Vincent L. Barker

CEO Characteristics and Firm R&D Spending

Over the past fifteen years, a number of studies have examined the determinants of firm R&D spending. These studies, however, almost invariably focus on the role of firm or external ownership characteristics in predicting R&D spending while overlooking the attributes of the top managers involved in allocating corporate resources. In this study, we change that focus by empirically examining how R&D spending as compared to industry competitors varies at firms based on the characteristics of their CEOs. Using a sample of publicly traded firms, we find that CEO characteristics explain a significant proportion of the sample variance in firm R&D spending even when corporate strategy, ownership structure, and other firm-level attributes are controlled. In terms of individual CEO characteristics, we find that R&D spending is greater at firms where CEOs are younger, have greater wealth invested in firm stock and signifacant career experience in marketing and/or engineering/R&D. In contrast to existing theory, we find that the amount of a CEOs formal education had no significant association with R&D spending once a CEO has attained a college degree. However, significant R&D spending increases are found at firms where CEOs have advanced science-related degrees. From subgroup analyses, we further find that CEO effects on relative R&D spending increase with longer CEO tenure implying that CEOs, over time, may mold R&D spending to suit their own preferences. From these results, we make implications for both research on determinants of R&D spending and managerial practice.

STRATEGIC CHANGE IN THE TURNAROUND PROCESS: THEORY AND EMPIRICAL EVIDENCE

Early corporate turnaround theorists argued that strategic reorientations are central to the recovery process at many declining firms. However, subsequent large-sample empirical studies have reported that performance turnarounds for declining firms are primarily associated with cutback actions that increase efficiency, thus creating a gap between theory and empirical findings. We close this gap by presenting and empirically supporting a model proposing that the extent of strategic change initiated in a successful turnaround varies systematically with a declining firm’s need and capacity to reorient its strategy. Based on our model, we offer explanations for why past large-sample researchers were not able to verify the role of strategic change in the turnaround process and we reassert the adaptive role that strategic reorientations have in the turnaround attempts of declining firms with weak strategic positions.

Organizational Causes and Strategic Consequences of the Extent of Top Management Team Replacement During Turnaround Attempts

Researchers have argued that top management team changes are an important force spurring change at declining firms. Yet, studies find that top executives at some firms are able to avoid being replaced even though their firms perform poorly. Also, despite support from numerous case analyses, there is little systematic evidence that replacing top managers leads to substantial organizational change at declining firms. In this study, we examine these issues by looking at levels of top management team replacement at a sample of declining firms attempting turnarounds. We find that top management team replacement levels vary with the presence of inertial or change‐creating forces within firms. In particular, reduced levels of top management team replacement occur during turnaround attempts at large firms and those that have followed the same strategic orientation for a long period of time. Meanwhile, increases in outsider control of the board are associated with increased levels of replacement. We further find that higher levels of top management team replacement are associated with greater changes in firm competitive strategy and firm structure and controls during turnaround attempts. Overall, our findings show that organizational‐level forces play an important role in top management and strategic change processes at declining firms.

Some Ideological Foundations of Organizational Downsizing

This article explores the ideological foundations of organizational downsizing in the 1990s and focuses on the ideology of employee self-reliance and the ideology of debureaucratization. We document these two managerial ideologies by examining business press articles and popular management literature in which they are being promulgated. Based on past organizational research that has traced the effects of ideologies on organizations, we argue that these two ideologies increase the likelihood of downsizing. This theoretical framework is developed, and its implications for future research, management practice, and government policy are discussed.

CEO Commitment to the Status Quo: Replication and Extension Using Content Analysis:

A limited number of studies have identified multilevel determinants of chief executive officer (CEO) commitment to the status quo (CSQ). Using an unintrusive measure of CEO CSQ developed through computer-aided content analyses of CEO letters to shareholders, this study confirmed that determinants of CEO CSQ are multilevel, including factors at the individual (CEO age and tenure), organizational (size and financial slack), and industry (extent of industry discretion) levels of analysis. In addition, as an important extension to prior research, the authors find that CEO CSQ is associated with future performance changes depending on a firm’s industry environment. They find that in high-discretion industries, firms whose CEOs are committed to the status quo suffer future financial and market performance declines as compared with their competitors, whereas such performance deterioration does not occur in low-discretion environments. Indeed, when future performance is market based and measured as Tobin’s Q, the authors find that compared with competitors, a firm’s performance actually improves in low-discretion industries if its CEO is committed to the status quo.

Upper Echelons and Board Characteristics of Turnaround and Nonturnaround Declining Firms

Abstract Despite the publication of a number of studies examining the top management team (TMT) and board characteristics of failing firms, empirical studies of how turnaround firms differ from failing firms on such characteristics are scarce. To examine this understudied issue, we use a matched-pair sample to test whether turnaround and nonturnaround declining firms have significant differences in board composition, board size, CEO duality, TMT size, and TMT change. The results indicate that turnaround firms are more likely to have CEOs that are also board chairs, medium-sized boards, and greater outsider control of the board. Also, by the end of their recoveries, turnaround firms have TMTs employing a significantly smaller proportion of their pre-decline top managers as compared to nonturnaround firms. Overall, these findings imply that turnaround firms develop strategic decision-making structures that are fast yet influenced by outside perspectives.

Linking top manager attributions to strategic reorientation in declining firms attempting turnarounds

Abstract For decades, researchers have been reporting case studies or theoretic models suggesting that top managements interpretations of the sources of performance problems shape their firms response to declining performance. Yet, no systematic studies of declining firms have examined this argument. Using field and archival data from a sample of declining firms, this study examines the influence that causal attributions for the sources of declining performance have on the level of strategic change implemented during turnaround attempts. Consistent with attribution theory and past case study research on turnaround attempts, we find that firms whose top managers attribute decline to internal sources as opposed to external sources are more likely to show greater levels of strategic reorientation in response to declining performance. We further find that causal attributions are influenced by factors surrounding the turnaround attempt, such as top management changes and firm size, and that other firm factors, such as director turnover and financial slack, can directly spur strategic reorientation. Finally, we forward implications for understanding firm responses to decline.

Managerial Discretion An Empirical Review and Focus on Future Research Directions

Scholars have long been interested in when and to what degree managers are able to exert control over their organizations. In this review, we examine managerial discretion, or the latitude of action available to managers. Since its introduction, scholars have attempted to explain when managers will have discretion, what discretion means for organizational outcomes, and how discretion may differentially influence organizational outcomes when it enables or constrains leaders. Our review indicates that while a significant number of studies have examined discretion, few have attempted to validate the prescriptions of the managerial discretion construct. Furthermore, studies to date have primarily focused on the industry task environment as a measure of discretion, with less attention focused on the manager’s characteristics and the internal organization. We then assess construct validity and the measurement of managerial discretion, offering recommendations to future researchers for improving the operationalization of this construct. Finally, we consider how discretion forces may interact as either complements or substitutes and how such interactions may have both organizational- and individual-level consequences.

When things go wrong : organizational failures and breakdowns

The book, ‘When Things Go Wrong: Organizational Failures and Breakdowns,’ edited by Helmut K. Anheier, is a collection of essays and articles concerning organizational failure. Some of the contributions appeared earlier in a 1996 special issue of ‘American Behavioral Scientist,’ in which this same topic was addressed. The reviewer, who has spent the last decade researching organizational decline, downsizing, and turnaround, found that, despite some weaknesses, the chapters of the book were a coherent package that stimulated new thoughts about organizational failure.

Formal Strategic Analyses and Organizational Performance: Decomposing the Rational Model:

Although a substantial body of literature suggests a positive relationship between decision process rationality and organizational performance, there is also compelling evidence that this relationship is negative. We argue that these equivocal findings may be due, in part, to a lack of construct specificity and different methodologies employed to assess decision process rationality. Drawing from Langleys (1989) framework of decision process rationality, we examined the effects of formal analysis for purposes of information, persuasion and communication, control and direction, and symbolism, considering also their effects in the context of environmental dynamism. Using survey data from top management teams in 42 organizations, we found that in both high and low dynamism environments, the instrumental use of information in decision processes was positively linked with organizational performance. In dynamic environments, while analyses for symbolic and control purposes were positively associated with performance, analysis for persuasion was negatively associated with performance. By unraveling the performance effects of different elements of decision-making rationality, we can better understand the nature of relationships between strategic decision processes and organizational performance. This understanding might ultimately lead to better strategic decision making in organizations.