T. Russell Crook

Does Human Capital Matter? A Meta-Analysis of the Relationship between Human Capital and Firm Performance.

Theory at both the micro and macro level predicts that investments in superior human capital generate better firm-level performance. However, human capital takes time and money to develop or acquire, which potentially offsets its positive benefits. Indeed, extant tests appear equivocal regarding its impact. To clarify what is known, we meta-analyzed effects drawn from 66 studies of the human capital-firm performance relationship and investigated 3 moderators suggested by resource-based theory. We found that human capital relates strongly to performance, especially when the human capital in question is not readily tradable in labor markets and when researchers use operational performance measures that are not subject to profit appropriation. Our results suggest that managers should invest in programs that increase and retain firm-specific human capital.

The Dimensionality of Organizational Performance and its Implications for Strategic Management Research

Organizational performance is widely recognized as an important – if not the most important – construct in strategic management research. Researchers also agree that organizational performance is a multidimensional construct. However, the research implications of the constructs multidimensionality are less understood. In this chapter, we use a synthesis of previous attempts to describe the dimensions of performance and our own analysis of performance measurement in the Strategic Management Journal to build a conceptual model of organizational performance and its dimensions. Our model suggests that operational performance and organizational performance are distinct, and that organizational performance can be further dimensionalized into accounting returns, stock market, and growth measures. The model has implications for how future research might advance understanding about performance and how empirical studies should conceptualize and measure performance.

Mixing Business With Politics: A Meta-Analysis of the Antecedents and Outcomes of Corporate Political Activity

Corporate political activity (CPA) has increased rapidly in the United States; however, research findings are spread across several social science fields. The authors use meta-analysis to aggregate findings involving two sets of research questions: (1) what factors and to what extent do these factors influence firms to engage in CPA, and (2) does CPA, in turn, affect firm performance and, if so, to what extent? Two important contributions are made. First, the evidence suggests that, although many factors shape CPA, very few affect CPA to a large extent. Second, the results suggest that CPA is positively related to firm performance and is an important determinant of firm performance. The authors build on this evidence to suggest several future research directions.

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.

Are We There Yet? An Assessment of Research Design and Construct Measurement Practices in Entrepreneurship Research

Research design is a central element of empirical research, and thus, an important consideration for entrepreneurship researchers and anyone interested in entrepreneurship-related research findings. Yet, many years have past since the last thorough review of research design and construct measurement practices. Thus, it is unknown whether there is a gap between what is currently being done versus what needs to be done. In this article, authors use a two-study approach involving a content analysis of published empirical research and a survey of experts within the field to assess the current state of practices. Their findings indicate that, in general, research design and construct measurement practices continue to improve; however, there are some issues that still need to be resolved. Authors lay out key implications and provide several suggestions to help resolve these issues.

The Impact of Family Representation on CEO Compensation

Understanding the nature of family representation in public firms has been an important topic for entrepreneurship research. Because CEO compensation is a key tool that boards use to align the interests of shareholders and managers, researchers have taken steps toward understanding how family representation affects CEO compensation. Prior research has painted family–member CEOs as stewards who accept lower compensation. Based on agency theory, we describe a different scenario wherein family representatives engage in strategic control that reduces family–member CEOs‘ compensation. Thus, family–member CEOs accept lower compensation only when additional family members are represented in management or on the board. In comparison with CEOs at nonfamily firms, we find that family–member CEO compensation is 13% lower when multiple family members are involved, but 56% higher when the CEO is the lone family member.

Assessing Cumulative Evidence within Macro Research: Why Meta-Analysis Should Be Preferred Over Vote Counting

Understanding the conclusions a body of evidence offers involves accumulating findings. Two recent articles used vote counting to assess the evidence related to important macro theories: transaction cost theory and resource-based theory. Each concluded that its focal theory is not well supported. In contrast, recent meta-analyses of the same theories concluded that both are strongly supported. We explain why macro researchers should trust the findings of meta-analyses but not those of vote counts. A direct implication is that researchers interested in advancing transaction cost and resource-based theories need to build upon the meta-analytic evidence. A broader implication is that, as the preferred method for accumulating evidence, meta-analysis can be a catalyst for the re-evaluation of established theories and the development of new theory.

Using Tournaments to Reduce Agency Problems: The Case of Franchising

Anecdotal evidence suggests that franchisors use multiunit franchising to reward franchisees. In this paper, we model multiunit franchising as the reward in a tournament—one solution to the franchising agency problem. We use a unique database of 68 restaurant franchisors and find support for the tournament model. Franchisors that seek franchisees with managerial experience and franchisors that build routines to share knowledge use more multiunit franchising. Also, franchisors that grow faster use more multiunit franchising than franchisors that grow more slowly, suggesting that faster–growing franchisors use multiunit franchising as a reward in a tournament to reduce agency problems.

Entrepreneurial Team Composition Characteristics and New Venture Performance: A Meta‐Analysis

Upper echelon theory highlights the importance of top management teams in large and established firms; however, effects are not always clear outside of this context. Due to the unique nature of new ventures, the composition of entrepreneurial teams and its effects on performance is worthy of investigation. Accordingly, we meta–analyze the effect of three characteristics of entrepreneurial team composition (i.e., aggregated, heterogeneity, team size) on new venture performance. Our meta–analysis, which includes 55 empirical samples and 8,892 observations, finds significant and unique effects of entrepreneurial team characteristics on new ventures. Based on our findings, we derive avenues for future research.

Competence- and Integrity-Based Trust in Interorganizational Relationships Which Matters More?

Trust is an important factor for managing transaction costs within interorganizational relationships (IORs). Research on trust indicates that separate dimensions of trust arise from a partner’s competence (i.e., technical skills, experience, and reliability) and integrity (i.e., motives, honesty, and character), and that these dimensions have potentially unique effects. Because scholars rarely apply this distinction within IOR research, past studies may have masked important relationships involving competence- and integrity-based trust. In response, we build and test theory that explains how competence- and integrity-based trust have asymmetric effects on different kinds of transaction costs. In particular, we build on theory that describes how parties process positive and negative information about others’ behavior to predict that integrity-based trust in IORs is more potent for reducing transaction costs than is competence-based trust. We also theorize that building strong IORs requires more up-front investment with competence-based but not with integrity-based trust. By applying meta-analytic structural equation modeling to data on 37,366 IORs drawn from 150 samples, we find that integrity-based trust is about 10 times more effective at reducing these costs. A key implication is that managers seeking to improve the efficiency of their IORs may do well by performing competently, but they can do even better by building perceptions of integrity.