Abstract: This study utilizes an exploratory case analysis to examine the specific activities and decision-making processes surrounding private equity investments. Qualitative data was generated from semi-structured interviews at twenty private-equity groups. Rather than relying on a retrospective review of prior decisions, our multi-case analysis presents each decision-maker with teasers, a summary document that introduces an investment opportunity. Following prior research, our results indicate that decision-makers utilize various heuristics that guide selection and execution of their investments. We also uncover the role of affect: strong positive or negative responses to specific stimuli in the teasers. This partially reflected learning and feedback on investment experiences that lead to the construction of affect heuristics. Furthermore, affect, despite occurring rapidly and automatically, enhances decision efficiency in complex environments.

Abstract: Building on cognitive evaluation theory, this paper argues that dual-class ownership structures can increase managerial perceived control and competence and safeguard managerial intrinsic motivation, facilitating corporate innovation input (R&D intensity) and output (the number of patents granted and the number of patent citations). We also contend that earnings pressure reinforce the difference between dual-class ownership firms and single-class ownership firm in innovation input. Using matched sample research design, we find empirical support for most of our arguments. Empirical evidence from this study suggests that dual-class ownership firms with a large divergence between voting rights and cash-flow rights can be in the long-run interests of shareholders, providing new insights into dual-class ownership structures as well as other takeover defenses.

Abstract: Although a significant literature exists on executive scanning behaviors, the pathways linking scanning to strategic outcomes are relatively less well-understood. We report a field study of 41 CEOs of firms in the US metal foundry industry wherein we first find that the amount of scanning effort that a focal CEO engages in positively influences beliefs about her self-efficacy and this relationship is stronger the more proactively the CEO scans for information. Second, we find that CEO self-efficacy significantly influences long-term firm performance and incremental innovation outcomes, thereby suggesting that self-efficacy plays an important and hitherto under-recognized mediational role between executive scanning behaviors and strategic outcomes.

Abstract: We propose a complementary system of affective and cognitive sensegiving to examine how top management emotion expression and cognition independently and interactively influence R&D investment. R&D investment is a key strategic decision that can facilitate innovation and competitive advantage, but is also fraught with uncertainty and risk. Using a five-year panel of 182 firms in the semiconductor, pharmaceutical, computer, and medical industries, we find an interaction between expression of positive affect in the CEO letter to shareholders and number of threats articulated in the 10-K annual report, such that R&D investment was greatest when both expressions of positive affect and number of threats were high. We conclude that both affective and cognitive sensegiving are necessary to better understand the mechanisms underlying firm investment in innovation.

Abstract: Emotions and other forms of affect have a central place in the field of behavioral strategy. A major problem is that we do not have any reliable method to ensure comparable positive and negative emotions or affect when assessing their influence on strategic variables. The consequence is biased development of theories that ultimately will polarize strategy researchers. In this article, we suggest alpha brain waves as a physiological correlate to overcome this issue. The benefit of this approach is that the alpha band is sensitive to not only negative emotions, but also to positive ones, by relying on two different psychological mechanisms. This correlate will act as a yardstick when validating emotion measures for the strategy field. We illustrate the benefit of this through three emotion functions.

Abstract: Extant work on narcissistic executives has depicted narcissism as a personal quality of decision-makers. Narcissists overclaim and dominate, but are also preoccupied with getting affirmations and adulations from stakeholders. Narcissism, then, should be manifested in the constructs of social esteem. I begin by discussing the nature of narcissists, their paradoxes, and their practices. Then, I develop new theoretical propositions about narcissists as status-seekers in the groups they lead, as prestige-seekers from peers, as charisma-seekers from followers and as celebrity-seekers from journalists. I conclude with possible performance implications and future research on the implications of executive narcissism.