Knowledge that Transforms

Amidst frequent and consequential worker shortages, export manufacturers in developing economies use incentives to reward workers for perfect attendance each month. However, it is unclear to what extent the attendance incentive differentials observed between export manufacturers are shaped by both employers' and workers' interests. By applying prior pay setting theory in the context of evidence of when consequential worker shortages occur due to workers' pursuit of personal or professional interests during workdays, I develop a framework that explains export manufacturers' policy decisions on the incentive level to reward workers' perfect attendance. Hypotheses are tested using data on 104 export apparel manufacturing establishments in Sri Lanka. The findings imply that attendance incentive pay setting is shaped not only by export manufacturers' strategic interest in minimizing vulnerability to worker shortages but also by their understanding of workers' willingness to forgo personal/professional interests (e.g., time‐off, alternative careers/jobs) to attend on every workday.

In this study, we focus on the unintended consequences of new technology deployment for control‐trust dynamics. When addressing these dynamics, managers and management researchers often focus on consciously designed and implemented controls and management actions that build, repair, or preserve trust. At the same time, unowned processes – processes that have no single source or purpose – easily go unnoticed. These processes may have effects that are inadvertent and sometimes detrimental. A close‐up ethnographic study of a technology deployment provides insight into the emergence of unintended control practices and shifts in trust. Our findings demonstrate how deployment of new technology prompted a shift in the loci and forms of control and how trust, suspicion, and distrust surfaced asymmetrically as organizational members interpreted in different ways how others were using the new technological features. These developments contributed to the emergence of four unintended control practices: incidental monitoring, organizational surveillance, individual concealment, and collective resistance. Our study highlights the role of unowned processes in the control‐trust dynamics and emphasizes that whether or not control and trust are consciously addressed, both play interactive and evolving roles in organizations.

Nonmarket scholars have paid limited attention to noncompliance as an alternative strategy to capture regulators; yet noncompliance is particularly consequential given its potentially significant negative externalities. We exploit rich data on price ceilings introduced in India in 2013 on 255 essential medicines to test whether noncompliance by other firms drives the focal firm's noncompliance decision. Our results indicate that noncompliance by other firms, particularly those with larger products in the market, is positively associated with a focal firm's noncompliance. The focal firm's scope and sales positively moderate this relationship. Overall, our study indicates that firms are more likely conclude that the potential benefits of regulatory capture using negative incentives outweigh the potential financial and social costs in the presence of a greater number of firms that are already noncompliant. As such, our study draws attention to negative incentives as an important yet largely overlooked nonmarket strategy.

This Point‐Counterpoint (PCP) on the Responsible Research in Business and Management (RRBM) movement features three essays on the roles of science and scholars in addressing problems that are significant to both business and society . This introduction discusses three areas that seem to hinder the RRBM movement. The first is that the movement seeks to ‘own the responsible research domain’. A second is that using societal impact to adjudicate whether a single study is ‘responsible’ or ‘irresponsible’ can be irresponsible. A final hindrance are some unintended consequences of overstressing societal impact. Despite these concerns, the three essays bring tremendous clarity and hope to scholars who want their studies to make the world a better place.

While economics has largely moved ‘beyond theory’, in management research the ‘theory always’ imperative is still held high. This imperative has come under attack lately with scholars saying we have too much theory that explains too little, or that insisting on theoretical contributions in every article hampers our ability to address timely issues. I argue that there is unease with the practice of theorizing in management and organization because we fail to demonstrate what theory does (or cannot do) for advancing knowledge, and under what conditions. In this article, I therefore seek to show when and how management theory is more useful and when less useful for moving research fields forward. Drawing on a position about progress that is rooted in a combination of Popper's critical rationalism and social criticism, I unearth four instrumental functions of theory and three areas of limitation. I suggest that scholars should be clearer about which of these functions their theorizing serves, or use the framework to justify why, instead of crafting theory, they focus on applying theory, on empirical analysis, or on method. The article provides guidance to authors, reviewers, and editors. It also offers suggestions for the strategic positioning and publishing policies of journals.

To ensure cooperation, parties in inter‐organizational relationships (IORs) draw upon both control and trust. Yet, how control–trust dynamics change as IORs evolve remains unclear. This study illuminates the interplay between control–trust dynamics and IOR dynamics by unpacking how control and trust refer to and create one another through action–reaction cycles. We find that conflicting enactments of vulnerability and risk caused by critical incidents lead to tensions between the parties (IOR dynamics) regarding how and when they rely on control and trust. Consequently, coping practices are applied to redefine the controlling and trusting domain and mediate between the multiple and temporal domains to ensure that control and trust refer to and create one another to (re)form positive expectations. The study's main implication is that it makes little sense to study control‐trust dynamics in IORs, like other relational phenomena, in isolation and at a single point in time.

Momentum theory suggests that acquisition experience leads to acquisition momentum in the form of a higher likelihood of subsequent acquisitions of the same type. However, this argument has been challenged theoretically and empirically. We reconcile conflicting predictions and findings of prior research and extend momentum theory by incorporating activity load as a novel causal mechanism to both replicate the base finding and explain deviations from it. We find that a high activity load due to increased acquisition activity acts as a counterforce to momentum, decreasing the likelihood of subsequent acquisitions of the same type. Moreover, we also find that the interplay of routines, cognitive frames, and activity load causes companies to alternate between different types of acquisitions – from small to large and from large to small – as management engages in attention modulation to preserve momentum. Taken together, our arguments and findings contribute to an improved understanding of temporal patterns of acquisition behaviour.

The allocation of financial resources to entrepreneurial initiatives in subsidiaries of multinational corporations is crucial to their realization. When allocating resources to these initiatives, senior headquarters managers face uncertainty that they attempt to address using various heuristics, which may bias allocation. Name‐based heuristics – cognitive shortcuts based on names associated with a decision‐making situation – have been shown to influence financial decisions ranging from food purchase to stock investment. Yet little is known about name‐based heuristics in the allocation of financial resources to entrepreneurial initiatives. We analyse 1308 resource allocation decisions made by 109 senior managers in an experiment in which we vary subsidiary country and subsidiary manager names. We find that psychic distance to the subsidiary country is negatively related to resource allocation when subsidiary managers' names express a potential expatriate status. In contrast, this relationship is positive when subsidiary managers' names express a potential local status. We contextualize our results by interviewing senior managers and discuss how reliance on name‐based heuristics to infer the context of an initiative or the interests and competences of subsidiary managers can lead to biased decisions.

It is well established that words matter. Yet, there remains much that we do not understand about when and how words are best utilized in various business contexts. This study uses a mediation model to examine how investment risk influences the choice of different rhetorical frames – logos (logic), pathos (emotion), and ethos (character) – in the initial public offering (IPO) prospectus, and subsequently how rhetoric influences investment performance. We apply rhetorical theory to describe how authors use different amalgamations of words to frame messages to persuade audiences to engage in specific actions. Two key mechanisms of rhetorical theory that we investigate and build upon in this study are: 1) rhetoric reflects an author’s perspective of a context (i.e., perspective of the investment risk) and 2) the process through which cognitive resource limitations of authors and audiences influence outcomes. Specifically, we question whether these two mechanisms create a paradoxical situation where rhetoric that reflects the author’s perspective is not always the most effective approach given cognitive resource limitations. Based on a sample of 644 IPO firms, we find that using words that reflect the author’s perspective is not always the most persuasive. We posit that this is because investment authors fail to account for other communicative symbols (such as data and financial information) that can fulfill the role of more logic‐based rhetorical frames, thereby creating cognitive resource slack.

A key stream of research in the control‐trust literature concerns how control builds trust. Yet, the iterative nature between control building trust and trust impacting control is poorly understood. Early formation of trust in work relationships is important because it pervades future interactions and trust‐building attempts, and we join this conversation by examining how workgroups can actively constrain newcomer behaviour through control to build trust during socialization. Specifically, our theory building focuses on the unofficial socialization practice of workgroup hazing to explore how workgroups can systematically force a circumstance in which newcomers must demonstrate their trustworthiness to the workgroup before they can be trusted as insiders of the group. Through this process, the perceived trustworthiness of newcomers affects how the workgroup subsequently controls them. By examining the perspective of the workgroup, we uncover two key mechanisms that impact these control‐trust dynamics in how workgroups often socialize newcomers: (1) there is a shift in vulnerability from the workgroup to the newcomer, and (2) person‐group fit serves as a proxy for the trustworthiness of the newcomer. We conclude with an agenda for future control‐trust research given our theory building.