Katalin Takacs Haynes

Socioemotional Wealth and Business Risks in Family-controlled Firms: Evidence from Spanish Olive Oil Mills

This paper challenges the prevalent notion that family-owned firms are more risk averse than publicly owned firms. Using behavioral theory, we argue that for family firms, the primary reference point is the loss of their socioemotional wealth, and to avoid those losses, family firms are willing to accept a significant risk to their performance; yet at the same time, they avoid risky business decisions that might aggravate that risk. Thus, we propose that the predictions of behavioral theory differ depending on family ownership. We confirm our hypotheses using a population of 1,237 family-owned olive oil mills in Southern Spain who faced the choice during a 54-year period of becoming a member of a cooperative, a decision associated with loss of family control but lower business risk, or remaining independent, which preserves the familys socioemotional wealth but greatly increases its performance hazard. As shown in this study, family firms may be risk willing and risk averse at the same time.

Contingency Hypotheses in Strategic Management Research Use, Disuse, or Misuse?

The answer to many strategic management research questions is often summarized as “It depends.” Faced with the marginal results of many main effect hypothesis tests of one variable on another variable, strategy researchers began developing contingency hypotheses that explored more nuanced relationships involving multiple variables. Herein, the authors examine the development of contingency thinking in strategic management via a review of all empirical articles published in Strategic Management Journal from its inception in 1980 through 2009. Using Venkatraman’s framework, they identify all contingency studies within this sample. Their analysis reveals that, while contingency hypotheses are becoming more common, there is less diversity in the way the effects are tested. Additionally, while the framing of contingency hypotheses has become more sophisticated over time, there remain many opportunities for methodological improvements. Based on this content analysis, the authors offer both theoretical and methodological guidelines for future strategic management studies.

Dimensions of CEO–Board Relations

Interactions between CEOs and their boards of directors are a prominent focus of management and strategy research. Despite the extensive literature on CEO–board relations, to date there has been limited integration of theoretical perspectives and measurement schemes. Through an extensive analysis of published studies, we hope to facilitate future research on CEO–board relations. We begin with a comparison of key theoretical approaches. Next, we conduct a content analysis of 51 empirical articles. We find that prior studies have an unbalanced focus regarding both topics and theoretical perspectives, and that there is limited consistency in the choice of measures. Based on this review, we lay out a number of promising directions for future research. We also find that, while there has been progress in international research on CEO–board relations, there are still many unanswered questions regarding the generalizability of governance theories across different geographic settings.

Minding the Gap Antecedents and Consequences of Top Management-To-Worker Pay Dispersion

Management researchers have long been concerned with the antecedents and consequences of managerial compensation. More recently, scholarly and popular attention has turned to the gap in pay between workers at the highest and lowest levels of the organization, or “pay dispersion.” This study investigates the performance implications of pay dispersion on a longitudinal (10-year) sample of publicly traded firms from multiple industries. We combine explanations based on tournament theory and equity theory to develop a model wherein pay dispersion has opposing effects on a firm’s short-term performance and their trend in performance over time. We also show that ownership is a key antecedent of pay dispersion. Specifically, transient institutional investors (who have short time horizons and equity stakes in a wide variety of firms) positively influence pay dispersion whereas dedicated institutional investors (who have longer investment time horizons and equity stakes in fewer firms) negatively influence pay dispersion. We discuss the wide-ranging implications of these findings for scholars, managers, and policy makers alike.

The Dark Side of Leadership: Towards a Mid‐Range Theory of Hubris and Greed in Entrepreneurial Contexts

Much of the research on entrepreneurial behaviour and leadership has emphasized their importance and potentially valuable outcomes, along with the challenges involved in each. Although entrepreneurial activities are essential in all types of organizations, this research focuses on the potential dark side of strategic leaders. Specifically, we examine the potential for and the outcomes of the display of greed and hubris in different entrepreneurial contexts. We present a theoretical model of moderated mediation, focused on the effects of greedy and hubristic behaviour by entrepreneurial leaders on the firms human and social capital, and consequently venture success. However, the negative relationship manifests differently in the presence of certain firm-level characteristics. We examine the implications of the dark side of entrepreneurial leadership and recommend several avenues for future research. In so doing, this work contributes to the development of a mid-range theory of the dark side of entrepreneurial leadership.

When More Is Not Enough Executive Greed and Its Influence on Shareholder Wealth

The concept of greed is one of the oldest social constructs; however, greed as a managerial attribute that affects firm outcomes has yet to attract scholarly attention in management. In this study, we examine the relationship of CEO greed to shareholder wealth. After anchoring greed to familiar constructs in organizational literature, we test our hypotheses on a sample of over 300 publicly traded firms from multiple industries. As predicted, greed has a negative relationship with shareholder return, but this relationship is moderated by the presence of a powerful, independent board, managerial discretion, and CEO tenure. The contributions of this study, which include refining our understanding of self-interest and opportunism, developing the greed construct, and illustrating its impact on shareholder wealth, are intended to open a new line of inquiry in the management literature.

Tipping Point Managers’ Self-Interest, Greed, and Altruism

We explore the potential effects of managers’ greed and altruism on their behaviors and firm outcomes. Greed represents extreme self-interest whereas altruism reflects concern for others. We argue that managerial greed leads to a focus on short-term decisions and short-term firm performance. Alternatively, managerial altruism normally produces a focus on longer term decisions and long-term firm performance. Managerial greed is also more likely to produce wrongdoing, whereas managerial altruism produces greater corporate citizenship behaviors. Managerial greed is likely to lead to turnover for non-performance–related reasons whereas managerial altruism is more likely to produce managerial turnover for performance reasons. Overall, we conclude that measured self-interest keeps managers focused on the firm’s goals and measured altruism helps the firm to build and maintain strong human and social capital. The extremes of either greed or altruism likely will harm firm performance. Thus, balance between managerial self-interest and managerial altruism leads to the greatest success.

CEO overpayment and underpayment: executives, governance and institutions

Purpose Based on the findings of Aguinis et al. (in press) that only a few executives are properly compensated, we examine potential causes and consequences of CEO overpayment and underpayment. Ineffective compensation of the CEO represents a governance failure by the board of directors. Better understanding the reasons for such failures may help boards to correct their processes and to enact more effective governance. Boards must look beyond the normally constrained focus of agency theory to examine executive characteristics and motivation. Thus, tailoring compensation plans and governance to the executive and organizational context requires attention to a broader set of theoretical notions. Design/methodology/approach Using the Aguinis et al (in press) work, we conceptually identify and explain the causes and consequences of CEO overpayment and underpayment along with their implications for governance and future research Findings We identify potential reasons for CEO overpayment and underpayment. For ex...

Something old, something new: culture and CEO compensation revisited

Purpose - – This study is a replication of Tosi and Greckhamers work examining how uncertainty avoidance, power distance, individualism and masculinity/femininity are related to total CEO pay, the ratio of variable to total CEO pay and the ratio of CEO pay to the pay of the lowest level employees in 23 countries. Its main purpose is to investigate whether the replication confirms, questions or extends the results of TG2004. Design/methodology/approach - – Tosi and Greckhamer used generalized linear modeling (GLS) to analyze the relationships between Hofstedes four cultural dimensions and CEO compensation. In the replication, the author used GLS to retest the original seven hypotheses with more recent data from Hofstede and test the same hypotheses relying on cultural values and practices scores from the GLOBE study. Further, using firm-level data unavailable for the original study, the author analyzed fixed and random effects in mixed models. Findings - – The replication generally confirms the findings of the original study for the effects of power distance, individualism and masculinity on CEO total pay. Results are mixed or indicate the lack of significant effect for other relationships. Research limitations/implications - – This study reexamines the effects of country-level contextual variables in the area of CEO compensation. Originality/value - – The replication presents firm-level CEO compensation and firm performance data from 21 countries, extending the original study and unveiling possible spurious effects.