuscripts by April 28, 2017, through http://mc.manuscriptcentral.com/oe
  • Be sure to specify in the cover letter document that the manuscript is for the special issue on “Financial Markets and the Transition to a Low-Carbon Economy.”
  • Manuscripts should be prepared following the Organization & Environment author guidelines, available at http://oae.sagepub.com/
  • After an initial screening by the guest editors, all articles will be subject to double-blind peer reviewing by a minimum of two anonymous referees and editorial process in accordance with the policies of Organization & Environment.
  • Authors who are invited to revise and resubmit their papers will be invited for a manuscript development workshop (expected date and location: Fall 2017, Paris). Acceptance for presentation at the workshop does not guarantee acceptance of the paper for publication in Organization & Environment.

Please click here to view this in full-text format, along with references.

Organization OR Environment?

organization-enviroment[We’re pleased to welcome Jennifer Tosti-Kharas, Assistant Professor at Babson College in Organizational Behavior. Tosti-Kharas recently published an article in Organization & Environment entitled “Organization OR Environment? Disentangling Employees Rationales Behind Organizational Citizenship Behavior for the Environment.” From Tosti-Kharas:]

The origin of this paper came from bridging two different research projects. My co-authors, Tom Thomas and Eric Lamm of SFSU, published a theoretical paper regarding how individuals develop attitudes toward organizational sustainability. Meanwhile, Eric and I have performed research on what motivates employees to perform sustainable behaviors. We look at what we term organizational citizenship behaviors toward the environment ¬ OCB-Es for short ¬ which are voluntary actions at work that help conserve resources, things like recycling, printing double-sided, etc. This paper joined these two streams of inquiry to examine how the reasons why people think it is important to act sustainably at work relates to their performance of OCB-Es and we tested it empirically.

Most past research on this topic has used a measure of how important people think sustainability is in general, meaning for broad ecological reasons, but never contextualized within a work organization. In the paper we distinguish between believing sustainability is important in and of itself, what we term an ³eco-centric rationale,² and believing it is important as a means to an end, specifically a business end, which we term an ³organization-centric rationale.² We also differentiate employees¹ own rationales about why it is important for their companies to operate sustainably from their perceptions about why their organizations believe it is important. Perhaps the most surprising finding when we surveyed 489 working adults across a wide range of organizations and occupations was that people were more likely to perform OCB-Es when they believed their organizations valued sustainability, regardless of their own personal beliefs about the importance of sustainability. These findings held for both eco-centric and organization-centric rationales. This to us was surprising, as lots of research would lead us to predict that personal values would trump perceived organizational values. Yet, we find the opposite, which suggests that perhaps people perform voluntary sustainability behaviors at work not just because they think it¹s important, but because their company believes it is important. It is worth noting that we included in our OCB-E measure not only simple, everyday tasks, but also ³higher-level² behaviors, like collaborating with other employees or making suggestions to supervisors to increase organizational sustainability.

These findings raise several interesting and timely implications for organizational leaders looking to increase employee sustainability behaviors. Since employee perceptions of organizational rationales for sustainability were so important in motivating OCB-Es, we advise communicating corporate values around sustainability and resource conservation as clearly as possible. By contrast, trying to screen employees for pro-environmental values seemed to be less important in a company that clearly communicated these values, since even employees who didn’t buy in on their own behaved more sustainably when they believed their employers cared about the environment.

 

Don’t forget to sign up for email alerts so you can stay up to date with the latest research from Organization and Environment.

How Does Organization Culture Act As A Driver Of Competitive Advantage?

[We’re pleased to welcome back Pankaj M. Madhani of ICFAI Business School (IBS). Pankaj cbrpublished an article in Compensation & Benefits Review entitled “Sales Organization Culture, Compensation Strategy and Firm Valuation.” Notes from Madhani:]

The culture of sales organization is comprised of fundamental principles and beliefs that are shared by its members and hence determines the norms that dictate how sales employees should think and behave. In addition to this, compensation systems promote behaviour of sales employees that ultimately becomes dominant behaviour in the sales organization. Thus, many sales organizations today are focusing on their culture as a strategic tool, deciding what it should be, aligning with strategic goals, business strategy and sales compensation design. Sales organization culture is defined both in terms of its causes and effects such as process-oriented culture and outcome-oriented culture, respectively.

A process-oriented culture focuses on behavior controls and emphasizes sales behaviors, whereas an outcome-oriented culture focuses on outcome controls and emphasizes sales outcomes. This research provides various frameworks and models for establishing relationship between organization culture and compensation structure and deriving its impact on sales performance. Study also provides numerous illustrations to calculate optimal compensation structure and corresponding organization culture to achieve maximum valuation of sales organization. An effective sales performance supported by an appropriate compensation strategy and culture of sales organization plays a significant role in determining financial performance, enhancing valuation of the sales organizations and increasing competitive advantage in the market place.

 

Don’t forget to sign up for email alerts for new articles from Compensation and Benefits Review here. 

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.

 

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.

Want to stay up to date with all of the latest research from the Journal of Leadership & Organizational StudiesClick here to sign up for e-alerts! You can also check out the latest podcasts from the Journal of Leadership & Organizational Studies by clicking here!