Knowledge that Transforms

We reflect on our 2005 article, “Social Capital, Networks, and Knowledge Transfer,” which received the Academy of Management Review Decade Award in 2015. We first discuss the origin of the idea for the paper and how it evolved during the rigorous review process. Then we identify the reasons for the article’s high number of citations by scholars worldwide and trace the research advances that have occurred since it was published. We show that research on the three main concepts in the article has expanded to a wide range of fields, far beyond the management discipline. In particular, a stream of research building on the framework proposed in the article has emerged.

While corporations are increasingly being called on to improve social welfare, researchers have primarily focused their efforts on the role of external pressures and top managers in shaping a corporation’s engagement with social issues. As an alternative, I consider the role of social change agents who work within corporations and direct their firms to address a social issue. I suggest two issue impediments obstructing these efforts—issue illegitimacy and issue equivocality—that are shaped by economic philosophies, institutional fields, firm missions, and social change agent beliefs. These impediments ground four types of issues that social change agents attempt to advance: convertible, blurry, safe, and risky. I propose meaning-making tactics best suited to address the type of social issue individuals seek to advance inside a firm: framing, labeling, maintaining, and importing. I argue that by matching the issue type and meaning-making tactic, social change agents will more likely influence top managers to support a social issue. This article contributes to the literature by explaining how meaning making serves at the heart of impediments to and potential solutions to firms’ efforts to improve social welfare and by spotlighting the role of a firm’s employees in encouraging the organization to improve social welfare.

Agency theory draws attention to certain behaviors of CEOs and boards that, in aggregate, create losses for society. The empirical literature, however, characterized by contentious findings, suggests that the current form of agency theory is not supporting a clear understanding of these behaviors and their costs. We propose a change to one assumption, with potentially profound implications. Expanding on the assumption of narrow self-interest underlying agency theory, we apply an empirically well-established refinement that self-interest is bounded by norms of reciprocity and fairness. The resulting logic is that perceptions of fairness mediate the relationships derived from standard agency theory through positively and negatively reciprocal behaviors. This mediating variable provides a parsimonious new way to help explain extreme results found in prior studies. Rather than aiming to limit CEOs’ self-serving behaviors, boards that apply these arguments improve social welfare by initiating positive reciprocity and avoiding unnecessary, welfare-reducing “revenge” behaviors.

We integrate a rhetorical perspective with neoinstitutional theory to develop a rhetorical model of institutional decision making. We use this model to describe how the communicative practices of decision makers both enable and constrain how actors manage the risk and uncertainty of their judgments and decisions within an institutional context. We first develop a dual conception of reason as both communication (public argument) and cognition (private argument). With this dual conception of reason, we conceptualize actors as active and passive speakers and listeners who interpret, produce, and present public and private arguments to persuade themselves and others to adopt, maintain, or reject practices. Speakers and listeners have cognitive limits and thus create presumptions or shared decision-making rules to help them efficiently produce and process the arguments needed to debate, evaluate, and adjudicate recurring institutional decisions. We suggest that arguments shape actors’ reasoning and judgment because they reflect appeals to pathos (emotion), logos (logic), and ethos (values) that support or criticize decisions to act. These appeals also shape the nature and construction of presumptions that bind rationality. We describe how these binds on rationality affect the formation of judgments and decisions, as well as the performance evaluation of institutional practices.

CEO severance has captured the attention of a wide array of audiences, yet it remains largely unexplored by management scholars. In this article we offer a rigorous theoretical examination of CEO severance with the goal of developing a foundation for a systematic research agenda. In particular, we consider if, and how, severance agreements can be effective in serving the interests of both CEOs and shareholders. We argue that severance agreements have potential value as both an executive recruitment and a governance tool but that the way they are conventionally structured undermines the value shareholders realize from them. The implications of structure have been almost entirely overlooked by scholars, perhaps because the influence of compensation consultants has left little variance in how severance agreements are implemented across firms. We address this gap by theorizing about how severance agreements could be structured to effectively generate value for executives and shareholders. To do this, we introduce a categorization of key dimensions of CEO severance agreements and consider how each of these dimensions can be structured to facilitate CEO recruitment while simultaneously mitigating future governance problems. Our propositions offer new opportunities for governance and compensation scholars to link CEO severance agreements to important organizational outcomes.

Corporations are increasingly held responsible for activities up and down their value chains but outside their traditional corporate boundaries. Recently, a similar wave of criticism has arisen about corporate activities of the past, overseen by prior generations of managers. Yet there is little or no scholarly theorizing about the ways contemporary managers engage with these critiques or how this corporate engagement with the past affects the legitimacy of current business. Extending theorizing about political corporate social responsibility and organizational legitimacy, we address this omission by asking the following: (1) What is the theoretical basis for holding a corporation responsible for decisions made by prior generations of managers? (2) What is the process by which such claims are raised and contested? (3) What are the relevant features that render a charge of historical harm-doing more or less legitimate in the current context? (4) How will a corporation’s response to such charges affect the intensity of the future narrative contests and the corporation’s own legitimacy?