Heli Wang

An Empirical Examination of the Mechanisms Mediating between High-Performance Work Systems and the Performance of Japanese Organizations

The resource-based view of the firm and social exchange perspectives are invoked to hypothesize linkages among high-performance work systems, collective human capital, the degree of social exchange in an establishment, and establishment performance. The authors argue that high-performance work systems generate a high level of collective human capital and encourage a high degree of social exchange within an organization, and that these are positively related to the organizations overall performance. On the basis of a sample of Japanese establishments, the results provide support for the existence of these mediating mechanisms through which high-performance work systems affect overall establishment performance.

Employee Incentives to Make Firm-Specific Investments: Implications for Resource-Based Theories of Corporate Diversification

We argue that the risk associated with the value of a firms core resources has an impact on employee decisions to make firm-specific investments, independent of the threat of opportunism that might exist in a particular exchange. We further explore mechanisms firms may adopt to mitigate the employee incentive problem stemming from the risk associated with core resource value. These arguments shed new light on resource-based theories of corporate diversification.

Untangling the Effects of Overexploration and Overexploitation on Organizational Performance: The Moderating Role of Environmental Dynamism†

Because a firms optimal knowledge search behavior is determined by unique firm and industry conditions, organizational performance should be contingent on the degree to which a firms actual level of knowledge search deviates from the optimal level. It is thus hypothesized that deviation from the optimal search, in the form of either overexploitation or overexploration, is detrimental to organizational performance. Furthermore, the negative effect of search deviation on organizational performance varies with environmental dynamism; that is, overexploitation is expected to become more harmful, whereas overexploration becomes less so with an increase in environmental dynamism. The empirical analyses yield results consistent with these arguments. Implications for research and practice are correspondingly discussed.

A New Look at the Corporate Social–Financial Performance Relationship The Moderating Roles of Temporal and Interdomain Consistency in Corporate Social Performance

The authors develop the argument that the establishment of good stakeholder relations is influenced not only by a firm’s having a high level of corporate social performance but also by its ability to deliver consistent social performance. Therefore, both level and consistency in corporate social performance should have significant financial implications. More specifically, the authors suggest that level and two types of consistency in corporate social performance—temporal consistency and interdomain consistency—interact positively to influence a firm’s financial performance. Using a sample of 622 firms and 2,365 firm-year observations based on the Kinder, Lydenberg, Domini, & Co. data, the authors found empirical results supporting this argument. In addition, they found that maintaining consistently good social performance is more important for firms with high levels of knowledge intensity.

Stimulating Firm-Specific Investment through Risk Management

This article suggests a rationale for firm risk management that has been largely ignored in financial economics literature. It presents an argument for harnessing the influence of a companys stakeholders who, whether as employees, suppliers or customers, make a valuable investment specific to the company. Such investments are crucial for a firms competitive advantage, yet because they are firm-specific and therefore cannot be transformed or transferred, stakeholders are often concerned about the risks involved in making them. A companys efforts to manage risk can therefore persuade stakeholders to make even greater firm-specific investments, bringing benefits to shareholders and stakeholders alike.

Slack Resources and the Rent-Generating Potential of Firm-Specific Knowledge:

We examine how two types of slack resources relevant to knowledge employees—human resource slack and financial slack at the R&D functional level—influence the rent-generating potential of firm-specific knowledge resources. According to the resource- and knowledge-based views of the firm, firm-specific knowledge resources are critical for generating economic rents for a firm. However, without motivated knowledge employees investing in the corresponding specialized human capital in the process of absorbing and deploying firm-specific knowledge resources, the resource potential for rent generation would be greatly discounted. We argue that human resource slack among knowledge employees and financial slack available for R&D activities affect the rent-generating potential of firm-specific knowledge resources by influencing knowledge employees’ incentives to invest in specialized human capital. In particular, while financial slack facilitates rent generation of firm-specific knowledge resources by increasing employee incentives to invest in specialized human capital, human resource slack hinders it by reducing such incentives. Empirical results based on longitudinal R&D employment data, U.S. patent data, and Compustat support these arguments.

Sincerity in Corporate Philanthropy, Stakeholder Perceptions and Firm Value

This study extends the literature on symbolic management by incorporating the role of stakeholder perceptions into the context of corporate philanthropy. In particular, we differentiate between the quantitative (generous giving) and qualitative (innovative giving) aspects of giving. We argue that although stakeholders may perceive both types of giving as being substantive rather than symbolic, innovative giving is likely to be perceived as more substantive than generous giving is and, thus, has a greater impact on firm value. Furthermore, stakeholder perceptions of corporate philanthropy as being more symbolic or substantive are influenced by firm characteristics—the type of products or services that a firm provides and the life-cycle stage that the firm is in—which provide stakeholders with a context to better assess the nature of a firm’s philanthropic actions and the substantiveness of its giving. We find support for our predictions using a sample covering U.S. firms’ philanthropic activities over a 19-year period.

Risk Reduction Through Acquisitions: The Roles of Firm-Specific Investments and Agency Hazards

This paper provides a stakeholder-based rationale for firm risk reduction through diversification. While firm-specific investments from stakeholders are often important sources of firm competitive advantage and economic rents, there is a reduced incentive for stakeholders to make these investments due to the risk associated with firm-specific investments. Since the risk associated with firm-specific investments is often related to the total firm risk level, we argue that stakeholders’ difficulties in diversifying the risks associated with their firm-specific investments create incentives for risk management by firms. We test this argument in a diversification setting. Based on a sample of firms’ first acquisition moves, we find that firms are more likely to engage in risk reduction through diversification when high levels of firm-specific assets are important to the firms operations. Several proxies for stakeholders’ specific investments are found to be significant in explaining cross-sectional variation in the extent of ex ante risk reduction in acquisitions.

Institutional Regime Shift in Intellectual Property Rights and Innovation Strategies of Firms in China

This study develops a novel conceptual framework to understand the differential impact of formal institutional regime shift in intellectual property rights on the innovation and patenting strategies of Chinese and Western firms operating in China. We argue that to the extent that Chinese firms have been deeply embedded in China’s informal institutions, they are less responsive to formal institutional changes than Western firms operating in China. Using the major China patent law reform of 2001 as an exogenous event, we find results consistent with our key arguments: With the strengthening of the previously weak (utility model) patent protection, Chinese firms are less likely to apply for such patents to safeguard their innovations than Western firms. However, this difference becomes less pronounced in regions with higher quality intellectual property rights and legal institutions that foster research and development and innovation, and when Western firms gain longer operational experience in China. This s...

Institutional Regime Shift in Intellectual Property Rights and Firms' Patenting Strategies in China

This study develops a new conceptual framework to understand the differential impact of formal institutional regime shift in intellectual property rights on the innovation and patenting strategies ...