Management & Organization
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Item Essays on the Consequences of Market Democratization for Organizations(2019) Shi, Yuan; Waguespack, David M; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)My dissertation investigates how organizations’ boundary spanning decisions are impacted by the democratization of market mediation, which is defined as a shift in the balance of power from professional intermediaries to laypeople in the market and is often induced by crowd-based technologies and institutional changes. The first study examines how democratization affects boundary spanning in creative production through a quasi-experiment in the Billboard charts that shifted the power of influence from specialized intermediaries to lay consumers. I find that after genre radio stations’ power to define market hits is diluted by average consumers, producers are more likely to introduce offerings that traverse market boundaries to appeal to a broader audience, as is captured by a measure of crossover appeal based on the objective features of song recordings. Meanwhile, the democratization effect varies by organization and is weaker for specialists and those with moderate experience. These findings suggest that intermediaries who are specialized in a market may be more protective of the market’s boundaries than lay consumers due to their greater knowledge and larger stakes in the clarified boundaries. As such, the major impediment to boundary spanning may be intermediaries, not consumers. The second study investigates how professional intermediaries, such as venture capital (VC) firms, change their boundary decisions following democratization events, such as the legalization of equity crowdfunding. VCs may be attracted to the novel opportunities identified by crowdfunding investors, and thus diversify their investments. VCs may also seek to differentiate from the crowd by positioning as dedicated experts, and thus become more specialized in their investments. I test these ideas by leveraging the legalization of equity-based crowdfunding in more than twenty states in the US during 2009-2017. I find that VCs make more specialized investments after the crowdfunding policy shocks in their home states, but the effect is attenuated when VCs and crowdfunding investors share similar investment focus. Mechanism tests indicate that specialization is driven by a crowd-out effect, whereas diversification is explained by a lead-in effect. Taken together, my dissertation documents the causal effects of the increasing influence of the crowd on organizations’ strategic decisions.Item Employee Mobility, Employee Entrepreneurship, and Employee Value Capture: Labor Market Frictions and the Impact of Social Comparison Costs on Compensation(2018) Olson, Daniel; Agarwal, Rajshree; Waguespack, David M.; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Strategic human capital research explores heterogeneity in firm performance based on differences in firms’ abilities to leverage human capital. Much of the discussion in this literature focuses on how firms can exploit isolating mechanisms that limit the mobility of employees. This dissertation studies two important facets of strategic human capital research related to the mobility of employees. The first essay explores how a labor market frictions lens can connect the strategic human capital literature to the employee entrepreneurship literature, two complementary but largely disparate literatures. The examination of the impact of various labor market frictions on employee mobility to competitor firms and employee transitions to entrepreneurship suggests that the outcomes of some frictions are divergent across the two literatures, the outcomes of some are aligned, and the outcomes of some are ambiguous. The complex interplay of labor market frictions provides opportunities for future research specifically exploring the intersection of the strategic human capital and employee entrepreneurship literatures. The second essay of explores how multi-location firms facilitate the spread of compensation increases across labor markets. Prior research cites the threat of employee mobility as the primary mechanism for the spread of compensation increases across locations. Multi-location firms that straddle more than one labor market, however, must manage employees across labor markets. I propose that internal firm processes, including social comparison between employees of the firm in different locations, may lead firms to raise compensation for employees in other locations when addressing competitive pressure in a given location. In doing so, these multi-location firms put pressure on local labor market competitors to also raise compensation, leading to compensation increases across distinct labor markets without reference to mobility constraints that dominate the strategic human capital literature.Item Essays on Motives and Market Outcomes(2015) Stroube, Bryan Kaiser; Waguespack, David M.; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation examines the existence of heterogeneous motives in markets, particularly how a tension between profit motives and other utility can shape outcomes for organizations and individuals. I explore this tension in the context of biases, organizational identity, and investment behavior. Each of the three empirical chapters employs decision-level data from a different online crowdfunding platform. Academic researchers and the general public are increasingly interested in the phenomenon of "crowdfunding." The term, however, encompasses an incredibly diverse set of activities---ranging from the facilitation of for-profit start-up investments to the charitable funding of medical procedures. This diversity can make it difficult to generalize research insights from studies of any particular instance of the phenomenon. In the introductory chapter I develop a general framework for understanding the source of observed behavior on crowdfunding platforms given some simple assumptions about platform policies.The goal is to provide context for the subsequent chapters of the dissertation. The first empirical chapter examines biases against demographic groups, which are typically explained by one of two mechanisms: either decision makers have a taste for one demographic group over another, or demographics are employed as informational proxies for other unobserved but economically important traits. These mechanisms are difficult to empirically untangle despite the theoretical and practical importance of separating them. I attempt to do so in a Chinese peer-to-peer lending market by leveraging a loan guarantee policy that reduces the economic rationale for lenders to discriminate on borrower demographics such as gender and geography. Comparison of pre- and post-policy periods therefore provides a fruitful tool for measuring the degree of taste versus informational bias. I find that female borrowers appear to receive a preferential informational bias but a negative taste bias, while lenders' geographic bias toward borrowers located in the same province appears to be driven predominately by informational processes and not taste. These findings have implications for multiple sets of decision makers and underscore the theoretical importance of accounting for motives. Chapter two examines the potentially conflicting investment motives found on a non-profit hybrid identity crowdfunding platform, where simultaneous market-like and charity-like motives may lead lenders to respond differently to funding requests from entrepreneurs who appear to have high economic ability and high personal need. I survey actual lenders on the platform to measure their stated preferences for borrowers who fit each of these categories. I find that 1) lenders vary in their preference for these categories and this preference is correlated with their demographics, and 2) past loans made by lenders with an above-average preference for both need and ability were funded faster than loans in other categories. These results highlight how actors' preferences are largely endogenous to the market in which they are observed. In the final chapter I present the results of a simple online experiment conducted in conjunction with a peer-to-peer lending website. Potential lenders were presented randomized versions of the platform's lender registration web page. The content of the page varied in whether it promoted the potential social benefit of lending versus only the financial benefit. No difference was found between the treatment and control groups. The experiment provides some insight into how lenders self-select into crowdfunding activity and may serve as a model for similar experiments on other platforms.Item THE STRATEGIC NETWORKS AND PERFORMANCE OF ENTREPRENEURIAL FIRMS: IMPACT OF PRE-FOUNDING TIES.(2014) Gaonkar, Shweta; Agarwal, Rajshree; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation examines the effect of founders’ background in shaping alliance ties and firm performance of new ventures. In the first chapter, I examine how founders’ prior affiliations contribute to the formation of network ties for new ventures founded by employee entrepreneurs. Prior research on employee entrepreneurship attributes the success of new ventures founded by employees (called spinouts ) to knowledge inheritance from founders’ previous employers (parents). However, studies on new venture alliances suggest that the success of new firms stems from establishing strategic alliances with other firms. I bridge the gap between these two literatures by examining how the knowledge accumulated by the spinout’s founder influences the new venture’s alliance partner choice, using a panel data of pharmaceutical and medical device firms from 1986 to 2012. The findings suggest that a spinout that is similar to its parent in terms of technology and product markets is likely to form marketing, manufacturing, or funding ties with firms that have no parent ties. Conversely, a spinout that is not similar to its parent more likely to form commercialization ties with firms that have indirect ties to the parent, as a way to deal with the risk of collaborating with its parent and its partners. Finally, a spinout that has different technology but operates in a similar market, as its parent is likely to forge commercialization ties with the parent’s partners. In the second chapter, I examine how heterogeneity in the founders’ backgrounds affects the start–up ’s performance. I examine two types of founder backgrounds: employee and academic entrepreneurs. Employee entrepreneurs have relevant industry experience due to their founders ’ prior affiliation, whereas academically founded firms are endowed with research–related resources through their founders’ experience. I use the panel data of academic and employee start–ups in the pharmaceutical and medical device industry, 1986–2013. I find that academic start–ups have higher research output and smaller alliance networks than do employee start–ups. Further, the founders’ background has no impact on the start–up’s performance outcome; instead, it shapes the patents and alliance ties formed by them.Item PROFESSIONAL REFERRALS: KEEPING-WHILE-GIVING, RECIPROCATION, AND THE TRANSFER OF OPPORTUNITIES AMONG ENTREPRENEURIAL PROFESSIONALS(2013) Searcy, Deborah Woods; Stevens, Cynthia K; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Through inductive research, I explored the dynamic process between entrepreneurial professionals in sending and receiving professional referrals. I define a professional referral as an entrepreneurial professional advising a client to instead do business with a specific other professional within the same industry. While considering the needs of the client, these entrepreneurs involved in the professions must transfer a valuable opportunity to a competitor. Prior research indicates that entrepreneurial professionals should refer opportunities based on skill and specialty, should receive fees for referrals, and should select referral recipients based on tie formation mechanisms, trust, and reputation protection. Yet professional referrals involve unique complexities, as they occupy a vague conceptual space between economic and social exchange. This paper addresses the interplay of these obligations. By using a grounded theory methodology, I was able to generate an emergent model and mid-level theory. I interviewed 42 lawyers, using semi-structured interviews. The model is arranged into three transitional decisions: refer the opportunity, select a referral recipient, and establish (or terminate) a referral routine. For the first decision, in addition to referrals based on objective skill and specialty, I found that entrepreneurial professionals will refer business on subjective costs, including emotional toll and being morally compromised; I term this new dimension social referrals. Next, the entrepreneurial professional must decide to whom the referral will be sent. I found that entrepreneurial professionals are possessive of their clients, as each client represents a long-term revenue stream. Possessiveness results in reciprocity expectations, the most important of which is keeping-while-giving, or the expectation of the return of the same client relationship. Entrepreneurial professionals also set dependability expectations. Expectations directly impact selection, and these relationships are amplified by the presence of tie formation mechanisms. Finally, entrepreneurial professionals establish referral routines; they repeatedly send their referral business to no more than three individuals within a given dimension for exchange. Breaching reciprocity and dependability expectations can cause routines to be terminated, but overall, this final transitional decision occurs by default and can continue indefinitely. These interconnected steps combine to form a middle-range theory of professional referral dynamics.Item Employee Departure from Organizations: Three Empirical Essays(2013) Carnahan, Seth; Agarwal, Rajshree; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)My dissertation includes three essays which focus on employee departure from organizations. In the first two essays, I study how employee departure allows individuals to capture more value from their firms. The third essay examines the effect of employee departure on firm performance. Each essay identifies an important theoretical puzzle or tension related to employee departures and sheds light on its resolution through careful research design. In total, this dissertation aims to challenge the way that researchers typically think about employee departures, both theoretically and empirically. The theoretical puzzle in the first essay relates to the connection between the failure of one firm and the birth of other firms. Does the failure of a rival firm cause the employees of existing firms to create entrepreneurial startups? On the one hand, theory suggests that the answer is yes - rival failures may release resources that potential entrepreneurs can use to start new firms. On the other hand, theory suggests that the answer is no - rival failures indicate to potential entrepreneurs that the environment is not munificent enough to support new entry. Using US Census data on the legal services industry, I disentangle these two arguments by examining law firm failures that are preceded by the unexpected deaths of highly paid attorneys. I find strong evidence that these quasi-random failures (which are likely to be weakly related to the broader economic environment) cause attorneys in rival firms to create startups, while other types of rival failures depress entry rates, probably because they proxy for weakness in the local industry. This essay thus provides a theoretical rationale for when the failure of one firm will lead to the creation of another while demonstrating an often-discussed but rarely demonstrated positive side effect of firm failure - a failed firm provides the component parts for new organizations. The puzzle in my second essay relates to the effect that one employee's departure has on the bargaining power and monetary earnings of his or her colleagues. This issue is likely particularly salient for members of underrepresented groups within an organization, such as women in American law firms, which, like the first essay, is the context of this study. Theory might dictate that the departure of a highly paid woman would hurt her female colleagues' earnings by reducing their bargaining power through the elimination of a mentor and advocate. However, an alternative mechanism suggests that the departure of a highly paid woman might provide her colleagues with increased bargaining power due to a relative scarcity of women in the organization. Using unexpected death as a stand-in for departure, I find that women experience an 8% average increase in earnings after a female colleague passes away suddenly. This increase is significantly larger than what women experience when the deceased colleague is male, and it outpaces gains that male attorneys experience when a colleague of either gender passes away. Additional analyses suggest that the departure of a woman from a law firm may imbue her female colleagues with increased bargaining power related to client acquisition or the firm's interest in maintaining gender diversity. The primary contribution of this essay is to point out a paradox related to the bargaining power of underrepresented groups. While much of the organizations' literature suggests that a group's overall bargaining power will increase as a function of the group's size, I find that an individual's bargaining power increases as the size of her overall group shrinks. The third essay extends the literature connecting employee departures and organizational performance by inserting the firm's manager in the causal process linking employee departure to organizational performance. The theoretical puzzle I address in this essay is whether managerial tenure weakens or exacerbates employee level turnover's negative effect on organizational performance. Managers with longer tenure may have superior knowledge of their firm's routines and remaining stock of human resources, allowing them to respond effectively to key employee departure. However, theories related to organizational inertia suggest an opposite effect: managerial stability may reduce an organization's ability to respond to change. I analyze data from the National Football League to test this argument. Using injuries to quarterbacks as a quasi-random source of employee departure and casting the head coach as the team's top manager, I find support for the second argument. Analyses indicate that NFL teams whose coaches have longer tenure perform worse following quarterback injury. The contribution of this essay is to show that stability at one level of the organization can exacerbate turmoil at another level, perhaps due to the ossification of the organization's ability to alter its routines.Item Reconfiguration Strategies, Entrepreneurial Entry and Incubation of Nascent Industries: Three Essays(2013) Moeen, Mahka; Agarwal, Rajshree; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The first essay of my dissertation focuses on the incubation stage -- the period between introduction of a technological change and its first commercialization -- of an industry, which is an understudied phenomenon. It examines firms' technological investments in a nascent industry in anticipation of commercialization, and contributes novel insights to the classic industry evolution literature that conceptualizes industry formation from the first instance of product. Using the agricultural biotechnology industry as the empirical context, this essay documents not only the extent to which firms undertake technological investments in anticipation of entry, but also the heterogeneity in types of entrants and their modes of value capture. I thus shed light on the intertwined processes of economic value capture at the firm-level and ecosystem development at the industry-level that underpin incubation of nascent industries. The second essay examines the capability antecedents of a firm market entry into a nascent industry. A firm's technical capabilities and complementary assets, at time of entry, have been consistently noted as key determinants of the likelihood of entry. Drawing on the premise that firms make deliberate decisions regarding technological investments well before they enter nascent markets, I make a distinction between a firm's pre-entry and pre-investment capabilities and study the type of pre-investment capabilities that are related to the likelihood of firm entry. I suggest that a firm's pre-investment reconfiguration experiences are the critical capability: these experiences shape the firm's development of pre-entry technical capabilities and complementary assets, which in turn affect the likelihood of entry. I find empirical support for the mediating role of pre-entry capabilities to the relationship between pre-investment experiences and the likelihood of entry in the context of the population of firms that conducted R&D investments in agricultural biotechnology between 1980 and 2010. The third essay studies the reconfiguration strategies pursued by firms in anticipation of entry into a nascent industry. Whether entry to a nascent industry is undertaken by de novo startups, diversifying firms from related industries or industry incumbents from the obsolescing industry, a critical strategic action for firms is to achieve the required configuration of capabilities for operations in the new industry. The choice, timing, and sequence of these capability reconfiguration mechanisms may, however, differ across different types of firms. I provide theoretical propositions that link firm types to the underlying sources of heterogeneity and suggest how this heterogeneity leads to differential paths undertaken by de novo startups, diversifying firms and industry incumbents while reconfiguring themselves in anticipation of entry into a nascent industry. Implications of the model are discussed using three firm case studies from the agricultural biotechnology industry.Item THE EFFECTS OF INFOMEDIARIES, NONMARKET STRATEGIES AND CORPORATE POLITICAL ACTION ON INNOVATION ADOPTION(2012) Benjamin, Scott; Reger, Rhonda K; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Strategic management research has recently become interested in the role of strategies that effect social stakeholders, such as the media, and how they affect the adoption of technological innovation. This dissertation consists of two essays that investigate how these stakeholders affect technological innovation adoption and how firms can increase the likelihood of having their products adopted by influencing these stakeholders. The first essay takes a fine-grained approach at investigating how the content of media coverage influences the adoption of wind projects in the United States wind energy industry. By focusing on certain characteristics of media coverage, I develop a theoretical framework that examines how coverage facilitates perception formation of an innovation in the market. Using content analysis, I examine certain characteristics of media coverage including media attention, positivity of tenor, issue diversity, economic & aesthetic issues and complexity of messaging, and hypothesize about the impact these characteristics have on how quickly stakeholders coalesce around a unified vision of a new technology. The second essay builds on the first essay by exploring how firms employ strategies in both social and political markets in an attempt to influence different segments of the general environment. I argue theoretically that general environmental segments, such as sociocultural and political markets, that were typically thought of as exogenous to the firm may be impacted by the firm. By introducing media specific concepts from the organizational literature and political strategies from the public policy domain to strategic management, this study investigates how firms can achieve more rapid technological innovation adoption by strategically using 1) social exchange mechanisms with the media for the facilitation of perception formation in the market and 2) corporate political activity to influence policy makers for the creation of beneficial legislation. I study both of these phenomena using a comprehensive sample of U.S. based wind projects that have either been proposed or are commercially operational between 2000 and 2009. The findings from both of these essays advance strategic management research by connecting themes from organizational research, mass communications and public policy research to help explain perception formation and technological innovation adoption in the market.Item DOES NETWORK DENSITY MATTER: ESSAYS ON INTER-FIRM GROUP FORMATION AND PERFORMANCE IMPLICATION(2011) Zhang, Lei; Gupta, Anil K.; Waguespack, David M.; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation studies inter-firm network formation and performance implication. Different from current network formation literature that focuses on the actor or dyad level, this dissertation examines network formation and its performance implication at the group level. Specifically, I examine: 1) How do inter-firm groups with different levels of density form? 2) When is a firm more likely to participate in a group with mostly unfamiliar firms? and 3) How do group internal and external network structures influence task performances? Using Venture Capital (VC) investments as the research context, I develop novel empirical designs to quantitatively test my theory. In Essay I, to investigate how groups with different levels of density form, I emphasize the path-dependence effect of previous ties among all potential group members and simultaneously examine the formation of all ties in a group. I find that both anticipated environmental adaptation and anticipated internal cooperation are important considerations in a group formation. Taking a firm-focused group perspective, Essay II studies when a firm participates in a group with mostly unfamiliar firms. The empirical results show that the group participation of an unfamiliar firm depends not only on the uncertainty it brings in value creation but also on the uncertainty in value appropriation. Essay III examines the impact of syndicate density and structural holes and finds that both have impacts on the startup company performance. This dissertation enhances our understanding of network formation by bringing in a brand-new perspective, by uncovering group-level antecedents of network formation, by illustrating the impact of concerns in value appropriation, by exploring group dynamics, and by linking network formation behaviors with task performance at the group level.Item ENTREPRENEURIAL SELF-EFFICACY AND THE SUCCESS OF SUBSEQUENT VENTURE STARTUP AFTER FAILURE(2010) Boss, Alan Dennis; Baum, J. Robert; Sims, Henry P; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Everyone experiences failure at some point in their lifetime. Entrepreneurs, especially, have a high incidence of failure, with estimates that over sixty percent fail within six years. Yet, a high percentage of failed entrepreneurs recover and persevere to start another business. Sometimes, they even become "serial entrepreneurs" who start many businesses. How do entrepreneurs recover from failure and have success? This research focuses on the failed entrepreneur, and I investigate aspects of how and why some failed entrepreneurs recover and start a new business. My research focuses on characteristics of the failed entrepreneurs themselves, and how certain attributes might differentiate between failed entrepreneurs who recover successfully versus those who do not. Based upon fundamental theories of human behavior and recent inquiries that have influenced the entrepreneurship literature, I draw upon research about entrepreneurs' personal competencies that stand out as predictors of venture persistence and success, specifically, (1) domain-specific self-efficacy (2) emotion regulation, (3) practical intelligence, and (4) self-leadership, to propose a path to recovery when failure occurs. I suggest that these areas of research may enhance our knowledge of how and why failed entrepreneurs recover from failure. In addition, I investigate how characteristics of the immediate context or environment support or discourage subsequent startup. I interview and survey failed entrepreneurs, beginning with a list of firms from a Bay Area business consulting firm that helps failed companies "work out" of their business. Other contact sources include small business development centers, personal contacts, university entrepreneurship centers, and two populations of healthcare workers in the southern United States. Results of this study include entrepreneurial self-efficacy fully mediating the effects of both practical intelligence and emotion regulation on subsequent venture success, as well as partial mediation of support from social contacts on success. Theoretical and practical implications are discussed. Although research has been conducted on future success of successful entrepreneurs, as far as I can determine, no other academic researcher has attempted to understand and empirically demonstrate the future success of failed entrepreneurs.