Amy J. Hillman

Shareholder value, stakeholder management, and social issues: what's the bottom line?

We test the relationship between shareholder value, stakeholder management, and social issue participation. Building better relations with primary stakeholders like employees, customers, suppliers, and communities could lead to increased shareholder wealth by helping firms develop intangible, valuable assets which can be sources of competitive advantage. On the other hand, using corporate resources for social issues not related to primary stakeholders may not create value for shareholders. We test these propositions with data from S&P 500 firms and find evidence that stakeholder management leads to improved shareholder value, while social issue participation is negatively associated with shareholder value. Copyright

Resource Dependence Theory: A Review:

Thirty years have passed since Pfeffer and Salancik’s seminal work on resource dependence theory (RDT). During this time RDT has been applied broadly across the research domain to explain how organizations reduce environmental interdependence and uncertainty. In this review, the authors assess the conceptual development, empirical research, and application of RDT. They structure their review around the five options that Pfeffer and Salancik propose firms can enact to minimize environmental dependences: (a) mergers/vertical integration, (b) joint ventures and other interorganizational relationships, (c) boards of directors, (d) political action, and (e) executive succession.The authors summarize past work, synthesize contemporary thought, and propose future research directions.

The Resource Dependence Role of Corporate Directors: Strategic Adaptation of Board Composition in Response to Environmental Change

Most research on corporate directors has focused on two roles: agency and resource dependence. While these two roles are theoretically and practically distinct, previous research has used the same classification scheme for measuring board composition regardless of role examined. Our paper examines the resource dependence role of directors and posits that the widely used insider/outsider categorizations do not adequately capture this role of directors. A taxonomy of directors is presented specifically for studying the resource dependence role. We then apply the taxonomy to a sample of US airline firms undergoing deregulation, and examine how board composition changes parallel the changing resource dependence needs of the firms. We conclude that the board’s function as a link to the external environment is an important one, and that firms respond to significant changes in their external environment by altering board composition.

Corporate Political Activity: A Review and Research Agenda

Corporate political activities, or corporate attempts to shape government policy in ways favorable to the firm, are commonly employed by firms across countries. We review recent scholarly work from management, political science, economics and sociology in the area of corporate political activity (CPA), paying particular attention to the literature published since Shaffer’s [Shaffer, B. 1995. Firm-level responses to government regulation: Theoretical and research approaches. Journal of Management, 21: 495–514] review. To integrate this literature we provide a model of the antecedents of CPA, the different types of CPA, how firms organize to implement CPA and the outcomes of CPA both for public policy and firm performance. We conclude our review by proposing an agenda for future research in the area.

Politicians on the Board of Directors: Do Connections Affect the Bottom Line?

Resource dependence theory emphasizes the importance of linking firms with external contingencies that create uncertainty and interdependence. A critical source of external interdependency and uncertainty for business is government. One way to link a firm to the government is appointing ex-politicians to the board of directors. This study compares the boards of two groups of firms—those from heavily and less regulated industries—and finds the former group has more politician directors. Firms with politicians on the board are associated with better market-based performance across both groups, although the relationship is more pronounced within heavily regulated industries.

Women and Racial Minorities in the Boardroom: How Do Directors Differ?

In this paper, we examine how the attributes of female and racial minority directors differ from those of white males. We track a sample of white male, white female, African-American female and African-American male directors who serve on Fortune 1000 boards and find differences in occupational background, education, and patterns of board affiliation. Female and African-American directors are more likely to come from non-business backgrounds, are more likely to hold advanced degrees, and join multiple boards at a faster rate than white male directors.

Board Composition and Stakeholder Performance: Do Stakeholder Directors Make a Difference?

In this article, we examine the link between board composition and an enterprise strategy outcome, stakeholder relations. Because a firm’s enterprise strategy is set at the highest level of the organization, we expect the presence of stakeholder directors (suppliers, customers, employees, and community representatives) to be positively associated with stakeholder performance.Results from an analysis of 3,268 board members representing 250 firms are discussed in the context of both corporate governance and stakeholder management literatures.

Determinants of Political Strategies in U.S. Multinationals

This study focuses on the determinants of political strategies used by U.S. multinationals (MNCs) in Europe. Empirical support is found for Hillman and Hitt’s taxonomy of political decisions—that is, approach, participation level, and strategy. The role of institutional- versus firm-level variable determinants of these choices is explored as are the relative effects of firm versus industry variables within differing political contexts. Results based on a survey sample of 169 U.S. MNC subsidiaries within 14 European countries support the finding that both institutional- and firm-level variables are important determinants of political strategy approach, participation level, and strategy.

The development of business–government strategies by diversified firms

This paper uses grounded theory to explore internal (intrafirm) conflicts in the formulation of business–government strategies by corporations with diversified business units. We find that three types of conflict exist within firms: conflict over proactive policy positions advocated by the firm (prepolicy issues), conflict over reactive internal distribution of compliance costs/benefits (postpolicy issues), and representational conflict (e.g., individual business units vs. corporate representation in the external public policy arena). We also develop a grounded framework for organizational structures for conflict resolution in the strategic management of government relations, based upon our case studies, and find a relationship between particular structures and the degree of diversification. Copyright

A Multidisciplinary Review of the Director Selection Literature

Director selection is a critical board process and outcome that influences the board and its overall performance. Because of this influence, research from a variety of different disciplinary areas examines the antecedents and outcomes of director selection. The authors offer a synthesis of this literature from these different disciplines. The authors first delineate the process that drives the selection of an individual to a board. They then review and categorize the director selection literature into two distinct perspectives—a rational economic perspective focused on the organization-level benefits driving the selection decision and a socialized perspective emphasizing the social processes that influence the director selection process. Finally, from their review, the authors suggest promising areas of future research regarding director selection.