Extending the managerial power theory of executive pay: A cross national test

Contextual factors are typically neglected in both theorizing and empirical tests on executive pay. The fast majority of empirical investigations use data from U.S. based firms. Theoretical implications are typically developed, understood and tested on the basis of the U.S. context. However, the U.S. case is not the world wide standard. Pay in other countries is on average considerably lower and have a different pay mix. The puzzle that from the typical use of agency theory can’t be explained is the variance of pay practices that exist not only within countries but also across countries. This paper extends scholars renewed attention to managerial power theory on executive pay. It sets out how and why institutional theory must be included in explanations of executive pay. On the basis of a sample of executive pay packages from 17 different countries we test the theoretical extensions. Results indicate that institutions interact with firm level determinants of executive pay. Explanations for executive pay should therefore account for the variance of pay practices within and across countries. Highlighting that the institutional embeddedness of pay practices play an important role in finding conclusive explanations of current pay practices.Executive compensation, corporate governance, managerial discretion, power, agency theory, institutional theory

Taming Trojan Horses: Identifying and Mitigating Corporate Social Responsibility Risks

Organizations are exposed to increasing pressures from their constituents to integrate corporate social responsibility (CSR) principles into their ongoing business practices. But accepting new and potentially open-ended commitments is not a harmless exercise, and companies may well expose themselves to serious risks when embracing such principles. To identify these risks, we conducted two naturalistic studies: one exploratory, the other corroborative. The results show that CSR adoption is associated with at least seven different business risks, ranging from failing strategy implementation to legitimacy destruction. To alleviate these risks, we discuss a set of managerial mitigation strategies that have the potential to realign companies’ CSR activities with their strategic objectives. Keywords corporate social responsibility - corporate social responsibility risks - managerial implications - mitigation strategies - strategy implementation - Trojan horses Pursey Heugens is an Associate Professor of Organization Theory in the Department of Business-Society Management at RSM Erasmus University. He received his PhD from the same school. His research interests span positive and normative theories of organizaton, including bureaucracy theory, neo-institutional theory, contractualist business ethics, and virtue ethics. Nikolay Dentchev is an independent research fellow at Ghent University, Belgium, and a project coordinator at the corporate venturing department of Fortis Group (Fortis Venturing). He holds a Ph.D. in business economics from Ghent University. His current research is related to entrepreneurship, instrumental stakeholder theory, and management challenges of corporate social responsibility

Unfit to Learn? How Long View Organizations Adapt to Environmental Jolts

Long view organizations have a technical core combining high levels of Woodwardian (1958) technological complexity and Thompsonian (1967) technological intensity. This significantly diminishes their capacity for operational flexibility and strategic adaptation. Little is known about how such organizations manage to learn from rare events. We shed light on this issue by reporting a thirteen-year longitudinal study of a major oil company, tracing its experiences with a socio-political crisis from original preparations to learnings that did not fully materialize until years after the event. We use three alternate templates to interpret the organization’s struggle to maintain its technical core under conditions of fierce contestation by changing constituent groups and dwindling public support: (1) a stakeholder template mapping shifts in the salience of constituent groups that punctuate long-standing negotiated equilibria; (2) a legitimacy template showing migration towards new forms of legitimacy while old forms crumble; and (3) a capability template highlighting how pre-existing stocks of capabilities hinder learning before being supplanted by new ones. These templates are tied together in a set of integrative propositions stating how long view organizations learn from rare events

Organization Theory: Bright Prospects for a Permanently Failing Field

Organization theory is a paradoxical field of scientific inquiry. It has struggled for more than fifty years to develop a unified theory of organizational effectiveness under girded by a coherent set of assumptions, and it has thus far failed to produce one. Yet, by other standards it is simultaneously a tremendously successful field. It has great intellectual mobilizing powers and its publications - journals as well as books - are highly esteemed. In this address I attempt to unravel this paradox by discussing the field’s considerable pathologies, such as its tendency towards theoretical fragmentation and methodological factionalism, as well as its formidable strengths, like the endlessly intriguing questions it asks itself and the considerable ambidexterity with which it handles pluralism problems. Most importantly, however, I propose three overarching methodological strategies with which organization theorists can address the problems currently hampering their field. First, I argue that greater integration amongst extant theories might be reached by exploring hidden moderators that can produce contradictory research findings across macro social contexts. Second, the field can improve upon its theoretical relevance by discovering and acknowledging the stylized facts of organizational life. Third, we can collectively increase our under standing of organization a phenomena by exploring the micro foundations of our macro theories. In short, if we dared to ruffle our methodological feathers, the prospects for the organization theory field could be very bright indeed

Why can't China clean up its act?

Winston Churchill once described the Soviet Union as 'a riddle wrapped in a mystery inside an enigma.’ Modern China is a very different story. By definition, the workings of the world’s largest economy (by purchasing power parity) can’t really be hidden from view nearly as easily. However, the sheer scale means that certain aspects of that vast market’s workings are still not all that easy to understand

Much Ado About Nothing: A conceptual critique of CSR

Corporate social responsibility (CSR) as a nominal term clearly resonates with scholars and practitioners alike. As a scientific concept, however, it has often been criticized for its lack of definitional precision and poor measurement. In this paper we review and assess intensional and extensional definitions of the concept, as they have figured in the prior CSR literature. But we also go beyond these traditional review exercises by assessing the role (if any) of the concept in positive theorizing. The upshot of this analysis is that since the CSR concept adds nothing of value to existing frameworks in the field of management and organization, such as the economizing and legitimizing perspectives, it is best to discard it altogether

Testing the Strength of the Iron Cage: A Meta-Analysis of Neo-Institutional Theory

In this study, we use meta-analytical techniques to quantitatively synthesize and evaluate the sizeable body of empirical work that has been conducted under the banner of neo-institutional theory. We find strong support for the influence of mimetic pressures on organizational isomorphism, but support for the predicted roles of normative and coercive factors is mixed. Similarly, we find that the strategic isomorphism, the homogenous application of corporate policies, tends to translate into symbolic but not substantive performance effects. In combination with additional moderator analyses, these findings suggest new directions for future research

The emergence of proto‐institutions in the new normal business landscape : dialectic institutional work and the dutch drone industry

In the current business landscape, in which technology‐enabled entrepreneurship is part of the New Normal, regulatory institutional structures are in constant flux. Previous studies have framed the challenges facing entrepreneurs in mature organizational fields as avoiding the power of overbearing regulators long enough to establish the legitimacy of their ventures. In fields typified by New Normal conditions, however, regulatory frameworks for evaluating new technology‐enabled ventures are often still lacking. Regulators may choose to actively reach out to entrepreneurs to arrive at a better understanding of the radical technological changes and high‐frequency entrepreneurial behavioral adaptations that occur in these settings. To grasp how novel regulatory institutional structures come about in the New Normal business landscape, we conducted a processual study of the emergence of a new technology that is the Dutch remotely‐piloted aircraft systems (drone) industry between 2000 and 2018. Our findings show that regulatory proto‐institutions result from dialectic institutional work in the form of structured interactions between entrepreneurs and regulators. Specifically, we present a process model that reveals how new regulatory structures evolve in contexts where high levels of technological and behavioral change induce systemic uncertainty, and enlarge the interdependence between entrepreneurs and regulators. We suggest that our process theory of proto‐institutional emergence generalizes towards other organizational fields in which technology‐enabled entrepreneurship has become the main driver of growth. Theoretically, our findings speak to the literatures on institutional work, proto‐institutional emergence, and the New Normal business landscape

Contracts to Communities: A Processual Model of Organizational Virtue

In the face of systemic challenges to corporate legitimacy, scholars and managers alike have been rethinking traditional answers to the question: What does it take to be a good company? We approach this question in two novel ways. We offer a normative answer, grounded in virtue ethics, by introducing a threefold typology of organizational forms. The moral goodness of each form depends on the congruence between its purpose and virtues. But we also offer a positive answer in the form of a processual model which traces corporate goodness to its empirical antecedents and consequences. The model defies a view of organizations as innately good or evil, but rather portrays virtue as the sediment of a value infusion process. We predict that if managers succeed in establishing in their organizations the kind of virtues necessary to support collective moral agency, they can expect to reap gains like enhanced effectiveness and legitimacy. However, when they neglect their moral responsibilities, the result will likely be organizational demise

What Is Dead May Never Die: Institutional Regeneration through Logic Reemergence in Dutch Beer Brewing

Through an in-depth, historically embedded study of the craft revolution in Dutch beer brewing that began in the 1970s, we illuminate how organizational fields may experience regenerative change through the reemergence of traditional arrangements. The remarkable resurgence of craft in this context, following the rapid industrialization of the twentieth century that left only industrially produced pilsner in its wake, serves as the basis of our process theory of regenerative institutional change through logic reemergence. The results of our qualitative analysis show that institutional logics that appear dead or decomposed may never truly die, as they leave remnants behind that field actors can rediscover, repurpose, and reuse at later stages. We show how, in the Netherlands, networks of individuals that had access to the remnants of craft brewing were regenerated, in part fueled by increasing exposure to British, Belgian, and German craft brewing, and how these networks ultimately succeeded in reviving traditional prescriptions for beer and brewing, as well as restoring previously abandoned brewery forms and technologies and beer styles. These activities led not only to a sudden proliferation of alternatives to the dominant industrial pilsner but also to fundamental changes in the meaning and organization of beer brewing, as they were associated with the reinvigoration of institutional orders that preceded those of the corporation and the market. Yet we also observe how, on the ground, remnants of traditional craft often needed to be blended with contemporaneous elements from modern industrialism, as well as foreign representations of craft, to facilitate reemergence. We thus argue that regenerative institutional change likely resembles a dualistic process of restoration and transformation