Sustainability is fast becoming fashionable in strategic management, and yet its meaning often elusive. Some people restrict sustainability to environmental issues, others use it synonymously with corporate social responsibility. In this essay, we return the roots of original argue that requires consideration time. obliges firms make intertemporal trade-offs safeguard intergenerational equity. clarify by showing notion ‘time’ discriminates from responsibility other similar concepts. We then...

Even though organizational researchers have acknowledged the role of social and environmental business practices in contributing to resilience, this work remains scarce, possibly because difficulties measuring resilience. In paper, we aim partly remedy issue by two ways which resilience manifests through outcomes a generalized disturbance—namely, severity loss, captures stability dimension time recovery, flexibility dimension. By isolating these variables, can then theorize types that...

We develop and test a theory of how unintended audiences create reaction costs for firms that use corporate social responsibility (CSR) as signal. introduce define signal senders incur when react negatively to true was intended another audience. argue activist hedge funds—an audience—treat CSR have wasteful intentions capabilities, which prevent from maximizing shareholder value in the short term. On basis, we hypothesize funds are more likely target with higher levels CSR, thus imposing on...

Signaling theory is about decision-making and communication. It describes scenarios where signalers send observable signals that carry credible information unobservable qualities. When decision-makers have incomplete or imperfect information, can help them make better decisions. The power of a signal, though, lies in its cost, with the best being highly costly for low-quality less high-quality signalers. Given centrality these ideas organizational sciences, we examine management studies use...

Abstract Research Summary We investigate how hedge fund activism affects firms' financial and social performance. So far, research has examined either the impact of on short‐term performance, or other types shareholder affect Crossing these boundaries with data 1,324 activist campaigns between 2000 2016, we find a clear trade‐off associated activism: benefits are shareholder‐centric short‐lived, reflected in immediate increases market value profitability; however, come at mid‐ to long‐term...

Common owners face an incredible investment challenge: managing systematic risk. Because common hold shares in multiple firms across industry, action (or inaction) by one firm that affects industry peers is felt more severely than non-common owners. Research has largely focused on owners’ role orchestrating competitive dynamics among their portfolio firms, with almost no empirical investigation of how manage Drawing research showing firm’s corporate social responsibility (CSR) can produce...

The behavioral agency model (BAM) posits that executives endow current wealth, but do not prospective wealth. As a result of this endowment effect, are risk averse with wealth and seeking These relationships, however, assume all perceive attend to future outcomes similarly, which is at odds research on temporal orientations. Drawing the concept focus, we theorize present-focused CEOs adhere BAM’s while exhibiting even stronger relationships between taking. In contrast, by nature being...

How do firms alter their strategic actions when targeted by different types of activist shareholders? We argue that hedge fund activists threaten in ways lead them to conserve resources and scale back simplify actions, which refer long-run competitive requiring substantial investment. By comparison, corporate shareholder bestow with new freedoms increase flexibility expand complexify actions. Using a matched sample difference-in-differences methodology, we find support for our theory: Firms...

Inspired by research on social movements, we extend the idea that activists look for opportunities to target firms realm of financially motivated shareholder activists. Focusing activist hedge funds, argue fund campaigns are more likely succeed when boards slow and less united that, compared with homogeneous boards, demographically diverse tend act slowly unity. Although these attributes make effective under “normal” circumstances, they become a liability in confrontations funds. We,...

Researchers have endeavored to explain the causes of short organizational time horizons because and societal costs corporate short-termism. These explanations, however, tend confound cognitive with behavioral which masks importance biases. We address this oversight by situating our work in prospect theory search, underscores external evaluations on asymmetry positive negative evaluations. Specifically, we argue that will shorten more than lengthen them. In research context financial...

Shareholder activism is an important driver of corporate change. Yet, the phenomenon has primarily been studied within disciplinary silos, providing only a partial understanding overarching process, actors involved, engagement approaches used, and tangible outcomes activism. Noting these limitations, purpose this review threefold. First, we present integrated account current state cross-disciplinary knowledge on shareholder to identify what know about different aspects activist–firm...

Many institutional investors are active political donors, but the impact that their partisanship has on corporate practices and policies mostly eluded academic examination. As donations can reflect investors’ views values, we theorize nature of shape managerial decision-making in important ways. We test this idea by examining changes social responsibility (CSR) activities, an area where managers have a high degree discretion over how they account for values. Our theory introduces two focal...

While research has uncovered an array of visible competitive dynamics, a strategic world competition lies beneath the surface that should also be theorized and empirically traced. We investigate consequences “media–rival” common ownership, in which investors own media company non-media focal firm’s rivals. posit firms receive worse coverage from outlets when institutional hold substantial ownership both rivals because investors’ holdings provide them with incentives power to enhance...

Though recent waves of large-scale street protests have not directly targeted the business sector, they can still represent a major development in company’s external environment. Building on literature community embeddedness, this study extends activism-as-information theory to understand how and when companies respond that take place their communities. We argue for leaders, scale serves as an information update regarding changing relevance protested social issue community. Using data from...

We investigate how CEOs’ implicit motives can shape firms’ competitive intensity in response to external threats. examine this phenomenon the context of short seller activism, which occurs when an activist publicly denounces a firm drive down its stock price. Implicit are motivational dispositions that operate outside individual’s conscious awareness. find needs for achievement and power associated with decrease following implying lead CEOs avoid behaviors they fear may result failure or...

Activist shareholders face a challenging task in preemptively identifying executives who they perceive might destroy shareholder value—before harm is done. We develop framework where activist resolve this problem by forming attributions about executives’ intentions based on their displays of agentic values, which reflect independence and control. For shareholders, strong display can evoke concerns that an executive will act without the regulation input, control create engineer governance...

To explain wavering empirical support for a female leadership penalty, we introduce novel stakeholder-oriented framework that highlights variance in the application and expression of gender bias upper echelons. Directed by their relationship with firm's leadership, theorize stakeholders' appraisals top leaders map onto category-complexity continuum. At "category" end this continuum, stakeholders neither have access nor are attentive to capability cues from leader, increasing reliance on...

Abstract Research Summary We draw attention to a rapidly emerging phenomenon—the appointment of activist‐nominated directors boards—that could have consequences for stakeholders. Although appointing an activist director tends improve firm value shareholders, we uncover hidden externality wherein it also yields increased reports stakeholder harm. introduce the management literature and examine array considerations with view toward launching stream that explores nuanced forms directorships,...

In this paper, we introduce the concept of organizational resilience to deepen current understanding sustainability. Drawing on prior work in socioecology, integrate both time and levels analysis develop a model that offers trait process view resilience. We three propositions explain how organizations can be more resilient. Our argue efficiency may sometimes at odds; too much or little compromise also sustainability is not characteristic single organization, but systems organizations.

Recent research has shown that earnings pressure from financial analysts and investors encourage managers to make decisions over-prioritize short-term profits relative long-term value. According this body of research, these pressures cause shorten their time horizons, focusing attention in the present ignoring long run implications decisions. However, many competing studies have are often short term even when not, reward firms investments. The equivocal findings may arise because...

This study examines whether coverage from financial analysts causes corporate short-termism by affecting the horizons of firms’ capital investments. Financial evaluate performance firms in order to develop and distribute opinions about a firm’s stock. I hypothesize empirically illustrate that greater analyst leads more pressure on perform short-term, which biases away making longer-term To establish causality, use difference-in-differences technique exploits series quasi-natural experiments...