Asymptotic Distribution Theory for Nonparametric Entropy Measures of Serial Dependence

Entropy is a classical statistical concept with appealing properties. Establishing asymptotic distribution theory for smoothed nonparametric entropy measures of dependence has so far proved challenging. In this paper, we develop an asymptotic theory for a class of kernel‐based smoothed nonparametric entropy measures of serial dependence in a time‐series context. We use this theory to derive the limiting distribution of Granger and Lin's (1994) normalized entropy measure of serial dependence, which was previously not available in the literature. We also apply our theory to construct a new entropy‐based test for serial dependence, providing an alternative to Robinson's (1991) approach. To obtain accurate inferences, we propose and justify a consistent smoothed bootstrap procedure. The naive bootstrap is not consistent for our test. Our test is useful in, for example, testing the random walk hypothesis, evaluating density forecasts, and identifying important lags of a time series. It is asymptotically locally more powerful than Robinson's (1991) test, as is confirmed in our simulation. An application to the daily S&P 500 stock price index illustrates our approach.     

Theory as Fantasy: Emotional Dimensions to Grounded Theory

In this paper we discuss emotions and fantasies that inform and influence the project of theory building. Our argument is that theory building can be improved by engaging directly with emotions and with fantasies that are defensively and creatively generated by the researcher. Once acknowledged, these can be transformed into ideas and insights. We provide an example of the emotional dynamics surrounding a novice researcher's use of grounded theory within her doctoral research. We highlight three distinctive researcher fantasies of containment, coherence and purity associated with her experience of the method. We discuss how engagement with these fantasies deepened the researcher's analysis and thereby enhanced the process of building theory from the data. Therefore, our paper contributes to an understanding of how fantasies mobilized by such an open‐ended research method can help to refine our thinking about emerging theory.     

Drivers and Outcomes of Long‐term Orientation in Cooperative Relationships

We argue in this paper that a buyer may deliberately develop long‐term orientation as a governance mechanism to deal with risks arising from exchange hazards, and to reduce the opportunistic behaviour of a supplier. While the exchange hazards of asset specificity pose a safeguarding problem, those of market uncertainty pose an adaptation problem. We test our model on a sample of 221 procurement partnerships. Our results show that satisfactory prior history of a supplier, asset specificity of the buyer and market uncertainty are all positively related to a buyer's long‐term orientation towards a supplier. Consistent with the idea that asset specificity and market uncertainty pose different governance problems, we find that satisfactory prior history reduces the positive relationship between asset specificity and a buyer's long‐term orientation, but enhances the positive relationship between market uncertainty and a buyer's long‐term orientation. We also find that a buyer's long‐term orientation fully mediates the relationship between satisfactory prior history and a supplier's opportunistic behaviour. Finally, implications on the theory and the practices of relationship governance are discussed.     

Subsidiary managers' initiative pursuit: A behavioral agency model

Subsidiary managers' decisions to pursue initiatives for innovative product introductions in their host markets provide opportunities for rent creation, but also bear risks for the multinational corporation (MNC). However, we lack insights into which factors drive such decisions. Grounded in behavioral agency theory, our study investigates which factors at the individual level, the corporate level, and the subsidiary's implementation context increase subsidiary managers' likelihood of initiative pursuit. We propose that an individual manager's capability and the MNC's entrepreneurial orientation serve as reference points in a specific implementation context. Based on a stated-choice experiment with 799 respondents, results show that subsidiary managers' likelihood to pursue an innovation initiative varies depending on the context, and the choice of implementation mode activates subsidiary managers' gain frames. Our findings advance theory by providing granularity on the situational complexity across multiple methodological levels that instigate subsidiary managers' initiative pursuit.     

The S‐Curve Effect of Lean Implementation

There is currently no theory that explains the pattern of change in a plant's performance as it implements a lean program. Does it improve at a declining, increasing, or constant rate, or in some other pattern? We use empirical data from the implementation of the Volvo Group's lean program worldwide to develop a grounded theory to explain this pattern. We find that the pattern roughly follows an S‐curve shape: as a plant progresses in its implementation of lean production, its operational performance improves slowly first, then grows rapidly, and finally tapers off. The initial stage can be characterized by “exploration”, during which the plant is essentially discovering and experimenting with lean principles, and the later stages by “exploitation”, during which the plant is realizing their benefits. We derive the grounded theory from quantitative internal company data and find additional qualitative support for it from our visits to 45 Volvo plants on 5 continents and 210 interviews with employees in these plants and Volvo headquarters. The S‐shape pattern has important implications. Practitioners must assess a plant's maturity in lean implementation and adjust their targets, action plans, and expectations accordingly. Scholars must take the position of the plant on the S‐curve into consideration when they analyze the impact of lean programs.     

A conceptual replication of ambidextrous leadership theory: An experimental approach

Ambidextrous leadership theory proposes that a leader's interplay between opening behaviors and closing behaviors enhances followers' exploration and exploitation behaviors, which ultimately increases innovative outcomes. Unfortunately, previous research suffers from problems with causal interpretation and endogeneity concerns threatening the validity of the theory. Our aim was to constructively replicate previous research with an experimental design, more rigorous measures, and state-of-the-art data analytical approaches (2SLS). In two randomized experiments (Study 1: N = 395, Study 2: N = 229), we manipulated four leadership styles (opening, closing, ambidextrous, and transformational leadership) and tested their effects on participants' exploration/exploitation behaviors as well as objective innovation outcomes. We only found partial support for the hypotheses from ambidextrous leadership theory. We discuss implications in terms of refining central concepts of the theory and offering more accurate assumptions about timing. We also elaborate on more general insights from our constructive replication studies for the leadership field.     

Setting the tone at the top: How the interface processes of organizational climate and non-TMT Managers' leadership transmit TMT cohesion to employees

We explore whether, and how, Top Management Team (TMT) cohesion can affect the collective turnover intentions of employees, through two interrelated interface processes. Based on Social Information Processing theory, we propose that the organization's corrosive climate and non-TMT managers' transformational leadership transmit TMT cohesion-based symbolic and relational information through a moderated-mediation model. The results of our Structural Equations Modelling (SEM) analyses of a multi-source dataset of 96 organizations—including 305 TMT members and 10964 employees split across three surveys—support our hypotheses. Confirmatory Factor Analyses support our measurement model, and the testing of various alternative models indicate that our findings are robust. Overall, our theory and findings highlight a more complex interface perspective on how the TMT affects employees, as key internal stakeholders, and provides a comprehensive model for future work.     

The Influence of Cost and Quality Priorities on the Propensity to Outsource Production*

Outsourcing of production has escalated over the past decade due to unprecedented competition and worldwide access to low‐cost labor markets. This article examines how cost and quality priorities—two key attributes of manufacturing strategy—influence a manufacturer's propensity to outsource. By doing so, we bridge the existing gap between research on manufacturing strategy and firm boundaries. We develop a theory‐based model that links a manufacturer's cost and quality priorities to its plans to outsource production. Our empirical analyses, based on survey data obtained from 867 manufacturing business units, control for firm‐specific factors previously shown to impact outsourcing, including asset specificity, uncertainty, and current capabilities in cost and quality. We found that the competitive priority placed on cost played an integral role in sourcing decisions, while, surprisingly, conformance quality priorities did not. The cost result is consistent with our expectations and observations in practice. The significant effect of cost priority on outsourcing shows that any theory of firm boundaries that fails to consider competitive priorities is incomplete. The finding regarding quality, which was counter to our expectations, may partially explain why there is an emergence of so many nonconforming products associated with outsourcing. Taken together, our results provide theoretical insights for future research into how manufacturing managers can improve their decision making on outsourcing production.     

On flexible product-mix decision problems under randomness and fuzziness

This paper considers several models of product-mix decision problems and production planning problems under uncertain conditions, and shows that these are extensional and versatile models for resolving previous product-mix problems. These proposed models include randomness derived from statistical analysis based on historical data, ambiguity of decision maker's intuition and the quality of received information, and flexibility in accomplishing the original plan. Furthermore, given that the upper limit values of some constraints have flexibility, and given a decision maker's level of satisfaction, we propose a flexible product mix of problems using the theory of constraints (TOC), and develop an efficient solution method. We then provide a numerical example that compares our models with some previous basic models. Efficiency of flexibility is obtained when our proposed models are applied to several conditions, such as measurable changes from the expected value of future returns.     

An Equilibrium Theory of Learning,Search, and Wages

We examine the labor market effects of incomplete information about the workers' own job‐finding process. Search outcomes convey valuable information, and learning from search generates endogenous heterogeneity in workers' beliefs about their job‐finding probability. We characterize this process and analyze its interactions with job creation and wage determination. Our theory sheds new light on how unemployment can affect workers' labor market outcomes and wage determination, providing a rational explanation for discouragement as the consequence of negative search outcomes. In particular, longer unemployment durations are likely to be followed by lower reemployment wages because a worker's beliefs about his job‐finding process deteriorate with unemployment duration. Moreover, our analysis provides a set of useful results on dynamic programming with optimal learning.     

Parenting With Style: Altruism and Paternalism in Intergenerational Preference Transmission

We develop a theory of parent‐child relations that rationalizes the choice between alternative parenting styles (as set out in Baumrind, 1967). Parents maximize an objective function that combines Beckerian altruism and paternalism towards children. They can affect their children's choices via two channels: either by influencing children's preferences or by imposing direct restrictions on their choice sets. Different parenting styles (authoritarian, authoritative, and permissive) emerge as equilibrium outcomes and are affected both by parental preferences and by the socioeconomic environment. Parenting style, in turn, feeds back into the children's welfare and economic success. The theory is consistent with the decline of authoritarian parenting observed in industrialized countries and with the greater prevalence of more permissive parenting in countries characterized by low inequality.     

Governance Choice,Sourcing Relationship Characteristics,and Relationship Performance

Past work on exchange relationships has debated the efficacy of partnership versus arm's‐length governance on performance of a buyer–supplier relationship. However, how these governance approaches leverage key supplier specific relationship characteristics has not been examined. In this study, we examine the moderating role of governance choice (arm's‐length versus partnership governance) in leveraging key supplier specific characteristics to achieve superior performance for the buyer in a relationship. Specifically, drawing from residual rights theory, we argue that the governance choice buyers make moderates the impact of supplier flexibility, supplier human capital and relationship dependency on performance. Our findings suggest that, for a buyer, the benefits of supplier flexibility and relationship dependency are better realized in partnership governance as opposed to arm's‐length governance. Further, our findings suggest that although buyers choose a specific governance approach consistent with their outsourcing motivation, the choice of governance is critical to leveraging the impact of supplier characteristics due to the moderation effects studied. We elaborate on these effects and discuss the implications of our findings.     

Putting the “psychic” Back in Psychic Distance: Awareness,Perceptions, and Understanding as Dimensions of Psychic Distance

Unlike the IB literature whose emphasis within the term ‘psychic distance’ has been more on “distance” and less on “psychic,” our starting point is all “psychic” and no “distance,” assuming distance is defined as the difference between two countries. We propose that psychic distance be centered on the firm's managers and explain how their cognitive limitations, perceptions, heuristics, and experiences interact with a foreign environment to influence their decision making. We replace the conventional definition of distance with the cognitive dimensions of managerial awareness, perceptions, and understanding. Awareness captures the manager's consciousness of foreign context elements relevant to the firm's decision, perception is the manager's interpretation of the extent of these relevant environmental elements, and a manager's understanding captures the relationships among these context elements and the firm's decision. We argue that a multidimensional psychic distance construct is necessary as many of distance's problems are due to the illusion it promises of capturing a manager's perception of a complex foreign environment in a single number. Our approach eliminates distance's problems of symmetry and linearity. It also eliminates the constraint that distance is only associated with negative outcomes. After explaining the theoretical value of awareness, perception, and understanding by developing propositions predicting context traps, we present our operationalization of psychic distance.     

Peer performance evaluations in global virtual teams: A longitudinal analysis of surface- and deep-level attributes

Most research on peer performance evaluations (PPEs) has been conducted using co-located teams, assuming that PPEs are static, and focusing on the effects of PPEs, while ignoring how attributes of the evaluated individual influence PPEs, and if PPEs may vary over time. The present study advances this line of research by applying theory on impression formation and Tuckman's team stages model to explore the varying relevance of surface-level and deep-level individual attributes on PPEs across the team's life, and specifically in the context of global virtual teams (GVTs). We used longitudinal data across ten weeks of 831 individuals from 34 countries working in 239 different GVTs. We found that surface-level attributes, such as age and home country reputation, affect PPEs in the early stages of the team project, while the deep-level attributes, such as cognitive ability and English language proficiency, influence PPEs in the late phase of a GVT's life. We also found that cultural intelligence impacts PPEs relatively early on, and emotional intelligence is only relevant for PPEs when the GVT hits critical turning points, while gender influences PPEs throughout the project. We discuss the theoretical and managerial implications of our findings and provide directions for future research on PPEs in GVTs.     

Deciding what's right: The role of external sanctions and embarrassment in shaping moral judgments in the workplace

We assert that previous research has overlooked the pervasive ambiguity in ethical situations in organizations, as well as how people pierce through this ambiguity to realize new distinctions between right and wrong. Focusing on well-intentioned individuals who unknowingly transgress, we present a theory of how they come to recalibrate their moral judgments. We begin by discussing the composition and nature of a moral judgment. Building on this discussion, we then consider how external sanctions can be used to shift moral judgments. Finally, we posit that internal emotional responses to sanctions (namely embarrassment) will facilitate this shift by triggering a sense of moral deficiency. More specifically, we assert that embarrassment will focus the transgressor's attention on what went wrong. This reflection provides an opportunity for the recalibration of the initial moral judgment. We conclude with a discussion of the implications of our theory.     

Decision Bias in Capacity Allocation Games with Uncertain Demand

Existing studies on capacity allocation games have demonstrated that the standard Nash theory exaggerates retailers' tendency of ordering more than they need in the situation of supply shortage. Adding to the results in the literature, our experimental study with consideration of demand uncertainty demonstrates that the standard Nash theory also exaggerates retailers' tendency of telling the truth in their ordering strategy. To account for these systematic biases, based on the quantal response equilibrium framework, we develop a behavioral model with different mental weights on the underage and overage costs to characterize a retailer's perception bias regarding a critical fractile. Based on the parameter estimates, we show that retailers perceive the critical fractile as being closer to 0.5 than it is, and the perceived critical fractile increases over time. Such empirical evidence of retailers' behavior in capacity allocation games can be valuable, for example, in the mechanism design of coordination and in improving supply chain performance.     

A robust approach to the share-of-choice product design problem

A critical issue when solving the share-of-choice product design problem is the reliability of the optimal solution in the presence of partworth uncertainty. Existing approaches use point estimates of an individual's partworth utilities as input to the product optimization stage, ignoring within-person variability in estimates. Post-optimality sensitivity analysis is occasionally performed to assess the degree to which a solution is negatively impacted by partworth uncertainty. We propose a robust optimization model that explicitly captures variation in partworth estimates during the optimization process. Using a large, commercial dataset, we benchmark our model's performance against its deterministic counterpart. We also present inferential theory to guide the selection of model parameters controlled by the analyst. Results reveal that the new approach produces robust solutions in the face of measurement error. Out-of-sample coverage for individuals drawn from the target population is significantly higher than corresponding solutions from published methods.     

Do emotionally perceptive leaders motivate higher employee performance? The moderating role of task interdependence and power distance

Extant emotional intelligence research has examined the relationship between employees' emotional intelligence and their job performance. We developed theory to extend this line of research to the domain of leader–employee relationships. Integrating emotional intelligence research with social exchange theory, we contended that leaders' emotion perceptions enhance employees' job performance. Drawing from social impact theory, we further argued that the strength of this relationship depends upon two contextual variables: within-group task interdependence and power distance. We tested our hypotheses using a sample of 350 employee nested in 74 workgroups. Hierarchical linear modeling results supported the hypothesized relationships between leaders' emotion perceptions and employees' job performance, and revealed that this relationship was strengthened by task interdependence and attenuated by power distance.     

Leader motive profiles in eight types of organizations

McClelland (1975) introduced the leadership motive pattern (LMP), a motivational configuration found to contribute to leader performance in traditional bureaucratic organizations. Using McClelland's general theory of motivation and Miner's work on organizational sociology, we refine McClelland's original leadership motive pattern, develop leader motive profiles for eight classical and new types of organizations, and advance eight testable propositions for empirical verification. We conclude with implications for future research and practice.