Knowledge that Transforms

This article describes new micro-foundations for theorizing about executive compensation, drawing on the behavioral economics literature and based on a more realistic set of behavioral assumptions than those that have typically been made by agency theorists. We call these micro-foundations “behavioral agency theory.” In contrast to the standard agency framework, which focuses on monitoring costs and incentive alignment, behavioral agency theory places agent performance at the center of the agency model, arguing that the interests of shareholders and their agents are most likely to be aligned if executives are motivated to perform to the best of their abilities. We develop a line of argument first advanced by Wiseman and Gomez-Mejia and put the case for a more general reassessment of the behavioral assumptions underpinning agency theory. A model of economic man predicated on bounded rationality is proposed, adopting Wiseman and Gomez-Mejia’s assumptions about risk preferences, but incorporating new assumptions about time discounting, inequity aversion, and the trade-off between intrinsic and extrinsic motivation. We argue that behavioral agency theory provides a better framework for theorizing about executive compensation, an enhanced theory of agent behavior, and an improved platform for making recommendations about the design of executive compensation plans.

Scholars have called for examinations of trust at the dyadic level, but only recently have we begun to see trust examined as a dyadic phenomenon from multiple perspectives. This review examines three approaches to understanding dyadic trust: reciprocal trust, wherein one party’s trust influences the other party’s trust; mutual trust, wherein both parties share a given level of trust that has important consequences for the dyad; and asymmetric trust, wherein each party has a different level of trust, and this disparity has consequences for the dyad. We provide a critical analysis of the empirical research addressing these three approaches and suggest future research directions to provide a more comprehensive view of dyadic trust.

Ten years ago, Martins, Gilson, and Maynard reviewed the emerging virtual team (VT) literature. Given the proliferation of new communication technologies and the increased usage of work teams, it is hardly surprising that the last decade has seen an influx of VT research. In this review, we organize the last 10 years of empirical work around 10 main themes: research design, team inputs, team virtuality, technology, globalization, leadership, mediators and moderators, trust, outcomes, and ways to enhance VT success. These themes emerged inductively because they either represent areas with consistent results, a large proliferation of studies, or a grouping of studies and results that differed from where the literature stood a decade ago. Following the review section, we turn our attention toward 10 opportunities for future research: study setting, generational impacts, methodological considerations, new and emerging technologies, member mobility, subgroups, team adaptation, transition processes and planning, creativity, and team member well-being. Some of these opportunities emerged from our review of the extant VT literature; others are grounded in the broader team literature, are unresolved theoretical issues, or were linked to insights discussed within the VT practitioner literature. Within the domain of VTs, technological innovation continues to advance the way team members interact and enable individuals who previously could not be connected to work together as a team. Accordingly, VTs provide great promise to organizations, and the field continues to be rich with research opportunities for the coming decade(s).

Team reflexivity, the extent to which teams collectively reflect upon and adapt their working methods and functioning, has been shown to be an important predictor of team outcomes, notably innovation. As described in the current article, the authors developed and tested a team-level contingency model of team reflexivity, work demands, and innovation. They argue that highly reflexive teams will be more innovative than teams low in reflexivity when facing a demanding work environment. A field study of 98 primary health care teams in the United Kingdom corroborated their predictions: Team reflexivity was positively related to team innovation, and team reflexivity and work demands interacted such that high levels of both predicted higher levels of team innovation. Furthermore, an interaction between team reflexivity, quality of physical work environment (PWE), and team innovation showed that poor PWE coupled with high team reflexivity was associated with higher levels of team innovation. These results are discussed in the context of the need for team reflexivity and team innovation among teams at work facing high levels of work demands.

Scholars have long been interested in when and to what degree managers are able to exert control over their organizations. In this review, we examine managerial discretion, or the latitude of action available to managers. Since its introduction, scholars have attempted to explain when managers will have discretion, what discretion means for organizational outcomes, and how discretion may differentially influence organizational outcomes when it enables or constrains leaders. Our review indicates that while a significant number of studies have examined discretion, few have attempted to validate the prescriptions of the managerial discretion construct. Furthermore, studies to date have primarily focused on the industry task environment as a measure of discretion, with less attention focused on the manager’s characteristics and the internal organization. We then assess construct validity and the measurement of managerial discretion, offering recommendations to future researchers for improving the operationalization of this construct. Finally, we consider how discretion forces may interact as either complements or substitutes and how such interactions may have both organizational- and individual-level consequences.

The dynamic managerial capabilities literature has developed over the past decade to the point where a review and synthesis of relevant literature can move the scholarly conversation forward. The concept of dynamic managerial capabilities—the capabilities with which managers create, extend, and modify the ways in which firms make a living—helps to explain the relationship between the quality of managerial decisions, strategic change, and organizational performance. We clarify theoretical constructs and their relationships, review and synthesize empirical research on the role and impact of managerial capabilities directed toward strategic change, and suggest avenues for future research. Our review begins with an overview of theoretical conceptions of dynamic managerial capabilities. Then we organize the remainder of the review around the three core underpinnings of dynamic managerial capabilities: managerial cognition, managerial social capital, and managerial human capital. In our review, we examine evidence from studies of dynamic managerial capabilities and reinterpret evidence prior to the introduction of the dynamic managerial capabilities concept through that lens. Consistent with the dynamic managerial capabilities concept, empirical research shows that managers differ in their impact on strategic change and firm performance and that differences in managerial cognition, social capital, and human capital lead to different outcomes.

This study provides meta-analytic estimates of the antecedents and consequences of feedback-seeking behavior (FSB). Clear support was found for the guiding cost/benefit framework in the feedback-seeking domain. Organizational tenure, job tenure, and age were negatively related to FSB. Learning and performance goal orientation, external feedback propensity, frequent positive feedback, high self-esteem, a transformational leadership style, and a high-quality relationship were positively associated with FSB. Challenging some of the dominant views in the feedback-seeking domain, the relationship between uncertainty and FSB was negative and the relationship between FSB and performance was small. Finally, inquiry and monitoring are not interchangeable feedback-seeking tactics. So FSB is best represented as an aggregate model instead of a latent model. In the discussion, gaps in the current FSB knowledge are identified and a research agenda for the future is put forward. Future research may benefit from (a) a systematic and integrative effort examining antecedents of both feedback-seeking strategies on the basis of a self-motives framework, (b) adopting a process perspective of feedback-seeking interactions, and (c) taking the iterative nature of feedback into account.

A recent article in the Journal of Management gives a critique of a Bayesian approach to factor analysis proposed in Psychological Methods. This commentary responds to the authors’ critique by clarifying key issues, especially the use of priors for residual covariances. A discussion is also presented of cross-loadings and model selection tools. Simulated data are used to illustrate the ideas. A reanalysis of the example used by the authors reveals a superior model overlooked by the authors.

Judgment and decision-making research has a long tradition in management and represents a substantial stream of research in entrepreneurship. Despite numerous reviews of this topic in the organizational behavior, psychology, and marketing fields, this is the first review in the field of entrepreneurship. This absence of a review of entrepreneurial decision making is surprising given the extreme decision-making context faced by many entrepreneurs—such as high uncertainty, time pressure, emotionally charged, and consequential extremes—and the large number of studies in the literature (e.g., 602 articles in our initial screen and 156 articles in a refined search). In this review, we (1) inductively categorize the articles into decision-making topics arranged along the primary activities associated with entrepreneurship—opportunity assessment decisions, entrepreneurial entry decisions, decisions about exploiting opportunities, entrepreneurial exit decisions, heuristics and biases in the decision-making context, characteristics of the entrepreneurial decision maker, and environment as decision context; (2) analyze each context using a general decision-making framework; (3) review and integrate studies within and across decision-making activities; and (4) offer a comprehensive agenda for future research. We believe (hope) that this proposed review, integration, and research agenda will make a valuable contribution to management scholars interested in decision making and/or entrepreneurship.

Current theory and research suggest a positive linear relationship between perceived organizational support (POS) and employees’ taking charge, or change-suggesting, behaviors. Via a sample of 89 subordinate-supervisor dyads, we hypothesize and test an inverted U-shaped relationship between employees’ POS and their taking charge behaviors and the likelihood that this curvilinear pattern is accentuated when employees anticipate costs related to their taking charge. Results support both of these patterns. We conclude by discussing our findings’ implications regarding future needed sensitivity on the part of managers as well as management scholars regarding how to gauge optimal levels of POS.