Palash Deb

The Effects of CEO Founder Status and Stock Ownership on Entrepreneurial Orientation in Small Firms

This paper studies how governance drives entrepreneurial orientation (EO) in small firms. We argue that founder status and ownership create powerful personal incentives for small firm CEOs to engage in behaviors that influence EO. Integrating stewardship theory and the principal‐principal branch of agency theory, we test our hypotheses on a sample of 339 Swedish firms, and find that CEO founder status is significantly and positively associated with EO, while CEO stock ownership significantly but negatively predicts EO. We additionally test two boundary conditions that show that the founder‐CEOs prior managerial experience in start‐up firms positively moderates the founder‐EO relationship, while contrary to expectations, CEO ownership diversification has no effect on the negative association between ownership and EO. Thus, our study adopts a corporate governance perspective to explain how variations in EO across small firms are driven by the goals and motivations of its leader. Our research also shows that in small, private firms the balance of power is tipped in favor of the CEO rather than the board of directors. Finally, we underline the importance of adopting alternative theoretical lens like stewardship and principal‐principal agency, given that traditional principal‐agent problems are largely mitigated in the small firm context.

Signaling Type and Post‐IPO Performance

Management research has examined how signaling at the time of an initial public offering (IPO) certifies firm quality and helps address the adverse selection problem for uninformed investors. We add to this literature by proposing a typology of signals based on whether the signal involves upfront cash investments (default‐independent) or whether it is meant to be a credible non‐cash commitment to suffer negative consequences should the firm underperform (default‐contingent). We also argue that this definitional distinction highlights differences in the underlying characteristics of these signal types in terms of cost, certifiability, clarity, consistency, commitment, and visibility. Using underwriter reputation and patents as proxies for default‐independent signals, and director ownership and founder status as proxies for default‐contingent signals, we find that only default‐independent signals improve post‐IPO firm performance.

Cross-Cultural Dimensions, Metaphors, and Paradoxes: An Exploratory Comparative Analysis

We elicit the views of 37 experts who compare three distinctive approaches to the study of cross-cultural understanding: dimensions, cultural metaphors and paradoxes. Underlying this survey, although not openly stated and hopefully invisible to the expert respondents (and confirmed by informal meetings with some of them after they completed the survey), is the assumption that complexity of understanding increases as one moves from dimensions to cultural metaphors and then to paradoxes, with feedback loops connecting them. Prior research supports this progressive perspective based on feedback loops. Also, these three approaches are among the most popular, if not the most popular, methods for describing and analyzing cross-cultural differences, similarities and areas of ambiguity. Indeed, other approaches to cross-cultural similarities and differences can be subsumed in this progressive perspective. This chapter starts with a background discussion of the rationale for focusing on these three approaches, and the justification for analyzing in a comparative manner the major issues that have surfaced about these three approaches relative to their respective strengths and weaknesses. There is then a discussion of our reasons for selecting the 19 survey items, followed by a description of the methodology used, including sample selection and statistical procedures. Since this is an exploratory study of experts, we report only the major findings. However, in the final part of the review we offer suggestions about the manner in which this progression of cross-cultural understanding (via feedback loops) can be applied in the areas of research, teaching and practice, with particular emphasis on modeling human behaviors.