Linda Brewster Stearns

A longitudinal study of borrowing by large American Corporations

Mizruchis research for this paper was supported by a National Science Foundation Presidential Young Investigator Award (Grant #SES-8858669 and SES-9196148). Stearns was supported by the Russell Sage Foundation and the George A. and Eliza Gardner Howard Foundation. Both authors were supported by National Science Foundation research grant #SBR-9308443. The authors are grateful to Marshall W. Meyer and three anonymous ASO reviewers for their extensive comments on earlier drafts of the paper and to Linda J. Pike for her editorial suggestions. Please direct correspondence to Mark S. Mizruchi, Department of Sociology, University of Michigan, Ann Arbor, Ml, 48109-1382. Using models drawn from organizational theory and institutional economics, this paper examines the extent to which firms borrow money. We argue that corporate borrowing depends on four factors: the expected return on borrowing, the availability of internal funds, the strategic orientation of the chief executive officer, and the firms board composition. We formulate four hypotheses, which we test with data on 22 large U.S. manufacturing firms from 1956 through 1983. Retained earnings, the expected return on borrowing, the presence of a representative of a financial institution on the firms board of directors, and the presence of a CEO from a finance background are all associated with the level of borrowing. The findings suggest that both economic and organizational factors affect the extent to which firms borrow.-

Economic Behavior in Institutional Environments: The Corporate Merger Wave of the 1980s

Over the last 100 years, the United States has experienced four waves of corporate merger activity. The first occurred at the turn of the century, then again in the 1920s, the 1960s, and the 1980s. Most research on merger waves has focused on individual mergers within a wave. Our research focuses on the wave itself. We develop a theoretical model that centers on the actors who promote the mergers and on those changes in the political and economic environments that provide the resources these actors need to act. Specifically, we argue that a permissive state combined with increased access to capital market funds encourages fringe players to initiate the innovations that enable them to execute mergers. Merger waves occur when these actors become increasingly successful and their innovations are imitated throughout the business community. We provide empirical support for the model using data from the 1980s merger wave.

Getting a Bonus: Social Networks, Performance, and Reward Among Commercial Bankers

Research on the effects of social networks on individual status attainment has exploded in recent years, but the results remain equivocal, varying across network structures, types of ties, and outcome variables. The focus in this literature has been on two primary outcomes: performance benefits and rewards (including promotion and compensation). These two types of outcomes have often been conflated, however, despite the fact that high levels of one do not guarantee high levels of the other. We examined the effects of job performance, network tie strength, and network structures on the size of the year-end bonuses received by 71 relationship officers in a major, multinational commercial bank. We found that in networks based on information acquisition, both strong ties and sparse networks are positively associated with high bonuses, as is the combination of the two. In networks based on approval and support for ones deals, neither tie strength nor density predicts bonus size, but the benefits of strong ties increase as network density increases. Our results demonstrate the importance of distinguishing networks based on collegial relations from those based on authority, as well as the importance of distinguishing the network factors that improve performance from those that generate favorable evaluations independent of performance.

Executive Defense: Shareholder Power and Corporate Reorganization.

C om o advento das corporações de tamanho extraordinário, no início do século XX, surgiram também configurações inovadoras para responder aos desafios dos novos tempos. Simultaneamente ao crescimento do tamanho das empresas, aconteceu a difusão ou pulverização de sua propriedade entre muitos acionistas. Para administrar as enormes empresas que se formaram a partir das fusões e outras associações de capitais, era preciso também uma nova estratégia de gestão de corporação. Invenrou-se, então, uma nova forma de gerir o capital, através da figura do administrador profissional, o hoje tão conhecido executivo empresarial. O executivo, qual procurador do capital, tem sua origem no movimento gerencialista, sobretudo com Taylor, Ford, Fayol e outros. Nasceu assim o capitalismo gerencial ou do executivo. Agora vem Michael Useem, professor de management na famosa Wharton School, Universidade da Pennsylvania, propor que a predominância do capitalismo executivo está sendo desafiada, nos anos 80 e 90, pelo surgimento do capitalismo investidor (institucional).