Governing top managers: Board control, social categorization, and their unintended influence on discretionary behaviors

Corporate Governance: An International Review

Volumn 19, Issue 4, 2011, Pages 295-310

  Knapp, Joshua R ^a   Dalziel, Thomas ^b   Lewis, Marianne W ^b  

^a UNIVERSITY OF LETHBRIDGE   (Canada)

^b UNIVERSITY OF CINCINNATI   (United States)

Author keywords

Agency theory; Corporate governance; Social categorization theory; Stewardship theory

Indexed keywords

EID: 79959870178     PISSN: 09648410     EISSN: 14678683     Source Type: Journal    
DOI: 10.1111/j.1467-8683.2011.00845.x     Document Type: Article

References (130)

1. Amason, A. C. & Sapienza, H. J. 1997. The effects of top management team size and interaction norms on cognitive and affective conflict. Journal of Management, 23: 495-516.
2. Ashforth, B. E. & Humphrey, R. H. 1995. Labeling processes in organizations: Constructing the individual. In B. M. Staw & R. I. Sutton (Eds.), Research in organizational behavior, vol. 17: 413-461. Greenwich, CT: JAI Press.
3. Ashforth, B. E. & Johnson, S. A. 2001. Which hat to wear? The relative salience of multiple identities in organizational contexts. In M. A. Hogg & D. J. Terry (Eds.), Social identity processes in organizational contexts: 31-48. Ann Arbor, MI: Taylor and Francis.
4. Banaji, M. R. & Hardin, C. D. 1996. Automatic stereotyping. Psychological Science, 7: 136-141.
5. Behfar, K., Peterson, R., Mannix, E. & Trochim, W. 2008. The critical role of conflict resolution in teams: A close look at the links between conflict type, conflict management strategies, and team outcomes. Journal of Applied Psychology, 93: 170-188.
6. Bennett, R. & Stamper, C. L. 2002. Corporate citizenship and deviancy: A study of discretionary work behavior. In C. S. Galbraith & M. Ryan (Eds.), Strategies and organizations in transition, vol. 3: 269-290. Amsterdam: Elsevier Science, Ltd.
7. Berle, A. & Means, G. 1932. The modern corporation and private property. New York: Macmillan.
8. Blau, P. M. 1964. Exchange and power in social life. New York: Wiley.
9. Boeker, W. 1992. Power and managerial dismissal: Scapegoating at the top. Administrative Science Quarterly, 37: 400-421.
10. Boyd, B. 1994. Board control and CEO compensation. Strategic Management Journal, 15: 335-344.
11. Brehm, S. S. & Brehm, J. W. 1981. Psychological reactance: A theory of freedom and control. New York: Academic Press.
12. Brewer, M. B. & Miller, N. 1988. Contact and cooperation: When do they work? In P. Katz & D. Taylor (Eds.), Eliminating racism: Means and controversies: 315-326. New York: Plenum Press.
13. Brown, R. 2000. Group processes: Dynamics within and between groups, 2nd edn. Malden, MA: Blackwell Publishers Ltd.
14. Bruce, A., Buck, T., & Main, B. G. M. 2005. Top executive remuneration: A view from Europe. Journal of Management Studies, 42: 1493-1506.
15. Carpenter, M. 2002. The implications of strategy and social context for the relationship between top management team heterogeneity and firm performance. Strategic Management Journal, 23: 275-284.
16. Carson, C. M., Mosley, D. C., & Boyar, S. L. 2004. Performance gains through diverse top management teams. Team Performance Management, 10: 121-126.
17. Chang, S. J. 2003. Ownership structure, expropriation, and performance of group-affiliated companies in Korea. Academy of Management Journal, 46: 238-254.
18. Chatman, J. A. & Flynn, F. J. 2001. The influence of demographic heterogeneity on the emergence and consequences of cooperative norms in work teams. Academy of Management Journal, 44: 956-974.
19. Chatman, J. A., Polzer, J. T., Barsade, S. G., & Neale, M. A. 1998. Being different yet feeling similar: The influence of demographic composition and organizational culture on work processes and outcomes. Administrative Science Quarterly, 43: 749-780.
20. Chen, M. & Bargh, J. A. 1997. Nonconscious behavioral confirmation processes: The self-fulfilling consequences of automatic stereotype activation. Journal of Experimental Social Psychology, 33: 541-560.
21. Claire, T. & Fiske, S. T. 1997. A systemic view of behavioral confirmation: Counterpoint to the individualist view. In C. Sedikides, J. Schopler & C. Insko (Eds.), Intergroup cognition and intergroup behavior: 205-231. Mahwah, NJ: Lawrence Erlbaum Associates.
22. Colquitt, J. A., Conlon, D. E., Wesson, M. J., Porter, O. L. H., & Ng, K. Y. 2001. Justice at the millennium: A meta-analytic review of 25 years of organizational justice research. Journal of Applied Psychology, 3: 425-445.
23. Combined Code 2008. The UK's combined code on corporate governance. London: The Financial Reporting Council.
24. Conyon, M. J. & Peck, S. I. 1998. Board control, remuneration committees, and top management compensation. Academy of Management Journal, 41: 146-157.
25. Crisp, R. J. & Hewstone, M. 2006. Multiple social categorization: Context, process, and social consequences. In R. J. Crisp & M. Hewstone (Eds.), Multiple social categorization: 3-22. New York: Psychology Press.
26. Dalton, D. R., Daily, C. M., Ellstrand, A., & Johnson, J. 1998. Meta-analytic review of board composition, leadership structure, and financial performance. Strategic Management Journal, 19: 269-290.
27. Dalton, D. R., Daily, C. M., Certo, S. T., & Roengpitya, R. 2003. Meta-analysis of financial performance and equity: Fusion or confusion? Academy of Management Journal, 46: 13-26.
28. Dalziel, T., White, R. E., & Arthurs, J. 2011. Principal costs in initial public offerings. Journal of Management Studies, 48 (in press).
29. Davis, G. F. & Thompson, T. A. 1994. A social movement perspective on corporate control. Administrative Science Quarterly, 39: 141-173.
30. Davis, J. H., Schoorman, F. D., & Donaldson, L. 1997. Toward a stewardship theory of management. Academy of Management Review, 22: 20-47.
31. Devine, P. G. 1989. Stereotypes and prejudice: Their automatic and controlled components. Journal of Experimental Social Psychology, 56: 5-18.
32. Donaldson, L. & Davis, J. H. 1991. Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of Management, 16: 49-64.
33. Dovidio, J. F., Gaertner, S. L., Isen, A. M., & Lowrance, R. 1995. Group representations and intergroup bias: Positive affect, similarity, and group size. Personality and Social Psychology Bulletin, 21: 856-865.
34. Dru, V. 2007. Authoritarianism, social dominance orientation, and prejudice: Effects of various self-categorization conditions. Journal of Experimental Social Psychology, 43: 877-883.
35. Dunlop, P. D. & Lee, K. 2004. Workplace deviance, organizational citizenship behavior, and business unit performance: The bad apples do spoil the whole barrel. Journal of Organizational Behavior, 25: 67-80.
36. Eisenhardt, K. M. 1989. Agency theory: An assessment and review. Academy of Management Review, 14: 57-74.
37. Eisenhardt, K. M., Kahwajy, J. L., & Bourgeois, L. J., III. 1997. Conflict and strategic choice: How top management teams disagree. California Management Review, 39: 42-62.
38. Fama, E. F. 1980. Agency problems and the theory of the firm. Journal of Political Economy, 88: 288-325.
39. Fama, E. F. & Jensen, M. C. 1983. Separation of ownership and control. Journal of Law Economics, 26: 301-323.
40. Finkelstein, S. & Mooney, A. C. 2003. Not the usual suspects: How to use board process to make boards better. Academy of Management Executive, 17: 101-113.
41. Gaertner, S. L. & Dovidio, J. F. 2000. Reducing intergroup bias: The common ingroup identity model. Philadelphia, PA: Psychology Press.
42. Gaertner, S. L., Mann, J., Murrell, A., & Dovidio, J. F. 1989. Reducing intergroup bias: The benefits of recategorization. Journal of Personality and Social Psychology, 57: 239-249.
43. Gaertner, S. L., Mann, J. A., Dovidio, J. F., Murrell, A. J., & Pomare, M. 1990. How does cooperation reduce intergroup bias? Journal of Personality and Social Psychology, 59: 692-704.
44. Gaertner, S. L., Dovidio, J. F., Anastasio, P. A., Bachman, B. A., & Rust, M. C. 1993. The common in-group identity model: Recategorization and the reduction of intergroup bias. In W. Stroebe & M. Hewstone (Eds.), European review of social psychology, 4: 1-26. Chichester: Wiley.
45. Gaertner, S. L., Dovidio, J. F., Banker, B., Houlette, M., Johnson, K. & McGlynn, E. 2000. Reducing intergroup conflict: From superordinate goals to decategorization, recategorization, and mutual differentiation. Group Dynamics, 4: 98-114.
46. Giacalone, R. & Greenberg, J. 1997. Antisocial behavior in organizations. Thousand Oaks, CA: Sage.
47. Graham, J. 1986. Principled organizational dissent: A theoretical essay. In B. Staw & L. L. Cummings (Eds.), Research in organizational behavior, 8: 1-52. Greenwhich, CT: JAI Press.
48. Grice, T. A., Gallois, C., Jones, E., Paulsen, N., & Callan, V. J. 2006. "We do it, but they don't:" Multiple categorizations and work team communication. Journal of Applied Communication Research, 34: 331-348.
49. Gulati, R. & Westphal, J. D. 1999. Cooperative or controlling? The effects of CEO-board relations and the content of interlocks on the formation of joint ventures. Administrative Science Quarterly, 44: 473-506.
50. Hamilton, D. L. & Sherman, S. J. 1996. Perceiving persons and groups. Psychological Review, 103: 336-355.
51. Hewstone, M. & Greenland, K. 2000. Intergroup conflict. International Journal of Psychology, 35: 136-144.
52. Hillman, A. J. & Dalziel, T. 2003. Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28: 383-396.
53. Hodgkinson, G. P., Bown, N. J., Maule, A. J., Glaister, K. W., & Pearman, A. D. 1999. Breaking the france: An analysis of strategic cognition and decision making under uncertainty. Strategic Management Journal, 20: 977-985.
54. Hofstede, G. 1980. Culture's consequences: International differences in work related values. Beverly Hills, CA: Sage Publications.
55. Hogg, M. A. 2001. Social categorization, depersonalization, and group behavior. In M. A. Hogg & R. S. Tindale (Eds.), Blackwell handbook of social psychology: Group processes: 57-85. Malden, MA: Blackwell Publishers Ltd.
56. Hogg, M. A. & Hornsey, M. J. 2006. Self-concept threat and multiple categorization within groups. In R. J. Crisp & M. Hewstone (Eds.), Multiple social categorization: 112-135. New York: Psychology Press.
57. Hogg, M. A. & Terry, D. J. 2000. Social identity and self-categorization processes in organizational contexts. Academy of Management Review, 25: 121-140.
58. Hoskisson, R. E., Hitt, M. A., Johnson, R. A., & Grossman, W. 2002. Conflicting voices: The effects of institutional ownership heterogeneity and internal governance on corporate innovation strategies. Academy of Management Journal, 45: 697-716.
59. Hoskisson, R. E., Castleton, M. W., & Withers, M. C. 2009. Complementarity in monitoring and bonding: More intense monitoring leads to higher executive compensation. Academy of Management Perspectives, 23: 57-74.
60. Houghton, S. M., Simon, M., Aquino, K., & Goldberg, C. B. 2000. No safety in numbers: Persistance of biases and their effects on team risk perception and team decision making. Group & Organization Management, 25: 325-353.
61. Howell, J. & Avolio, B. 1993. Transformational leadership, transactional leadership, locus of control, and support for innovation: Key predictors of consolidated-business-unit performance. Journal of Applied Psychology, 78: 891-902.
62. Huse, M. 2005. Accountability and creating accountability: A framework for exploring behavioral perspectives of corporate governance. British Journal of Management, 16: 65-79.
63. Ibarra, M. 2009. Vampire bankers (or the nuts and nolts of the scam). The Humanist, 69: 29-34.
64. Jensen, M. C. & Meckling, W. H. 1976. Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3: 305-369.
65. Johnson, R. A., Hoskisson, R. E., & Hitt, M. A. 1993. Board of director involvement in restructuring: The effects of board versus managerial controls and characteristics. Strategic Management Journal, 14: 33-50.
66. Judge, W. Q. & Zeithaml, C. P. 1992. Institutional and strategic choice perspectives on board involvement in the strategic decision process. Academy of Management Journal, 35: 766-794.
67. Kahneman, D. & Tversky, A. 1984. Choices, values and frames. American Psychologist, 39: 341-350.
68. Karakowsky, L. & Miller, D. 2002. Teams that listen and teams that do not: Exploring the role of gender in group responsiveness to negative feedback. Team Performance Management, 8: 146-156.
69. Katz, D. & Kahn, R. 1966. The social psychology of organizations. New York: Wiley.
70. Koys, D. J. 2001. The effects of employee satisfaction, organizational citizenship behavior, and turnover on organizational effectiveness: A unit-level, longitudinal study. Personnel Psychology, 54: 101-114.
71. Kramer, R. M. 1991. Intergroup relations and organizational dilemmas: The role of categorization processes. In B. M. Staw & R. I. Sutton (Eds.), Research in organizational behavior, vol. 13: 191-228. Greenwhich, CT: JAI Press.
72. Landrine, H., Klonoff, E. A., Alcaraz, R., Scott, J., & Wilkins, P. 1995. Multiple variables in discrimination. In B. Lott & D. Maluso (Eds.), The social psychology of interpersonal discrimination: 183-224. New York: Guilford Press.
73. Lane, P. J., Cannella, A. A. Jr, & Lubatkin, M. H. 1998. Agency problems as antecedents to unrelated mergers and diversification: Amihud and Lev reconsidered. Strategic Management Journal, 19: 555-578.
74. Lawrence, B. 1997. The black box of organizational demography. Organization Science, 8: 1-22.
75. Leiponen, A. & Helfat, C. E. 2010. Innovation objectives, knowledge sources, and the benefits of breadth. Strategic Management Journal, 31: 224-236.
76. Lowe, K., Kroeck, K., & Sivasubramaniam, N. 1996. Effectiveness correlates of transformational and transactional leadership: A meta-analytic review of the MLQ literature. Leadership Quarterly, 7: 385-425.
77. Lubatkin, M. H. 2005. A theory of the firm only a microeconomist could love. Journal of Management Inquiry, 14: 213-216.
78. Lubatkin, M. H., Lane, P. J., Collin, S., & Very, P. 2007. An embeddedness framing of governance and opportunism: Towards a cross-nationally accommodating theory of agency. Journal of Organizational Behavior, 28: 43-58.
79. MacKenzie, S. B., Podsakoff, P. M., & Fetter, R. 1993. The impact of organizational citizenship behavior on evaluations of salesperson performance. Journal of Marketing, 57: 70-80.
80. Mahalingam, A. 2006. Unintended consequences of vigilance activities in two project settings in India. Asian Journal of Political Science, 14: 163-188.
81. North, M. J. & Macal, C. M. 2007. Discovering strategic solutions with agent-based modeling and simulation. Oxford: Oxford University Press.
82. Nussbaum, K. & duRivage, V. 1986. Computer monitoring: Mismanagement by remote control. Business and Society Review, 56: 16-20.
83. Oakes, P. 1987. The salience of social categories. In J. Turner (Ed.), Rediscovering the social group: 117-141. New York: Basil Balckwell Ltd.
84. Oakes, P. 2001. The root of all evil in intergroup relations? Unearthing the categorization process. In R. Brown & S. L. Gaertner (Eds.), Blackwell handbook of social psychology: intergroup processes: 3-21. Malden, MA: Blackwell Publishers Inc.
85. Organ, D. W., Podsakoff, P. M., & MacKenzie, S. B. 2006. Organizational citizenship behavior: Its nature, antecedents, and consequences. Thousand Oaks, CA: Sage.
86. Pelletier, L. G. & Vallerand, R. J. 1996. Supervisors' beliefs and subordinates' intrinsic motivation: A behavioral confirmation analysis. Journal of Personality and Social Psychology, 71: 331-340.
87. Peng, M. W. 2004. Outside directors and firm performance during institutional transitions. Strategic Management Journal, 25: 453-471.
88. Perdue, C. W., Dovidio, J. F., Gurtman, M. B., & Tyler, R. B. 1990. Us and them: Social categorization and the process of intergroup bias. Journal of Personality and Social Psychology, 59: 475-486.
89. Petersen, T. 1993. The economics of organization: The principal-agent relationship. Acta Sociologica, 36: 277-293.
90. Pettigrew, A. & McNulty, T. 1995. Power and influence in and around the boardroom. Human Relations, 48: 845-873.
91. Podsakoff, P. M., Ahearne, M., & MacKenzie, S. B. 1997. Organizational citizenship behavior and the quantity and quality of work group performance. Journal of Applied Psychology, 82: 262-270.
92. Podsakoff, P. M., MacKenzie, S. B., Paine, J. B., & Bachrach, D. G. 2000. Organizational citizenship behaviors: A critical review of the theoretical and empirical literature and suggestions for future research. Journal of Management, 26: 513-563.
93. Polzer, J. T., Kramer, R. M., & Neale, M. A. 1997. Positive illusions about oneself and one's group: Antecedents and consequences. Small Group Research, 28: 243-266.
94. Pugliese, A., Bezemer, P., Zattoni, A., Huse, M., Van den Bosch, F. A. J., & Volberda, H. W. 2009. Boards of directors' contribution to strategy: A literature review and research agenda. Corporate Governance: An International Review, 17: 292-306.
95. Rediker, K. & Seth, A. 1995. Boards of directors and substitution effects of alternative governance mechanisms. Strategic Management Journal, 16: 85-99.
96. Rhoades, D. L., Rechner, P. L., & Sundaramurthy, C. 2000. Board composition and financial performance: A meta-analysis of the influence of outside directors. Journal of Management Issues, 12: 76-91.
97. Roberts, J., McNulty, T., & Stiles, P. 2005. Beyond agency conceptions of the work of the non-executive director: Creating accountability in the boardroom. British Journal of Management, 16: 5-26.
98. Robinson, S. L. & Bennett, R. J. 1995. A typology of deviant workplace behaviors: A multi-dimensional scaling study. Academy of Management Journal, 38: 555-572.
99. Roethlisberger, F. J. & Dickson, W. J. 1939. Management and the worker. Cambridge, MA: Harvard University Press.
100. Rose, J. M. 2007. Corporate directors and social responsibility: Ethics versus shareholder value. Journal of Business Ethics, 73: 319-331.
101. Sanders, W. G. & Carpenter, M. A. 2003. Strategic satisficing? A behavioral-agency theory perspective on stock repurchase program announcements. Academy of Management Journal, 46: 160-178.
102. Sarbanes, P. & Oxley, M. 2002. Text of the Sarbanes Oxley Act. Washington: US Congress.
103. Shapiro, S. P. 2005. Agency theory. Annual Review of Sociology, 31: 263-284.
104. Sharma, A. 1997. Professional as agent: Knowledge asymmetry in agency exchange. Academy of Management Review, 22: 758-798.
105. Simons, T. L. & Peterson, R. S. 2000. Task conflict and relationship conflict in top management teams: The pivotal role in intragroup trust. Journal of Applied Psychology, 85: 102-111.
106. Spitzmüller, C. & Stanton, J. M. 2006. Examining employee compliance with organizational surveillance and monitoring. Journal of Occupational and Organizational Psychology, 79: 245-272.
107. Stanton, J. M. 2000. Reactions to employee performance monitoring: Framework, review, and research directions. Human Performance, 13: 85-113.
108. Stevenson, W. B. & Radin, R. F. 2009. Social capital and social influence on the board of directors. Journal of Management Studies, 46: 16-44.
109. Stewart, S. M., Bing, M. N., Davison, H. K., Woehr, D. J., & McIntyre, M. D. 2009. In the eyes of the beholder: A non-self-report measure of workplace deviance. Journal of Applied Psychology, 94: 207-215.
110. Strunk, D. R. & Adler, A. D. 2009. Cognitive biases in three prediction tasks: A test of the cognitive model of depression. Behavior Research and Therapy, 47: 34-40.
111. Sundaramurthy, C. & Lewis, M. 2003. Control and collaboration: Paradoxes of governance. Academy of Management Review, 28: 397-415.
112. Tajfel, H. & Turner, J. C. 1986. The social identity theory of intergroup behavior. In S. Worchel & L. W. Austin (Eds.), Psychology of intergroup relations, 2nd edn: 7-24. Chicago: Nelson-Hall.
113. Taylor, M., Tracy, K., Renard, M., Harrison, J., & Caroll, S. 1995. Due process in performance appraisal: A quasi-experiment in procedural justice. Administrative Science Quarterly, 40: 495-523.
114. Tosi, H. L. & Gomez-Mejia, L. R. 1994. CEO compensation monitoring and firm performance. Academy of Management Journal, 37: 1002-1016.
115. Tosi, H. L., Werner, S., Katz, J. P. & Gomez-Mejia, L. R. 2000. How much does performance matter? A meta-analysis of CEO pay studies. Journal of Management, 26: 301-339.
116. Turner, J. C. 1978. Social categorization and social discrimination. In H. Tajfel (Ed.), Differentiation between social groups: Studies in the social psychology of intergroup relations: 101-133. New York: Academic Press.
117. Turner, J. C., Oakes, P. J., Haslam, S. A., & McGarty, C. 1994. Self and collective: Cognition and social context. Personality and Social Psychology Bulletin, 20: 454-463.
118. Tversky, A. & Kahneman, D. 1973. Availability: A heuristic for judging frequency and probability. Cognitive Psychology, 5: 207-232.
119. Van Dyne, L., Graham, J. W., & Dienesch, R. M. 1994. Organizational citizenship behavior: Construct redefinition, measurement, and validation. Academy of Management Journal, 37: 765-802.
120. Van Dyne, L., Cummings, L. L., & Mclean Parks, J. 1995. Extra-role behaviors: In pursuit of construct and definitional clarity. In B. M. Staw & R. I. Sutton (Eds.), Research in organizational behavior: 17: 215-285. Greenwich, CT: JAI Press.
121. Villalonga, B. & Amit, R. 2006. How do family ownership, control, and management affect firm value? Journal of Financial Economics, 80: 385-417.
122. Waldman, D. & Yammarino, F. 1999. CEO charismatic leadership: Levels-of-management and levels of analysis effects. Academy of Management Review, 24: 266-285.
123. Walsh, J. & Seward, J. 1990. On the efficiency of internal and external corporate control mechanisms. Academy of Management Review, 15: 421-458.
124. Westphal, J. D. 1998. Board games: How CEO's adapt to increases in structural board independence from management. Administrative Science Quarterly, 43: 511-537.
125. Westphal, J. D. 1999. Collaboration in the boardroom: Behavioral and performance consequences of CEO-board social ties. Academy of Management Journal, 42: 7-24.
126. Westphal, J. D. & Zajac, E. J. 1995. Who shall govern? CEO/board power, demographic similarity, and new director selection. Administrative Science Quarterly, 40: 60-83.
127. Wilder, D. A. 1986. Social categorization: Implications for creation and reduction of intergroup bias. In L. Berkowitz (Ed.), Advances in experimental social psychology. 19: 293-355. New York: Academic Press.
128. Wiseman, R. M. & Gomez-Mejia, L. R. 1998. A behavioral agency model of managerial risk taking. Academy of Management Review, 23: 133-153.
129. Zahra, S. A. 1996. Governance, ownership, and corporate entrepreneurship: The moderating impact of industry and technological opportunities. Academy of Management Journal, 39: 1713-1735.
130. Zahra, S. A. & Covin, J. 1995. Contextual influences on the corporate entrepreneurship - performance relationship: A longitudinal analysis. Journal of Business Venturing, 10: 43-58.