Management and Strategy - HKU Business School

14 September

An Experimental Examination of Incentive and Sorting Effects of Pay-for-Performance on Creative Performance

SPEAKER

Miss Ji Hyun Kim
Ph.D. Candidate in Management and Human Resources
Wisconsin School of Business
University of Wisconsin

ABSTRACT

There has been a longstanding debate about whether pay-for-performance (PFP) enhances or undermines creative performance. Traditional motivation and revised creativity theories suggest that PFP and intrinsic task interest can be combined additively to enhance creative performance, whereas self-determination theory (SDT), which incorporates the earlier cognitive evaluation theory (CET), posits an undermining effect of PFP. To resolve the two conflicting predictions and provide a more comprehensive understanding of the effects of PFP on creative performance, the current study incorporated both incentive and sorting mechanisms of PFP, varying levels of PFP intensity, and moderators of central theoretical importance. A novel laboratory experiment was developed with a focus on incorporating key elements of workplace settings. They are reflected in the designs of the creative work tasks (creating advertising slogans and writing magazine articles), task autonomy (low or high), PFP conditions (three levels based on common organization practices), and allowing mobility between PFP conditions to enable participants to sort themselves into their preferred PFP condition. Risk attitude was included as a key person variable, given its central importance in PFP. Results showed that high PFP intensity more strongly enhanced creative performance through both incentive and sorting mechanisms. In addition, the role of creative self-efficacy in sorting behaviors was exploratively investigated. Finally, the implications of the results and future research directions were discussed.

14 September

Outsourcing Scope and Cooperation: Evidence from Airlines

SPEAKER

Dr. Giorgio Zanarone
Visiting Associate Professor
Olin Business School
Washington University in St. Louis

ABSTRACT

This paper provides evidence that broad outsourcing scope, whereby a buyer assigns a large share of its outsourced activities to a single supplier, increases both parties’ willingness to cooperate with each other. We also provide evidence that the effect of such broad scope on mutual cooperation is greater when externalities between suppliers, which are internalized in broad scope relationships, are more important. We document these effects in the context of outsourcing agreements between major and regional airlines in the US, where we measure cooperation as landing time slot exchanges during inclement weather. Because outsourcing scope – the share of a major’s routes that are assigned to a regional – varies across airports within a given outsourcing relationship, we are able to include relationship fixed effects in our regressions. This rare feature of our data allows us to separate the externality internalization mechanism from alternative mechanisms that operate at the interorganizational relationship level, and hence do not vary within a relationship, including dependence balancing, self-enforcing agreements, and interorganizational trust. To the best of our knowledge, this is the first empirical study showing that broad outsourcing scope governs bilateral interfirm cooperation, and isolating a precise mechanism through which it does so.

01 September

Advance ‘Em To Attract ‘Em: An Argument Against Internal Talent Hoarding

SPEAKER

Dr. JR Keller
Assistant Professor of Human Resource Studies
School of Industrial & Labor Relations
Cornell University

ABSTRACT

Recent research demonstrates that reallocating workers to new internal jobs creates value when it occurs through a free-flowing internal talent market in which employees are encouraged to actively pursue new internal opportunities. Yet individual managers often introduce friction into internal talent markets by dissuading or otherwise preventing their subordinates from pursuing other jobs within the firm, a practice known as talent hoarding. While noting that there are clear reasons why managers might engage in talent hoarding, we argue and show that managers who secure promotions for their subordinates actually attract more, better, and more functionally diverse internal candidates for their open jobs. In demonstrating how facilitating internal mobility actually benefits individual managers, we provide a powerful counterargument to the rationale underlying talent hoarding.

25 August

Too Much Sunshine? Legitimacy And Firm-User Collaboration In The Shadow Of State Regulation

SPEAKER

Ms. Jiang Bian
Ph.D. Candidate in Management Science & Engineering
Stanford University

ABSTRACT

Young firms strive to establish relationships with the users of their products and services. These relationships facilitate direct resource access and signal legitimacy to external stakeholders. Yet, young firms’ relationships with their users are often multiplex and involve overlapping ties across different domains, triggering different types of legitimacy evaluations. We examine how incongruent legitimacy signals derived from multiplex firm-user relationships affect firms’ decisions to retain or dissolve ties in a specific domain. We exploit a quasi-natural experiment in the medical device industry provided by the staggered rollout of state-level sunshine laws, which offers exogenous variation in legitimacy concerns associated with firm-physician relationships. Using a difference-in-differences analysis of 539 device ventures and their physician partners over a 12-year study period, we show that illegitimacy associated with firm-physician ties in the sales and marketing domain propagates to the research and development (R&D) domain. This crossdomain propagation of legitimacy concerns leads to reduced R&D ties of device ventures with physicians despite the potential benefits of those ties. Our findings contribute to research on legitimacy multiplicity, network dynamics and firm-user collaborative innovation. The findings also contain policy implications.

25 August

Weapons of mass attention direction: Durable dominance in the Korean popular music industry

SPEAKER

Dr. Johan Chu
Visiting Assistant Professor of Management and Organizations
Kellogg School of Management
Northwestern University

ABSTRACT

Technological advances now allow savvy actors to direct mass attention at scales previously unthinkable, enabling new, potent—but ill-understood—methods for instigating social change and capturing profit. This study investigates durable sources of power and competitive advantage in a setting where technologies for directing mass attention are consequential and highly evolved—the fast-moving, ultra-competitive Korean popular music industry. Drawing on extensive quantitative, archival, and interview data, we examine how a few dominant production companies repeatedly generate widespread attention and consumption for their offerings, focusing on three puzzles: How dominants tame the unpredictability of social influence-driven successes, why dominants’ advantage persists when competitors imitate their techniques, and why these techniques remain effective after consumers learn their attention is being manipulated. We find dominants trigger attention cascades, often by mobilizing fans to rush offerings to the top of rankings charts. Consumer knowledge of such ranking manipulation tactics benefits dominants. Knowledgeable consumers react positively to dominants’ offerings propelled up the charts but punish non-dominants, attributing unexplained non-dominant success to manipulation. Dominant advantage strengthens with increased competition and wider awareness of technologies for directing mass attention. These findings suggest sobering implications of more powerful, democratic, and open social ranking, rating, and recommendation platforms for society.

25 August

Managing Stigma Spillover

SPEAKER

Mr. Milo Wang
PhD Candidate in Strategy, Entrepreneurship & Management
Alberta School of Business
University of Alberta

ABSTRACT

Firms can be compromised by a scandal, or an “event” stigma spillover—adverse consequences arising simply from being in the same industry subcategory as other firms that are directly implicated in a socially vilified scandal. Our mixed-methods study of the Chinese infant formula industry after the 2008 melamine scandal contributes to stigma management theory in three ways: it offers an empirical account of strategic responses to stigma spillover that arises from a scandal in a previously respected industry (as opposed to strategies used in core stigmatized industries); second, it examines how firm prominence/visibility and media scrutiny impact firms’ strategic choices; and third, it assesses the performance implications of the strategies.

25 August

Which Entrepreneurs Benefit Most from Having a Partner? Examining the Joint Effects of Intrinsic Motivation and Partnership on Startup Success

SPEAKER

Dr. Jihae Shin
Assistant Professor of Management and Human Resources
Wisconsin School of Business
University of Wisconsin-Madison

ABSTRACT

Bringing on a partner is one of the earliest and most salient decisions an entrepreneur makes when starting his or her venture. We examine how an entrepreneur’s motivation for starting a business is an important consideration vis-à-vis partnership decisions—and how founder motivation and partnership jointly affect the likelihood of achieving startup initial profitability. Using the PSED II dataset, a representative sample of 1214 nascent entrepreneurs in the United States, we find that highly intrinsically motivated entrepreneurs—those who are motivated by interest in the business itself—are less likely to, and take longer to, achieve initial profitability when they do not have a partner, but that these negative associations are absent when they have a partner. Highly extrinsically motivated entrepreneurs—those motivated by money or legacy, on the other hand—are more likely to achieve initial profitability and to do so more quickly, regardless of whether they take on a partner. We end with a discussion of entrepreneurial motivation and the hidden costs for those entrepreneurs motivated by the passion and interest in the startup idea, and the dynamics behind entrepreneurial partnerships in attending to startup success and outcomes.

25 August

Compensatory Conspicuous Communication: Low Status Increases Jargon Use

SPEAKER

Mr. Zachariah Brown
PhD Candidate in Organizational Behavior
Columbia Business School

ABSTRACT

Jargon is commonly used to efficiently communicate and signal group membership. We propose that jargon use also serves a status compensation function. We first define jargon and distinguish it from slang and technical language. Nine studies, including experiments and archival data analyses, test whether low status increases jargon use. Analyses of 64,000 dissertations found that titles produced by authors from lower-status schools included more jargon than titles from higher-status school authors. Experimental manipulations established that low status causally increases jargon use, even in live conversations. Statistical mediation and experimental-causal-chain analyses demonstrated that the low status à jargon effect is driven by increased concern with audience evaluations over conversational clarity. Additional archival and experimental evidence found that acronyms and legalese serve a similar status compensation function as other forms of jargon. These findings establish a new driver of jargon use and demonstrate that communication, like consumption, can be both compensatory and conspicuous.

25 August

Who resists algorithmic advice? Cognitive style precludes algorithmic aversion

SPEAKER

Ms. Heather Yang
PhD Candidate in Behavioral & Policy Sciences (Micro/OB)
Sloan School of Management
Massachusetts Institute of Technology

ABSTRACT

As technology and artificially-intelligent (AI) algorithms become increasingly prevalent in all aspects of life, individuals have more opportunity to rely on these sources of advice when making consequential decisions. Recent research has documented both algorithmic aversion and appreciation, but little is known about who prefers algorithmic over human advice. In this paper, we present the first evidence that peoples’ cognitive style corresponds to the kind of advice they prefer to seek out. We present results from 4 studies (combined N = 2,450) showing that cognitive style consistently predicts the degree to which users seek input on their decisions from AI versus human advisors. Those scoring higher on the Cognitive Reflection Test are more likely to embrace input from artificially-intelligent algorithms into their decisions making, demonstrating algorithmic appreciation. We find that this effect is partially mediated by users’ perceptions of the expected accuracy of the advisor: people who are more cognitively reflective expect the algorithmic advisor to be more accurate than the human advisor.

25 August

Vertical Co-opetition: Incentives and Impact

SPEAKER

Mr. Young Hou
Ph.D. Candidate in Business Administration, Strategy
Harvard Business School

ABSTRACT

In this paper, I examine how retail firms’ intangible resources in brand equity affect their incentives to compete and cooperate in a vertical setting. I exploit a natural experiment in the ready-to-eat breakfast cereal industry, in which the largest private-label manufacturer (Ralston) merged with one of the leading branded manufacturers (Post). Post-Ralston subsequently both competed and cooperated with retailers. Through this lens, I assess changes to competition and performance outcomes as a result of vertical co-opetition. Leveraging 4.5 billion observations, I show that competition between retailers and Post-Ralston decreased, allowing Post-Ralston to capture market share. More broadly, I find that retailers with significant private-label resources across multiple categories are less inclined to fully cooperate with individual manufacturers, such as Post-Ralston, as there exist high opportunity costs to do so. This paper contributes to the competitive and corporate strategy literatures by unpacking the tradeoffs that retail firms face in choosing between the potential gains of co-opetition in a focal product category and the potential loss in decreasing the value of their umbrella brand resources.