Ithai Stern

The Other Pathway to the Boardroom: Interpersonal Influence Behavior as a Substitute for Elite Credentials and Majority Status in Obtaining Board Appointments

Using survey data on interpersonal influence behavior from a large sample of managers and chief executive officers (CEOs) at Forbes 500 companies, we examine how ingratiatory behavior directed at individuals who control access to board positions can provide an alternative pathway to the boardroom for managers who lack the social and educational credentials associated with the power elite. Findings show that top managers who engage in ingratiatory behavior toward their CEO, with ingratiation comprising flattery, opinion conformity, and favor-rendering, will be more likely to receive board appointments at other firms where their CEO serves as director and at boards to which the CEO is indirectly connected in the board interlock network. Further results suggest that interpersonal influence behavior substitutes to some degree for the advantages of an elite background or demographic majority status. Our findings help explain why norms of director deference to CEOs have persisted despite increased diversity in the corporate elite and have implications for research on corporate governance, social networks in the corporate elite, and for the sociological question of whether demographic minorities and individuals who lack privileged backgrounds have equal access to positions of leadership in large U.S. companies. Our study ultimately suggests that such individuals face a rather subtle and perhaps unexpected form of social discrimination, in that they must engage in a higher level of interpersonal influence behavior in order to have the same chance of obtaining a board appointment.

Selection-Based Learning: The Coevolution of Internal and External Selection in High-Velocity Environments

To understand the effects of selection on firm-level learning, this study synthesizes two contrasting views of evolution. Internal selection theorists view managers in multiproduct firms as the primary agents of evolutionary change because they decide whether individual products and technologies are retained or eliminated. In contrast, external selection theorists contend that the environment drives evolution because it determines whether entire firms live or die. Though these theories differ, they describe tightly interwoven processes. In assessing the coevolution of internal and external selection among personal computer manufacturers across a 20-year period, we found that (1) firms learned cumulatively and adaptively from internal and partial external selection, the latter occurring when the environment killed part but not all of a firm; (2) internal and partial external selection co- evolved, as each affected the others future rate and the odds of firm failure; (3) partial external selection had a greater effect on future outcomes than internal selection; and (4) the lessons gleaned from prior selection were reflected in a firms ability to develop new products, making that an important mediator between past and future selection events.

Set up for a Fall: The Insidious Effects of Flattery and Opinion Conformity toward Corporate Leaders

This study considers the potentially negative consequences for corporate leaders of being subjected to high levels of ingratiation in the form of flattery and opinion conformity from other managers and board members. Chief executive officers (CEOs) who have acquired positions of relatively high social status in the corporate elite tend to be attractive targets of flattery and opinion conformity from colleagues, which can have potentially negative consequences for CEOs and their firms. Our theory suggests how high levels of flattery and opinion conformity can increase CEOs’ overconfidence in their strategic judgment and leadership capability, which results in biased strategic decision making. Specifically, we contend that heightened overconfidence from receiving high levels of such ingratiatory behavior reduces the likelihood that CEOs will initiate needed strategic change in response to poor firm performance. We tested and confirmed our hypotheses with a dataset that includes original survey data from a large sample of U.S. CEOs, other top managers, and board members in the period 2001–2007. Further analyses suggest that strategic persistence that results from high levels of flattery and opinion conformity directed at the CEO can result in the persistence of low firm performance and may ultimately increase the likelihood of the CEO’s dismissal. Implications for theory and research on social influence, sources of overconfidence in decision making, and the dynamics of executive careers are discussed.

Mergers and Acquisitions: A Guide to Creating Value for Stakeholders

The article reviews the book “Mergers and Acquisitions: A Guide to Creating Value for Stakeholders,” by Michael A. Hitt, Jeffrey S. Harrison and R. Duane Ireland.

firms’ indirect responses to stakeholders’ attacks

Stakeholders can attack a firm to challenge, criticize, or condemn its activities, behavior, or values. Firms may struggle to respond to stakeholders’ attacks, which can have severe negative reputa...