British Journal of Management

vLex
Publisher:
Wiley
Publication date:
2021-02-01
ISBN:
1045-3172

Issue Number

Latest documents

  • Bankruptcy in the UK: Do Managers Talk the Talk Before Walking the Walk?

    This study examines whether managers employ annual report textual disclosures as a conduit to communicate the probability of future corporate bankruptcy or to intentionally mislead stakeholders owing to impression management incentives. We conduct various examinations around the information content of the tone conveyed by textual disclosures in unstructured UK annual reports and the probability of corporate bankruptcy. We document that firms that communicate a more net positive tone are associated with lower bankruptcy risk. Importantly, this association is found to be stronger for firms whose managers have a lower incentive to mislead investors owing to better board monitoring, stringent stock market regulation, and Big 4 audits. We also offer complementary evidence that firms conveying a more net positive tone exhibit higher future performance and earnings persistence, and lower future performance volatility. These firms are also less likely to exhibit extreme corporate policies and to receive a qualified auditor's opinion. Overall, this study sheds light on whether managers tend to inform or misinform (bury their heads in the sand) about corporate bankruptcy.

  • The Effect of Foreign Divestment on Subsequent Firm Performance: The Moderating Role of Spatial and Temporal Dispersion of Prior Divestment Experience

    Previous research has stressed the importance of the relationship between foreign divestment and subsequent firm performance. Yet, controversy remains, as some authors suggest that foreign divestment has a positive effect on firm performance, and others propose that foreign divestment has negative performance effects. To help reconcile this controversy, we first explicate existing arguments and argue that in the context of retail (de‐)internationalisation, foreign divestment will have a predominantly negative effect on retailers’ financial performance. We then draw on organisational learning theory to argue that this negative performance effect of foreign divestment is contingent on (a) the spatial dispersion of previously divested foreign operations (i.e. the extent of geographical diversity of the foreign divestments the multinational enterprise [MNE] has conducted over a specified period of time), and (b) the temporal dispersion of previously divested foreign operations (i.e. the time between prior divestment episodes). Drawing on a panel of some of the largest retail MNEs over the 20‐year period 1997–2016, we find that foreign divestment has a negative effect on retailers’ subsequent performance. Our results also indicate that the negative performance effect of foreign divestment is effectively mitigated by retailers’ prior divestment experience in spatially diverse and temporally dispersed settings.

  • The Delicate Equilibrium: Unveiling the Curvilinear Nexus Between Supply Concentration and Organizational Resilience

    The ability of organizations to remain resilient in the face of supply chain disruptions has been severely tested due to their increased frequency and impact. This study leverages the adaptive cycle framework to investigate the intricate dynamics between supply concentration and organizational resilience. We unveil a paradox where, up to a critical threshold, supply concentration fortifies resilience through tight‐knit buyer–supplier relationships and a bolstered resource base. Yet, surpassing this tipping point precipitates a rigidity trap, eroding the resilience fabric of organizations. Additionally, we scrutinize the nuanced roles of three dimensions of entrepreneurial orientation – proactiveness, innovativeness and risk‐taking – in shaping this complex interplay. We test our hypotheses using both secondary and primary data collected from Chinese firms, employing ordinary least‐squares regression and survival analysis. The results show that an inverted U‐shaped relationship emerges between supply concentration and organizational resilience. Furthermore, our research generally confirms the conjectured moderating influences of entrepreneurial orientation dimensions, enriching our understanding of how they calibrate the balance between concentration benefits and vulnerabilities. This study offers a new perspective on the implications of supply concentration for organizational resilience and contributes to the intersection of supply chain management, organizational resilience and entrepreneurship.

  • Escaping Zombiness: Does Corporate Governance Have the Elixir of Life?

    This study investigates the influence of corporate governance on firms’ transition into and out of zombiness. We underscore the beneficial role of external members in the corporate governance structure and long‐tenured chief executive officers (CEOs) in facilitating access to the external resources that firms need to be successful. Using a sample of European listed firms over the period 2008–2018, we adopt a dynamic view of zombiness by identifying shifts in the state from zombie to non‐zombie and vice versa. The results show that board independence is a twofold panacea against zombies, prompting zombie recovery and preventing healthy firms from becoming zombies. By contrast, leadership independence, materialized by separating the CEO and chairperson roles, hampers the recovery of zombies, probably because the cost of lacking unified leadership may exceed the benefits of external dependence minimization. Finally, the results suggest that longer CEO tenure helps healthy firms avoid zombiness. When considering a broader array of stakeholders, government bailout programmes impair zombie recovery, and stronger trade unions help healthy firms escape zombiness. Overall, this study brings a ray of hope to the zombie problem and provides a better appraisal of when supporting zombies might be worthwhile vis‐à‐vis saving promising firms and bringing them back to life.

  • Do Digital Technologies Enable Firms that Prioritize Sustainability Goals to Innovate? Empirical Evidence from Established UK Micro‐businesses

    This paper examines the importance of sustainability within firms’ strategic goals and its links with innovation in the context of micro‐businesses. Micro‐businesses provide an appropriate context for investigating this relationship because, while they tend to prioritize social and environmental goals, they are also more likely to confront resource constraints that can restrict their capability to innovate. Building on goal‐setting theory and the resource‐based view (RBV) of the firm, we explore under what conditions established micro‐businesses that prioritize sustainability goals are more likely to innovate. Using novel survey data on 4649 established micro‐businesses in the UK, we examine the enabling role of digital technologies. Our results suggest that owner‐managers who prioritize sustainability goals are significantly more likely to generate new product and process innovations. Moreover, we find that this effect is stronger when micro‐businesses adopt digital technologies. Digital technologies enhance the capabilities of micro‐businesses, strengthening the connection between sustainability goals and product and process innovation.

  • Do Pre‐merger Loyalties Help or Hinder Post‐merger Retention? A Longitudinal Study

    Mergers potentially threaten employees’ organizational identities. For some, a merger could be a trigger to seek employment elsewhere, but the factors associated with increased withdrawal cognitions post‐merger necessitate further research. Using a longitudinal, pre‐ and post‐merger design, we investigated two competing predictions drawing on social identity theory: a vulnerability hypothesis (high identification with the pre‐merger organization will be associated with increased withdrawal cognitions over time) versus a buffer hypothesis (high pre‐merger identification will be associated with decreased withdrawal cognitions over time). Employees from two public sector organizations were surveyed two months before and 22 months after a merger (N = 869). Consistent with the buffer hypothesis, higher pre‐merger identification was associated with lower pre‐to‐post‐merger withdrawal cognitions. We found that this relationship was moderated by both pre‐merger professional and workgroup identification, highlighting the importance of considering multifoci identification patterns in a merger context. Findings indicate that work‐related identification plays a key buffering role through organizational‐level change, with pre‐merger identification potentially helping retain staff through the merger storm. Thus, our study contributes to social identity theory by showing that an abundance of pre‐merger identification forms should help employees navigate the challenges faced during the change experienced with an organizational merger.

  • Stock Price Crash Risk and the Market for Corporate Control

    Recent studies suggest that greater exposure to the market for corporate control matters for managers and shareholders since it affects firms’ ex‐post risk of experiencing a stock price crash. The findings though question the direction of the effect. In contrast, in this study, we are the first to examine the effects of firms’ ex‐ante risk of experiencing a stock price crash, a likely antecedent of which is managers’ concealment of news on aspects of the market for corporate control. We find that higher crash risk leads to greater takeover target likelihood. This relationship, which is robust to duly circumventing reverse causality, depends to a significant extent on inferior managerial quality and greater managerial discretion around financial accruals, affording richer insight into the notion that correction of managerial behaviour is a stimulus for the market for corporate control, but one that depends on the likely extent of managers’ concealment of news. We also concurrently find that actual takeover targets with higher crash risk generate a lower bid premium and receive more payment with stock. Overall, our findings strongly suggest that decision‐making in the market for corporate control is at least partially explained by incentives linked to opportunistic prices and takeovers of lemons.

  • Autonomy, Power and the Special Case of Scarcity: Consumer Adoption of Highly Autonomous Artificial Intelligence

    Unlike previous generations of artificial intelligence (AI), AI assistants today can autonomously perform actions without human input or intervention. Several studies have proposed but not tested the notion that increased levels of AI autonomy may ultimately conflict with consumers’ fundamental need for autonomy themselves. Across five experiments (N = 1981), including representative samples and pre‐registered hypotheses, we investigate consumer responses to high (vs. low) AI autonomy in the context of online shopping. The results show a pronounced negative effect of high AI autonomy on consumers’ adoption intentions – an effect mediated by consumers’ relative state of powerlessness in the presence of high AI autonomy. However, when consumers face situations characterized by scarcity, such as when preferred options are being sold out rapidly (e.g. Black Friday), the aversive aspects of high (vs. low) AI autonomy are attenuated. Together, these findings offer novel insights regarding whether, when and why consumers are willing to adopt high (vs. low)‐autonomy AI assistants in online shopping settings.

  • Blockchain‐Based Governance: Implications for Organizational Boundaries and Structures

    Blockchain has emerged as a key Industry 4.0 technology, enabling novel forms of governance and coordination mechanism among organizations and markets. However, extant literature has largely focused on the technical aspects of blockchain, with limited attention to the behavioural and institutional aspects. In this paper, we argue that blockchain‐based smart contracts and decentralized autonomous organizations represent the potential for a radical departure from traditional forms of contractual governance and hierarchy, carrying profound implications for the design and governance of economic transaction and organizational structures. We elucidate how blockchain technologies, characterized by transparency, immutability, programmability and decentralization, reduce transaction costs and establish an industrialized and trustless transactional governance system. Finally, we present an agenda for future research, highlighting the need for new theoretical frameworks and empirical evidence to understand the impact of blockchain on organizational design and forms.

  • From Negative Emotions to Personal Growth: Failure and Re‐entry into Entrepreneurship

    This study explores how entrepreneurs’ extent of experience of business failure affects the level of negative emotional response (NER) they experience, moderating the level of personal growth that occurs after business failure. Contrary to common assumption, the study finds no significant relationship between the extent of failure experience and the level of NER. The results show that many entrepreneurs demonstrate personal growth following business failure, however, the extent of failure experience and the level of NER. This interaction moderates the level of personal growth for the entrepreneur and suggests that high levels of failure experience interfere with the level of personal growth obtained. The study contributes to theory by providing insights into the processes and consequences of entrepreneurial failure. In particular, the study brings together key threads of debate on personal growth and failure to develop and test conceptual arguments, and further explores the way entrepreneurship scholars think about emotion, business failure and its impact on the individual and society.

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