Jiing-Lih Farh, P. Christopher Earley, Shu-Chi Lin, Impetus for Action: A Cultural Analysis of Justice and Organizational Citizenship Behavior in Chinese Society, Administrative Science Quarterly, Vol. 42, No. 3 (Sep., 1997), pp. 421-444
Javier Gimeno, Timothy B. Folta, Arnold C. Cooper, Carolyn Y. Woo, Survival of the Fittest? Entrepreneurial Human Capital and the Persistence of Underperforming Firms, Administrative Science Quarterly, Vol. 42, No. 4 (Dec., 1997), pp. 750-783
This study examines the role of a chief executive officer's hubris, or exaggerated self-confidence, in explaining the large size of some premiums paid for acquisitions. In a sample of 106 large acquisitions, we found that four indicators of CEO hubris are highly associated with the size of premiums paid: the acquiring company's recent performance, recent media praise for the CEO, a measure of the CEO's self-importance, and a composite factor of these three variables. The relationship between CEO hubris and premiums is further strengthened when board vigilance is lacking-when the board has a high proportion of inside directors and when the CEO is also the board chair. On average, we found losses in acquiring firms' shareholder wealth following an acquisition, and the greater the CEO hubris and acquisition premiums, the greater the shareholder losses. Thus, CEO hubris has substantial practical consequences, in addition to having potentially great theoretical significance to observers of strategic behavior.
The paper profited greatly from the careful reading and helpful comments given by Nitin Nohria, Herminia Ibarra, Steve Barley, and the three ASO reviewers. The author is grateful to Robert Eccles, Paul Lawrence, Peter Marsden, and Pat Kaufmann for their early help in framing the issues, to the companies that served as research sites, and to the Division of Research at Harvard Business School for its financial support. This article uses data from a field study of five large U.S. restaurant chains to model how chains use a plural form-simultaneous use of company and franchise units-to maintain uniformity and achieve systemwide adaptation to changing markets. From interview and observational data, I identify organizational structure, control systems, career paths, and strategy-making processes as four means through which the combination of company and franchise units helps chains achieve their objectives. The paper shows how the control and innovation processes provided by this plural form ameliorate some of the weaknesses and leverage some of the strengths of the company and franchise arrangements, enhancing the performance of the chain overall.'
Shona L. Brown, Kathleen M. Eisenhardt, The Art of Continuous Change: Linking Complexity Theory and Time-Paced Evolution in Relentlessly Shifting Organizations, Administrative Science Quarterly, Vol. 42, No. 1 (Mar., 1997), pp. 1-34