Christophe Boone

Oxytocin and cooperation under conditions of uncertainty: the modulating role of incentives and social information.

The neuropeptide Oxytocin (OT) has been implicated in many aspects of mammalian social behavior. This study investigates how OT interacts with two well-studied determinants of cooperative behavior: incentives and social information. Participants received OT or a placebo and played two economic games: a Coordination Game (with strong incentives to cooperate) and a Prisoners Dilemma (with weak cooperative incentives). OT enhanced cooperation only when social information was present, and this effect was significantly more pronounced in the Coordination Game. When social information was lacking, OT surprisingly decreased cooperation. Consistent with the well-established role of OT in trust-building and in social cognition, social information appears to be crucial for OT to boost cooperative expectations in an interdependent social interaction that provides incentives to cooperate. When these cues are absent, OT appears to instead elicit a risk-averse strategy.

The impact of personality on behavior in five Prisoner's Dilemma games

There is a huge body of literature on both theoretical and experimental research of behavior in Prisoners Dilemma and similar non-cooperative settings. Despite this impressive stock of knowledge, our understanding of the determinants of (non-)cooperative behavior remains limited. An important reason is that the economic approach tends to start from the untenable assumption of the homo anonymous. The purpose of the present study is to explore the potential gain of cross-fertilizing insights from economics and psychology by relaxing this assumption in a market setting (a Prisoners Dilemma - duopoly pricing) game. More specifically, it is argued that economic agents differ as to their inclination toward cooperation. To analyze this issue, we conducted an experiment at the University Maastricht. We investigate the effect of personality on competitive versus cooperative behavior in five Prisoners Dilemma games. Specifically, the paper deals with four personality traits: locus of control, self-monitoring, type-A behavior and sensation seeking. The experiment clearly shows that personality matters. By way of appraisal, the implications of our findings are discussed.

Top Management Team Diversity and Firm Performance: Moderators of Functional-Background and Locus-of-Control Diversity

Past research on the relationship between top management team (TMT) compositional diversity and organizational performance has paid insufficient attention to the nature of TMT team processes in interaction with TMT diversity. We fill this gap by studying how three team mechanisms (collaborative behavior, accurate information exchange, and decision-making decentralization) moderate the impact of TMT diversity on financial performance of 33 information technology firms. We focus on two fundamentally different forms of TMT diversity: functional-background (FB) and locus-of-control (LOC). We argue that the former has the potential to enhance decision quality and organizational performance, whereas the latter might trigger relational conflict, and is, therefore, potentially detrimental to firm effectiveness. The ultimate aim of our study is to analyze which team processes help to transform distributed FB knowledge into high-quality decisions and organizational effectiveness, and which help avoid the potential detrimental effects of LOC diversity. We find that a TMTs collaborative behavior and information exchange are necessary conditions to unleash the performance benefits of FB diversity, but do not interact with LOC diversity. In addition, decentralized decision making spurs the effectiveness of functionally diverse teams, while at the same time reinforces the negative consequences of LOC diversity on firm performance.

Top Management Team Functional Diversity and Firm Performance: The Moderating Role of CEO Characteristics

Past research indicates that the effect of TMT functional diversity on firm performance is equivocal. We address this issue by focusing on the integrative role of the CEO, postulating that the CEOs expertise and background characteristics affect the TMT functional diversity–firm performance relationship, because of their impact on the exchange and integration of distributed knowledge within the TMT. Using a dataset of 33 Dutch and Belgian Information Technology firms we investigate the moderating role of three sets of CEO characteristics (functional background, status as founder, and shared experience with the other TMT members) on the relationship between TMT functional diversity and firm performance. Our results reveal that CEO and TMT characteristics do interact in realizing the potential advantages of distributed TMT functional expertise.

Custom Service: Application and Tests of Resource-Partitioning Theory among Dutch Auditing Firms from 1896 to 1992

This article examines resource-partitioning theory in organizational ecology in the context of the Dutch auditing industry. The theory predicts that under certain conditions, specialist organizations will proliferate as the overall industry concentrates and becomes dominated by large generalist firms. Although Dutch auditing shows long-term trends towards market concentration and a burgeoning specialist sector, the professional service orientation of the industry presents some challenges for applying the theory. Accordingly, we first reconsider the theory in this new context. Using data on the life histories of (almost) all auditing firms ever to operate in the Netherlands, we also test the implications of the theory for exit rates of auditor organizations. Although we find substantial support for the basic theory, it is also apparent that resource-partitioning processes interact with regulatory changes in the institutional environment in interesting ways.

When Do People Cooperate? The Neuroeconomics of Prosocial Decision Making.

Understanding the roots of prosocial behavior is an interdisciplinary research endeavor that has generated an abundance of empirical data across many disciplines. This review integrates research findings from different fields into a novel theoretical framework that can account for when prosocial behavior is likely to occur. Specifically, we propose that the motivation to cooperate (or not), generated by the reward system in the brain (extending from the striatum to the ventromedial prefrontal cortex), is modulated by two neural networks: a cognitive control system (centered on the lateral prefrontal cortex) that processes extrinsic cooperative incentives, and/or a social cognition system (including the temporo-parietal junction, the medial prefrontal cortex and the amygdala) that processes trust and/or threat signals. The independent modulatory influence of incentives and trust on the decision to cooperate is substantiated by a growing body of neuroimaging data and reconciles the apparent paradox between economic versus social rationality in the literature, suggesting that we are in fact wired for both. Furthermore, the theoretical framework can account for substantial behavioral heterogeneity in prosocial behavior. Based on the existing data, we postulate that self-regarding individuals (who are more likely to adopt an economically rational strategy) are more responsive to extrinsic cooperative incentives and therefore rely relatively more on cognitive control to make (un)cooperative decisions, whereas other-regarding individuals (who are more likely to adopt a socially rational strategy) are more sensitive to trust signals to avoid betrayal and recruit relatively more brain activity in the social cognition system. Several additional hypotheses with respect to the neural roots of social preferences are derived from the model and suggested for future research.

Industrial Organization and Organizational Ecology: The Potentials for Cross-fertilization

The population of organization studies that has become known under such names as population ecology and organizational ecology (OE), is entering the stage of maturity. It is argued here that this branch of organization studies can increase the carrying capacity of its niche by seeking cross-fertilization with the century-old field of industrial organization and the economically inspired sub-field of strategic management. Doing so would enrich the study of the long-run evolution of organizational populations by adding a focus on differ ences between and within industries to OEs emphasis on universal similarities. The argument is illustrated by investigating the long-run development of the German and U.S. brewing industries on the one hand and the Dutch audit industry on the other.

Research Note: CEO Locus of Control and Small Firm Performance

Boone et al. (1996) reported that Chief Executive Officer (CEO) locus of control was significantly associated with profitability in a cross-sectional study of 39 small firms. As the authors could not rule out the possibility that firm performance causes an internal locus of control rather than the other way around, a follow-up study was performed to provide us with a possible clarification of the direction of causation. We traced the life history of each of these 39 firms and analyzed the relationship between locus of control and long-run organizational survival. We found that 21 percent of the 39 firms studied in Boone et al. (1996) went bankrupt within 6 years. Among the CEOs classified as internals, only 1 company failed (1 out of 14), whereas among the external CEOs 45 percent did not survive (5 out of 11). We also found that the differences between internal and external CEOs were only observable for firms that were relatively unprofitable in 1990-1991, indicating that short-term performance shields the companies from subsequent bankruptcy. We conclude that our findings suggest that CEO locus of control is an important predictor of small firm performance.

Inducing Cooperative Behavior among Proselfs versus Prosocials: The Moderating Role of Incentives and Trust

This study investigates how an individual’s social value orientation (SVO) interacts with explicit cooperative incentives on one hand, and intrinsic and extraneously induced trust on the other hand, to affect cooperative behavior. In three experiments, subjects (n = 322) played a one-shot prisoner’s dilemma (PD; with weak cooperative incentives) and an assurance game (AG; with strong cooperative incentives) in conditions with or without trust signals. The authors found, as expected, that cooperative behavior is strongly spurred by explicit incentives, but not by trust, among people with a proself value orientation. Conversely, trust is very important to enhance cooperative behavior of participants with a prosocial value orientation, whereas explicit incentives are less important compared to proselfs. The authors conclude that this study reveals two fundamentally different logics of cooperative behavior: one based on extrinsic incentives and the other on trust.

LOCUS OF CONTROL AND CEREBRAL ASYMMETRY

Data about the lack of synchronism of flexor carpi ulnaris peak EMG values of bimanual reactions during a semantic and during a visuospatial discrimination reaction time task are reported. The effects of type of task as well as the presence or absence of an unexpected stimulus preceding the reaction stimulus on lack of synchronism clearly depend upon the locus of control of the subjects, as measured on Rotters I-E scale. On the basis of several arguments it is proposed that the measure of lack of synchronism reflects in an opposite sense the amount of dopaminergic activation or motor readiness in the sense in which Pribram and McGuinness in 1975 and Tucker and Williamson in 1984 have defined these concepts The results for 15 women and 18 men show that more internally oriented subjects are more activated by a semantic task and by an unexpected preparatory stimulus in this type of task than more externally oriented subjects. The opposite appears to hold on the visuospatial task and unexpected preparatory stimuli therein. Together with earlier findings about reaction times and a number of relevant findings in the literature, the results are interpreted as indicative of basic differences in asymmetric tonic activation of the cerebral hemispheres between more internally and more externally oriented subjects. A model is proposed to explain phasic activating effects which ensue when tonically more left- or right-activated subjects perform left- or right-hemisphere tasks and when supplementary irrelevant stimuli are received.