DO BETTER PAID POLITICIANS PERFORM BETTER? DISENTANGLING INCENTIVES FROM SELECTION

The wage paid to politicians affects both the choice of citizens to run for office and the performance of those who are appointed. First, if skilled individuals shy away from politics because of higher opportunities in the private sector, an increase in politicians’ pay may change their mind. Second, if the re‐election prospects of incumbents depend on their in‐office deeds, a higher wage may foster performance. We use data on all Italian municipal governments from 1993 to 2001 and test these hypotheses in a quasi‐experimental setup. In Italy, the wage of mayors depends on population size and sharply rises at different thresholds. We apply a regression discontinuity design to the only threshold that uniquely identifies a wage increase: 5,000 inhabitants. Exploiting the existence of a two‐term limit, we further disentangle the composition from the incentive component of the effect of the wage on performance. Our results show that a higher wage attracts more‐educated candidates, and that better‐paid politicians size down the government machinery by improving efficiency. Importantly, most of this effect is driven by the selection of competent politicians, rather than by the incentive to be re‐elected.     

KNOWING THE RIGHT PERSON IN THE RIGHT PLACE: POLITICAL CONNECTIONS AND RESISTANCE TO CHANGE

We use a political economy model of Schumpeterian growth with entry to investigate how an incumbent politician can strategically use the level of red tape to acquire incumbency advantage. By setting sufficiently high red tape, the politician induces the incumbent firm in the intermediate sector to invest in political connections, which are valued also by voters, who recognize that bureaucratic costs can be reduced by connected firms. Within this framework, we study the Markov perfect equilibria of an infinitely repeated game among politicians, firms, and voters, and show that all equilibria are characterized by investments in political connections and the re‐election of the incumbent politician. Political connections may prevent entry of advanced competitors and cause the economy to lag behind the technological frontier. Our model provides a possible explanation for the persistence of inefficient democracies and political barriers to technology development, where these reflect shared rather than conflicting interests.     

THE LIMITS OF CAREER CONCERNS IN FEDERALISM: EVIDENCE FROM CHINA

Performance‐based promotion schemes in administrative hierarchies have limitations. Chinese provincial leaders, despite facing strong career concerns, make different policy decisions depending on their career backgrounds. Provincial party secretaries who have risen from low to high positions within the province they govern (“locals”) spend a higher share of budgetary resources on education and health care and invest less in construction infrastructure than party secretaries who have made their most significant career advancements in other provinces (“outsiders”). Identification comes from variation in central leadership and term limits. As the promotion mechanism rewards infrastructure investments, locals are less likely to be promoted at the end of the term. We explore various mechanisms and provide evidence that the difference between locals and outsiders is not driven by knowledge or experience. Several pieces of evidence suggest that locals cater to low‐level provincial elites, who helped them rise to power. Thus, local career trajectories limit the power of career concerns by fostering competing allegiances.     

Preemptive or promotive: The differential impact of strategic leaders’ political connections on firm long-term investment in China

Research on corporate leaders' political connections has remained silent on the impact of heterogeneity of political resources on firm behaviors and of how strategic leaders differentially leverage these resources. We propose that a firm whose chair had ascribed bureaucratic connections as opposed to achieved political connections acquires different types of resources and chair differentially leverages the resources when making long-term investment. These effects are weaker when a firm is performing well. Our analyses of Chinese firms from 2003 to 2016 generally support these predictions. This study contributes to literature on political connections by providing greater specificity with respect to the heterogeneity of political resources and offering new insights into how strategic leaders leverage these resources. This study also contributes to the literature on board chairs and corporate governance by suggesting that when considering a firm's long-term plan, chair plays an important role and it is also important to monitor chair behaviors. Finally, it highlights the role of the interface between strategic leaders and state matters when considering the antecedents of long-term investment.     

The use and effectiveness of top executive dismissal

We provide a systematic assessment of the empirical evidence on the use and effectiveness of top executive dismissal as a governance and performance improvement mechanism. Our results suggest that poor individual and firm performance significantly increase the likelihood of executive dismissal. A strong power base might help under-performing top executives to extend their tenure in office, but effective ownership and governance structures can provide a counterweight to such entrenchment behaviors. However, our review casts doubt on the effectiveness of top executive dismissal as a means to enhance future firm performance: employing meta-analytical techniques we show that, although the dismissal announcement leads to positive abnormal returns, it has no significant effect on long-term measures of firm performance. On the basis of our findings, we develop a conceptual model of the possible antecedents and consequences of top executive dismissal. We derive implications for boards involved in situations of executive dismissal and for the successors of dismissed executives, and we provide directions for future leadership research on executive dismissal.     

Strategic leadership in organizational crises: A review and research agenda

Of all actors involved in managing an organizational crisis, strategic leaders play a particularly central role. However, the growing scholarship on the impact of strategic leaders in crisis situations is characterized by a high degree of fragmentation, considerably hindering the generation of parsimonious theory and practically useful insights. To address this issue, we conduct a systematic multidisciplinary literature review that spans the research streams on strategic leadership and organizational crises. For each type of strategic leader—Chief Executive Officer (CEO), top management team, and board of directors—we identify the different applied theoretical lenses and highlight commonalities and differences between studies and their insights. We use our review to derive an integrative conceptual framework that guides future research. Our exploratory review unveils that, while each type of strategic leader plays a significant role in a crisis context, the perspectives taken and the resulting evidence vary: as for the CEO, research focuses on social evaluations—for instance, based on the CEO's appearance—as well as agency-theoretic considerations—particularly, financial incentives. Regarding the top management team, research mostly adopts a managerial and organizational cognition lens, focusing on characteristics such as personality and human capital. Lastly, for the board of directors, agency-theoretic considerations again dominate the scholarly conversation, especially studies of board independence. Overall, we review and organize a rich but patchy research landscape, and we derive ample opportunities for novel theoretical and empirical inquiries into strategic leaders and their role in managing organizational crises.     

PARTY CUES IN ELECTIONS UNDER MULTILEVEL GOVERNANCE: THEORY AND EVIDENCE FROM US STATES

In federal countries, voters’ ability to evaluate the performance of their leaders might be reduced when different levels of government shape policy outcomes. This can blur political accountability. In this article, we analyze how party cues (i.e., politicians’ party membership acting as a cue towards their characteristics) affect voters’ incomplete information in a federal setting. We theoretically show that party cues allow indirect inference regarding politicians using observed policy outcomes, and can alleviate the accountability problem. Empirical evidence from US presidential election results across all 50 US states over the period 1972–2008 supports this proposition. However, party cues also have a downside in that they may reduce politicians’ effort, particularly when politicians at different levels of government are from different parties.     

政治关系与组织绩效的关系研究

以组织学习和动态能力、政治关系对绩效的影响为中介变量,构建了一个政治关系、组织学习、动态能力与绩效关系的理论模型;然后以广东珠三角地区166家企业为调查对象,采用SEM方法进行实证检验。研究结果发现,政治关系是否影响以及如何影响组织绩效,在很大程度上取决于企业所在行业的特征与企业本身的特点:对于非知识密集型企业而言,政治关系可以通过组织学习与动态能力间接地提高绩效水平;对于知识密集型企业而言,政治关系对于组织绩效、动态能力以及组织学习均没有显著的影响。     

The role of political ties and political uncertainty in corporate innovation

We examine the relationship between firms' political connections and corporate innovation in a European context. We also consider the moderating effect of political connections on the relationship between political uncertainty and firms' innovation. We use two different metrics of innovation: R&D (an input measure), and patent counts (an output measure). We find that firms with former politicians on their board of directors invest less in R&D than their counterpart firms. However, the presence of this type of director on the board is positively associated with the number of a firm's patent applications. It seems that, although political ties reduce the amount of resources devoted to R&D activities, they increase the effectiveness of intellectual rights protection. Results also show that political uncertainty decreases R&D investment but exacerbates the need for legal protection of innovation through patents. According to our results, political connections attenuate the effect of political uncertainty on firm innovation such that the negative (positive) effect of uncertainty on R&D intensity (patents) weakens when the firm is politically connected.     

Assassination of political leaders: The role of social conflict

Given human aggression and warfare are often described as the most pressing behavioral problems of our time, we focus on a related phenomenon, with large-scale social, political, and economic consequences: assassination of political leaders. We explore the role of social conflict as a predictor of political assassination and use historiometric methods and an extensive archival dataset to identify and code for contextual factors associated with social conflict and political homicide. Our results indicate an increase in social conflict increases the likelihood of assassination; moreover, environmental constraints and traditional culture predict leader assassination through social conflict. We discuss implications of these findings and suggest future research on contextual factors, assassination of political leaders, and their collective-level impact.     

Paternalistic leadership and employee voice in China: A dual process model

Drawing from social exchange and self-concept-based leadership theories, we investigate how paternalistic leadership — authoritarian, benevolent, and moral — affects employee voice from leader–member exchange (LMX) and status-judgment perspectives in the Chinese context. Data from 402 employees and their supervisors show that LMX and status-judgment mechanisms could work simultaneously in transmitting the influences of paternalistic leadership behaviors to employee voice. Authoritarian paternalistic leaders reduce employee voice by reducing their status judgment. Benevolent paternalistic leaders encourage employee voice by enhancing both LMX and status judgment. Moral paternalistic leaders positively influence employee voice mainly through LMX processes. We discuss theoretical and practical implications of the findings.     

Effect of charismatic signaling in social media settings: Evidence from TED and Twitter

Informal leaders in social media currently characterize a large part of political and economic communication on various challenges societies face, whether localized or transborder (e.g., COVID-19 pandemic, global warming). Scholars have theorized that charismatic signaling is effective in informal leadership settings; yet empirical evidence remains scarce in understanding a ubiquitous phenomenon that marks our times and plays an important role in shaping public opinion. In this article, we used two unique data sets extracted from social media to investigate the success of charisma for informal leaders, leaders who signal their beliefs and preferences to others but having no formal authority over them. Social media offers us a standardized medium as well as a natural environment to test our predictions. Using a sample of TED talks and tweets, we coded for objective markers of charisma and found that using more verbal charismatic signals predicted (a) higher views for TED talks as well as higher ratings for the extent to which the talk was found to be inspiring—beyond attractiveness and nonverbal behavior—and (b) more retweets. We discuss the implications of such results for both theory and practice in the media age.     

Effects of knowledge management strategy on organizational performance: A complementarity theory-based approach

The extant research investigating the relationship between knowledge management (KM) strategies and organizational performance has yielded inconclusive results. Our paper revisits this research problem by drawing on complementarity theory from Economics. The empirical segment of our work is based on data on KM strategies and organizational performance from a sample of 131 Korean firms. Our results suggest three types of relationship among KM strategies: non-complementarity, and non-critical symmetric complementarity, and asymmetric complementarity. Integrating explicit-oriented with tacit-oriented KM strategies showed non-complementarity, which suggests a drag on obtaining higher levels of organizational performance. Our analysis of KM strategies based on KM source shows that companies could benefit from KM by implementing external-oriented or internal-oriented strategy. Combining the tacit-internal-oriented and explicit-external-oriented KM strategies indicates a complementarity relationship, which implies synergistic effects of KM strategies on performance.     

Knowing me,knowing us: Personal and collective self-awareness enhances authentic leadership and leader endorsement

In the present research, we examine how two aspects of leader self-awareness — namely, leader awareness of their (a) personal identity and (b) collective (group) identity — influence perceptions of authentic leadership and leader endorsement. Study 1 provides experimental evidence that (a) leader personal self-awareness has a somewhat stronger impact on perceptions of their authentic leadership than leader collective self-awareness, but that (b) leader collective self-awareness has a stronger impact on leader endorsement. These findings are replicated in a second field study with political leaders, and in a third experimental study with workplace supervisors. Results suggest that for leaders to be seen as authentic and garner support, they need to be seen as aware not only of who they are as individuals, but also of who they are as members of the collective they seek to lead. Implications for theories of the nature of self, authenticity, and leadership are discussed.     

政治关联与财务困境公司的政府补助——来自中国ST公司的经验证据

本文以2002-2007年沪深两市的ST公司为样本,实证研究了企业的政治关联对财务困境公司获取政府补助的影响.结果显示:(1)民营企业的政治关联对企业处于财务困境时获取政府补助有显著影响,但对国有企业作用不显著.(2)考虑企业所处的地区环境差异之后,本文发现民营企业的政治关联优势受到地区财政富余程度的显著影响,而地方政府干预要起作用也受到地区财政状况的制约.只有在地方财政有充足财力的情况下,民营企业才可能利用政治关联获得更多的政府补助.(3)从政府补助的效果来看,政府补助虽然可以在救助当年明显改善公司业绩,但对公司长期业绩的提升作用却因企业政治关联程度和企业性质的不同而存在差异:政治关联较弱的民营企业获得的政府补助对公司长期业绩的提高作用显著,但对于国有企业以及具有较强政治关联的民营企业作用则不显著,这在一定程度上说明政治关联导致了政府补助资金的低效运作.     

Political connections,gender diversity and compensation policy

In this paper we analyze the influence of corporate governance, specifically political connections and gender diversity, on board and managers’ remuneration in savings banks in Spain. We also analyze whether financial experience moderates the relation between political experience and board compensation. To the best of our knowledge, the effects of having politicians on remuneration levels of financial firm have not been studied. Connections are important in hiring decisions and in generating business so it is interesting to explore whether they are important when it comes to compensation policies. We use a panel data and financial and corporate governance information from 44 savings banks for the period 2004–2009. Our results show that the previous political activity of the chairperson positively influences board remuneration. Our study provides the first evidence for a link between political connection and compensation policy, showing that, in addition to the standard firm-level factors, political and financial experience are material determinants of economic significance in compensation policies. Specifically, we show that financial expertise may substitute for governance mechanisms that are lacking in firms with weak governance environments (e.g. saving banks with high politicization).     

CEO political liberalism,stakeholders, and firms’ support for LGBT employees

We argue that CEO political liberalism, or the extent to which CEOs are more liberal rather than conservative, affects firms’ support for LGBT employees. Specifically, compared to conservative CEOs, liberal CEOs will be more likely to support LGBT employees by implementing LGBT-friendly policies. We furthermore posit that the presence of certain internal and external stakeholders—including boards, top management teams, and employees, as well as transient institutional investors and LGBT advocacy organizations—alter the proposed effect. Results based on a sample of Fortune 500 firms support our arguments. Our findings contribute to the literatures on leadership, stakeholders, and workplace diversity.     

The role of human and social board capital in driving CSR reporting

The objective of this paper is to analyze the effect of the professional, technical and relational background (human and social capital) of outside directors on promoting firm CSR disclosure. Following the Hillman et al. (2000) taxonomy of board members, we classify outside directors as business experts, support specialists and community influential, and examine whether business and technical expertise or political ties in the boardroom affect CSR disclosure.This study confirms that not all outside directors are equally effective in improving CSR disclosure and that only certain kinds of outside directors, those classified as support specialists, help promote it. On the other hand, our findings also show that directors with previous experience as politicians affect CSR disclosure negatively, probably due to their interests in safeguarding their reputation within the company, in avoiding public scrutiny and in protecting their political connections. In addition, our set of analysis with interaction effects reveals that powerful CEOs have the incentive to promote CSR-related strategies and to convince business experts and support specialist directors to enhance profitable sustainability strategies and transparency in CSR disclosure. Nevertheless, the powerful CEO effect is not enough to compensate the negative role of political directors on CSR reporting. Therefore, this paper supports the theories in favor of analyzing the multiple configurations of corporate governance mechanisms by adopting a holistic approach, and the need to combine these configurations in order to analyze their impact on CSR behavior.     

Leader errors and the influence on performance: An investigation of differing levels of impact

Errors will inevitably occur when one is involved in decision making tasks with complex, ill-defined problems. Qualitative research on this topic has illuminated the complex nature of problems faced by many leaders and organizations as they make decisions. Although this research has answered many questions about the nature of errors, empirical research on errors among leaders remains scarce. To further explore this topic, 170 undergraduates were assigned to one of five work conditions and asked to read three cases with initiating structure problems and three cases with consideration problems while taking on the role of the CEO in the scenario. Errors committed by leaders were examined to answer questions about how work conditions influence errors committed. Additionally, how these errors influence performance outcomes was also examined. Results indicated that work conditions paired with errors made by leaders influenced levels of performance. Under certain conditions, most notably process overload, errors led to negative performance. We also discuss the implications of these findings for understanding the influence of work conditions on errors committed and their combined influence on performance outcomes.