When do leaders matter? Ownership,governance and the influence of CEOs on firm performance

Leadership and strategic management research suggests that the extent to which CEOs influence performance largely depends on the presence or absence of certain factors. These factors may include the characteristics of the task at hand, subordinates, the organization itself or the external environment. Among these factors, a fundamental contingency that has received little empirical attention is an organization's ownership and governance structure—that is, who owns and monitors the organization. In this paper, we outline how different ownership and governance structures can present the opportunity for, or limit, leader influence and empirically examine the extent to which CEO effects on financial performance depend on these structures. Examining organizations in the same industry but with different ownership and governance structures, our results suggest that these structures are closely aligned with the degree to which CEOs influence firm performance. Our findings support the notion that leaders matter most when ownership and governance structures correspond with a weak or ambiguous institutional logic. This study contributes new insight into the “opportunity structure” of CEO influence, that is, the organizational factors that shape leader discretion and, hence, condition the CEO's level of influence over firm performance.     

The impact of family CEO’s ownership and the moderating effect of the second largest owner in private family firms

This study explores two ownership issues in private family firms. First, we investigate the relationship between the ownership of family CEOs and firm performance, and postulate that this relationship in private family firms is more complex than the inverted “U” relationship found in public family firms. Second, we predict a potential moderating effect of the second largest owner, who may exert a monitoring role on family CEOs. We focus on private family firms as recent studies show that private family firms have distinct features compared to public family firms, and that findings documented in public family firms may not apply to the ubiquitous, but much less studied, private family firms. We have applied agency theory to develop the two hypotheses, used secondary data on a large sample of private family firms, utilized an adjusted conventional quadratic technique to test the hypotheses, and validated the findings using a second method of piecewise linear specification. The results show that the non-linear relationship between the ownership of family CEOs and firm performance is more complicated than the often-documented inverted “U” shape from public firms. Meanwhile, the second largest owner with a high enough ownership stake can impose a positive moderating effect by mitigating potential agency problems caused by family CEOs.     

Organizational structure and success of international joint ventures in emerging economies: the case of Spanish–Moroccan SMEs

One of the most common ways in which SMEs internationalize their business is through the creation of joint ventures; nevertheless, many of these fail. To avoid this risk, it is important to identify the factors that favour the continuity of such enterprises. The aim of this paper is to analyse the factors related to organizational structure that determine the success of international joint ventures between SMEs in emerging economies, taking as the particular area of study the question of joint ventures between Spanish and Moroccan firms, located in Morocco. The research hypotheses were tested using a linear regression model applied to a sample of 210 international joint ventures. The results obtained from a structured survey show that, with respect to the success of the partnership, significant factors include the existence of majority ownership by the foreign partner, management by a local CEO and the effort made by each party to adapt to the management style of the other. This research contributes to the knowledge of the main factors related to the organizational structure of joint ventures that influence the level of success achieved. The value provided by this research lies in the breadth of the sample examined, in its focus on a very common type of partnership between SMEs, on which very little has been previously studied, and in the fact that the results obtained are extensible to other realities, such as partnerships between European companies and those from countries with similar characteristics (located in Africa or in countries where an Arab culture prevails).     

The importance of self-efficacy in the moderating effects of social support on stressor–strain relationships

Abstract

Occupational stress research offers inconsistent findings on the moderating effects of social support on the stressor–strain relationship. This study contributes to the research literature by examining how social support's moderating effect is dependent on one's self-efficacy. Ninety-six US military police soldiers completed two surveys 3 months apart. The results showed that three out of four regression equations had significant three-way interactions. Organizational constraints×supervisor support×self-efficacy had statistically significant interactions in the prediction of job satisfaction and psychological well-being. Organizational constraints×co-worker support×self-efficacy had a significant interaction in the predicted of psychological well-being. These interactions explained between 5% and 10% of the variance in the dependent variables. Social support buffered the stressor–strain relationship when self-efficacy was high and reverse buffered the relationship when self-efficacy was low. These results indicate that interventions aimed at reducing strains by increasing social support should consider an individual's self-efficacy. Future research should consider incorporating content of communication to determine if high and low self-efficacy individuals receive or react differently to different types of communication content.     

Human capital and agency effects on CEO compensation of IPO biopharmaceutical firms and the market’s response

This paper examines the determinants of base pay and total incentive compensation packages of CEOs of biopharmaceutical firms that have recently gone public, and whether human capital and agency factors affect the market’s response to the initial public offering. We find that in terms of net proceeds, the IPO market appears to reward the firms that have founder-CEOs and CEOs with higher incentive compensation. CEOs with prior venture capital experience are associated with receiving higher incentive compensation, while CEOs with a greater ownership interest in the firm receive lower incentive compensation but higher salaries. CEOs of firms with a greater percentage of insiders are associated with lower salaries. The results should add to our understanding related to human capital and agency theories, as well as help firms and investors better understand and structure CEO compensation.     

When do leaders sacrifice?: The effects of sense of power and belongingness on leader self-sacrifice

Past research on leader self-sacrifice has focused entirely on the effects of this leader behavior on followers and its implications for organizations. The present research focused on antecedents of leader self-sacrifice. We argued that self-sacrifice is positively influenced by leaders' sense of belongingness to the group they supervise. Furthermore, leaders' subjectively sensed power can serve as a moderator of this effect. We expected this because a high sense of power is known to facilitate goal pursuit. Given that organizational goals often prescribe serving the interests of the organization, leaders' sense of belongingness should promote self-sacrifice particularly among leaders low in subjective power; leaders high in subjective power should display self-sacrifice regardless of their sense of belongingness. Two field studies supported these predictions. A final experiment supported a critical assumption underlying our argument in showing that the sense of power × sense of belongingness interaction is restricted to situations that prescribe cooperative goals. When situations prescribe competitive goals, this interaction was absent.     

How do shareholders influence international firms’ environmental strategies? The differential impact of strategic and financial investors

Debates about the drivers of corporate environmental strategy as well as the influence of shareholders on environmental investments have grown exponentially in the last decade. This paper provides a novel perspective on the influence of investors on a firm's environmental strategy by theorizing how the shareholders' orientation may provide different resources for firms to outperform environmental institutional pressures, and further analyzing how foreign market exposure moderates this relationship. Our results, produced from a longitudinal sample of 2237 observations between 2007 and 2017 from 276 US firms in 11 industries, show that having a higher percentage of strategic shareholders positively drives firms' environmental proactivity. Meanwhile, having a higher percentage of financial shareholders is positively related to firms' environmental proactivity only at high levels of foreign market exposure, but is negatively related at low levels. Our results contribute to the ownership and environmental strategy literature by delimitating the different influences of strategic and financial investors on firms' environmental strategy and making a bridge between institutional and resource-based perspectives.     

A matter of time? Challenging and hindering effects of time pressure on work engagement

The aim of our research was to test time-exposure effects of time pressure as a stressor typically considered to be a challenge, rather than a hindrance stressor. We examined the within- and between-person effects of time pressure on work engagement in two diary/panel studies with employees using intervals of five days and three weeks, respectively (Study 1, n?=?350, and n?=?357, respectively) and six to eight weeks (Study 2, n?=?238). We assumed that it is a matter of time whether time pressure acts as a challenge (under short-term exposure) or as a hindrance stressor (under long-term exposure). We found significant positive within-person effects of time pressure on work engagement when controlling for strain in the daily and weekly diary assessment (Study 1), but a significant negative within-person effect in the six to eight weeks’ assessment (Study 2). The between-person effects were significant and negative in all studies. Although a short-term increase can be beneficial for a certain time, stable and long-time exposure of time pressure does rather reduce work engagement. Thus, employers should not keep time pressure permanently high to motivate their employees. However, short-term increases of time pressure (e.g. before a deadline) may serve as a motivating factor.     

The moderating effects of corporate and national factors on lean projects barriers: a cross‐national study

Abstract

Despite companies’ efforts to develop lean thinking in their industrial context, the implementation of many lean projects has not been consistently successful, often resulting in delay, failure, abandonment or rejection. Whereas some authors emphasised that company characteristics, like the product demand profile, are significant factors in lean projects, other studies analysed the impact of national culture. This paper aims to study the combined effect of various factors related to national culture and company characteristics of lean implementation barriers in order to determine whether the environmental context in which the company operation can affect the outcome of lean project implementation. A survey has been conducted to collect information about companies of various sizes (small–medium–large) in all industry fields. Data from companies, including manufacturing firms, in 23 different countries, were analysed in depth by a combination of Association Rules and Network Analysis. The results show that some national culture dimensions, such as Performance Orientation and Gender Egalitarianism, influence lean management success and help to maintain a lean culture. Maintaining a lean culture is even more critical than developing it. Furthermore, if the implementation of lean practices is an arduous task for large organisations, it becomes even greater for SMEs. Other cultural factors of individuals such as Uncertainty Avoidance, Future Orientation and Institutional Collectivism also help to support a lean culture and overcome human and cultural barriers.     

The effect of large controlling shareholders on equity prices in France: monitoring or entrenchment?

Journal of Management and Governance - The corporate governance literature has shown that firms with better governance exhibit higher abnormal returns. In this paper, we examine the effect of cash...     

Does state ownership really matter? The dynamic alignment of China's resource environment and firm internationalization strategies

Recent research suggests that unequal access to home country institutional resources affects firm internationalization strategies. We add to this debate, based on an analysis of state-owned (SOEs) and non-state-owned (NSOEs) Chinese mining firms, by developing a more dynamic and multi-layered understanding of this interplay. We find that home institutional support can be ownership-based or performance-based, whereby the former benefits SOEs and the latter favors high-performing NSOEs. Combined, these support structures serve as institutional control mechanisms in promoting competition, performance and loyalty to national policies. In addition, they establish a permanent link between firm- and home country-specific assets and incentivize firms to develop dynamic resource access capabilities at home and abroad. Our findings inform our understanding of the firms-institutions nexus and Chinese foreign direct investment dynamics, especially in industries of strategic importance to the state.     

The moderating role of leader and follower sex in dyads on the leadership behavior–leader effectiveness relationships

Transformational leadership (TL) and leader–member exchange (LMX) literatures provide theoretical frameworks and accompanying empirical evidence for studying the relationship between leader behavior and effectiveness. Although prior attention has been given to gender differences in leadership style and leader effectiveness, the moderating effects of the sex of the leader and subordinate on the leadership–leader effectiveness relationship have not been investigated. In a field study of employees from a manufacturing plant, we examined whether leader and subordinate sex, and the sex composition of the leader–subordinate dyad, moderated the linkages of each set of leader behaviors (i.e., TL and LMX) with actual evaluations of leader effectiveness provided by the leader's subordinates and direct supervisor. Although female leaders were rated as more effective than male leaders overall, a fine-grained analysis of leader–subordinate dyads revealed that the male leaders benefited more than the female leaders from the use of transformational leadership in the leader behavior–leader effectiveness relationship. Implications and future research directions are discussed.     

How do executive search firms increase interest in career opportunities? The role of past interactions

This article explores how executive search consultants stimulate executives’ consideration of career opportunities available at other employers. The study is based on a panel dataset of 3582 executives invited to a job interview by a global executive search firm from January 2005 to May 2009. The results demonstrate that past interactions between executives and the search consultants had a delayed effect on consideration of career opportunities. The results contribute to research on executive careers by identifying past relationships with search consultants as a factor affecting rejection of new career opportunities. They also shed light on the relatively understudied phenomenon of executive search firms.     

What do people desire in their leaders? The role of leadership level on trait desirability

Do individuals desire different traits in leaders dependent on the leader's position in the organizational hierarchy? To address this question, participants first rated the traits they perceived their current supervisor possessed, traits they desired in their supervisor, and traits they viewed were characteristic of a leader in that role (Study 1). Next, participants rated the desirability of these same traits for 6 high-level and 6 low-level leaders (Study 2). Finally, to force them to prioritize traits, participants designed ideal high-level or low-level leaders by “purchasing” leadership traits using limited budgets of tokens (Study 3). Overall, participants highly and consistently desired trustworthiness and intelligence across leaders, yet they differentially desired other traits depending on the level of leadership. In addition, the desired–current discrepancy predicted leader–member exchange, job satisfaction, and organizational commitment, even after controlling for the prototype–current discrepancy. We discuss the implications of these findings for leadership selection, development, and promotion.     

The face of wrongdoing? An expectancy violations perspective on CEO facial characteristics and media coverage of misconducting firms

We examine the extent to which CEO facial characteristics matter in media coverage of firms implicated in corporate wrongdoing. We build on literature discussing that leaders’ faces may convey subjective behavioral expectations and that outsiders often over-rely on facial cues when making social judgments. We situate these insights in the context of corporate wrongdoing, where information incompleteness may be particularly high, potentially prompting outsiders to draw on CEO facial characteristics in forming their social judgments. Drawing on Expectancy Violations Theory, we hypothesize that firms led by CEOs expected to be more trustworthy, as inferred from their lower facial width-to-height ratio (fWHR), will draw greater attention and more negative opinions from the media in the wake of corporate wrongdoing. Results of an experiment (Study 1) where CEO fWHR was digitally manipulated support this counterintuitive logic, while findings based on an archival study of corporate wrongdoing of US firms from 2003 to 2016 (Study 2) partly generalize the rationale in the field setting. Our findings suggest that subjective expectations inferred from CEO faces may serve as part of a complex and underexamined source of variation in media coverage of misconducting firms. We discuss implications for theory and practice.     

The impact of frequency of contact on protégé mentoring outcomes: the moderating effects of protégé general self-efficacy and face-to-face interaction

As a Human Resource Development (HRD) intervention, mentoring assists individuals in their career development. However, it is still unknown if mentoring could enhance individuals’ early career decision-making. Moreover, the literature lacks longitudinal research that investigates the role of frequency of contact in mentoring relationships. Therefore, this study examines whether frequency of contact between mentor and protégé influences protégé mentoring outcomes, namely, improvement in career decision self-efficacy (i.e. CDSE development) and satisfaction with mentoring. Data were collected at two times from 86 first-year undergraduate students who participated in a mentoring programme at a Middle Eastern business school, where email communication facilitated the contact between these protégés and their mentors. Based on regression analyses, the associfations were significant between frequency of contact and mentoring outcomes. The findings partially confirmed the effects of two moderating variables in the relationships mentioned above. This study has practical implications for HRD practitioners in higher-education institutions.     

How do boards of directors contribute to family SME export intensity? The role of formal and informal governance mechanisms

Internationalization is a strong challenge that firms have to face today. However, small and medium-sized family firms internationalize their business after consolidating their position in domestic markets. Family SMEs approach international markets usually through export activities. Considerable academic attention has been given to family SME export behaviour, however, the debate is still inconclusive. Therefore, more attention on family SME unique governance mechanisms may shed a new light on this issue. The paper analyses family SME export intensity by showing how the board of directors could provide assistance in the selection and implementation of this strategy. We explore whether, and to what extent, both formal and informal features of boards of directors (dual governance) influence family SME export intensity. This is explored in a sample of 101 Norwegian family SMEs. Export intensity is the dependent variable and hypotheses on the positive effect of independence in board behaviour (formal governance mechanism), relational norms and trust (informal governance mechanisms) are supported. The paper has substantial theoretical contributions and practical implications. The results show that formal and informal governance mechanisms can co-exist complementing and supplementing each other, thus positively influencing family SME export intensity.     

When do subordinates commit to their supervisors? Different effects of perceived supervisor integrity and support on Chinese and American employees

While subordinates' commitment to the supervisor is highly desirable, the routes to achieve this might vary in different cultures. Drawing on the theories of leader–member exchange (LMX) and cultural logic, this study posits different interaction effects for subordinates' perceived supervisor integrity and support on commitment to the supervisor in cultures with different expectations of personal integrity. The results indicate that an additive effect can be observed for American subordinates: perceived supervisor support increases commitment to the supervisor to a greater extent when a high degree of supervisor integrity is also perceived. In contrast, a compensatory effect can be observed for Chinese subordinates: perceived supervisor support increases commitment to the supervisor more when a lower degree of supervisor integrity is perceived. Our findings shed light on cultural differences in the psychological mechanisms of employees' relationship with their supervisors. Theoretical and practical implications for the effectiveness of Asian leadership are discussed.     

The effects of international diversification on the link between product diversification and performance in a boom and bust cycle: Evidence from Spanish firms (1994–2014)

This study examines the individual effects of product diversification on performance and the moderating effects of international diversification on the product diversification–performance link in the context of a boom and bust cycle. Most prior research on firm strategies largely neglect the business cycle. We use data on a large sample of Spanish manufacturing firms from 1994 to 2014. In this period, the Spanish economy experienced a boom period (1994–2008) and a bust period involving a severe economic crisis (2009–2014). Our study highlights the important role of each stage of the economic cycle. Specifically, with respect to product diversification, our findings show that in a boom, moderate diversifiers obtain better profitability levels than their highly diverse or limited diversification counterparts do. In contrast, during an economic downturn, moderate and high diversifiers can be equally effective up to some point of optimization. Our findings also reveal a negative and significant effect of internationalization on profitability, independent of the stage of the economic cycle. Product and international diversification are complementary strategies during a period of economic growth when firms opt for moderate levels of product diversification. Meanwhile, when firms choose high levels of product diversification, both types of strategies are complementary during the boom cycle, but substitutive during the bust cycle.