While being innovative can lead to a firm growing quickly, the opposite may also be true. Growing quickly may contribute to a firm's ability to improve its processes. Employees are often a source of process improving ideas. Employees' primary incentive to go “outside the job description” to improve those processes is often promotion. The availability of promotions, however, is linked to the firm's growth rate. Firms that are growing quickly can credibly promise to reward their most innovative employees with promotions. Established and slowly growing firms have fewer opportunities for growth, which gives employees less incentive to go “above and beyond.” This can mean that rapid growth can reinforce a firm's competitive advantage .
Recently, many universities have developed programs to promote entrepreneurship. However, relatively little is known about the impacts of such university initiatives. In this article, we examine the two major initiatives that were established in the mid-1990s—the Stanford Center for Entrepreneurial Studies at the Business School and the Stanford Technology Ventures Program at the Engineering School. We find that the Business School program had a negative to zero impact on entrepreneurship rates and participation in the Engineering School program had no impact on entrepreneurship rates. However, the Business School initiative decreased startup failure and increased firm revenue. University entrepreneurship programs may not increase entrepreneurship rates, but help students better identify their potential as entrepreneurs and improve the startup performance.
Multinational firms face challenges in host countries where corruption is common, due to concerns that they will need to engage in corrupt acts in order to survive. Some respond by simply not operating in these countries, while others fall into the trap of engaging in illicit activities. We consider an alternative perspective: that firms may use deeper positive engagement with the host country to reduce pressures to engage in corruption, by building their popular acceptance and strengthening their bargaining power. Although we find that this “engagement” approach was first used by developing country firms, developed country firms have also begun using this strategy. The logic underlying this approach can help managers succeed abroad while reducing the need to get their hands dirty in the process.
Growing startups face the question of who to hire and how much to compensate the new hires. Simultaneously, prospective new hires ask which startup to join and how much their salary will be. We explore these questions using a novel method that tackles the mutual selection process. In the context of five technological manufacturing industries, we find that having industry experience within founding teams may not be necessary to attract new hires with high quality if the startup can signal its own quality through other means such as having a larger founding team. Our results indicate that startups prefer employees with industry experience for which startups offer a wage premium. Thus, employees seeking startup employment benefit from gaining industry experience prior to joining a startup.
Women are less likely to be entrepreneurs than men. We investigate whether working in a startup founded by a woman instead of a man influences individuals' decision to become an entrepreneur later. We find this to be the case for women. This result is best explained by female founders acting as role models for their female employees in male‐dominated domains. Female founders able to break gender stereotypes seem to have an influence on the career choices of their female employees, especially among those who have lacked contact with entrepreneurs. Moreover, this influence is stronger if the female founder and employee have similar backgrounds. These findings confirm the importance of social interactions at work and suggest new ways to inspire more women to launch startups.
When managers use their (legitimate) power to take decisions on behalf of their staff, they risk setting back employees and making them detach from the firm. This danger is particularly salient whenever highly motivated teams of staff autonomously work on corporate problems and are used to governing themselves. Examples range from skunkwork initiatives within traditional firms to entire team‐based organizations, such as Valve or Zappos. When and how managers can add value by resolving conflicts within and across these teams once their self‐organization fails is what we study in this article. Inspired by data from Wikipedia, we suggest that managers should not intervene prematurely, benefit from visible competence, and are respected most for their actions by specialized peers who recently joined the organization.
Managers often try to stimulate innovation by encouraging serendipitous interactions between employees, for example by using office space redesigns, conferences and similar events. Are such interventions effective? This article proposes that an effective encounter depends on the degree of common knowledge shared by the individuals. We find that scientists who attend the same conference are more likely to learn from each other and collaborate effectively when they have some common interests, but may view each other competitively when they work in the same field. Hence, when designing opportunities for face-to-face interactions, managers should consider knowledge similarity as a criteria for fostering more productive exchanges.
We articulate how CEOs posses-sing certain psychological, behavioral, and social charac-teristics may unknowingly precipitate competitive attackson their firms. Our explanation integrates insights fromvictimology which explain how individuals are subject tomore attacks if they possess characteristics others perceiveas more submissive or more provocative. While priorresearch articulates that CEOs' characteristics affect deci-sions such as attacking rivals, integrating theories of vic-timization into this line of inquiry paints a more socializedview of why firms may be subject to competitive attacksas well. The logic and evidence we provide advances the-oretical explanations of firms' competitive behaviors andexecutives' roles therein. At the same time, providingknowledge about how CEO characteristics precipitate competitive actions toward their firms can aid in preven-tion and intervention strategies.
Awards are widely used in the corporate sector. They fundamentally differ from monetary incentives, which risk crowding out employees' intrinsic motivation. Among the variety of awards, two general types can be distinguished: confirmatory awards based on explicit, pre‐determined performance criteria, and discretionary awards, which rely on broad performance evaluations and may be used ex post to honor outstanding performance. Appropriately designed and adjusted to the specific firm's characteristics, awards enhance employees' motivation and corporate performance. They express recognition and support their recipients' perceived competence and social status. Awards help to retain valuable employees and to establish role models. However, awards may also backfire, for instance, when they provoke envy among coworkers. We propose when awards risk destroying value and when they are particularly useful .
We study how the optimal configuration of the overall pay system differs between firms that pursue growth‐oriented and efficiency‐oriented strategies. Our results show that growth‐oriented firms (prospectors) benefit from pay structures with relatively large pay differentials horizontally between employees based on ability, effort, and results. Efficiency‐oriented firms (defenders), on the other hand, benefit from pay structures with relatively larger differences in pay across organizational levels vertically. Our findings suggest that while defenders should pay special attention to average pay levels to avoid over compensating their employees relative to competitors, prospectors should pay attention to the CEO‐employee pay differentials to avoid overcompensating executives relative to employees. Overall, our findings provide further evidence on the importance of matching the pay system design to a firm's strategy.