Journal of Management Inquiry: Corruption Special Issue

JMI_72ppiRGB_powerpoint.jpgThe July 2017 Special Issue of the Journal of Management Inquiry is now online to view! This issue focuses on the phenomenon of corporate corruption, with specific topics such as counterproductive behavior, corporate culture and ethics, and media framing. Below is an excerpt from the special issue introduction entitled “Expanding Research on Corporate Corruption, Management, and Organizations,” from authors Stelios Zyglidopoulos, Paul Hirsch, Pablo Martin de Holan, and Nelson Phillips:

Corruption is a major problem in much of the world. It often prevents economic development, causes inefficiency and unfairness in the distribution of resources, can be the underlying factor behind corporate failures and industry crises, can erode the social fabric of societies, and can have other major negative impacts in the well-being of individuals and societies….But, before we proceed to discuss the topic of corruption research, we should address the issue of what corruption is and note its complexity. Transparency International (2017) defines corruption as “the abuse of entrusted power for private gain.” Similarly, Ashforth, Gioia, Robinson, and Treviño (2008) define corruption as “the illicit use of one’s position of power for perceived personal or collective gain” (p. 671). We believe we should enrich and expand this definition by differentiating between first- and second-order corruption….In this special issue, our purpose is not only to renew and extend the research agenda around corporate corruption, so that we can contribute toward a more sophisticated and complex understanding, but also to facilitate communication between different researchers.

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Call for Papers: Business & Society’s Special Issues

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Business & Society is currently accepting manuscripts for two special issues.

Please click here for details on how to submit to “Modern slavery in business.”

Please click here for details on how to submit to “Corporations, capitalism and society.”

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Leaders as Heroes: Can They Liberate Themselves?

[We’re pleased to welcome author Gerardo D. Abreu Pederzini of the University of  Bath, UK. Pederzini recently published an article in the Journal of Management Inquiry entitled “Leaders, Power and the Paradoxical Position: Fantasies for Leaders’ Liberation. Below, Pederzini reflects on the inspiration for conducting this research:]

3042794481_1300140a3c_z.jpgOur world of illusions, sooner or later crumbles in front us. The dreams and fantasies that move us are doomed to show their true colors at some point or another. And, within those fantasies, that of the paternalistic leader is perhaps the most powerful. Since the times of the Romance of Leadership, we have known that people love a good hero story. Yet, finding out that the paternal figure, whoever that might be for us, is not as almighty as we used to think, is one of those crucial points in life when we cross a threshold from which most of the times we cannot go back. However, there is sometimes no way to avoid this moment, as the fantasy of great leaders usually ends with their inevitable fall. When I first realized this, I realized as well that there was a missing element in the latter narrative. We calm our fears and sorrows forcing certain people -leaders- to pretend they control it all. But, how do leaders feel playing a role that is probably doomed to fail?

It is like this that Leaders, Power and the Paradoxical Position: Fantasies for Leaders’ Liberation emerged from my curiosity to answer a perennial question: how do normal limited human beings (i.e. leaders) cope with the challenge of having to pretend that, for some magical reason, they know better than any of us what they are doing? Fantasy is the answer that my paper in the Journal of Management Inquiry proposes for the aforementioned question. But, it is not fantasy as pure magic that is explored in this paper, but fantasy as a subtle socio-cognitive process to find ways to disguise magic in reality itself. In short, it is magical realism fantasizing that explains how a group of leaders that I studied, were able to escape that paradoxical position of having to pretend that they can do it all, when actually knowing they cannot. Like this, the paper contributes to one fundamental aim: to rethink leaders from those who have all power to those that are actually subjects of it.

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Chalkboard photo attributed to thinkpublic (CC).

The elephant (and the donkey) in the boardroom

[The following post is re-blogged from the London School of Economics and Political Science Business Review. Click here to view the article from LSE. It is based on a paper recently published in Administrative Science Quarterly titled “The Elephant (or Donkey) in the BoardroomHow Board Political Ideology Affects CEO Pay.” From LSE:]

 

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Firms governed by politically conservative boards of directors pay their CEOs more money than do firms with more liberal-leaning (the ideological left in the US) boards. That’s the conclusion of our new study on the impact of political ideology in the boardroom. We also find an ideological disparity in the degree to which directors weigh recent firm performance when deciding upon CEO pay. Relative to their liberal counterparts, conservative-leaning boards tie CEO pay more closely to firm performance. They offer bigger financial rewards after periods of strong earnings or stock returns, and impose harsher penalties after periods of weak performance.

How much is a CEO worth to an organisation?

It’s a hotly debated question in American fiscal discourse, especially as the pay gap between chief executives and front-line workers grows ever vaster. Of course, this debate is largely academic for all but the few whose votes really matter: the corporate directors who set compensation packages for their firms’ senior leaders.

Boards have a fiduciary responsibility to ensure that CEOs are paid the appropriate amount to serve the best interest of shareholders. But what’s “appropriate” is highly subjective, and might be directed by political beliefs. Given that pay is the most observable manifestation of directors’ biases about how much CEOs matter to the success of their organisations, we wondered whether corporate boards’ ideological leanings may affect decisions about CEO pay.

To find out, we tracked the pay and performance of more than 4,000 CEOs of S&P 1500 firms from 1998 to 2013. We also tallied donations by those firms’ corporate directors to political parties and candidates over the same period, establishing an ideology score for each board along the left-right political spectrum. To create an apples-to-apples comparison of CEO pay, we controlled for firm size, age, industry, sales growth and other factors in compensation decisions. This allowed us to isolate the relative effect of political ideology on CEO pay across a wide range of public companies.

After levelling the landscape, we found that conservative boards, on average, paid their CEOs four percent more money than liberal boards paid theirs. This translates to approximately $140,000 in additional compensation for the typical chief executive. This pay differential equals more than three times the median income in the United States.

When we factored recent firm performance into the equation, we found that good times brought an even bigger premium in compensation. After a period of strong earnings or increased market capitalisation, conservative boards paid their CEOs 18 per cent more than CEOs who report to liberal boards. The difference in CEO pay across liberal and conservative boards was much smaller, however, following poor performance. Our findings indicated that the poorest performing chief executives fared more or less the same in terms of their pay, regardless of whether their boards were conservative or liberal.

What’s going on here?

Our findings suggest that there may be differences in the way that liberals and conservatives view the impact of individual leaders. While it would be ideal to examine these differences by collecting primary data through surveys, we were unable to do that. Instead, we drew from prior psychological research that has shown that conservatives are more likely to make internal (as opposed to external, or situational) attributions for outcomes.

This logic suggests that directors’ political ideologies may shape their perceptions of how much — or how little —CEOs matter to a firm’s profitability and survival. According to our theory, conservative boards will be more inclined to believe that the fortunes of an organisation hinge on the actions of its CEO. And this higher assessment of CEO impact translates into higher CEO pay. In contrast, liberal boards are more likely to attribute firm performance to social structures, market conditions and broader environmental factors, resulting in lower CEO pay.

What does it mean?

For practitioners and astute observers of business, our findings suggest that the criteria for evaluating corporate governance may be less objectively clear-cut than previously thought. Instead, opinions about whether governance practices are good versus bad may be in part driven by the politics of the beholder. For instance, conservative directors could reasonably argue that higher CEO pay is good governance. After all, it is their responsibility to recruit and retain uniquely talented CEOs, a task that takes on heightened importance when CEOs matter — or are perceived to matter — a great deal to the organisations they lead.

For corporate directors, it may be beneficial to have the awareness that their political beliefs are shaping their views and influencing their approaches to corporate governance. Political biases may creep into these really important decisions. To understand that this is happening is informative. However, the question is: if you knew about your biases, would it make you more reflective? Would it alter your behaviour?

Notes:

 

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Call for Papers: World Future Review!

Current Issue CoverWorld Future Review is currently accepting submissions concerned with futures research. The journal publishes foresight literature addressing topics informed by technology assessment, policy analysis, operations research, issues management, competition research, and more. To find out more about the manuscript submission guidelines and how you can submit your manuscript to World Future Review, click here.

In the recent June 2016 issue, World Future Review featured articles that addressed social movements and futures research, the operational process for organizational foresight, and the health of futures studies. In addition, a new article published online by authors David N. Bengston, Jim Dator, Michael J. Dockry, and Aubrey Yee entitled “Alternative Futures for Forest-Based Nanomaterials: An Application of the Manoa School’s Alternative Futures Method” delves into four alternative futures for forestry. The abstract for the article:

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Forestry and forest products research has entered into a robust research agenda focused on creating nano-sized particles and nanoproducts from wood. As wood-based materials can be sustainably produced, the potential of these renewable products could be limitless and include high-end compostable electronics, paint-on solar panels, and lightweight materials for airplanes and cars. Others warn about potential serious negative health and environmental consequences. Either way, wood-based nanomaterials could disrupt forestry as we know it. This article is a summary and analysis of a collaborative research project exploring the futures of wood-based nanomaterials within the context of the futures of forests and forest management within the United States. We start by describing the history of forestry through the lens of the U.S. Forest Service, then describe nanotechnology in general and wood-based nanocellulose specifically. Next, we outline the Manoa School alternative futures method, and how we used it to design and carry out a “complete futures of x” project. Following the Manoa School approach, we describe four alternative futures for forestry and forest management. We conclude with implications for the future of forestry, forests, and forest-based nanomaterials, as well as a discussion on the implementation of a complete “futures of x” project.

You can read both the June 2016 issue and the article “Alternative Futures for Forest-Based Nanomaterials: An Application of the Manoa School’s Alternative Futures Method” from World Future Review free for the next two weeks. Want to stay up to date on all of the latest research from World Future ReviewClick here to sign up for e-alerts!

*Wood image attributed to Dennis Hill (CC)

A Broader Look at Firms’ Corporate Social Performance in 2000-2010

 

10310820984_fb57a27068_z[We’re pleased to welcome Elise Perrault of College of Charleston. Elise recently published an article in Business & Society, entitled “What have firms been doing? Exploring what KLD data report about firms’ corporate social performance (CSP) in the period 2000-2010,” with co-author Michael Quinn of Bentley University.]

With a strong interest for firms’ relationship with stakeholders and, more broadly, society, we constantly read about how firms address – or not – a wide variety of social issues. However, this stream of research generally provides anecdotal evidence or analyzes antecedents and consequences of firms’ involvement in a targeted issue (such as philanthrophy or environmental management, for example). In short, we felt the need for a broad, 30,000 ft, view of how firms generally engage with stakeholders through addressing social issues. At the same time, with the soaring popularity of KLD data in the field, we wanted to gain a more precise appreciation of how this data source pictured firms’ actions in society.

We find our results quite revealing and at times surprising. For instance, the results show that firms are increasingly attending to secondary stakeholders, even while garnering more concerns on primary stakeholder dimensions. This points us to question whether managers are experiencing shifting beliefs regarding the value of BAS CoverCSR; specifically that it represents less a mechanism to attract stakeholder support and more a cornerstone to their risk management approach in terms of how society values the firm’s existence. We also find, as expected, that firms generally nurture strengths in the same dimensions in which they present concerns.

The most surprising finding is the extent to which prior corporate social performance (CSP) in a given dimension is linked to CSP in other dimensions over time. This suggests that as firms engage in CSP, they find rewards that drives them to further invest in yet other dimensions of CSP. As a result, we are led to reconsider the notion of a “virtuous circle” (Waddock & Graves, 1997) and suggest that future research examines in greater depth the real benefits that firms perceive from CSP and the motives that drive their increasing commitment to CSP.

Having provided this broader view of firms’ involvement with stakeholders and social issues, we hope this research will serve as a foundation for future research in several ways. For starters, we note the significance of industry dummies in the analysis. This finding confirms what previous research indicates, that industry matters to CSP strenghts and concerns. However, the extent to which industry affiliation predisposes a population of firms to certain CSP strenghts or concerns remains unaddressed. Pushing further in this direction would be to explore how industry affiliation affects stakeholders’ perceptions, and whether stakeholders are more forgiving or scrutinizing of firms in certain industries, for example.

Another insight from our analyses is the importance of using a long time frame when analyzing firms’ CSP, which has seldom been used in previous research. Doing so would enable researchers to see patterns and connections between various dimensions of CSP, answering questions such as “Do strengths (concerns) on certain dimensions of CSP generally prompt firms to subsequently perform better or worse on these and other dimensions?” While this would shed light on the ways in which firms can be primed to address certin social issues, on a broader scale, these analyses contribute to the conversation debating the fundamental question regarding the purpose of the firm and its obligations to shareholders and stakeholders.

The abstract for the paper:

With the blossoming of research on corporate social performance (CSP), the data produced by Kinder, Lydenberg, Domini (KLD) have become the standard to measure firms’ social and stakeholder actions. However, to date, only a few studies have focused on examining the data directly, and have done so largely in terms of validating the concepts and methods in the data set’s construction. The present study seeks to complement these efforts by contributing knowledge about what the KLD data report on firms’ actions toward primary and secondary stakeholders, and the dimensions of CSP that firms generally engage in, together or sequentially. With data on 3,073 firms over the period 2000-2010, results show that firms expend more resources on garnering strengths in primary stakeholder dimensions, although this trend is sharply deteriorating to the benefit of secondary stakeholders—notably the natural environment. Results also show that firms generally approach CSP with a mixed behavior, with strengths and concerns in the same dimensions, especially as it pertains to secondary stakeholders. These are the same dimensions in which firms show the longer, more intrinsic commitments, suggesting that secondary stakeholder strengths and concerns may be structural in nature. However, there is also evidence of relationships across dimensions, indicating that firms’ involvement in CSP can generate momentum. The rich implications of these findings are discussed.

You can read “What have firms been doing? Exploring what KLD data report about firms’ corporate social performance (CSP) in the period 2000-2010” from Business & Society free for the next two weeks by clicking here. Want to stay current on the latest research published by Business & SocietyClick here to sign up for e-alerts!

Interested in submitting a manuscript to the journal? You can learn more about Business & Society‘s manuscript guidelines by clicking here.

*Conference sponsorship image attributed to Fortune Live Media (CC)

Does Social Activism Disrupt Corporate Political Activity?

The use and efficacy of corporate political activity has been well researched in the past, but a new paper published in Administrative Science Quarterly from authors Mary-Hunter McDonnell and Timothy Werner is taking a new perspective of corporate political activity. The paper, entitled “Blacklisted Businesses: Social Activists’ Challenges and the Disruption of Corporate Political Activity,” focuses on how large scale activist protests disrupt corporations’ ability to influence political stakeholders. Mary-Hunter McDonnell dives into the findings of the paper in the video below:

The abstract for the paper:

This paper explores whether and how social activists’ challenges affect politicians’ willingness to associate with targeted firms. We study the effect of public protest on corporate political activity using a unique database that allows us to analyze empirically the Current Issue Coverimpact of social movement boycotts on three proxies for associations with political stakeholders: the proportion of campaign contributions that are rejected, the number of times a firm is invited to give testimony in congressional hearings, and the number of government procurement contracts awarded to a firm. We show that boycotts lead to significant increases in the proportion of refunded contributions, as well as decreases in invited congressional appearances and awarded government contracts. These results highlight the importance of considering how a firm’s sociopolitical environment shapes the receptivity of critical non-market stakeholders. We supplement this analysis by drawing from social movement theory to extrapolate and test three key mechanisms that moderate the extent to which activists’ challenges effectively disrupt corporate political activity: the media attention a boycott attracts, the political salience of the contested issue, and the status of the targeted firm.

You can read “Blacklisted Businesses: Social Activists’ Challenges and the Disruption of Corporate Political Activity” from Administrative Science Quarterly free for the next two weeks by clicking here. Want to keep current on all of the latest research from Administrative Science QuarterlyClick here to sign up for e-alerts!