Jason W. Ridge

CEO Regulatory Foci, Environmental Dynamism, and Small Firm Performance

This research proposes and tests that regulatory foci of small business chief executive officers (promotion focus and prevention focus) relate to firm performance differentially when levels of environmental uncertainty vary. Results suggest that a promotion focus is positively related to firm performance, whereas a prevention focus is negatively related to firm performance. Further, these relationships are moderated by the degree of environmental dynamism such that in more dynamic environments, the relationship between promotion focus and firm performance is strengthened, whereas the relationship between prevention focus and firm performance is negatively affected. The reverse was found for less dynamic environments. Theoretical and practical implications as well as future research avenues are offered.

Implications of Multiple Concurrent Pay Comparisons for Top-Team Turnover

This article relies on tournament and social comparison theorizing to understand how multiple concurrent pay structures and, thus, potential for comparison to multiple referents, affect turnover in the CEO’s top team. Specifically, we explore how the concurrent effects of pay dispersion within the CEO’s top team, pay disparity between the team and the CEO, and pay level in comparison to top teams at other firms in the industry affect turnover among members of the CEO’s top team. Consistent with social comparison theorizing, we find that pay dispersion is positively associated with turnover within CEO’s top teams. We also find that pay disparity has an effect consistent with tournament theorizing in which firms with greater tournament prizes (i.e., CEO salary gap) have lower turnover within their CEOs’ top teams. Furthermore, we find that pay disparity interacts with both pay dispersion and pay level to affect turnover within CEOs’ top teams. These results have theoretical and practical implications for CEOs’ top-team pay design in organizations. Specifically, our findings imply that theoretical mechanisms associated with how firms compensate executives—and the inherent comparisons in which those pay structures result—work in concert to affect turnover within the CEO’s top team. Hence, to understand the effect that compensation has on executives’ subsequent responses, researchers and practitioners must consider multiple concurrent pay references simultaneously.

Modesty in the Top Management Team Investor Reaction and Performance Implications

Much of the recent research on executive characteristics focuses on attributes that society tends to view negatively, such as self-interest, self-serving bias, and narcissism. While providing insights into how executives’ impact organizational outcomes, there may be attributes more positively viewed by society present in top management teams (TMTs) that have been overlooked, specifically TMT modesty. Though modesty deviates from the conventional view of executives, evidence from social psychology suggests that modesty positively impacts career success and upward mobility, suggesting that at least some individuals that rise to the level of the TMT are more modest than previously expected. Building on this insight, we argue that TMT modesty both elicits positive investor reactions following earnings calls and corresponds with higher levels of firm performance.

The influence of managerial myopia on firm strategy

Purpose – The purpose of this paper is to examine the effects of temporal myopia (focussing on the short-term) and spatial myopia (focussing on the current market) on firm strategy. Specifically the paper investigates the effects of temporal and spatial myopia on the persistence and conformity of firm strategy. Additionally, the paper tests how environmental munificence moderates these effects. A secondary purpose of this paper is to develop a replicable method of measurement of temporal and spatial myopia. Design/methodology/approach – The authors conducted a manual content analysis of letters to shareholders for 100 firms over three years to measure spatial and temporal myopia. After collecting strategy variables and control variables from Compustat, the authors utilize a random-effects panel methodology. Findings – The results indicate that strategy is influenced by both temporal and spatial myopia. Specifically, temporal myopia creates a focus on the firms current strategy, leading to a persistent strategy over time and spatial myopia focusses firm decision makers on better known technologies and competitors, leading to conformity to industry strategic profiles. Additionally, the paper tests how environmental munificence influences these relationships. In total, the paper finds that the differing types of managerial myopia have distinct influences on firm outcomes. Originality/value – This paper makes two important contributions to the literature on managerial myopia. First, the paper investigates the differential effects of both spatial and temporal myopia on firm strategy, topics that have been relatively overlooked in empirical investigations of decision making. Second, the paper develops replicable measures for both temporal and spatial myopia, which have been previously suggested to limit the ability to empirically test the implications of managerial myopia (Laverty, 1996).

Intended and Unintended Consequences of CEO and Top Management Team Compensation

Executive compensation has become a major issue in contemporary society, particularly with the lavish compensatory packages that today seem to be the standard rather than the rule. The aims of this chapter are to discuss different components of executive compensation and more importantly the impact that these components have on executive behavior and firm performance. The chapter begins by addressing both the theoretical and practical intentions of different aspects of both individual aspects of executive compensation packages and then from a more macro view, the intentions of behind inequality of the overall executive level compensation structure within the firm. Following this discussion, focus is turned to the more ominous unanticipated outcomes that have been demonstrated to be produced through different aspects of compensatory packages and structures. Generally, this chapter addresses both how individual executive compensation packages and firm level compensation structure achieve intended benefits (i.e., goal and risk alignment between shareholder and executive) while also eliciting unintended consequences (i.e., negative effects of risk taking, fraudulent reporting, earnings manipulation, inter-team conflict, decreased employee satisfaction, decreased firm performance).