Stretch goals and the distribution of organizational performance

Many academics, consultants, and managers advocate stretch goals to attain superior organizational performance. However, existing theory speculates that, although stretch goals may benefit some organizations, they are not a “rule for riches” for all organizations. To address this speculation, we use two experimental studies to explore the effects on the mean, median, variance, and skewness of performance of stretch compared with moderate goals. Participants were assigned moderate or stretch goals to manage a widely used business simulation. Compared with moderate goals, stretch goals improve performance for a few participants, but many abandon the stretch goals in favor of lower self-set goals, or adopt a survival goal when faced with the threat of bankruptcy. Consequently, stretch goals generate higher performance variance across organizations and a right-skewed performance distribution. Contrary to conventional wisdom, we find no positive stretch goal main effect on performance. Instead, stretch goals compared with moderate goals generate large attainment discrepancies that increase willingness to take risks, undermine goal commitment, and generate lower risk-adjusted performance. The results provide a richer theoretical and empirical appreciation of how stretch goals influence performance

Network centrality and organizational aspirations: A behavioral interaction in the context of international strategic alliances

Whereas social network analysis has been associated with organizational aspirations, little is known on how firm's structural positioning, and particularly network centrality, affects organizational aspirations to engage in international strategic alliances (ISA). This study examines the impact of network centrality on firm's internationalization behavior within the ISA domain in response to the performance-aspiration gap. We build on social and behavioral perspectives to predict that network centrality and performance-based aspirations will be associated with the number of ISA the firm engages in. Using a sample of 7760 alliance collaborations from the top 81 global pharmaceutical firms for the period of 1991-2012, we find supporting evidence for most of our arguments

Angel investor's selection criteria: a comparative institutional perspective

Despite the important role of angel investors as critical financial providers for new ventures, little is known regarding how institutions make their investment decisions. While angels make decisions based on selection criteria during the first stage, they are also embedded within and affected by different institutional settings and as a result weight these criteria differently than other investors. We compare angel investors' selection criteria in China and Denmark using the comparative institutional perspective. We use a policy capturing approach and hierarchy linear modeling, revealing that since Chinese angels are embedded within relationship-based institutional settings they tend to reply more on strong ties such as family and friends in management team, as well as weighting risks less compared to Danish angels operating within more rule-based institutional contexts

Attention to Fairness versus Profits: The Determinants of Satisficing Pricing

We investigate determinants of the competitive behaviour of satisficing, non-profit-maximizing pricing. Taking a behavioural approach, we argue that pricing decisions are motivated by fairness objectives as well as the desire to achieve economic objectives. We draw from the attention-based view to build our theoretical model explaining the contextual conditions that are most likely to be associated with attention to fairness relative to attention to achieving maximum profits when setting prices. Our hypothesized predictors of satisficing pricing decisions encompass the institutional context in which the firm is embedded, the exchange context with customers and suppliers, and the context internal to the firm. Hypotheses are tested with survey data of over 3000 firms from 15 countries. We find that the decision to set prices at a satisficing level is remarkably common, and its prevalence is associated with contextual factors that are consistent with greater attention to fairness concerns

ANZAM - ISBN 978-0-9875968-5-7

We investigate how operational governance formalization and flexibility affect organizational performance, both directly and jointly. We build our arguments using learning mechanisms. Based on 434 observations from project managers in a large multi-department government organization, we hypothesize a positive-increasing U-shaped learning curve effect regarding governance formalization and a positive effect regarding governance flexibility. Most importantly, we hypothesize that governance formalization and flexibility exhibit joint effects. We find that governance flexibility increases performance when formalization is low and decreases performance when formalization is high. Our finding that flexibility can be counter-productive to performance is novel. Overall, this paper contributes to the operational governance literature by clarifying how learning mechanisms explain the joint effects of governance formalization and flexibility

Under New Management Innovating for sustainable and just futures 30th ANZAM Conference

We investigate the relationship between operational governance, specifically governance formalization and flexibility, and the propensity for organizations to have multiple goals. We extend the traditional sequential attention logic from behavioural theory by drawing insights from the literature on polychronicity – defined as the extent to which organizations focus attention on multiple goals simultaneously. We build our arguments on attentional efficiency logic including directional efficiency for governance formalization and discretionary efficiency for governance flexibility. In a multi-country sample of 555 top managers, we find moderation effects of governance flexibility on the curvilinear (inverted-U) relationship between governance formalization and polychronicity in managing multiple goals. Our research opens new avenues of theorizing multiple goals and builds theoretical link between multiple goals and operational governance

Proceedings of the Seventy-seventh Annual Meeting of the Academy of Management

We investigate forward-looking and backward-looking antecedents of organizational aspirations. Undertaking a mixed-method investigation, we find a high prevalence of forward-looking antecedents of aspirations and identify the salient roles of competitive turbulence, strategic aggressiveness, and performance relative to aspiration. Our work lays a foundation for an attention-based theory of aspirations

Proceedings of the 27th Australian and New Zealand Academy of Management Conference

We develop a theoretical model which links managerial cognition, resource choice, and innovation. A cognitive perspective puts managers back into innovation strategy and adds important theoretical understanding to innovation as a firm-level outcome. Examining the role of managerial cognition in the choice of resource for innovation, we propose that (1) a combined use of internal and external resources will increase innovation, (2) CEO’s cognitive style of global dominance will affect the combined use of resources, and (3) CEO’s cognitive style of complexity will moderate the impact of the combined use of resources on innovation. To inform future research direction, we discuss measurement and analysis approaches for empirical testing of the model

Enacting formal controls in information system development: Process guidance and goal importance

This paper examines the enactment of formal controls in information system development (ISD). Specifically, we investigate process guidance and goal importance as enactments of behavior control and outcome control, respectively. We hypothesize the direct and interaction performance relationships of these control enactments, arguing process guidance exhibits a curvilinear (inverted U-shape) and goal importance exhibits a positive linear relationship with performance. Our finding of a U-shaped interaction relationship indicates that when goal importance is high, higher performance is achieved by either low or high process guidance. Our work bolsters the growing idea that control enactment is a salient consideration in ISD