| The Impact of Change Catalysts on Organizational Restructuring Decision-Making: An Empirical Test of the Adaptive versus Inertial View of Strategic Change |
| | Wayhan, Victor B. | U. of Houston | vwayhan@uh.edu | 713-743-4682 |
| | This research investigates the dynamics of organizational restructuring and workforce reductions by exploring the phenomenon within the broader context of strategic change. In specific, the study provides an empirical test of the adaptive versus inertial view of strategic change in a panel of Fortune 500 companies going through organizational restructuring. A path analytic framework tests whether change catalysts such as top management turnover and pool financial performance are of sufficient power to overcome inertia in the panel firms, as evidenced by differences in workforce reduction intensity and frequnecy. The results, for the most part, indicate that the top management teams of te panel firms were able tomake subtantial changesin their respective firms without reorganizing hte tpop mangaemnet team or having poor financial preformance provide the primary impetus. This calls into question the magnitude of the inertial forces at work in firms that are experiencing substantial oragnizational changes -- fundamental tent of the inertial view of strategic change.
During the 1980's, corporate restructurings were endemic in the U.S., especially among the Fortune 500. Bethel & Liebskind charcterized this decade as "the most intesen perid of corporate restructurings, more that five million jobs were eliminated (1987-1991), wiht more than 85 percent of the FOrtune 1000 engaging in downsizing or workforce reductions (Hitt, Keats, Harback, & Nixon, 1994). Corporate restructuring and workforce reduction activities continuted unabated into the early 1990's, with an additional two million more jobs elimnated by the end of 1995 (Cascio, 1996). Since U.S. corporations continue to restructure in an aggressive manner-primarily because the same economic, technological, geopolitical, and business antecedents still exert their influences (Gersick, 1991; Bowman & SIngh, 1993), this particular organizaitonal phenomenon warrants continued empirical investigation (Schnedel, 1993).
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| | Keywords: Organizational Restructuring |
| Temporal Dynamics of CEO Tenures |
| | Hambrick, Donald C. | Columbia U. | dch2@columbia.edu | 212-854-4421 |
| | Henderson, Andrew D. | Columbia U. | ah246@columbia.edu | 212-854-2009 |
| | Danny, Miller | Columbia U. | dannymiller@hec.ca | 212-854-4421 |
| | There have been very few attempts to explore how a CEO's perspective, behavior, and performance vary over time in office. Generally, those few studies have been limited by small samples or sample selection bias; or they have focused only on CEO succession effects, which represent thin slices of an organization's life. Our paper examines the dynamics of organizational change and performance over CEOs' entire tenures, using longitudinal data on 98 CEOs in the branded foods industry and 228 CEOs in the computer industry. Several strong results emerge, largely in line with our propositions. First, the likelihood of major strategic adjustments was greatest at the beginning of CEOs' tenures and declined sharply thereafter. Second, there was an inverted U-shaped relationship between CEO tenure and organizational performance. The point of peak performance, however, was much later than prior speculations had anticipated; and, contrary to one of our propositions, the performance peak was at about the same point - about 15 years -- for CEOs in both industries. In line with our expectation, however, the performance decline for long-tenured computer CEOs was much steeper than for food company CEOs. |
| | Keywords: Upper Echelons; CEO Tenures; Strategic Change |
| Managerial Change, Strategy Formulation and Firm Performance: A Closer Look at the Issue of Creating Value |
| | Morrow, Jr., J. L. | Mississippi State U. | bmorrow@cobilan.msstate.edu | (601)-325-0283 |
| | Compelling theoretical arguments and anecdotal evidence suggest that when firm performance has suffered, a new manager is best suited to lead the firm's turnaround efforts. However, this study develops arguments that a firm's existing manager is better equipped to formulate valuable new strategic initiatives. From a sample of 100 manufacturing firms, the results suggest firms that retain their existing CEO and decrease the CEO's cash compensation are most likely to formulate valuable strategies. In addition, these valuable strategies were found to have a positive effect on firm performance. |
| | Keywords: Managerial change;; strategic change;; strategy formulation. |
| Learning across the life cycle: Experimentation and performance among the Hollywood studio heads |
| | Miller, Dan | Columbia U. | Danny.Miller@hec.ca | 514-484-7768 |
| | Shamsie, Jamal | U. of California, Los Angeles | jamal.shamsie@anderson.ucla.edu | 310-206-2703 |
| | Guided by notions from the literature on organizational learning, this paper investigates how product-line experimentation and organizational performance change across the careers of top managers. Its subjects are the studio heads that ran all the major Hollywood studios from 1936 to 1965. The study found first, that product-line experimentation declines over the course of executive tenures; Second, that there is an inverse U-shaped relationship between top executive tenure and an organization's financial performance; And third, that product-line experimentation is more likely to benefit financial performance late in top executives' tenures. These findings are consistent with a three stage "executive life cycle". During the early years of their tenures, top managers experiment intensively with their product lines to learn about their business; later on their accumulated knowledge allows them to reduce experimentation and increase performance; finally, in their last years, executives reduce experimentationstill further, resulting in performance decline.
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| | Keywords: experimentation; life cycle; learning |
| CEO Commitment to the Status Quo: Replication and Explication and Extension Using Content Analysis |
| | Patterson, Paul W. | U. of Wisconsin, Milwaukee | barker@uwm.edu | (414) 229-4235 |
| | Barker, Vincent L. | U. of Wisconsin, Milwaukee | barker@uwm.edu | (414) 229-6524 |
| | Some Chief Executives seek change in their organizations while others are more cautious and deviate less from past
organizational practices. While resistance to change has often been viewed as synonymous with increasing tenure or
age of top executives, several studies have singled out executive commitment to the status quo as a unique psychological
construct influenced by a number of independent variables such as CEO tenure, past performance or industry conditions.
This study attempts to extend this line of inquiry. Through computer-aided content analyses of CEOs' letters to shareholders
at 129 firms, we develop an unintrusive measure of CEO commitment to the status quo. Consistent with past research and
theory, we find that CEO commitment to the status quo is positively associated with increasing CEO age, increasing CEO
tenure in his/her organization, and being in a low discretion industry. Also, CEOs at large firms and those with liquid financial
resources seem less committed to the status quo. Further, while the existing literature implies that CEO commitment to the
status quo will have a negative effect on future firm performance, we find that it's performance influence is moderated by the
level of managerial discretion created by a firm's industry. In particular, CEO commitment to the status quo has significant
negative future performance implications for firms in high discretion industries. However, in low discretion industries, CEO
commitment to the status quo seems to have less negative influence on future firm performance and even increases certain
types of performance.
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| | Keywords: Chief Executives; Change; Content Analysis |