2015 CONFERENCE Sustainability, Ethics and Entrepreneurship (SEE) Academic Research Conference April 30- May 1, 2015 - Denver, Colorado Papers accepted for presentation on Friday, May 1 (listed in alphabetical order by primary author’s last name) Moral Communities as Antidotes to Moral Deafness and Blindness Nino Antadze, University of Waterloo; Oana Branzei, Richard Ivey School of Business, University of Western Ontario; Haiying Lin, University of Waterloo Management scholars have explored moral impairment of organizations (Bird, 1996; Shadnam & Lawrence, 2011; Palazzo et al., 2012). Yet, less is known about how organizations go about reclaiming and restoring their moral conduct. Drawing on the case of the deadly collapse of the Rana Plaza factory in Dhaha, we suggest that morality can be externally sourced. We explain how the emergence of concern-focused moral communities can help their individual members reverse the decline and even restore moral conduct, when their internal cultures have eroded their own moral hearing and seeing abilities. Do Organizations Light a Candle and Hide It Under a Bushel? The Strategic Publication of Certification Status Chad Carlos, Brigham Young University; Ben Lewis, Brigham Young University Scholars have long recognized the symbolic value of certifications in helping organizations to acquire legitimacy and other benefits. However, extant research has largely treated the attainment and publication of a certification as a single process. In so doing, previous literature provides few insights as to why organizations might attain a certification and at times elect not to publicize their certification status. Drawing upon impression management theory, we suggest that the attainment and publication of certification status are two distinct actions and that firms may engage in strategies to limit communications about a certification if their recent actions appear hypocritical in light of the claims associated with the certification. We test our hypotheses by examining variation in the publication of membership in the Dow Jones Sustainability Index. How Social Hybridity Can Be Sustained From the Ground Laura Claus, University of Cambridge While much research has focused on how complexity can be managed at the organizational level, we know less about how individuals experience and cope with conflicting institutional prescriptions. To examine how individuals balance multiple logics as an ongoing accomplishment, we conducted an indepth case study at a leading Benefit Corporation in the U.S. – a newly emerging hybrid form that incorporates a social welfare and commercial logic at its core. We find that not every organizational member experienced complexity to the same degree, and that individuals caught between objectives coped by means of anchoring. Anchoring served to mitigate the discomfort experienced from having to satisfy competing demands, safeguard against drift toward either alternative and sustain hybrid organizing from the ground. 1 2015 CONFERENCE – Accepted Papers Do I put solar panels on my roof if my neighbors can see them? Uniqueness and conformity as drivers of individual technology adoption Jörg Claussen, Copenhagen Business School; Anders Ørding Olsen, Copenhagen Business School Utility from technology adoption is not only derived from economic value but also influenced through social factors. We argue that visibility of technology adoption can be an important social factor that can increase adoption if individuals want to signal uniqueness or decrease adoption if they want to conform to their peers. We study in how far the potential visibility of solar panels from the street influences the adoption decision of 122,349 Danish households and find that conformity motivations seem to dominate, i.e. the average household is less likely to adopt if solar panels are visible from the street, but less wealthy households are more likely to adopt of solar panels are visible. These findings generate policy implications for supporting the adoption of sustainable technologies. Hybrid Social Enterprise and the Problem of Identity Correspondence Michael Conger, Miami University; Jeff York, University of Colorado-Boulder; Jeffery McMullen, Indiana University The rise of social enterprise as a new class of organization and the basis of emerging hybrid industries has potential implications for the future of both charity and business. However, we know relatively little about the processes or means by which individual actors and organizations become aligned with movements, nor and the mechanisms by which this alignment leads to active participation in collective action and, ultimately, field emergence. We examine this phenomenon through an inductive study of the B Corp movement in the U.S. and build a process model of identity correspondence spanning the individual and organizational levels. Our findings shed light on the role of identity processes in the emergence of hybrid organizational forms, industries, and fields. Authenticity in CO2 Reductions: the Impact of Women Directors Elizabeth Cooperman, University of Colorado-Denver; John Byrd, University of Colorado-Denver; Ken Bettenhausen, University of Colorado-Denver This paper adds to the literature on the impact of corporate board gender diversity on the environmental performance of corporations. Using a sample of 214 S&P 500 companies during 2010 to 2013, reporting to the CDP on corporate environmental commitments and CO2 emissions, we examine whether the presence of women board of directors, along with other corporate governance characteristics, are associated with firm carbon reductions. We identify companies that made a high commitment to reducing their carbon emissions and the firms among these actually reporting lower emissions in the following two to three years. The empirical results show for firms with a high organizational commitment about climate change, those with a larger percentage of women on their boards are more likely to follow through and reduce CO2 emissions. We also find a significant relation between CEO tenure and the likelihood that a firm will have CO2 emission reductions. JEL Classification: G38, M14, J16, Q56 Keywords: Corporate governance, Diversity, Board of Directors, Environmental Performance Institutionalizing fair trade: A rhetorical analysis of new market category creation Bob Doherty, University of York We draw on category and rhetoric theories to examine how language is employed to create and mainstream new market categories. Originating in the 1970s from consumer interest in alternative trade, annual sales of fair trade certified products now exceed $6 billion. From our analysis of archival data and interviews, we theorize three rhetorical strategies that we connect to new market category creation: Oppositional rhetoric demarcates the new market and establishes the boundaries between new and existing categories; impact rhetoric communicates the purpose and achievements of the new category; and regulatory rhetoric formalizes, disciplines and monitors category membership. Growth rhetoric mainstreams the new market category by selectively combining elements of oppositional, impact and regulatory rhetoric with growth. Category growth proceeds against a backdrop of competing member interests concerning the plasticity and rigidity of category boundaries. We propose the process of category elaboration to explain how members relax category boundaries to accommodate increasing membership and certification variety. 2 2015 CONFERENCE – Accepted Papers New firm sustainable performance via the implementation of resource bundles utilizing resource based theory Mark Gagnon, Pennsylvania State University A significant number of entrepreneurs add sustainability to existing business models that in many instances leads to incremental results and lower performance. Rather, to optimize sustainable performance, sustainability should be a core element of firm business models with model underpinnings in key resource bundle combinations. In this work we examine five key resource bundles of human capital, social capital, process, place and physical capital for sustainability-focused firms. Case data from 30 sustainability-focused firms is used to illustrate for-profit, sustainabilityfocused business models and the role of resource bundles. Our findings indicate that combinations across resource bundles build unique sustainable competitive differentiation. Shine on me: Firm density, social movement support, and government endorsement of the solar photovoltaic industry Panayiotis Georgallis, University of Michigan; Glen Dowell, Cornell University; Rodolphe Durand, HEC Paris In this paper we treat regulative institutions as dependent on firm populations and supportive collective action. We argue that in emerging sectors, as the number of firms grows it signals legitimacy and growing acceptance of the sector, which in turn increases the likelihood that the government will endorse it. We further disentangle the influence of two different types of entry – by de novo and de alio firms – on government endorsement, and consider the role of supportive social movements in augmenting the influence of firm density on the establishment of favorable regulation. Analyses of the feed-in-tariff policy support scheme in the European Union suggest that government endorsement depends on the number of firms in a country, and that the presence of a supportive movement increases the effect of de novo firm density on government endorsement. We discuss the implications of our findings for institutional theory, research of social movements and markets, and industry creation. When Organizational Form Influences Ethics: Intrafirm Co-opetition in Hybrid Organization Peter Gianiodis, Clemson University; Jill Brown, Bentley University Ethical tensions can manifest when current environmental conditions place pressure on an organization to adapt in a manner that may contradict with the imprinting related to its original mission. As firms have increasingly adopted hybrid organizational forms to better fit more challenging external environmental conditions, they have had to manage the ethical challenges resulting from intrafirm co-opetition. In this study, we investigate how a new hybrid form and the adoption of intrafirm co-opetition affected ethical decision-making within a hospital setting. We find that, consistent with prevailing game theory’s prisoners dilemma and organizational explanations of moral misconduct, tensions inherent in intrafirm co-opetition can provoke unethical decision-making. We also find that control mechanisms and incentives increase tensions and perpetuate opportunities for misconduct, rather than reduce them. Organizational Responses to Public and Private Politics: An Analysis of Climate Change Activists and U.S. Oil and Gas Firms Jake Grandy, University of Southern California; Shon Hiatt, University of Southern California; Brandon Lee, Melbourne Business School We explore how activists’ public and private politics elicit different organizational responses. Using data on U.S. petroleum companies from 1982-2010, we investigate how climate change activists serving as witnesses at Congressional hearings and engaging in firm protests influenced firms’ internal and external responses. We find that public politics induced internally focused technical actions while private politics induced externally focused institutional actions. The results suggest that activists can have a significant impact on firm behavior by instilling regulatory uncertainty in the early phases of the policymaking process. We discuss the implications of our study for social movement research, organization theory, and nonmarket strategy. 3 2015 CONFERENCE – Accepted Papers Cultivating an Industry Identity: The Agency and Influence of Stakeholders in Colorado’s Emerging Cannabusiness Aimee Hamilton, University of Denver; Paul Seaborn, University of Denver Despite considerable work in the identity theory literature on how collectives develop workable, coherent, sustainable identities, major questions remain regarding how other types of interested parties influence the emergence of a new industry as well as the identity of that new industry. Our paper uses stakeholder theory to understand how the actions taken by entrepreneurs and other stakeholders in Colorado’s emerging marijuana industry interrelate to form a collective identity. In highly regulated industries, such as our setting, governments hold tremendous power to influence industry identity through their requirements in areas such as ownership qualifications, vertical integration and marketing. In addition to issues pertaining to entrepreneurship in a new market, we also consider the industry’s ethical conflicts and sustainability challenges. Entrepreneurial Round Tripping: Contributing to Sustainability through MultiDirectional Value Creation Richard Hunt, Virginia Polytechnic Institute; Lauren Ortiz-Hunt, University of Colorado-Boulder One of the key drivers of sustainable growth involves the development of commercial processes that allow for the extended use, reuse or recycling of disposable productive assets. One significant way in which this enhanced utilization occurs is in the realm of multi-directional value creation, which refers to profits that are generated from the development of solution sets that allow commercializable goods and services to flow in more than one direction. The focal point of our investigation centers on the paradox of incumbency in round-tripping: that despite possessing insider knowledge, efficient scale and technical resources, incumbent firms often fail to develop the leading solution sets for multidirectionality. Far more often, it is innovating entrepreneurs, who create and capitalize on these sustainability-driven gains. Community-Building Strategies: The Role of Non-Pecuniary Incentives, Rewards, and Exchanges Christina Kyprianou, University of Texas-Austin A type of firm-sponsored external stakeholder community, customer communities increasingly play a central role in how entrepreneurial firms create and capture value. Existing research, however, still lags in explicating the mechanisms through which firms build customer communities. Through an inductive multi-case study, I explore entrepreneurial firm strategies that support community building while focusing on the role of non-pecuniary incentives, rewards and exchanges. Findings suggest that firms face a central strategic challenge: balancing the growth of the community against the quality of its membership. Firms approach this problem by pursuing three sets of processes: community organizer training, community member education, and social processes of inclusion. These findings provide evidence of the important yet neglected role of non-pecuniary mechanisms that support community-building strategies. Market Mediators and the Tradeoffs of Legitimacy-Seeking Behaviors in a Nascent Category Brandon Lee, Melbourne Business School; Michael Lounsbury, University of Alberta; Shon Hiatt, USC This study contributes to a growing body of research on the emergence and growth of new product market categories by focusing attention on market intermediaries and their role in garnering legitimacy for a nascent market category. Although extant research has demonstrated the importance of attaining legitimacy for new market categories, few have considered the tradeoffs associated with such actions. Using the U.S. organic food product category as a context, we explore how one type of market intermediary—a standards-based certification organization—sought to balance the expansion of a nascent market category with retaining its distinctive coherence and identity. Our findings suggest that standards-based certification organizations can expand a market and demarcate clear categorical boundaries, but at a cost to the initial collective identity of the category’s members. Our findings hold important implications for the literatures on legitimacy, new category formation and growth, market intermediaries, and movement-driven markets. 4 2015 CONFERENCE – Accepted Papers Stuck in the Middle: Corporate Innovation and Environmental Performance Jegoo Lee, Stonehill College; Sang-Joon Kim, University of California, Irvine This research proposes that a firm considers environmental issues once it achieves innovation at certain levels. Combining the resource allocation approach and the good management theory, we hypothesize the ushaped relationship between firms' patenting activities and their environmental performance, and test this hypothesis with a panel of 1564 firms from 1991 to 2010. Based on research findings, we suggest that the motivation for “doing good” for environment is accelerated once corporate innovation through patenting activities are accumulated. We also offer a practical implication that corporations who are “stuck in the middle” with moderate innovation level should attempt to diminish the negative environmental activities as well as to develop knowledge creation further. Sustainability Commitment in IPO Firms: The Role of Board Capital Krista Lewellyn, University of Wyoming The IPO event is fraught with uncertainty. Being committed to sustainability so as to help address environmental and social issues creates even greater uncertainties since the costs and any benefits of sustainability initiatives on the IPO’s future performance are not certain. According to institutional theory one means by which organizations attempt to reduce uncertainties is through mimetic isomorphism, or imitating competitive and proven strategies of successful organizations. From a resource dependency theory view IPO firms attempt to reduce uncertainty by receiving valuable resources such as strategic advice from the human and social capital of their boards. Using a unique, hand-collected dataset of IPO firms between 2009 – 2011, we explore the relationships between industry sustainability, board capital, and a focal firm’s commitment to sustainability. Firm Strategies for the Development of Environmental Technology Capabilities Alfred Marcus, University of Minnesota; Joel Malen, Hitotsubashi University This study identifies strategies that firms employ when technological objectives include the internalization of negative environmental externalities as well as mitigation of additional risk brought about by the market, technological, and public policy uncertainties associated with ETD. Employing data from 256,649 patents held by 347 US manufacturing firms over a 20-year period allow for a clear distinction between ETD and non-ETD activities and enable the use of estimation strategies that control for unobserved firm-level heterogeneity. Results indicate that when firms develop environmental technologies they modify their innovation strategies by relying less on their own knowledge and capabilities, more on publicly generated knowledge, and by adopting a more incremental approach to innovation. Insider-Driven Change in Fields of Practice: Exploring the Case of Green Chemistry Andrew Nelson, University of Oregon; Jennifer Howard-Grenville, University of Oregon; Andrew Earle, University of New Hampshire; Julie Haack, University of Oregon; Doug Young, Lane Community College Insiders can be effective at mobilizing to bring about change in organizations or professions, yet we know little about how they work to influence change in a less structured field of work practice. Drawing on interview, observational, and archival data, we inductively investigate the emergence and growth of “green chemistry,” an effort within the chemical sciences to improve the health, safety, and environmental impacts of chemicals through changing practices associated with chemical synthesis and design. We find that advocates mobilized other chemists through a multivocal discourse and flexible principles, as opposed to a cohesive resonant frame. A pluralistic community resulted, which demanded ongoing efforts to both check and sustain this pluralism. The trajectory of green chemistry suggests that insiders can leverage the very elements that structure a field – shared expertise and work practices – in service of change, but that these same elements are threatened by such change. We discuss implications for theory on insider-driven change in fields of practice, the strategic use of multivocality, and the challenges of social and environmental change among those bound by common expertise, including members of occupations. 5 2015 CONFERENCE – Accepted Papers Towards Understanding Community-based Enterprise Performance in Resource Constrained Environments Kiven Pierre, Syracuse University; Tom Lumpkin, Syracuse University; Todd Moss, Syracuse University While there has been considerable research into the effect of market oriented development in less developed economies on entrepreneurship in general, research on the relationship between such development and community-based enterprise has remained sparse. Building on entrepreneurship, institutional theory, and resource dependence literatures, the present study addresses this gap by exploring the effect of pro-market institutions and resource dependence factors on the performance of community-based enterprises within resource constrained environments. Using multi-level random effects estimation on a cross-country sample we find evidence that pro-market institutions have both positive and negative effects on the performance of community-based enterprises which are contingent on a country’s magnitude of dependence on the external environment. We discuss the theoretical and practical contributions of these findings to entrepreneurship literature. Spillover Effects of Institutional Entrepreneurship: Observations from the Global Carbon Offset Industry Hans Rawhouser, University of Nevada-Las Vegas; Michael Cummings, University of Nevada-Las Vegas New industries are often the source of revolutionary changes in economic, organizational, and social life. This study focuses on the creation of an institutional infrastructure to support an emerging industry (Van de Ven, 1993). In particular, it explores the role of public and private sector institutionbuilding activities in the global carbon offsets industry. Insights from our study may provide lessons for future market-based approaches to economic externalities or social value creation. 50$, a Laptop, and a Client – The Start to How Impact Makers Has Become a Business Working to Better Their Community Joseph Sprangel, Mary Baldwin College; Amanda Slemaker, Mary Baldwin College B Lab is leading a global movement to redefine success in business. This research is a qualitative study of Impact Makers (IM) a for-profit company and B Lab Certified B Corporation that contributes 100% of their net profits ($247k in 2013) to their nonprofit partners. The design strategy of this qualitative inquiry was a purposeful sampling of IM as an “information rich” organization where the intent is to share empirical evidence of organizational success that can be generalized to the current and future Certified B Corporation population. The data collection involved 22 interviews to date of in-depth open interview questions of representatives of the various stakeholder groups of IM. Gains, Large and Small Through Industrial Symbiosis Suzanne Tilleman, University of Montana; Raymond Paquin, Concordia University; Jennifer Howard-Grenville, University of Oregon Addressing the challenge firms face to improve environmental performance while simultaneously earning profits, we test learning and capability development by firms completing successful industrial symbiosis exchanges. These exchanges provide an opportunity to reduce carbon dioxide equivalent emissions while also finding new avenues for financial benefit by selling waste. Using data on 5,016 industrial symbiosis exchanges in in the United Kingdom from 2003-2012, we find partner experience is significant in completing industrial symbiosis exchanges for all firms. However, the impact is greater for novice firms who do not continue after the most opportunistic exchanges are completed. Also, firms gain more financially when they commit to seeking out many industrial symbiosis exchanges despite losses during the development of a capability in industrial symbiosis. Cleantech Clusters and Firm Performance: Evidence from Young Private U.S. Firms Y. Lisa Zhao, University of Missouri-Kansas City ; Sanwar Sunny, University of Missouri-Kansas City Although Cleantech represents a fast growing sustainable economy, the market is still nascent and uncertain. As a result, a wide range of responses in business strategies and government policies are emerging; yet it is not clearly how these will affect Cleantech performance at both regional and individual firm levels. This study attempts to fill the literature gap by examining how local entrepreneurship and innovation climate, government policy, resources, and general population awareness affect Cleantech entrepreneurial firm creation and performance using the lenses of 6 2015 CONFERENCE – Accepted Papers institution theory, resource-based theory and economy of agglomeration. Our results show that entrepreneurship and innovation climate and access to resources have positive impact on geographical clustering and entrepreneurial firm performance but findings about policy and public awareness are mixed. Papers accepted for “lightning presentation” or poster sessions on Thursday, April 30 (listed in alphabetical order by primary author’s last name) Stakeholder theory and value creation Antonio Argandona, IESE Business School One often reads in the literature that firms must be “managed” not only “for shareholders” but, more generally, “for stakeholders”. What does this mean? In this paper we discuss how economic value is created for all stakeholders – that is, the “social (economic) value” – and how that value is distributed or captured. We consider the appropriation of value as the outcome of negotiation or confrontation between stakeholders and the company; as the outcome of a company strategy to achieve economic or non-economic results in the long run, and as the outcome of actions that approach the logic of gratuity. Sharing Tribes: Using Collaborative Consumption To Engage Millennial Employees Anita Bhappu, University of Arizona In today’s global economy, motivated and productive employees are the differentiating factor when it comes to business performance and competitive advantage (Rich, Lepine & Crawford, 2010). Organizations today are struggling to engage their employees, especially Millennials – the generational cohort born between 1980 and 2004 – who will be 75% of the workforce in 2025 (Council of Economic Advisers, 2014). 51% of Millennials report that they prefer to share rather than buy things (Havas, 2014), which is why collaborative consumption is the essence of the rapidly growing sharing economy (Botsman, 2010). This exploratory research investigates, both theoretically and empirically, whether organizations can better engage and integrate Millennials into their enterprise by encouraging collaborative consumption among their employees. Pausible, Yet Unpredictable: The Effects of Comprehensibility and Normative Legitimacy on Entrepreneurial Success Goran Calic, Krannert School of Management, Purdue University; Elaine Mosakowski, Purdue University The current paper extends extant research on the importance of normative legitimacy for entrepreneurial success by focusing on the comprehensibility of a new venture idea. While external actors may generally support entrepreneurs seeking to address environmental or social problems, a sustainability orientation by itself does not explain entrepreneurial success. Given the complexity of social and environmental problems in particular, backers will also emphasize the comprehensibility of a venture idea in their evaluation. We decompose comprehensibility into plausibility and predictability, and conduct an empirical examination of the effects of these factors, along with factors indicating a sustainability orientation, in an analysis of the crowdfunding outcomes of technologybased projects. We find support that plausibility contributes to success, but that predictability has a negative effect. We interpret the latter result as unpredictable ideas being perceived as more novel. 7 2015 CONFERENCE – Accepted Papers Toward a New ROI: Measuring Intangible Entrepreneurial Returns on Investment Mellani Day, Colorado Christian University; Mary Boardman, Globalytica, LLC Scholars have discussed both the profit motive (Simons & Astebro, 2010) and a broader set of motives (Elkington, 1997; Becker, 1993; Balog, et al, 2014) when studying entrepreneurial behavior. Some of these are internal and underlie how entrepreneurs perceive and experience risk and reward, costs and benefits. These motivators that may affect an internal return on investment (ROI) calculation can also be examined through a neuroentrepreneurship lens. Day (2014) takes a first step in this through framing the issue, identifying a set of potential costs and benefits, and developing a hypothesis for how these may be ranked in order of importance. This current paper presents a first step in the empirical testing of the ROI model presented in Day (2014). It does so by identifying existing data that measures these costs and benefits to varying degrees, then discussing the future research necessary to build upon this moving forward. Marketized, activist, and brokered market social orders Silvia Dorado, University of Rhode Island; Alex Nicholls, Said Business School, Oxford University; Bogdan Prokopovych, Stockholm Centre for Organizational Research This paper contributes to research on the advancement of social value within markets. It advances a typology that establishes a connection between the 'social order' of a market and variances (beyond those rooted in organizational charter) in (a) the degree to which the generation of social value generates financial/competitive upsides, (b) the potential for private value to crowd out social value, and (c) the challenges of balancing private and social value. Here, social order describes institutional alignments which solve the three inevitable coordination problems required for a market to operate (Beckert, 2009): An alignment which defines the use value derived by customers; reconciles the competitive forces framing how much of this value is privatized, and limits the risk of opportunistic behavior in exchanges. This alignment is institutional rooted by emerges stochastically as actors interactions layer historically and generate differences among markets. From "Pounds Delivered” to “Shortening the Line”: Food Bank Leaders in the U.S. as Ethical Sensemakers and Social Innovators Michael Elmes, Worcester Polytechnic Institute; Karla Mendoza-Abarca, Worcester Polytechnic Institute This paper considers the critical role that food bank leaders are playing in sensemaking around the ethical and justice dimensions of hunger and food-related illnesses in the U.S. These food bank leaders are engaged in a kind of ethical sensemaking (Sonenshein, 2009) that has led to a shift from a traditional operationally-focused strategy (food-in/food-out efficiencies and pounds served) to one that both provides emergency food aid and tries to “shorten the line” through experimentation with innovative, ethical solutions designed to eliminate hunger at its source. We consider food justice as a discourse of resistance to the logic of industrial agriculture and at how some food banks as ethical sensemakers are trying to bridge these discourses in their approach to hunger and food-related diseases. To illustrate the phenomenon, we consider the transition that has occurred at one food bank in the US and the justice-based innovations that they have designed and implemented across its county to end hunger. We conclude by proposing a model of ethical sensemaking that may help to explain how some food bank leaders have successfully adopted a variety of new strategies in their approach to food insecurity. Value and Valuation for a Sustainable Approach to Finance Scott Fullwiler, Presidio Graduate School; Vanessa Fry, Boise State Univesrity; Steven Crane, Presidio Graduate School Financial tools, models, and theories play a powerful role in the planning, assessment, and decision making about the economic aspects of an enterprise. The concept of value within these foundations largely means economic value, namely it can be counted and converted to a monetized unit. Acceptance of value as economic value continues to dominate research on value concepts in the social and natural sciences disciplines even when an alternative approach to value is proposed. Our research attempts to expand concepts of value beyond financial/economic and be inclusive and integrative with social and ecological value. We believe this research is critical and important to influence the 8 2015 CONFERENCE – Accepted Papers education of finance in business and management schools that offer course work or focus on sustainability. Is Information Enough? An Investigation of the Effects of Executive Pay Disclosure on Future Pay Practices Amy Guerber, University of Alberta ; Samantha Conroy, Colorado State University Social unrest due to the increasing wealth gap in the U.S. could lead to a widespread legitimation crisis – threatening the sustainability of social, economic, and government institutions. Although the government has passed legislation requiring increased reporting of pay policies and outcomes for top managers and for average workers, questions about the likelihood that these policies will have a meaningful impact persist. In the current paper, we explore the conditions under which compensation disclosures may influence future pay outcomes for executives as well as average employees. We propose a model explaining the impact of compensation disclosure characteristics on future compensation outcomes for both executives and workers, and we explore the moderating impact of stakeholder influence (specifically employee and shareholder bargaining power) on this relationship. Sustainability: Is a Dematerialized Economy the Answer? Steven Hinson, Webster University It now seems evident that the global economy has overshot the ecological carrying capacity of the planet. Yet there remains some difference of opinion as to whether this necessitates limits on economic growth. This paper critiques the ‘weak’ sustainability argument that the substitution of human-made capital and technology for natural capital allows for potentially unlimited growth. Yet the need for continued growth is real. One possible answer put forward is the dematerialization of economic activity. This paper discusses the potential weaknesses of the dematerialization argument but acknowledges that this may yet be the best way forward. Do Constraints from Socially Responsible Investing Impact an Investment Manager’s Discretion? John Hughen, University of Denver Investment managers commonly construct equity portfolios subject to client-imposed constraints. Common constraints include restrictions on investing in socially responsible companies (SRI). When clients impose severe restrictions, the portfolio manager is prevented from applying his investment strategy, and the account is classified as a non-discretionary portfolio. Most investment management firms have now adopted ethical guidelines (GIPS Standards) that prevent non-discretionary portfolios from being included in performance presentations to prospective clients. This paper uses Compustat data and ASSET4 ESG ratings on environmental, social, and corporate governance performance to quantify the impact of SRI. As measured by Jensen’s alpha, SRI constraints generally do not impact a portfolio manager’s discretion in implementing popular investment strategies. This study is the first to provide guidelines on how SRI constraints impact manager discretion. When the crowd gives credit: the ethics of debt-based crowdfunding Claire Ingram, Stockholm School of Economics; Michel Elmoznino Laufer, Stockholm School of Economics Existing investment legislation and standard terms around investments are implemented with professional investors in mind. Allowing consumers, or crowdfunding creditors, to invest smaller amounts of money than professional investors online may require a different regulatory framework. This paper looks into the implications of applying the existing arrangements to debt-based crowdfunding, first through an examination of the differences between professional investors and consumers who make purchases online and then through an examination of the terms and conditions of a debt-based crowdfunding company based in Sweden. We find that professional investors and crowd investors differ in three key ways: first, in the amounts that they invest, second in the variance of their levels of education and experience of investment, and third how they interact with investment opportunities. 9 2015 CONFERENCE – Accepted Papers Does It Pay to Be Good and Green? A Cross-Sectional Analysis of Corporate Sustainability Florian Jaeger, RWTH Aachen University Empirical studies have shown that corporate commitment to sustainability can be achieved through the simultaneous adoption of economic, environmental, and social principles. Firms must apply these principles to their organizational practices and strategies in order to express sustainable forms of development. These prior findings are mainly based on aggregated measures of corporate sustainability and may not consider the measurement of the underlying determinants. This study provides a more comprehensive operationalization of corporate sustainability in order to reveal its increasing complexity. We test the generalizability and applicability of the multidimensional measures by using original survey data obtained from 396 firms, representing different industries in Europe and the United States. Drawing on the institutional and resource-based theories, we find evidence that organizational size, ownership structure, and regulatory environment influence a firm’s transition toward sustainability. The results also suggest that firms benefit from their investments in corporate sustainability activities. This unambiguous result challenges the inconsistent association of financial performance and corporate sustainability. The study’s findings have several academic and practitioner implications which are then discussed. No chaos, no creation – the role of physical environment for entrepreneurs Chanhyo Jeong, University of Oregon Entrepreneurship is all about creativity. Without enough understanding, we design our work environment based on intuition and anecdotal evidences. Although some research found a causal link between clutter and divergent thinking ability, their research covered neither team creativity nor convergent thinking. Our brain does not always make a distinction between physical and cognitive activity. We hypothesize that being surrounded by disorganization will activate the alleviation of controlled self. We also expect that it will take less time for a team in a disorganized environment to complete creativity tasks. We predict that people in a disorganized space will reach a consensus for a convergent thinking task quicker, because a disorganized environment will hinder a team to carefully evaluate each option due to ego depletion. Firm “Kingmaking" as an NGO Strategy to Achieve a Transformational Partnership in an Industry Sector Roland Kidwell, University of Wyoming; Rhoda Davidson, University of Wyoming; Corey Billington, University of Wyoming This study illustrates how a non-governmental organization working with a utility firm used a deliberate partnership strategy to create large-scale transformational benefits in the form of a lower carbon economy. The adoption of a “kingmaker” strategy by the NGO allowed the firm to gain appreciable competitive advantage through an agreement to reduce its carbon emissions in return for strong NGO support. Joint partnership projects additionally created “networked enablers” that subsequently brought institutional pressure to bear on government and industry competitors leading to the signing of an environmentally-friendly energy policy in The Netherlands. This longitudinal case study illustrates the factors required to create a transformational partnership and demonstrates how a deliberate NGO strategy can create systemic and sustainable change. Predicting and Examining Links Between IPO Hype, Managerial Expectations, and Firm Outcomes Kip Kiefer, U.S. Air Force Academy This paper provides a model for understanding the information environment and explores how differential relationships between media hype and managerial behavior exist. A key aspect of the model is sources and timing of hype, particularly a concept from communications literature called a trigger event. The specific trigger event explored is the IPO. Results indicate that managers are influenced by media hype in that they exhibit actions reflecting overconfidence when the media hype generated about the firm surrounding its IPO is volumous, salient with respect to the focal firm and relatively positive in nature. Curiously, results reveal that media’s influence is not the same at all times 10 2015 CONFERENCE – Accepted Papers and that it impacts managerial expectations and firm outcomes differently for different types of hype at different times. Attributes of Environmental Disaster & TMT Attention to Natural Environmental Issues Jaemin Kim, Richard Stockton College; Clay Dibrell, University of Mississippi Research in the attention-based view literature has made advances in exploring the effects of organizational characteristics on its attention and responses. However, less is understood about why top management teams (TMTs) allocate their limited attention to natural environmental issues in response to environmental disasters. Combining attention-based view and stakeholder theory, we hypothesize that technological disaster, economic damages, and number of occurrence affect the extent to which TMTs elaborate a cognitive category of the issues associated with stakeholders. Examining five most polluting industries for 10 years, we found that technological disasters and economic damages of environmental disasters stimulated TMTs to attend to natural environmental issues and the frequent occurrence was inversely U-related with the TMT attention. Challenges for global supply chain sustainability: Evidence from the conflict minerals reports Yong Kim, University of Michigan Can companies determine if their products contain conflict minerals? Section 1502 of the Dodd-Frank Act gives us an opportunity to answer this question. Our analysis of all reports submitted to the SEC show that nearly 80% of companies admitted that they were unable to determine the country of origin of such materials. Highly diversified firms, that tended to have large and complex supply chains, were less likely to declare their products as conflict-free. Subsequent analysis showed that this was partially because they were unable to gain information from their suppliers and suppliers’ suppliers. Also, most CSR programs (e.g., GRI, CDP) were not effective in helping companies figure out their supply chains, except when the companies had a large cap and were thus more heavily scrutinized. Escaping Unscathed: The Varying Treatment of Firm Misconduct by Markets and Civil Society Jocelyn Leitzinger, University of Michigan; Ivana Katic, Columbia University Prior research indicates that firms caught in acts of misconduct may suffer a loss of legitimacy, damage to their reputations, or other sanctions. Yet, despite pressures to conform, many prominent firms continue to “misbehave” – some successfully, and others to the outcry of stakeholder audiences. In this study, I suggest that both discrepancies may be due to variation in stakeholders’ assessments of firm actions as instances of misconduct, and that these assessments depend on characteristics of the wrongdoing allegation, the firm accused, and the act itself. Using a unique data-set of corporate front groups in the U.S., I examine how markets and society react to allegations of firm misconduct – investigating changes in the accused organization’s social legitimacy and market value after their misdeeds are made public. Who Is Manning the Gates? Gatekeepers and Crowdfunding R. Scott Livengood, The Ohio State University; Claire Ingram, Stockholm School of Economics Providers of financial capital play an integral role in the entrepreneurial process. From one perspective, financiers provide capital to resource-constrained enterprises and make possible activities that otherwise would not occur. From another perspective, however, financial institutions can also act as gatekeepers, withholding funds from enterprises that are not deemed to have a high likelihood of success and effectively allocating funds to those new firms that appear to capitalize on promising opportunities in the marketplace. This theoretical paper examines the underlying characteristics and motivations of various sources of financial capital available to early-stage firms in light of their roles as gatekeepers of both social and economic value creation. This gatekeeper model is then applied to a relatively new form of entrepreneurial finance, crowdfunding. 11 2015 CONFERENCE – Accepted Papers Value Experience and Persistence: A Regulatory Engagement Perspective on what Keeps Social Entrepreneurs Engaged over Time Cristina Martinez, IE Business School; Peter Bryant, IE Business School, Madrid We develop a theoretical explanation of how value experience and level of engagement in entrepreneurial goal pursuit help to explain social entrepreneurs persistence through the entrepreneurial process, or withdrawal from it. In doing so, we examine the role of entrepreneurial behaviors and self-regulatory orientation on motivation and engagement. This conceptual integration proposes a novel explanation for what keeps individuals engaged in social entrepreneurship over time: it is not only the pursuit of an opportunity as an outcome which explains entrepreneurial persistence over time, but also the strength of motivation and engagement with the entrepreneurial process itself and the value derived from this experience. Animating stakeholder engagement processes: Lessons from the Ceres-Nike Corporate Responsibility reporting process Amanda Moss Cowan, University of Oxford; Doug Creed, ; Marc Ventresca, University of Oxford In 2005, environmental NGO Ceres’ stakeholder report review process with Nike yielded unexpected, positive outcomes. By 2015, the organization’s Roadmap to Sustainability had institutionalized expectations for business reporting of sustainable business practices. This paper explores the formative experiences underpinning Ceres’ work supporting firms and stakeholders working on difficult issues. As this qualitative study reveals, practical lessons from the Ceres-Nike go beyond current ‘best practices,’ also illustrating how the presence of ambiguity and unpredictability leads to progress in these complex multi-stakeholder dialogues. In contrast to accounts that treat ambiguity as a deficit, we identify opportunities for breakthrough outcomes through the robust, intentional managing of these ambiguities. This case reveals the ways that a carefully convened process enhances firm’s strategic capabilities and creates stakeholder-to-stakeholder benefits. The Squeaky Wheel Gets the Grease: The Effect of Organizational Wrongdoing on Stakeholders’ Responses Brian Park, INSEAD Research on organizational wrongdoing has been dominated by the social punishment view whereby organizations can expect to be punished by stakeholders for wrongdoing. Drawing on research on organizational sensemaking, this paper questions the social punishment perspective, suggesting that whether organizations are punished after wrongdoing depends on the type of stakeholders concerned. Classifying stakeholders in two groups – consumers or governments – I show that while consumers punish an organization in the wake of severe wrongdoing, governments lend financial support to the culpable organization. I propose that these divergent responses are the result of their respective roles in the market and different ways of sensemaking. The study also explores how such stakeholders interpret and react differently according to the controllability of wrongdoing and to the size of the focal organization. Analyzing the airport industry in the United States from 2009 to 2014, I found that following a serious accident, airports experienced a drop in service fees from consumers but received more funds from government. Surprisingly, airports received more government funds when the accident was controllable. Another finding was that after a severe accident, large airports were less punished by consumers but less supported by governments. This paper contributes to the research stream by providing a more nuanced understanding of stakeholders’ responses to wrongdoing. Business Sustainability in Entrepreneurial Firms: Examining the Signaling Impact of Virtue and Temporality on Market Performance G. Tyge Payne*, Texas Tech University; Curt Moore, West Virginia University; Miles Zachary, West Virginia University; Keith Brigham, Texas Tech University Business sustainability is the ability to virtuously manage a business such that short-term demands can be addressed without compromising the future of the business, its stakeholders, or society. As such, two key dimensions of business sustainability must be considered from an organizational level of analysis: temporality and virtue. In this manuscript, we conceptually develop these dimensions and empirically examine their ability – as independent and combined signals of business sustainability – to 12 2015 CONFERENCE – Accepted Papers influence the market performance of entrepreneurial firms. Our findings, based on a longitudinal sample of 236 IPO firms, support our main hypothesis regarding the effect of sustainability on performance. Hypotheses on the differential influences of each dimension and curvilinear effects of business sustainability are also supported. Mentor or Tormentor: Understanding How Mentors Impact Entrepreneurs’ Performance Using a Creativity Perspective Sid Saleh, University of Colorado-Boulder; Maw Der Foo, University of Colorado-Boulder; David Hekman, University of Colorado-Boulder Mentors benefit entrepreneurs by lending them expertise and access to contacts (Ozgen & Baron, 2007; Davidsson & Honig, 2003). Using a creativity lens, we explore how mentor-investors (mentors who invest) influence startup performance. Self-determination theory (Deci & Ryan, 1985) suggests mentor-investors may stifle creativity increasing the likelihood of startup failure. In contrast, the learned industriousness theory (Eisenberger, 1992) suggests that rewards influence individuals’ behavior towards goals that enhance creativity. We suggest that choice control (Byron and Khazanchi, 2012) moderates the relationship between rewards and startup creativity. This study links the entrepreneurship, creativity and mentoring literatures. We offer insights into how mentor-investors may undermine the creativity that they need to recoup their investments. Enhancing the Sustainability Narrative: Conceptualizations from Thermodynamics and Ecology Manjula Salimath, University of North Texas; Vallari Chandna, University of North Texas Constant growth fueled by endless consumption, production and waste harms the ecosystem’s ability to regenerate natural resources and creates areas of excesses and voids. In this paper, we present two key vocabularies: entropy and metabolic rift to add to the dialog of sustainability. We provide relevant arguments from Georgescu-Roegen, Marx, Foster, Moore and other scholars that provide a sound rationale for advancing the current work in sustainability using the underlying fundamentals of systems theory and natural-resource based theory. In our search for additional conceptualizations, we were encouraged by the deep thinking of earlier scholars who were able to bridge the domains of ecology and thermodynamics to render a holistic perspective that we believe provides value and informs future understanding of sustainability. Does Entrepreneurial Society Undermine Corporate Social Responsibility? An Empirical Investigation of Institutional Setting Hessamoddin Sarooghi, University of Missouri-Kansas City; Niloofar Abolfathi, Bocconi University Previous studies on institutional determinants of Corporate Social Responsibility (CSR) have contributed to our understanding of the ceteris paribus effect of specific elements of institutional environments (e.g., rules, norms) on CSR. However, the contingencies that enhance or diminish the effect of these elements on CSR have not been explored in previous studies. To fill this gap, current study focuses on how entrepreneurial institutions (entry regulations and entrepreneurial culture) interact with social institutions (labor regulations and social empathy) to affect the social performance of firms embedded within different institutional settings. The preliminary results show that labor regulations are less efficient in improving CSR when firms are located in countries with entrepreneurship-friendly entry regulations. Results have implications for theory and efficient crosssectoral policy making. Human Capital Differences in Philanthropic vs. Traditional Venture Capital Firms Mariarosa Scarlata, University of Surrey; Jennifer Walske, ; Andrew Zacharakis, Babson College Philanthropic venture capital (PhVC), like traditional venture capital (TVC), provides funding and value added services to a portfolio of entrepreneurial firms. However, TVC’s primary goal is to maximize the economic return of its investments. In contrast, PhVC firms expect their portfolio companies to perform well in terms of social and economic return. This paper compares differences in human capital (HC) between PhVC and TVC firms, using hand-collected data. Our results indicate key differences in general and specific HC. PhVC firm founders have much greater social work experience, 13 2015 CONFERENCE – Accepted Papers compared to founders of TVC firms. However, both TVC and PhVC firms have high levels of commercial work experience. As for educational related variables, TVC firm founders have significantly more education in science, engineering, business, and law. Principals vs. Principles: How Environmentally and Ethically Responsible are Firm Managers? Ralf Steinhauser, Universitat Hamburg The separation of ownership and control in corporations opens up the potential for moral hazard. Thus it is conventional wisdom that managers who are not closely monitored pursue personal goals rather than maximize shareholder wealth. Yet little is known about what these goals are. This paper provides new insights into managers’ personal preferences by studying the variations in corporate environmental and social performance associated with different corporate governance provisions. I employ a unique dataset to exploit variations in takeover defenses to analyze differences in managers’ behavior. We find that with weaker governance, more resources are allocated into environmentally and socially responsible objectives and away from core responsibilities. These findings support a theory that ethical principles are important for the subjective well-being of managers. Changing the Cassette: Exploring Institutional Field Change Among Nicaraguan Dairy Farmers Chris Sutter, Miami University; Justin Webb, University of North Carolina at Charlotte; Geoff Kistruck, York University This study examines an institutional entrepreneur’s efforts to orchestrate field-level change: a nongovernmental organization’s efforts to change rural Nicaraguan dairy farmers’ long-held beliefs and practices, restructure their relationships and market transactions, and establish new rules for milk production as means to incorporate the farmers into more developed dairy supply chains. We find that the institutional entrepreneur uses inter-related tactics to change the understandings, relationships, and rules that characterize the field. We also find that field members’ willingness to participate varied depending on their prior experience with alternate institutional logics as well as their openness. We seek to contribute to theory regarding institutional entrepreneurship by exploring the relationships between understandings, relationships, and rules during field change and by clarifying how distributed agency fits into this process. Entrepreneurship in Contested Industries: The Case of the Marijuana Industry Dara Szyliowicz, University of the Pacific; Tammy Madsen, Santa Clara University Entrepreneurs in Colorado are pioneering businesses in the marijuana industry, an industry grossing over $600 million in 2014, that the federal government considers illegal. As a result, innovative entrepreneurs face a series of conflicting obstacles, or sources of contestation that hinder the development of a durable and productive industry. We identify five different drivers that generate contestation in industries -- actor heterogeneity, regulatory arrangements, competing logics, institutional voids and changes in social belief systems. We examine how these drivers influence contestation in, and the evolution of, the marijuana industry in Colorado and, in turn, the choices entrepreneurs make. Standing on Its Head: Using Institutional Entrepreneurship Theory to Facilitate Change Craig VanSandt, University of Northern Iowa Institutional theory seeks to identify and explain, post hoc, the processes and mechanisms leading to organizational stability and change, and ways in which those mechanisms constrain human agency. We will stand the existing agenda on its head. Rather than explaining how institutional change occurs, we will use institutional entrepreneurship theory to explore how organizational fields might facilitate more efficient evolution processes. In particular, we will focus on the well-established energy production fields—coal, oil, and natural gas. Our premise for spotlighting this particular field is the crucial need to move from “dirty” sources of energy generation to cleaner, renewable supplies, such as 14 2015 CONFERENCE – Accepted Papers hydropower, wind, and solar. We will use a model of institutional change processes proposed by Dorado as the starting point for our analysis. Big Pharma and BOP Markets: An Entrepreneurial Approach Isaac Wanasika, University of Northern Clorado; Abe Harraf, University of Northern Colorado The purpose of this paper is to develop an entrepreneurial framework for effective economic and social performance of big pharma in base of the pyramid (BOP) markets. BOP markets have immense business challenges and are the most underserved segments of the pharmaceutical industry. However, these markets have significant potential for sustainable growth and the most urgent medical needs. Instructively, other industries such as telecommunications and the consumer sector have made inroads in BOP markets, despite the odds. Big pharma stands to achieve sustainable benefits through increased focus on BOP markets. In this paper, we develop an entrepreneurial and transaction economics theoretic approach towards effective performance of big pharma in BOP markets. The Role of Overconfidence in the New Venturing Process Justin Weinhardt, University of Calgary; Justin Davis, University of West Florida; Olga Petricevic, University of Calgary Overconfidence plays a significant role in entrepreneurial decision making but the directionality, or potentially the varying nature, of its effects in the new venturing process is still not well understood. To address this complexity regarding overconfidence we integrate a multi-stage motivational framework that predicts differential effects of overconfidence depending on the context and stage of entrepreneur’s motivation during the new venturing process. We then take this framework and use it as a guide for conducting a systematic review of the entrepreneurship literature. Our findings reveal inconsistent results with respect to the impact of overconfidence on new venturing outcomes at different decision making stages and suggest several gaps in our understanding of the underlying mechanisms and relationships between overconfidence and new venturing processes. Beyond the Investment: The Social and Communal Impact of a Localized Microlending Project Nathan Woolard, Emporia State University The opportunity to invest in small business is changing due to Kickstarter and other creative venture funding websites. The purpose of this research project is to explore how participants in a specific Midwestern community crowdfunding project define their involvement in terms of social and political importance that may extend beyond contractual obligations. Specifically, the research will attempt to determine whether participants in the crowdfunding project were motivated by means beyond potential return on investment, and the extent in which communal obligation and consideration for localized economic development impacted the likelihood of their investment. This qualitative case study focuses on a specific large-scale micro-lending project, where an entrepreneur group worked with a local economic development agency to solicit micro-lenders for gap financing for a “BrewPub.” 15
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