Do the performance pressures of the capital market exacerbate short‐termism and stifle innovation? This longstanding question has doggedly eluded a conclusive answer due to conflicting empirical findings. We revisit two studies that have been central to rejecting short‐termism: Atanassov (2013) and its replication by Karpoff and Wittry (2018). After revising some of the empirical choices by Atanassov (2013), we find the opposite result: antitakeover laws that insulate managers from the market for corporate control enhance innovation, driven by firms with significant ownership by short‐term oriented investors. However, antitakeover laws do exacerbate the pursuit of value‐destroying acquisitions. Our findings highlight corporate governance as a strategic variable that imposes a tradeoff in disciplining different agency conflicts and weak governance as a necessary evil to stimulate innovation.
Managerial Summary：
We present evidence that shareholder pressure indeed exacerbates short‐termism and stifles innovation, especially in firms with significant ownership by short‐term oriented investors. One key implication is that calls to reduce managerial entrenchment and hold managers more accountable to shareholders warrant careful consideration. While curbing other forms of agency conflict, such as managerial shirking and the pursuit of value‐destroying acquisitions, such reforms can exacerbate the myopic focus on short‐term profits and prevent long‐term value creation. Our findings warn that it is misleading to look for universally “good” governance. There are multiple forms of agency conflict that require diametric prescriptions, and designing corporate governance should carefully consider the tradeoffs based on a firm's ownership structure and the need for innovation.
参考文献：Keum, D. D. 2020. Innovation, short‐termism, and the cost of strong corporate governance. Strategic Management Journal. 42(1), 3-29.
Supervised machine learning (ML) methods are a powerful toolkit for discovering robust patterns in quantitative data. The patterns identified by ML could be used for exploratory inductive or abductive research, or for post hoc analysis of regression results to detect patterns that may have gone unnoticed. However, ML models should not be treated as the result of a deductive causal test. To demonstrate the application of ML for pattern discovery, we implement ML algorithms to study employee turnover at a large technology company. We interpret the relationships between variables using partial dependence plots, which uncover surprising nonlinear and interdependent patterns between variables that may have gone unnoticed using traditional methods. To guide readers evaluating ML for pattern discovery, we provide guidance for evaluating model performance, highlight human decisions in the process, and warn of common misinterpretation pitfalls. The Supporting Information section provides code and data to implement the algorithms demonstrated in this article.
Managerial Summary：
Supervised machine learning (ML) methods are a powerful toolkit that might help managers and researchers discover interesting patterns in large and complex data. We demonstrate this by using several ML algorithms to investigate the drivers of employee turnover at a large technology company. We evaluate the performance of the models, and use visual tools to interpret the patterns revealed. These patterns can be useful in understanding turnover, but we caution not to confuse correlation with causation. These methods should be viewed as “exploratory” and not conclusive proof of relationships in the data. Our guidance can be helpful for managers evaluating analysis conducted by data scientists in their organizations.
参考文献：Choudhury, P. 2020. Machine learning for pattern discovery in management research, Strategic Management Journal. 42(1), 30-57.
This study contributes to the growing strategic corporate social responsibility (CSR) literature by examining the intersection of acquisition studies and international expansion research and highlighting the unexplored impact of media coverage of CSR and corporate social irresponsibility (CSI) in shaping completion and duration outcomes of cross‐border acquisitions. A quantitative analysis of 4,087 cross‐border acquisition announcements by firms from Brazil, Russia, India, China, and South Africa (1990–2011) shows that while media coverage of CSR is not important, media coverage of CSI is associated with lower likelihood of and longer duration till acquisition completion. By theoretically and empirically distinguishing media coverage of CSR from CSI, this paper pushes the existing literature to acknowledge these distinct concepts and their varying effects. In sum, managers should beware media coverage of CSI when acquiring abroad.
Managerial Summary：
Cross‐border acquisitions by firms from emerging markets often do not reach completion or are badly delayed, damaging the firms' attempts to expand. A key barrier to completing deals is that employees, customers, regulators, media, and other stakeholders in the target market are suspicious of these firms, fearing that they will be poor corporate citizens. I examine whether media coverage of acquirers' social activities helps overcome these suspicions. I find that media coverage of socially responsible activities does not facilitate deal completion. Strikingly, however, media coverage of irresponsible actions, such as labor or environmental issues, delays or blocks deal completion. The implication is that firms from emerging markets, which increasingly are expanding abroad, need to avoid activities that people outside their country will interpret as inappropriate.
参考文献：Hawn, O. 2020. How media coverage of corporate social responsibility and irresponsibility influences cross‐border acquisitions. Strategic Management Journal. 42(1), 58-83.
The benefits of foreign institutional ownership (FIO) have been amply researched, but there are also potential downsides to such ownership. High FIO can subject a firm to heightened regulatory scrutiny and compliance, increasing its political dependence. Drawing on resource dependence theory, we argue that firms can manage the political dependence that arises from FIO by engaging in corporate political spending (CPS). We derive two moderating conditions from our theoretical argument, positing that the strength of the positive relationship between FIO and CPS hinges on the intensity of a firm's government contracting and on the political sensitivity of the industry. Our study advances strategic ownership research by highlighting that U.S. firms may need to manage the potential liabilities associated with FIO through nonmarket strategy.
Managerial Summary：
Research suggests that firms can reap many benefits from equity investments made by foreign institutional investors. However, such investments may also have potential downsides. We posit that high levels of FIO may subject a firm to increased political and regulatory scrutiny, and that firms can manage this increased exposure to government by engaging in corporate political activities that allow them to monitor and influence the political landscape. To explore this question, we analyzed a large sample of publicly traded U.S. firms and find empirical support for our arguments. Our study highlights an unintended “liability” of FIO that firm executives should be aware of and has practical implications for how firms manage their investors and allocate resources between market and nonmarket strategies.
参考文献：Shi, W. et al. 2020. The liabilities of foreign institutional ownership: Managing political dependence through corporate political spending. Strategic Management Journal. 42(1), 84-113.
This paper investigates the corporate parenting advantage, the extent to which corporate parents improve the performance of their subsidiaries. Despite the importance of this concept for corporate strategy, researchers have yet to quantify it empirically. I measure the corporate parenting advantage by comparing the performance of utilities that were legally classified into one of two types of holding companies: regulated holding companies, which faced limits on their ability to parent, and exempt holding companies, which did not. I find that observationally similar utilities that were owned by exempt holding companies outperform utilities that were owned by regulated holding companies, and that this performance differential attenuates once the legal restrictions on parenting were lifted. These results provide the first large‐scale empirical evidence of the corporate parenting advantage.
Managerial Summary：
By how much do corporate parents improve the performance of their subsidiaries? Despite the importance of this question of the “corporate parenting advantage,” it does not yet have a clear answer. In this paper, I measure the corporate parenting advantage by comparing the performance of utilities that were legally grouped into one of two types of holding companies: regulated holding companies, which faced limits on their ability to parent, and exempt holding companies, which did not. I find that comparable utilities that were owned by regulated holding companies have lower return on assets than utilities that were owned by exempt holding companies, and that this performance difference disappears once the legal restrictions on parenting were lifted. These results provide evidence of the corporate parenting advantage.
参考文献：Feldman, E. R. 2020. The corporate parenting advantage, revisited. Strategic Management Journal. 42(1), 114-143.
In this paper, we suggest that staffing decisions in R&D alliances can reduce the inherent tension between value creation and value protection faced by participating firms. By considering R&D workers a primary source of knowledge leakage, we analyze the role of their intellectual property (IP) protection in shaping the misappropriation threat posed by the partner. We rely on patent ownership and inventorship data to analyze the selection of individuals for R&D collaborations in the pharmaceutical industry between 1991 and 2010. Our results suggest that an inventor's strength of IP protection is an important determinant in allocation decisions since it contributes to offsetting leakage risks in the alliance. The effect is especially strong in alliances that anticipate higher hazards.
Managerial Summary：
The literature argues that firms can reap many benefits from R&D collaborations. However, such activities are challenging to manage because they require firms to put valuable knowledge at risk of misappropriation by the partner. We draw attention to the role that inventors play in generating and channeling knowledge during collaborative work and posit that the strength of the IP protection covering their innovations can safeguard against the consequences of knowledge leakage. We analyze pharmaceutical alliances and find that managers are more prone to allocate to collaborations inventors whose knowledge is better protected, particularly when the alliance anticipates considerable misappropriation risks. Our study has implications for how firms allocate inventors across projects, which may be an important factor for the overall success of firms' R&D strategies.
参考文献：Palomeras, N. 2020. The strategic allocation of inventors to R&D collaborations. Strategic Management Journal. 42(1), 144-169.
Prior crisis‐response literature outlines zones of conformity (i.e., response meets stakeholder expectations), underconformity (i.e., response falls short of expectations), and overconformity (i.e., response exceeds expectations). We utilize a mixed‐method approach to empirically test the impact of different response strategies on customers (Study 1: experiment) and investors (Study 2: event study). We not only find empirical support that a conforming strategy outperforms both nonconforming strategies concerning stakeholders' affective evaluations of reputation, but extend this proposition to stakeholders' cognitive evaluations of reputation and the financial implications for the firm. The most counterintuitive finding is that overconforming strategies result in lower firm reputation and stock returns relative to conforming strategies. Thus, exceeding stakeholder expectations during a crisis can have unintended negative consequences.
Managerial Summary：
How should firms react to product recalls? Previous research suggests that exceeding expectations of external stakeholders should have a neutral or even positive impact on firm reputation and financial performance, while falling short of expectations should have a negative impact. In this article, we test the impact of different product recall strategies. The most counterintuitive finding is that exceeding stakeholder expectations during a product crisis can have unintended negative consequences on both customers and investors.
参考文献：Raithel, S. and Hock, S. J. The crisis‐response match: An empirical investigation. Strategic Management Journal. 42(1), 170-184.
Extant research rarely explores the relationship between executive compensation and chief executive officer (CEO) succession planning, despite practitioner claims that executive pay disparities indicate succession planning (in)effectiveness. Leveraging signaling theory, we use 830 succession events from 2010 to 2017 to show that pay disparity between the CEO and the highest paid non‐CEO executive is positively related to the likelihood of outside CEO succession. Thus, boards need to be aware of the implications of possible unintentional signals sent via executive compensation decisions. We do not find evidence of an interactive effect when compensation and CEO succession are co‐managed using linking pin directors—directors with compensation and CEO succession responsibilities—but supplemental analyses suggest a positive main effect of linking pin directors on the likelihood of inside CEO succession.
Managerial Summary：
Powerful watchdog agencies assert that high pay differences between a firm's CEO and its next highest paid executive (CEO–HPE pay disparity) indicate succession planning challenges. This assertion has profound implications for stakeholders, but evidence supporting it is unclear. Our study examines the relationship between CEO–HPE pay disparity and the board's choice of an outside CEO, an indicator of ineffective succession planning. We find evidence that higher pay disparity signals an increased likelihood of choosing an outside CEO successor. We also find that boards who co‐manage compensation and succession may be more likely to hire an inside CEO successor. Our findings suggest that boards need to understand how compensation decisions may be inadvertently signaling future CEO succession choices.
