Abstract Research Summary Research suggests firms can reduce stakeholder contention (e.g., lawsuits, protests) by collaborating with threatening stakeholders. We propose that by tapping into stakeholder networks and identities, collaborations also produce ripple effects beyond the firm's partner to attenuate contention from a broader set of stakeholders. Using variation in firms' and stakeholders' willingness to collaborate exogenous to contention to account for selection, our examination of contentious and collaborative interactions between 136 environmental movement organizations and 600 US firms corroborates our arguments. Firms face less contention when they collaborate with a better‐connected stakeholder motivated to share affirming information about the firm, or with a more contentious and authentic stakeholder. Our findings generalize to stakeholder criticism beyond movement organizations, suggesting collaborations are powerful tools for fashioning less contentious environments. Managerial Summary Companies can reduce conflict from hostile stakeholders like social activists by collaborating with their friends. We find social movement organizations mount fewer protests, boycotts, lawsuits, and other conflict against a company that collaborates with an organization that is either well connected in the movement or known for mobilizing movement's grassroots. This suggests that cross‐sector collaborations quell conflict through passing affirming information about a company through interorganizational networks or through the broadcast of an affirming signal to the broader stakeholder environment. We find that criticism from a wide range of stakeholders (e.g., media) also abates, suggesting that collaborations are powerful tools for fashioning less contentious environments.

Abstract We integrate behavioral agency research and the five‐factor model of personality to re‐visit investment analysts' efficacy as a mechanism for reducing agency costs. We highlight the role of personality in shaping how CEOs respond to analyst recommendations, leading to boundary conditions for the efficacy of analysts as external monitors. We theorize that the extent to which a CEO perceives a threat from more positive analyst recommendations is contingent upon their personality, which shapes their subjective interpretation of the recommendation and their use of income‐increasing earnings management in response. Our findings suggest that personality is critical to understanding how CEOs respond to external monitors and the agency costs associated with the positive analyst recommendations.

Abstract Research Summary How should firms respond to technological discontinuities in order to achieve greater performance? In contrast to most studies that advocate a timely transition from the old to the new technology, this paper posits that in markets where a discontinuous technology exposes customers' latent preference heterogeneity for certain old technology attributes, firms may ultimately experience a performance surge by adhering to the old technology during technological change. Explicitly, I theorize a U‐shaped relationship within such a market between competitors' increasing adoption of the new technology and the performance of firms that stick with the old technology. This prediction is thoroughly examined using comprehensive data from the traditional Chinese medicine industry in China during the 1990s and receives robust empirical support. Managerial Summary In some markets, the rise of a discontinuous technology, besides posing a substitute threat to the old technology, further exposes niche segments where customers continue to favor the old technology. This paper predicts that within such a market, as competitors increasingly adopt the new technology for varied motives, firms sticking with the old technology may see their performance declining before rebounding and potentially reaching new heights. Analyses using archival data from the traditional Chinese medicine industry in China during the 1990s provide robust support for this prediction. The arguments and findings of this paper offer an “existence proof” that when confronted with a technological discontinuity, adhering to the old technology may also represent an effective strategy that ultimately improves firm performance.

Abstract Research Summary In social networks, isolated subgroups often aggregate into a massively connected subgroup, or a giant cluster, when bridges are built across subgroups. To understand the roles of bridges in integrating subgroups, we develop models focusing on the percentage of bridges among all ties. When it is below 1%, diffusion does not affect many individuals because the system is merely a collection of fragmented subgroups. Near 1%, however, we find that a slight increase in the percentage of bridges leads to sudden widespread diffusion across many subgroups. This dramatic change stems from a threshold‐like structural characteristic of the network whereby previously fragmented subgroups come together abruptly. Our findings suggest that this integrating role of bridges is an important piece missing from the literature on small‐world networks. Managerial Summary Our findings suggest that the formation of a giant cluster could be a structural precondition for large‐scale diffusion. Detection of such clusters may allow prognostication of the possibility of large‐scale diffusion. With the rise of social media and the availability of large amounts of social network data, the ability to detect giant clusters seems to be more attainable than in the past; such an ability would be a source of competitive advantage. We describe methods of detecting giant clusters and analyzing their structural properties using readily available social network data. With these methods, entrepreneurs and established firms can stimulate user adoption by targeting massive clusters of aggregated subgroups and spreading viral messages about their new products or services throughout the clusters.

Abstract Research Summary Multi‐business firms redeploy human capital to strengthen individual business units. However, we know little about the antecedents of such redeployments and their effects on unit outcomes. Contributing to the resource redeployment and strategic human capital literatures, we test the relationships between parent–unit industry relatedness, the direction of redeployment (parent‐to‐unit and unit‐to‐parent), the type of human capital, the likelihood of redeployment, and post‐redeployment unit closure. Using Norwegian population‐level microdata of spinouts, we find that parent–unit industry relatedness increases the likelihood of human capital redeployment and that this effect is stronger for generalists than for specialists. Further, we find that parent‐to‐unit and unit‐to‐parent redeployment of generalists and specialists have distinct effects on unit closure, largely because of differences in post‐redeployment unit performance. Managerial Summary Firms with multiple business units often transfer employees between units to strengthen them. However, we do not know which employees are more likely to be sent and which employees, if any, affect the receiving unit's survival and performance. Analyzing over 9000 spinouts in Norway between 2004 and 2015, we find that employees are more likely to be sent when the parent and the unit are in related industries. We further show that employees with specialized professional knowledge are sent regardless of relatedness, while generalists are sent when industries are related. Regarding post‐transfer unit survival, we find that parent‐to‐unit and unit‐to‐parent redeployment of generalists and specialists have distinct effects on survival, largely because of differences in the impact on post‐transfer unit performance.

Abstract Research Summary Emerging‐market multinational enterprises (EMNEs) are known for their “light‐touch” integration after cross‐border acquisitions. That is, compared with their developed‐country counterparts, EMNEs are more likely to retain the top management team (TMT) of the target firms. In this paper, we argue that this difference in retention rate can be explained by country, cohort, and firm effects. While the literature mostly associates EMNEs with where they are from (country effect), EMNEs are also new to cross‐border acquisitions (firm effect) and among the first in their peers to venture abroad (cohort effect). Analysis on a sample of 1862 absorption‐type cross‐border acquisitions supports our hypotheses that while the country effect persists, the difference in retention rate narrows significantly as EMNEs and their peers gain more relevant cross‐border acquisition experience. Managerial Summary The retention of top management team in target firms is a critical aspect of post‐acquisition integration (PAI). In this study, we examine the reasons behind the curious observation that, compared with acquirers from developed countries, multinational enterprises from emerging markets (EMNEs) are more likely to keep the target firm TMT intact, even in deals where extensive integration is in line with the overall acquisition objectives. Our analyses show that the legitimacy constraints associated with EMNEs' less developed home countries indeed present initial challenges to their integration efforts. However, these differences narrow significantly as EMNEs and their peers accumulate more experience in similar cross‐border acquisitions. This study highlights the dynamic nature of PAI strategies and the large variance among firms beneath the “EMNE” label.

Abstract Research Summary How do new things in nascent markets become legitimate? Existing research points to a process where legitimacy is built by making associations with already legitimate ideas from other domains. In this study, however, we investigate the Internet boom of the 1990s, a nascent setting where something new—engagement metrics used to evaluate firms—gained legitimacy amongst investors, but not by being associated with already legitimate metrics. Using a question‐driven mixed‐methods approach, we reveal that these new metrics instead gained legitimacy through a novel process we term prospective legitimation , where a new basis of legitimacy was constructed by firms linking their otherwise unproven new metrics to future profitability. We discuss how these findings inform research on legitimacy, the development of nascent markets, and future‐oriented communications. Managerial Summary Firms in nascent markets often face the challenge of convincing investors to buy into something new. This is difficult because new ideas not only have few precedents, but they also have not been around long enough to have proven their value. Our research shows how firms can legitimate their new ideas prospectively by using future‐oriented communications that link their otherwise unproven new ideas to a desirable future outcome. Through an investigation of the Internet boom of the 1990s, we demonstrate that Internet firms gradually convinced investors to accept their new engagement metrics (e.g., traffic, visitors, users) before there was any concrete evidence that such metrics actually led to profitability. This study thus enhances our understanding of how new ideas gain traction in nascent markets.

Abstract Research Summary Corporate parents are important to subsidiary performance, but prior strategy research presents mixed results about the extent to which parents drive subsidiary performance differences. Drawing on the corporate strategy literature, we argue that corporate parents’ influence depends on the size of the corporate portfolio that determines subsidiaries’ access to finite corporate resources and the contextual conditions—industrial relatedness and institutional distance—that favor or constrain the applicability of said resources. We find support using a variance decomposition analysis and data on 12,336 subsidiaries of 854 multinational firms. Our study demonstrates that the corporate effect varies according to the structure of the corporate portfolio and the subsidiaries in it. We reconcile theoretical arguments and empirical findings regarding the relative importance of corporate parents to subsidiary performance. Managerial Summary A core objective of corporate managers is understanding those channels most salient to subsidiary performance. The implicit assumption is that the corporate parent matters, but how much so remains unclear, especially since corporate parents cannot contribute equally to all subsidiaries. We demonstrate that the corporate parents of small subsidiary portfolios play a significant role in explaining subsidiary performance differences vis‐à‐vis parents of larger portfolios. We also show how this relative importance increases when subsidiaries exhibit higher industrial relatedness to and institutional distance from the parent. Our findings offer insights into the role of corporate parents in multiunit firms that operate across multiple industries and geographic locations, as well as the need to consider the heterogeneity of corporate influence within and between subsidiary portfolios.