Laszlo Tihanyi

Composition of the Top Management Team and Firm International Diversification

This study investigates the impact of various top management team characteristics on firm international diversification. Relying on data from 126 firms in the electronics industry, we find that certain top management team characteristics are related to international expansion. Specifically, results indicate that lower average age, higher average tenure, higher average elite education, higher average international experience, and higher tenure heterogeneity are associated with firm international diversification. The study reinforces the importance of top management team composition in internationalization decisions and suggests further research in this context.

International Diversification: Antecedents, Outcomes, and Moderators

Pursuit of international markets and resources from foreign sources has increased dramatically during the past two decades, and the academic study of international diversification has increased concurrently. Reviewing the literature in management and related disciplines, the authors discuss recent findings of research on international diversification. A conceptual model groups key relationships, including antecedents, environmental factors, performance and process outcomes, moderators, and the characteristics of international diversification. The authors synthesize intellectual contributions, highlight unresolved issues, and provide recommendations for future research.

Ownership as a Form of Corporate Governance

Firm ownership is an increasingly influential form of corporate governance. Although firms might be owned by different types of owners, most studies examine owner influence on a particular firm outcome in isolation. This study synthesizes research from multiple disciplines on different types of owners and offers a unifying framework of governance through ownership. Using this framework, we describe the motivations of various types of owners, the tactics owners use to affect firms in which they are invested, and the dominant firm outcomes these owners seek to influence. We note how heightened managerial awareness of heterogeneous owner interests increases owner influence on firm-level outcomes. We also provide a roadmap for future study and offer research questions about where scholars might turn their attention to better understand the role of owners in directing firm actions. Our study draws attention to emerging forms of ownership, such as hedge funds and sovereign wealth funds, and highlights the changing (and often competing) interests of shareholders and how this impacts theories of governance.

Diversified Business Groups and Corporate Refocusing in Emerging Economies

As emerging economies have improved their economic institutions, the performance of many large business groups has been reduced because such groups acted as market-substitute mechanisms. Consequently, business groups have become increasingly involved in refocusing activities. The authors develop a framework in which such refocusing is explained as an attempt to balance overall transaction costs faced by groups with organization-specific costs in order to improve group performance. They examine external and internal factors that might lead to the initiation of refocusing and also explain why different ownership structures may affect the direction of that refocusing (e.g., related vs. unrelated diversification).

A Model of the Global and Institutional Antecedents of High-Level Corporate Environmental Performance

Stories of firms that exceed local compliance requirements in their environmental performance appear routinely. However, we have limited theoretical explanations of what propels these firms to exceed compliance. Our theory suggests that global competitive and institutional pressures lead multinational firms to develop highlevel, environmental management systems (EMS) that make them more competitive. For economic and other reasons, select firms make the choice to rationalize their collective environmental performance to the highest common denominator rather than the lowest. Regulations around the world differ widely and are a moving target in many settings. The need to comply with such myriad, shifting rules leads to firms creating EMS to help stay ahead of regulations worldwide. Using institutional and internationalization theories as our basis, we offer a propositional model concerning global competitive/institutional pressures and their effects on corporate environmental performance. We conclude the paper with a discussion of the implications of the model.

Tournament Theory Thirty Years of Contests and Competitions

Tournament theory is useful for describing behavior when reward structures are based on relative rank rather than absolute levels of output. Accordingly, management scholars have used tournament theory to describe a wide range of inter- and intraorganizational competitions, such as promotion contests, innovation contests, and competition among franchisees. While the use of tournament theory has gained considerable momentum in recent years, the ideas that underlie the theory have become blurred and potentially useful insights remain trapped within disciplines. We, therefore, provide a synthesis of the theory’s foundational concepts, review its use in the management literature, identify advancements from related disciplines that may be imported to management research, and delineate the steps likely to be critical to moving the theory forward. Our hope is this review will make tournament theory more accessible and salient to management researchers with a view toward developing more nuanced versions of the theory and applying it in a wider range of contexts.

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.

Technology transfer and institutional development in Central and Eastern Europe

The transfer of technology from developed countries to emerging markets has been of central interest to MNCs. This paper examines the problems associated with technology transfer in the context of Central and Eastern European countries. Contrary to a common perception of the region, we argue that different country institutional characteristics are determinants of technology transfer. By outlining the recent socioeconomic changes in the region, we consider the adoption of essential market institutions and the specific norms of regional integration with the European Union as these most important determinants. The paper concludes with the overview of potentially successful technology transfer strategies for MNCs interested in investing in the countries of Central and Eastern Europe.

A Tale of Two Politico-Economic Systems: Implications for Entrepreneurship in Central and Eastern Europe

Following the collapse of socialism in the late 1980s, Central and Eastern European countries initiated attempts to adopt capitalist economic frameworks and promote entrepreneurship. However, persistent economic difficulties and high levels of unemployment have led to dissatisfaction with political parties favoring capitalism. We integrate identity, institutional, and social movement theories to describe the emergence of four competing social movements (capitalist democracy, socialist command, social democracy, and populist command) that are undertaken to pursue politico–economic reforms. We discuss the implications for developing an entrepreneurial culture in Central and Eastern Europe.

Information-processing demands and the multinational enterprise: a comparison of foreign and domestic earnings estimates

We examine the information-processing demands top managers of the multinational enterprise (MNE) deal with in their portfolio of international operations by comparing the accuracy of foreign and domestic earnings estimates. Results indicate that the increase in information-processing demands is due to the complexity of managing foreign operations of the MNE. We also find greater information processing demands in foreign operations for managers of smaller multinational firms, firms with relatively low performance, and firms with lower levels of intangible assets. We use these results to develop implications for information-processing theory and practice.