Under Pressure: Culture and Structure As Antecedents of Organizational Misconduct

Abstract : Does a toxic organizational culture focused on performance lead to misconduct? To address this question, we build on Merton's strain theory and theorize the relationship between organizational culture, structure and misconduct. We first theorize that organizations with cultures characterized by strong performance pressure are more likely to engage in misconduct. Then we consider how organizational structure moderates this relationship, which we hypothesize is weaker in more formalized organizations and stronger in more decentralized organizations. To test these hypotheses, we analyzed the regulatory and law violations of 880 publicly traded firms in the United States and measured organizational culture and structure through a natural language processing (NLP) analysis of the firms’ employee reviews on Glassdoor. The empirical results lend support to our hypotheses. Organizations with high performance pressure are 68 percent more likely to be fined for misconduct than organizations with low performance pressure. The moderation effect of organizational structure is fully supported for decentralization, but only partially supported for formalization.

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Regional Trust and Multinational Firms

Abstract : Rapid international migration of the past decade has led to significant movement of people and firms between countries. As a result, people and business entities with different cultural values have to work together, often under the roof of one organization. Of all cultural components, trust is particularly important for multinational ventures since foreign parties often rely on informal agreements due to difficulty in implementation and enforcement of formal contracts. Trust normally determines the level of authority delegated to other individuals. In this paper, we examine how the asymmetry of generalized trust between home and host regions affects the performance of international firms. Specifically, we focus on the relationships between foreign owners and host country managers in multinational organizations and investigate what happens to firm performance when an owner and a manager come from regions with different levels of generalized trust and presumably have different trust to each other. We find that such trust asymmetry has a significant impact on organizational performance: firms with “under-trusted” managers do worse than other similar ventures. Providing a manager with a “credit” of trust, however, has no negative implications. We attribute the detrimental impact of “under-trust” to a lack of authority delegation, limited information sharing, excessive monitoring and micro-management, and reduced work motivation of managers.

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The Human Capital Puzzle and Ambitious Entrepreneurship: a Comparative Institutional Approach

Abstract : We propose a multilevel model in which pro-market institutions dampen the growth aspirations of entrepreneurs with formally transmitted human capital, while they augment the aspirations of entrepreneurs with human capital acquired in the marketplace. Further, we posit that this mechanism will be triggered when the entrepreneurs’ socio-cognitive trait of fear of failure is low, which could otherwise preclude a role of institutions. We test our predictions on a dataset of individual- and country-level characteristics obtained from the Global Entrepreneurship Monitor and World Development Indicators for the period 2005–2016. Results confirm our predictions and pave the way to institutional adaptive policymaking.

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Power and the Passion: Inherited Culture, Individualism and Worker Satisfaction with Power

Abstract : Job satisfaction is an important determinant of health outcomes like depression and morbidity, as well as employee turnover and engagement. Using unique employee-establishment data, we focus on a particular aspect of job satisfaction – an individual’s satisfaction with their workplace decision-making power. Consistent with our prediction, we find a casual relationship between an employee’s ethnic/culturally inherited preference for individualism, their authority and how satisfied they are with their power at the workplace. To account for potential endogeneity, we instrument for decision authority using equivalent workers in a different but similar country. Our estimates also account for establishment random effects, a worker’s earnings and other individual characteristics. A placebo test, using overall job satisfaction, provides reassurance we have identified a specific relationship between an individual’s inherited individualism, their decision authority and satisfaction with their power.

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