#management science

[theworststudentever]

"A mathematical model does not have to be exact; it just has to be close enough to provide better results than can be obtained by common sense."

- Herbert A. Simon

[alvinstrat]

A Primer On Upper Echelons Theory (UET)

Newcastle University provides an excellent primer on Upper Echelons Theory. I enjoyed reading it. Dr Georgios Bekos (Alliance Manchester Business School) managed to write a very succinct yet up to date primer.

It has become one of the main theories in Management Science, in seeking to explain scientifically why some organisations perform better than others. The Top Management Team can help explain many of the successes and failures of organisations (r-squared often around 0.2 to 0.4 depending on what we are looking at).

There is a lot more research done on the attention, process mechanisms and moderating and mediating variables areas in recent years. UET has also made the c-suite a unit of analysis in management science.

Here is a condensed version.

Basic Model

UET can be diagrammatically portrayed as a conceptual model explaining the inter-relationships among four key concepts: strategic situations, top managers’ (or upper echelon) characteristics, strategic choices, and organisational performance (Figure 1). At the heart of UET lies the proposition that senior-level executives' cognitive base and values, reflected in observable characteristics such as age and education, affect how they interpret and respond to strategic situations through their choices, thereby influencing organisational performance (Hambrick & Mason, 1984).

UET as a Managerial Logic for Strategic Choices

The first tenet of UET builds upon the premise that strategic situations encapsulate far more stimuli than decision-makers can comprehend (Cyert & March, 1992). Therefore, UET posits that managers try to interpret strategic issues and devise alternative courses of action by taking mental shortcuts and relying on their previous experiences (Hambrick, 2018). For instance, when faced with an unprecedented environmental shock, managers may utilise their previous experience when handling other types of business crises in order to analyse the situation and develop an appropriate response and a set of actions. The underlying perceptual process is delineated in Figure 2.

Moderators of UET

Since the seminal postulation of UET (Hambrick & Mason, 1984), a substantial stream of research has focused on establishing the boundary conditions of UET. Scholars have identified various moderators of the relationship between upper-echelon characteristics and strategic outcomes, including managerial discretion (UET1), TMT structure (Hambrick, 1995; Hambrick, Humphrey & Gupta, 2015), executive job demands (Hambrick, Finkelstein & Mooney, 2005), and managerial power (Finkelstein, 1992). According to this stream of research, UET has greater predictive strength in some contexts than in others (Figure 3).

Process Mechanisms of UET (Process Theory)

Another stream of research has attempted to establish the underlying processes/mechanisms through which managerial characteristics shape strategic choices and resulting performance outcomes. According to the original UET model (Hambrick & Mason, 1984), observable managerial characteristics serve as proxy indicators of the psychological processes that affect strategic decision-making. However, this approach does not capture the black box processes that shape strategic outcomes (Carpenter, Geletkanycz & Sanders, 2004). Scholars have therefore suggested that the effect of upper echelon characteristics on strategic decisions and organisational performance is mediated through cognitive processes. These may include managerial attention (Cho & Hambrick, 2006), decision-making processes (e.g., decentralisation, communication, and comprehensiveness) (Papadakis & Barwise, 2002), as well as TMT-related processes such as conflict (Knight et al., 1999), psychological empowerment (Lin & Rababah, 2014), and group functioning (Peterson et al., 2003) (Figure 4).

Summary of UET Research

UET has been mainly applied in the field of management, but it has also sparked research across various other domains, including: marketing (Chung & Low, 2022; Kashmiri & Mahajan, 2017), international business (Herrmann & Datta, 2005; Tihanyi et al., 2000), leadership (Waldman, Javidan & Varella, 2004; Lin & Rababah, 2014), psychology (Peterson et al., 2003; West & Anderson, 1996), accounting (Naranjo-Gil, Maas & Hartmann, 2009; Pavlatos, 2012) and economics (Bertrand & Schoar, 2003).

Significant empirical support has been offered to the upper echelons logic, thereby highlighting its applicability across various disciplines and decision-making situations. Scholarly work has consistently documented managerial characteristics' influence on various strategic choices – such as strategic changes (Wiersema & Bantel, 1992; Waldman, Javidan & Varella, 2004), alliance formation (Eisenhardt & Schoonhoven, 1996), competitive attacks (Ferrier, 2001), international diversification (Tihanyi et al., 2000), innovation (Bantel & Jackson, 1989; West & Anderson, 1996), R&D investments (Kor, 2006), new product introductions (Kashmiri & Mahajan, 2017), marketing management (Chung & Low, 2022), and management accounting and control (Naranjo-Gil, Maas & Hartmann, 2009; Pavlatos, 2012) – and the resulting performance outcomes.

Most Commonly Studied Upper Echelon Characteristics and Strategic Choice Variables

Upper echelon characteristics

CEO and average TMT demographic characteristics (e.g., age, educational background, functional background, tenure, career experiences), TMT heterogeneity, TMT size, CEO Compensation, Insider/Outsider CEO, CEO power, CEO and TMT ownership, CEO personality traits, Leadership behaviours, TMT turnover, CEO succession/turnover, Successor CEO characteristics, CEO duality, CEO-Founder, CEO Locus of Control, CEO Overconfidence, CMO presence, Executive migration, Internal and external network ties, Corporate governance and Board of Directors

Strategic Choices

Innovation, Strategic change and renewal, Strategic dynamism, Strategic reorientation, Strategic conformity, New product introduction, R&D intensity, Diversification, Differentiation, Alliance Formation, Competitive behaviour, Marketing and advertising intensity, Risk taking, Internationalisation, Market entry mode, Strategic decision quality

For instance, Chung and Low (2022) sought to understand the influence of CEO regulatory focus on myopic marketing management, which refers to the tendency to make short-term oriented marketing decisions. The authors showed that promotion-focused CEOs are more likely to engage in myopic marketing management as short-term performance aspirations drive their decisions. On the other hand, prevention-focused CEOs are less prone to making myopic marketing decisions, driven mainly by their need for security and loss avoidance.

In line with UET predictions, Chung and Low (2022) find that strategic decisions (myopic marketing management) mediate the impact of upper echelon characteristics (CEO regulatory focus) on long-term organisational performance. Marketing scholars have also investigated whether and to what extent the inclusion of a chief marketing officer (CMO) in the top management team affects organisational performance (Germann, Ebbes & Grewal, 2015; Nath & Mahajan, 2008; Whitler, Krause & Lehmann, 2018).

Considering that CMOs bring a customer perspective to the strategy table and facilitate decision-making (Bommaraju et al., 2019), it was found that firms benefit financially by employing CMOs on their management teams (Germann, Ebbes & Grewal, 2015). However, Nath and Mahajan (2008) reported neither a positive nor a negative effect of CMO presence on organisational performance.

Upper echelons research in the fields of accounting and economics has broadened the set of decision-makers and decision-making situations that are relevant to UET. For example, Pavlatos (2012) examined how chief financial officers’ (CFO) characteristics influence the use of cost-management systems for decision-making, control, and performance evaluation, while Naranjo-Gil et al. (2009) investigated the role of CFO characteristics in adopting management accounting innovations. It was found that firms with younger CFOs and CFOs with business-related educational backgrounds exhibit more comprehensive use of cost management systems (Pavlatos, 2012) and are more likely to adopt innovative management accounting systems (Naranjo-Gil, Maas & Hartmann, 2009).

In addition, scholars have established the applicability of UET beyond classic, demographic variables, and, therefore, have considered the effects on decision-making and the performance of senior managers’ political ideologies (Kashmiri & Mahajan, 2017), personality factors (Chatterjee & Hambrick, 2007), leadership behaviours (Waldman, Javidan & Varella, 2004), governance orientation (Kwee, Van Den Bosch & Volberda, 2011), power concentration (Greve & Mitsuhashi, 2007), network ties (Collins & Clark, 2003), and compensation (Luo, Wieseke & Homburg, 2012). As an example, Chatterjee et al. (2007) argued that narcissistic CEOs differ from non-narcissistic CEOs in how they make strategic decisions due to their inflated self-views and need for attention. The authors suggested that narcissistic CEOs are more likely to engage in novel and bold strategic actions with uncertain payoffs. In fact, CEO narcissism was found to be positively associated with strategic dynamism and intense acquisition activity. Firms led by narcissistic CEOs were also found to exhibit extreme (big wins or losses) and fluctuating performance. However, there were no significant performance differences between firms headed by narcissistic versus non-narcissistic chief executives. From a power relations perspective, Greve (2007) demonstrated that power concentration at the CEO level (i.e., when the CEO possesses excessive power compared to other organisational members) or TMT level (i.e., when a small number of senior managers have significantly more power than others) is associated with higher levels of strategic change. It was argued that power strongly affects the decision-making process as powerful managers favour decisions that signal and reinforce their position of power, such as strategic changes. Greve (2007:p1200) pointed out that “strategic changes have a symbolic value because a high level of change indicates that the TMT has an active hand in strategy making”.

Scholars have established the applicability of UET across different national contexts, including both Western and Eastern countries (Geletkanycz & Black, 2001; Wiersema & Bantel, 1992; Wiersema & Bird, 1993), different industries, including both the services and manufacturing sectors (Lee & Park, 2006; Lin & Rababah, 2014; van Doorn, Heyden & Volberda, 2017), and different types of firms, including large, mature organisations as well as SMEs and newly founded companies (Carpenter, 2002; Escriba-Esteve, Sanchez-Peinado & Sanchez-Peinado, 2009; Reuber & Fischer, 1997). For instance, Geletkanycz and Black (2001) utilised data from 20 countries to confirm UET predictions that managerial characteristics (i.e., functional experience) exert significant influence on decision-making (i.e., the tendency to change organisational strategies). Lee and Park (2006) applied the upper echelons logic using data from 14 industries to find that firms headed by managers with heterogeneous characteristics are more likely to establish international alliances, which in turn leads to higher levels of internationalisation. Carpenter (2002) addressed the performance effects of TMT heterogeneity in large and medium-sized organisations, while Escriba-Esteve et al. (2009) established the link between managerial characteristics (e.g., age, education, previous experience), strategic behaviour and organisational performance in small and medium-sized enterprises.

[alvinstrat]

Reproducibility Crisis in Science?

Recently I read that JD Vance was saying that science has a reproducibility crisis. Is there really a crisis?

JD Vance accuses universities of racial bias against whites and Asians

Vice President JD Vance accused U.S. universities of racially discriminating against white and Asian students and alleged widespread scienti

1,500 scientists lift the lid on reproducibility - Nature

Survey sheds light on the ‘crisis’ rocking research.

Science is supposed to be falsifiable and reproducible, all PhD trained scientists know this from their PhD level modules on the scientific method. One will usually not learn this even at the master's level so only very few people learn about the scientific method formally in society.

The general public may not know this and many may imagine science as just "fictional tales" and scientists as people who "cannot produce real work".

When many studies are not reproducible, is that a crisis? Well, in my opinion, not really.

Firstly, there is not enough funding for editors (usually senior scientists) to try to reproduce all studies before publishing them. It is impractical even if they have a very rigorous double blind process since many experiments can cost millions if not more.

Secondly, since science is meant to be reproducible, any important scientific work will eventually be reproduced by labs worldwide before it can go further (be used commercially, be patented and be developed further). If an important work cannot be reproduced, it will be flagged and the scientists will risk disrepute. Think of how many people have developed and replicated Enstein's Theory of Relativity and E=mc2 over the decades since.

Thirdly, while the untrained public generally thinks of science as making new things or innovating, a lot of science, at least in the business sciences, is about finding out the boundaries of theories (where theories fail) and finding phenomena that cannot be explained by existing theories. We do want to know the current limitations of theories and medicine, because there are usually limitations right? For example, Enstein's Theory of Relativity and E=mc2 does not exactly work well in the quantum realm and this discovery is a very important one too because it led to many new work on quantum physics. Water is liquid only from 1-99 degrees celcius.

And in the business and social sciences, a lot of work is not meant to be reproducible or falsifiable (interpretivist approach vs the positivist approach) but still considered good science (think a case study of Facebook during its early years or the development of the Android ecosystem).

I think it is normal for scientific works not to be reproducible, it is just the way science works currently.

[brokencolumnpress]

The Psychology of Management: The Function of the Mind in Determining, Teaching and Installing Methods of Least Waste

The Psychology of Management: The Function of the Mind in Determining, Teaching and Installing Methods of Least Wasteby Lillian Moller Gilbreth Ph.D.Buy on Amazon The Psychology of Management by Lillian Moller Gilbreth, Ph.D., is a pioneering work that explores the relationship between psychology and management, emphasizing the importance of understanding human behavior in the workplace.…

The Psychology of Management: The Function of the Mind in Determining, Teaching and Installing Methods of Least Waste

[alvinstrat]

A Quick Review Of The 7 Platform Business Articles Among The 10 Most Cited Articles In 2023 In The Strategic Management Journal

Top Ten most cited Strategic Management Journal (SMJ) articles for 2023 - SMS

SMS is pleased to share the Top 10 most cited articles for 2023 in the Strategic Management Journal. Congratulations to all authors!   Platf

A quick review of the 7 most cited articles on platform businesses (also called ibusinesses or more generally known to the public as apps and digital business) which are quite popular in strategy science these days.

This is unsurprising given the proliferation of many successful platform businesses from Google to Facebook to Tiktok to Alibaba over the past 2 decades. A lot of contemporary research has been focused on analysing these businesses to try to understand in detail how they work and what are the ingredients that facilitate business success.

Platform ecosystems as meta-organizations: Implications for platform strategies – Tobias Kretschmer, Aija Leiponen, Melissa Schilling, Gurneeta Vasudeva

This is an special feature introductory review of the meta-organisational features of platform ecosystems. It is interesting to me because it focuses on areas such as motivation, authority and governance, which are not that well understood yet.

Liminal movement by digital platform-based sharing economy ventures: The case of Uber Technologies – Raghu Garud, Arun Kumaraswamy, Anna Roberts, Le Xu

This is the famous case study of Uber. I have read it a few times previously.

It is basically describing the marketing and PR of Uber as it navigates governments. The authors focused on the non market strategies of Uber and found that Uber used a series of interrelated market and nonmarket strategies, which they label as liminal movement, to generate cognitive and sociopolitical legitimacy as it disrupted the taxi industry worldwide a decade ago.

Mutualism and the dynamics of new platform creation: A study of Cisco and fog computing – Saeed Khanagha, Shahzad (Shaz) Ansari, Sotirios Paroutis, Luciano Oviedo

This is an interesting case study of Fog and Cloud, 2 competing platform businesses involving Cisco. Cisco is a complementor (basically this means it is not the owner but a participant) on Cloud while on Fog it is the owner.

The authors developed a process model to reveal how a firm in a peripheral role in a platform ecosystem can reposition itself through a dynamic mix of material, symbolic and institutional actions to develop and legitimise an alternative platform.

User preferences and strategic interactions in platform ecosystems – Claudio Panico, Carmelo Cennamo

This is a study on ecosystem innovativeness (complement novelty and quality) vs ecosystem size (number of complementors/complements).

From proprietary to collective governance: How do platform participation strategies evolve? – Siobhan O’Mahony, Rebecca Karp

This is a study on how platform participants (also called complementors as above) adapt their strategies when a platform leader changes the rules governing access and control.

Platform governance matters: How platform gatekeeping affects knowledge sharing among complementors – Yuchen Zhang, Jingjing Li, Tony W. Tong

This is a study on how gatekeeping affects complementors' knowledge sharing. The authors find causal evidence that a lapse in gatekeeping reduces knowledge sharing among iOS app developers and the effect is mitigated among developers with greater knowledge complexity but magnified among those with greater knowledge routineness.

Platforms for the people: Enabling civic crowdfunding through the cultivation of institutional infrastructure – Danielle Logue, Matthew Grimes

This is a case study of a civic crowdfunding platform drawing upon institutional theory where the authors created a process model of social-mission platform creation.

[frederickwtaylor]

The Mental Revolution

Before Taylor’s principles could be implemented, he stated that first the attitudes of the workers and management needed to change. He defined his work as “a complete mental revolution on both the part of the workingman connected in any establishment and an equally complete mental revolution on the part of those on the management’s side”. Managers and workers needed to change their outlook on each other.

Therefore, they could turn their focus towards maximising profit. It would also create a more productive work environment and improve society as a whole. Taylor stated “Without this complete mental revolution on both sides, scientific management does not exist.” He found that for an organisation to operate to its maximum potential, the organisation and its employees needed to have a similar perspective and attitude towards the organisation.

He utilised this way of identifying scientific management as a way to demonstrate how it is a system rather than a solution. It is not an ‘efficiency device’ or a ‘motion study’, it was something completely new and unique.

It needed to be adapted by everyone, not just management or the workers.

The effects of Taylor's 'Mental Revolution' were later examined. One study carried out on the Link- Belt Company (an engineering company who were one of the first firms to adapt Taylor’s principles of management science), illustrated that scientific management had overall improved the efficiency of the firms, however, it did not necessarily promote unity between management and the workforce. Therefore in this particular example, his complete mental revolution was not accomplished.

~ David Kelly

References:

[russian-dallas]

Пообещайте себе здоровья в новом году!

Пообещайте себе здоровья в новом году!

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Каждый январь нового года примерно треть американцев принимают решение каким-то образом изменить свою жизнь к лучшему. И, как вы понимаете, читатель, гораздо меньший процент людей выполняют эти обещания. Исследования университета…

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[managementassignmentservices]

Pursue Construction Project Management for a Bright Future in the Field of Infrastructure

In construction project management, the responsibilities of a traditional project manager are combined with the expertise and skills of…

It is the responsibility of construction project managers to ensure that the project tracks along to the plan. These project managers are required to see that the project ends on budget and on time, and also that the team completes it as per the specs, plans and building codes. Other functions that they may play are the development of communication strategy to resolve conflicts, selection of workers and subcontractors, specifying schedules, budget and scope, among others.