Showing papers in "Strategic Management Journal in 2014"
TL;DR: In this article, the authors investigate whether superior performance on corporate social responsibility (CSR) strategies leads to better access to finance and find that firms with better CSR performance face significantly lower capital constraints.
Abstract: We investigate whether superior performance on corporate social responsibility (CSR) strategies leads to better access to finance. We hypothesize that better access to finance can be attributed to (1) reduced agency costs due to enhanced stakeholder engagement and (2) reduced informational asymmetry due to increased transparency. Using a large cross-section of firms, we find that firms with better CSR performance face significantly lower capital constraints. We provide evidence that both better stakeholder engagement and transparency around CSR performance are important in reducing capital constraints. The results are further confirmed using several alternative measures of capital constraints, a paired analysis based on a ratings shock to CSR performance, an instrumental variables approach, and a simultaneous equations approach. Finally, we show that the relation is driven by both the social and environmental dimension of CSR. Copyright © 2013 John Wiley & Sons, Ltd.
2,071 citations
TL;DR: In this paper, a nonlinear, inverse U-shaped moderation is proposed, implying that the relationship between dynamic capabilities and competitive advantage is strongest under intermediate levels of dynamism but comparatively weaker when dynamism is low or high.
Abstract: This article suggests that dynamic capabilities can give the firm competitive advantage, but this effect is contingent on the level of dynamism of the firm's external environment. A nonlinear, inverse U-shaped moderation is proposed, implying that the relationship between dynamic capabilities and competitive advantage is strongest under intermediate levels of dynamism but comparatively weaker when dynamism is low or high. This proposition is tested using data on alliance management capability and new product development capability, two specific dynamic capabilities widely recognized in prior research. Results based on longitudinal key informant data from 279 firms support the account that these dynamic capabilities are more strongly associated with competitive advantage in moderately dynamic than in stable or highly dynamic environments.
760 citations
TL;DR: This paper uses simulations to examine how endogeneity biases the results reported by ordinary least squares (OLS) regression and examines how instrumental variable techniques help to alleviate such bias.
Abstract: In this paper we use simulations to examine how endogeneity biases the results reported by ordinary least squares (OLS) regression. In addition, we examine how instrumental variable techniques help to alleviate such bias. Our results demonstrate severe bias even at low levels of endogeneity. Our results also illustrate how instrumental variables produce unbiased coefficient estimates, but instrumental variables are associated with extremely low levels of statistical power. Finally, our simulations highlight how stronger instruments improve statistical power and that endogenous instruments can report results that are inferior to those reported by OLS regression. Based on our results, we provide a series of recommendations for scholars dealing with endogeneity
466 citations
TL;DR: The theoretical framework was tested empirically across a sample of 106 SME transactions in the machinery, electronic, and logistic industries in the German-speaking part of Central Europe and supported the demand for an integrative perspective and theory on M&A.
Abstract: In this paper, we develop a comprehensive model of M&A success. We integrate fundamental constructs of different schools and discuss their interdependencies with M&A success. Our theoretical framework was tested empirically across a sample of 106 SME transactions in the machinery, electronic, and logistic industries in the German-speaking part of Central Europe. The results of our study support the demand for an integrative perspective and theory on M&A. M&A success is a function of strategic complementarity, cultural fit, and the degree of integration. Strategic complementarity also positively influences cultural fit and the degree of integration. Cultural fit positively influences M&A success, but surprisingly has a negative impact on the speed and degree of integration. The degree of integration is positively related to speed of integration
394 citations
TL;DR: Examining firms' responses to the Carbon Disclosure Project finds that firms led by newly appointed CEOs and CEOs with MBA degrees are more likely to respond to the CDP while those led by lawyers are less likely to responded.
Abstract: We contribute to the literature on firms' responses to institutional pressures and environmental information disclosure We hypothesize that CEO characteristics such as education and tenure will influence firms' likelihood to voluntarily disclose environmental information We test our hypotheses by examining firms' responses to the Carbon Disclosure Project (CDP) and find that firms led by newly appointed CEOs and CEOs with MBA degrees are more likely to respond to the CDP, while those led by lawyers are less likely to respond Our results have implications for research on strategic responses to institutional pressures and corporate environmental performance
369 citations
TL;DR: In this article, the authors provide empirical evidence in support of instrumental stakeholder theory's argument that increasing stakeholder support enhances the financial valuation of a firm, holding constant the objective valuation of the physical assets under its control.
Abstract: We provide direct empirical evidence in support of instrumental stakeholder theory's argument that increasing stakeholder support enhances the financial valuation of a firm, holding constant the objective valuation of the physical assets under its control. We undertake this analysis using panel data on 26 gold mines owned by 19 publicly traded firms over the period 1993�2008. We code over 50,000 stakeholder events from media reports to develop an index of the degree of stakeholder conflict/cooperation for these mines. By incorporating this index in a market capitalization analysis, we reduce the discount placed by financial markets on the net present value of the physical assets controlled by these firms from 72 percent to between 37 and 13 percent.
363 citations
TL;DR: Instrumental stakeholder theory proposes a positive relationship between fairness toward stakeholders and firm performance as discussed by the authors, but some firms are successful with an arms-length approach to stakeholder management, based on bargaining power rather than fairness.
Abstract: Instrumental stakeholder theory proposes a positive relationship between fairness toward stakeholders and firm performance. Yet, some firms are successful with an arms-length approach to stakeholder management, based on bargaining power rather than fairness. We address this puzzle by relaxing the assumption that all stakeholders care about fairness. Empirical evidence from behavioral economics and social psychology suggests that firms face a population of potential stakeholders that consists not only of so-called ‘reciprocators,’ who do care about fairness, but also of self-regarding stakeholders, who do not. We propose that a fairness approach is more effective in attracting, retaining, and motivating reciprocal stakeholders to create value, while an arms-length approach is more effective in motivating self-regarding stakeholders and in attracting and retaining self-regarding stakeholders with high bargaining power. Copyright © 2013 John Wiley & Sons, Ltd.
320 citations
TL;DR: The authors hypothesize that when performance exceeds aspirations, family firms manage socioemotional and economic objectives by making exploitative R&D investments that lead to more reliable and less risky sales levels.
Abstract: The behavioral agency model suggests family firms invest less in R&D than nonfamily firms to protect their socioemotional wealth. Studies support this contention but do not explain how family firms make R&D investments. We hypothesize that when performance exceeds aspirations, family firms manage socioemotional and economic objectives by making exploitative R&D investments that lead to more reliable and less risky sales levels. However, performance below aspirations leads to exploratory R&D investments that result in potentially higher but less reliable sales levels. Using a risk abatement model, our analyses of 847 firms over 10?years supports our hypotheses.
308 citations
TL;DR: In this article, the authors claim that balancing these tendencies within each mode undermines firm performance because of conflicting routines, negative transfer, and limited specialization, and that by exploring in one mode and exploiting in another, a firm can avoid some of these impediments.
Abstract: Prior research on ambidexterity has limited its concern to balancing exploration and exploitation via particular modes of operation. Acknowledging the interplay of tendencies to explore versus exploit via the internal organization, alliance, and acquisition modes, we claim that balancing these tendencies within each mode undermines firm performance because of conflicting routines, negative transfer, and limited specialization. Nevertheless, by exploring in one mode and exploiting in another, i.e., balancing across modes, a firm can avoid some of these impediments. Thus, we advance ambidexterity research by asserting that balance across modes enhances performance more than balance within modes. Our analysis of 190 U.S.-based software firms further reveals that exploring via externally oriented modes such as acquisitions or alliances, while exploiting via internal organization, enhances these firms' performance.
307 citations
TL;DR: In this article, the authors argue that good social performance is more valuable as an insurance mechanism for firms with higher litigation risks and that value generation of corporate social performance (CSP) depends on whether a firm has gained pragmatic legitimacy (i.e., a firm's financial health) and moral legitimacy among its stakeholders.
Abstract: This paper advances the risk management perspective that superior social performance enhances firm value by serving as an ex ante valuable insurance mechanism. We posit that good social performance is more valuable as an insurance mechanism for firms with higher litigation risks. Moreover, value generation of corporate social performance (CSP) depends on whether a firm has gained pragmatic legitimacy (i.e., a firm's financial health) and moral legitimacy (i.e., whether or not a firm operates in a socially contested industry) among its stakeholders. We find that the value of CSP as insurance against litigation risk is practically significant, adding 2 to 4 percent to firm value. But CSP is less likely to create value if the firm is in financial distress or is operating in socially contested industries.
292 citations
TL;DR: In this article, the authors explore how openness in terms of external linkages generates learning effects, which enable firms to generate more innovation outputs from any given breadth of external linksages, and find evidence of such learning effects: establishments with substantial experience of external collaborations in previous periods derive more innovation output from openness in the current period.
Abstract: We explore how openness in terms of external linkages generates learning effects, which enable firms to generate more innovation outputs from any given breadth of external linkages. Openness to external knowledge sources, whether through search activity or linkages to external partners in new product development, involves a process of interaction and information processing. Such activities are likely to be subject to a learning process, as firms learn which knowledge sources and collaborative linkages are most useful to their particular needs, and which partnerships are most effective in delivering innovation performance. Using panel data from Irish manufacturing plants, we find evidence of such learning effects: establishments with substantial experience of external collaborations in previous periods derive more innovation output from openness in the current period. © 2013 The Authors. Strategic Management Journal published by John Wiley & Sons Ltd.
TL;DR: This work introduces multiple refinements to the standard method for assessing CEO effects on performance, variance partitioning methodology, more accurately contextualizing CEOs' contributions, and generates substantially different and more logical estimates of the effects of many individual CEOs than are obtained through customary analyses.
Abstract: We introduce multiple refinements to the standard method for assessing CEO effects on performance, variance partitioning methodology, more accurately contextualizing CEOs' contributions. Based on a large 20-year sample, our new �CEO in Context� technique points to a much larger aggregate CEO effect than is obtained from typical approaches. As a validation test, we show that our technique yields estimates of CEO effects more in line with what would be expected from accepted theory about CEO influence on performance. We do this by examining the CEO effects in subsamples of low-, medium-, and high-discretion industries. Finally, we show that our technique generates substantially different�and we argue more logical�estimates of the effects of many individual CEOs than are obtained through customary analyses. Copyright © 2013 John Wiley & Sons, Ltd.
TL;DR: In this article, the authors show empirically that the choice of resource allocation strategy affects innovation performance and find that the performance benefit of breadth is higher for firms that allocate resources selectively at later stages of the innovation process.
Abstract: Our study demonstrates empirically that the choice of resource allocation strategy affects innovation performance. Allocating resources to a broader range of innovation projects increases new product sales, an effect that appears to outweigh that of resource intensity. In addition, we find that the performance benefit of breadth is higher for firms that allocate resources selectively at later stages of the innovation process. This breadth-selectiveness effect is greatest for firms intending to create relatively more novel products, departing further from their knowledge base. Based on these results, we theorize that breadth increases performance because it spreads firms' bets on unproven innovative endeavors. Limiting resource commitments by selecting out deteriorating projects prevents an escalation in the costs of breadth. This advantage increases with the uncertainty implicit in greater innovative intent. The paper thus contributes to theory of how resource allocation strategies influence performance outcomes of innovation project portfolios.
TL;DR: In this paper, the authors examined and extended the resource dependence logic of diversification for a better understanding of outward foreign direct investment (OFDI) activities by emerging market firms and found that the diversification logic is bounded by state ownership, an important but less considered component of interdependence.
Abstract: This study examines and extends the resource dependence logic of diversification for a better understanding of outward foreign direct investment (OFDI) activities by emerging market firms. We contend that the diversification logic is bounded by state ownership, an important but less considered component of interdependence. Our empirical results, based on panel data analysis of Chinese listed firms, suggest that the level of interdependence between Chinese and foreign firms in China in multiple forms, including symbiotic, competitive, and partner interdependencies, is positively associated with the level of the Chinese firms' OFDI activities. However, Chinese firms with higher levels of state ownership are less susceptible to the pressures imposed by foreign firms to invest abroad.
TL;DR: It is found that when firm performance declines during the tenure of occupational minority CEOs, these leaders are likely to be replaced by white men, a phenomenon dubbed the “savior effect.”
Abstract: Using a dataset of all CEO transitions in Fortune 500 companies over a 15-year period, we analyze mechanisms that shape the promotion probabilities and leadership tenure of women and racial/ethnic minority CEOs. Consistent with the theory of the glass cliff, we find that occupational minorities—defined as white women and men and women of color—are more likely than white men to be promoted CEO of weakly performing firms. Though we find no significant differences in tenure length between occupational minorities and white men, we find that when firm performance declines during the tenure of occupational minority CEOs, these leaders are likely to be replaced by white men. We term this phenomenon the “savior effect.” © 2013 John Wiley & Sons, Ltd.
TL;DR: Using data from 120 small- and medium-sized enterprises in Ecuador, it is found that some FFM traits of CEOs influenced initiation only, while others similarly influenced initiation and performance effects of implementation (emotional stability and agreeableness).
Abstract: Using the five factor model (FFM) of personality, we delineate two distinct roles of CEO personality in managing strategic change: initiating strategic change and determining the performance effects of strategic change implementation. Based on data from 120 small- and medium-sized enterprises (SMEs) in Ecuador, we found that some FFM traits of CEOs influenced initiation only (extraversion and openness), others similarly influenced initiation and performance effects of implementation (emotional stability and agreeableness), and still others had opposing effects on initiation and effective implementation (conscientiousness). These results point to a dual role of CEO FFM of personality in managing strategic change, and they indicate the differences in CEO FFM traits needed to initiate strategic change and those needed to improve the performance effects of strategic change implementation.
TL;DR: The study theorizes the role of �practices of strategy articulation� in emergent strategy formation, and explains why some autonomous strategic behavior becomes �ephemeral� and disappears rather than enduring to becomeEmergent strategy.
Abstract: This study develops a model of emergent strategy formation at a large telecommunications firm. It integrates prominent traditions in strategy process research�strategy as patterned action, as iterated resource allocation and as practice�to show how emergent strategy originates as a project through autonomous strategic behavior, then subsequently becomes realized as a consequence of mobilizing wider support to provide impetus, manipulating strategic context to legitimate the project by constructing it as consonant with the prevailing concept of strategy, and altering structural context to embed it within organizational units, routines, and objectives. The study theorizes the role of �practices of strategy articulation� in emergent strategy formation, and explains why some autonomous strategic behavior becomes �ephemeral� and disappears rather than enduring to become emergent strategy
TL;DR: It is argued that overlap is best viewed as two distinct constructs: target overlap, the proportion of the target's knowledge base that the acquirer already possesses, and acquirer overlap,the proportion ofThe acquirer'sknowledge base duplicated by the target.
Abstract: The performance of technological acquisitions depends heavily on the overlap between the knowledge bases of the target and acquirer. We argue that overlap is best viewed as two distinct constructs: target overlap, the proportion of the target's knowledge base that the acquirer already possesses, and acquirer overlap, the proportion of the acquirer's knowledge base duplicated by the target. Each affects the value created from the firms' technological capabilities differently due to absorptive capacity, knowledge redundancy, and organizational disruption. Further, the low quantity of innovations observed in acquisitions with low target overlap may conceal an offsetting increase in their novelty. Copyright © 2013 John Wiley & Sons, Ltd.
TL;DR: Li et al. as discussed by the authors examined the circumstances under which collective and private corporate political actions are more likely to be substitutes or complements, and found that firms that are engaged in collective political actions were more likely than others to pursue private political actions.
Abstract: This paper examines the circumstances under which collective and private corporate political actions are more likely to be substitutes or complements. Using data based on a series of nationwide surveys conducted on privately owned firms in China, I find that firms that are engaged in collective political actions are more likely to pursue private political actions. This positive relationship is stronger in less economically developed provinces and when there are greater opportunities for the state to redistribute economic resources in product and capital markets. Meanwhile, this relationship is weaker in the presence of heavier regulatory burdens and for firms in which the state has some equity or owned by individuals who had prior political careers. These findings contribute to the corporate political action literature
TL;DR: Use of a panel dataset of medical device companies and their collaborative efforts with innovative physicians finds evidence that inventive collaborations with users enhance corporate product innovation and that the benefits are greatest in new technology areas and in the generation of radical innovations.
Abstract: Prior research on corporate innovation highlights the importance of accessing external knowledge from other firms and universities. However, survey evidence indicates that product users are perhaps the most important source of external knowledge. We build on existing theory to identify the conditions under which user knowledge contributes to corporate innovation and when the benefits will be greatest. Using a panel dataset of medical device companies and their collaborative efforts with innovative physicians, we find evidence that inventive collaborations with users enhance corporate product innovation and that the benefits are greatest in new technology areas and in the generation of radical innovations
TL;DR: This study compares the relative impacts of exploration and exploitation alliances with large firms on small firms' valuation and argues that exploitation alliancesWith large firms will on average generate higher values for small firms than exploration alliances withLarge firms due to a heightened risk of appropriation in exploration alliances.
Abstract: How do small firms manage their alliance strategies with large firms? This study compares the relative impacts of exploration and exploitation alliances with large firms on small firms' valuation. Integrating the literatures on the exploration/exploitation paradigm and alliance governance, we argue that exploitation alliances with large firms will on average generate higher values for small firms than exploration alliances with large firms due to a heightened risk of appropriation in exploration alliances. However, if small firms can manage their alliances with large firms via proper alliance governance, they will increase their valuations from exploration alliances with large firms. Analyses of the U.S. biopharmaceutical industry from 1984 to 2006 largely support our hypotheses. Copyright © 2013 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors developed a three-layer framework to better determine when a firm will be attracted to agglomeration economies, and found that firms are far more attracted to skilled labor and specialized suppliers than they are to potential knowledge spillovers.
Abstract: Geographically concentrated industry activity creates pools of skilled labor and specialized suppliers, and increases opportunities for knowledge spillov ers. The strategic value of these agglomeration economies may vary by firm, depending upon the relative value of each economy, and upon firm and agglomeration economy traits. To better determine when a firm will be attracted to agglomeration economies, we develop a three-layer framework. The first layer assesses the relative importance of skilled labor, suppliers, and knowledge spillovers. The second layer considers whether firms can benefit from geographic concentration without colocating. The final layer examines why some firms are more inclined to co-locate than others based upon firm and agglomeration economy traits. We test our framework on the U.S. location choices of new manufacturing entrants between 1985 and 1994 and find that firms are far more attracted to skilled labor and specialized suppliers than they are to potential knowledge spillovers, even in R&D intensive industries. We also find that leading firms will be more attracted to pools of labor, suppliers, and potential knowledge spillovers when their own contributions are less fungible, and cannot be easily leveraged for strategic advantage by proximate competitors.
TL;DR: It is posited that more basic relationships that have been established through manufacturing integration can enable multicountry collaborative innovations and that these innovations will bring together diverse knowledge that is likely to spawn further innovation within firms.
Abstract: This paper examines both conditions that can enable collaborative and combinative knowledge generation within multinational corporations (MNCs) and benefits that firms can achieve from these types of innovations. I posit that more basic relationships that have been established through manufacturing integration can enable multicountry collaborative innovations and that these innovations will bring together diverse knowledge that is likely to spawn further innovation within firms. Empirical analysis of a panel that includes comprehensive and confidential data on the worldwide operations of U.S. MNCs and their worldwide patents reveals robust support for these arguments. Overall, this paper broadens extant research on knowledge generation within MNCs by exploring both the antecedents and benefits of multicountry collaborative innovations.
TL;DR: The authors empirically show that reputational social capital enhances the performance impact of middle managers' upward influence while informational social capital elevates the impact of their downward influence on business unit performance.
Abstract: This article reconciles mixed findings about the performance impact of middle managers' strategy involvement. We propose that the relationship between middle managers' adaptive strategy implementation—through upward and downward influence—and objective business performance can be curvilinear and contingent on formal and informal structures. Applying a multilevel perspective to social networks, we empirically show that reputational social capital enhances the performance impact of middle managers' upward influence while informational social capital elevates the performance impact of their downward influence. The size of a business unit or region has differential moderating effects. The curvilinear effects of middle managers' upward influence and reputational and informational social capital on business unit performance reflect paradoxes. We discuss the implications of these findings for strategy implementation research and practice. Copyright © 2013 John Wiley & Sons, Ltd.
TL;DR: This paper presents a meta-analysis of quantitative EMPIRICAL ANALYSIS in STRATEGIC MANAGEMENT conducted at the Kenan-Flagler Business School of the University of North Carolina, Chapel Hill, North Carolina and at the Rotman School of Management, Toronto, Canada.
Abstract: QUANTITATIVE EMPIRICAL ANALYSIS IN STRATEGIC MANAGEMENT RICHARD BETTIS,1 ALFONSO GAMBARDELLA,2 CONSTANCE HELFAT,* and WILL MITCHELL4,5 1 Kenan-Flagler Business School, University of North Carolina, Chapel Hill, North Carolina, U.S.A. 2 Department of Management & Technology & CRIOS, Bocconi University, Milan, Italy 3 Tuck School of Business, Dartmouth College, Hanover, New Hampshire, U.S.A. 4 Fuqua School of Business, Duke University, Durham, North Carolina, U.S.A. 5 Rotman School of Management, University of Toronto, Toronto, Ontario, Canada
TL;DR: In this article, the authors propose a practice-based view (PBV) of strategy scholarship to explain macro-level firm behaviors or characteristics and/or the influence of such behaviours or characteristics on firm performance.
Abstract: Many studies in strategic management attempt to explain macro-level firm behaviors or characteristics and/or the influence of such behaviors or characteristics on firm performance. Current strategy scholarship, however, rarely considers specific, actual techniques that managers might use to develop strategies or generally applicable firm practices. We propose a practice-based view (PBV) of strategy scholarship to address this gap. In contrast with the resource-based view emphasis on things that other firms cannot imitate, the PBV examines publicly known, imitable activities, or practices amenable to transfer across firms. We provide evidence for the PBV and discuss its contribution to strategy. The PBV has two important implications, one relating to potential explanations for performance and the other relating to the kinds of prescription strategy that scholars might offer. Copyright © 2014 John Wiley & Sons, Ltd.
TL;DR: The authors found that changes in R&D expenditure away from the firm's historic trend, in either direction, are indicative of transitions between exploitative and exploratory research and are associated with increased firm performance.
Abstract: A common perspective is that consistent R&D investment facilitates innovation, while volatile spending implies myopic decision making. However, the benefits to exploiting extant competencies eventually erode, so firms must disrupt their R&D function and explore for new competitive advantage. We suggest that high-performing firms recognize when extant competencies decline and increase exploratory R&D to develop new competencies at the appropriate time. We find that changes in R&D expenditure away from the firm's historic trend, in either direction, are indicative of transitions between exploitative and exploratory R&D and are associated with increased firm performance. Increases in R&D expenditure above the trend are associated with an increased likelihood of highly cited patents, suggesting that firms are making the leap between R&D-based exploitation and exploration. Copyright © 2013 John Wiley & Sons, Ltd.
TL;DR: It is argued that family firms sacrifice IPO proceeds by choosing higher IPO underprices than nonfamily firms if underpricing helps them protect their SEW.
Abstract: Socioemotional wealth (SEW), i.e., the noneconomic utility a family derives from its ownership position in a firm, is the primary reference point for family firms. Family firms are willing to sacrifice economic gains in order to preserve their noneconomic utility. Thus, we argue that family firms sacrifice IPO proceeds by choosing higher IPO underpricing than nonfamily firms if underpricing helps them protect their SEW. Our empirical results, based on a sample of 153 German IPOs, support our hypothesis. On average, family firms have 10?percentage points more IPO underpricing than nonfamily firms.
TL;DR: In this paper, the authors analyze a panel dataset of supply relationships in the mobile telecommunications industry to answer the following questions: What factors contribute to a supplier's ability to build technological and market capabilities? Does it matter to whom the firm supplies? Is involvement in product design important, or is manufacturing the key to learning? Do the same types of relationships that support technological innovation also facilitate successful introduction of own-brand products, or does this require a different ''locus� of learning?
Abstract: Outsourcing in many industries has advanced beyond simple component supply to encompass manufacturing of entire products, often by suppliers in emerging economies. Understanding the evolving role and capabilities of suppliers in global supply chains is thus a pressing strategic issue for suppliers and customers alike. We analyze a novel panel dataset of supply relationships in the mobile telecommunications industry to answer the following questions: What factors contribute to a supplier's ability to build technological and market capabilities? Does it matter to whom the firm supplies? Is involvement in product design important, or is manufacturing the key to learning? Do the same types of relationships that support technological innovation also facilitate successful introduction of own-brand products, or does this require a different �locus� of learning?
TL;DR: In this article, the authors empirically compare three different aspiration models defined using six different performance measures to explain three different firm outcomes (financial misrepresentation, R&D spending, and income stream uncertainty) and moderately support a model with separate historical and social aspirations over a model of aspirations that systematically switches between the two.
Abstract: Research on organizational aspirations has used various representations of firm-level aspirations and based those representations on various performance measures To advance our understanding of the measurement of aspirations, we empirically compare three different aspiration models defined using six different performance measures to explain three different firm outcomes (financial misrepresentation, R&D spending, and income-stream uncertainty) The results moderately support a model with separate historical and social aspirations over a model of aspirations that systematically switches between the two The results strongly support both the separate and switching models over a model where aspirations constitute a weighted average of historical and social comparisons, the model associated most directly with Cyert and March's original specification We discuss the implications of these results and highlight directions for future research