Michelle Rogan

Corporate Social Initiatives and Employee Retention

Firms are increasingly launching initiatives with explicit social mandates. The business case for these often relies on one critical aspect of human capital management: employee retention. Although prior empirical studies have demonstrated a link between corporate social initiatives and intermediate employee-related outcomes such as motivation and identification with the firm, their relationship with final retention outcomes has not been investigated. Our study fills this gap. Using individual-level data for approximately 10,000 employees in a global management consulting firm, we present empirical evidence of a positive retention effect associated with employee participation in a corporate initiative with explicit social impact goals. In addition, we offer arguments for moderating conditions that weaken this relationship and present evidence consistent with our arguments. Further econometric analysis based on a stringent matching approach as well as additional analyses based on survey and interview data suggest that the retention effect can at least partly be attributed to treatment and is not all just a manifestation of sorting of certain types of employees into the social initiative. Overall, by demonstrating a positive association between social initiative participation and employee retention, this study highlights the need for further research into how corporate social engagement can serve as a tool for strategic human capital management.

Picking a (Poor) Partner A Relational Perspective on Acquisitions

Using comprehensive data from the global advertising industry from 1995 to 2003, we examined the effects of indirect ties (common clients) on acquirers’ choices of partners for mergers and acquisitions and on the performance of the combined organizations. We found that the probability of being acquired rose but the performance of merged entities declined—both by losing clients and by selling less to the clients retained—with the number of common clients connecting the target to the acquirer. Two potential mechanisms could account for this pattern of results: either managers hold positively biased beliefs about those connected to them through common clients, or they restrict their searches for potential acquisition partners to those they already know, despite the disadvantages of doing so, ignoring targets that may have more potential but with whom they have no indirect ties.

Too Close for Comfort? The Effect of Embeddedness and Competitive Overlap on Client Relationship Retention Following an Acquisition

Drawing on insights from network dynamics and exchange theory, I develop and test arguments for the retention or dissolution of exchange relationships. I exploit mergers and acquisitions among advertising firms as strategic actions that change the networks in which they and their clients are situated, and examine the consequences of these changes for their network relationships. Analysis of an archival, longitudinal data set confirms that, in general, relational embeddedness reduces the likelihood of dissolution and that increases in competitive overlap among clients increase dissolution likelihood. The results also provide evidence of a significant interaction effect between relational embeddedness and competitive overlap. For low to moderate increases in competitive overlap, embeddedness reduces dissolution likelihood. However, when the merger results in a high increase in competitive overlap, increasing embeddedness actually increases dissolution likelihood. Mechanisms to explain the findings are explored, including fears of information leakage and trust betrayal. The findings suggest that under certain conditions, relational embeddedness can reduce—rather than increase—relationship stability.

Resource Dependence Dynamics: Partner Reactions to Mergers

Research on resource dependence typically takes a static view in which actions and outcomes are determined structurally, but not as responses to the actions of the counterparty in an exchange relation. By contrast, this study addresses a question of power dynamics by examining whether mergers of organizations trigger responses from their common exchange partners. We predict that common exchange partners respond by withdrawing from the relationship and that their responses vary with the availability of alternatives, the value of the relationship, and the relationship history. Using data on advertising agencies, we show that mergers of agencies do trigger reactions from their common clients, and the reactions differ with agency and client characteristics. Extending existing theory and evidence, our results suggest that firms respond to the dynamics of exchange relationships and not only to their structure.

Managerial Networks and Exploration in a Professional Service Firm

A firm’s growth and survival depends on the ability of its managers to explore for new business and knowledge; yet, exploration is challenging for most large, established firms. Extending prior research into networks and exploration, we propose that a key characteristic of managers’ external networks – the extent to which their networks include relationships built using predominately individual rather than firm resources – is positively related to managers’ abilities to explore for new business and knowledge in large firms. We propose that networks with more individual ties provide more diverse knowledge, enable greater autonomy and ease access to resources from contacts, hence facilitating exploration. Analysis of an original dataset of external networks of 77 senior managers in a large global consulting firm provides support for our arguments. We find that individual ties are positively related to exploration and, furthermore, that the positive (negative) relationship between sparse (dense) networks and exploration increases with the number of individual ties in managers’ networks.

Coordinating Complex Work: Knowledge Networks, Partner Departures, and Client Relationship Performance in a Law Firm

The mobility of individual managers has long presented a problem for firms in knowledge-intensive industries. Shifting to more complex work often reduces the importance of a single individual’s knowledge for the firm’s exchange relationships because complex work requires inputs from a broader set of the firm’s members. Although complex work decreases the likelihood that a single individual can shift the exchange relationship to another firm, we propose that it increases the vulnerability of the firm’s performance to departures of those individual managers who act as coordinators of knowledge. This leads us to focus on how the internal knowledge network formed to maintain each relationship can compound or mitigate the loss of a coordinating manager. Using original data on client relationships from a law firm, we examine the effect of internal knowledge networks and lead partner departures on the performance of the relationships. Supporting our argument, we find that the negative performance effect of a lead partner departure is greater when the network has high knowledge heterogeneity and involves more experts and lower when the network has high cohesion. This paper was accepted by Jesper Sorensen, organizations .

Book Review: The Oxford Handbook of Professional Service Firms

Twenty years ago, I started my first ‘real’ job out of university at a large global consulting firm. I was thrilled because the firm had an outstanding reputation. In truth, like many other recent graduates joining the firm, I had little idea what type of firm it was or what I would be doing. Had the Oxford Handbook of Professional Service Firms been available, I would have understood that I was joining a ‘neo-PSF’ and that my main task would be applying knowledge developed by the firm to solve clients’ problems. A closer read would have helped me anticipate the internal power dynamics the new and growing practice I was joining was about to face. And finally, I might have been able to predict the tension between my preference for autonomy and the firm’s standardized routines that eventually led me to leave. These are just a few of the many subjects covered in the handbook, a volume that is highly relevant to management scholars studying professional service firms (PSFs) as well as individuals working in them. In the Oxford Handbook of Professional Service Firms, editors Empson, Muzio, Broschak and Hinings offer a clear review of the literature to date on professional service firms. Given the significant increases in both the quantity and quality of research into professional service firms by management scholars in recent years, the editors’ aims are to consolidate, extend and differentiate this growing body of work. The review covers a tremendous breadth of research including foundational research in sociology, economics and legal studies. However, its main emphasis is on more recent research taking a strategy and organizations perspective, and therefore the handbook will be most valuable to management scholars studying professional service firms.