The Effect of CEO Compensation on their Responses to Institutional Pressures: Evidence from the Choice between Cross-Border Alliances and Acquisitions


Mirko Benischke
  • Speaker
Rotterdam School of Management (RSM), Erasmus University Rotterdam

Event Information

Type
Research Seminar
Programme
Strategy & Entrepreneurship
Date
Mon. 9 Dec. 2013
Contact
Pursey Heugens
Time
10:00-11:30 hours
Location
Mandeville Building T03-16


Abstract

Although neo-institutional theory has been increasingly sought to explain a firm’s strategic choices, there is a paucity of research explaining across-firm heterogeneity in the adoption of firm strategies. Drawing on the behavioural agency model (BAM), we explore the micro foundations of firm responses to institutional pressure by examining CEO risk preferences as an important source of practice variation. In particular, we contend that neo-institutional theorists have to consider the risk to the managerial agent created by the adoption of isomorphic strategies when explaining institutional processes. Our results support this idea by demonstrating that as risk bearing increases, CEOs are more likely to adopt strategies that are relatively less risky thereby influencing their responses to pressures emanating from the organisational field. These results also suggest that agency theorists would benefit by considering the institutional context when examining the effect of individual agency on strategic risk taking.

Pursey Heugens
Professor of Organization Theory, Development, and Change, Scientific Director ERIM, Dean of Research RSM
  • Coordinator
Justin Jansen
Professor of Corporate Entrepreneurship
  • Coordinator
Taco Reus
Endowed Professor in Global Strategy
  • Coordinator