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Summary of Lectures, Articles and the Tutorials

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A summary of everything needed to study for the exam, including the book. lectures, articles and tutorials

Voorbeeld 10 van de 45  pagina's

  • 27 januari 2025
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Top Management and Political Skill

Lecture 1

Cultural arrangement model




Rijn land model of governance
Anglo-Saxon world, assume a one-tier board


The theories, how do they relate with one another
Agency theory  Agency Theory is used to understand the relationships between an agent (e.g.,
corporate manager) and a principal (e.g., shareholder). An information asymmetry between the two
leads to a principle-agent problem. (Eisenhardt, 1989)
 based on three underlying psychological assumptions!
 weaknesses

Paper beyond agency conceptions (Roberts)
 Anglo-Saxon world,
 one-tier board,
 Quotes are interesting
 Accountability  monitoring and compliance
 Accountability is about creating a healthy balance between trust and distrust, and creating open
dialogue
 Such accountability is in practice achieved through a wide variety of behaviors, such as
challenging, questioning, probing, discussing, testing, informing, debating, exploring and
encouraging

Stewardship theory

, is a theory that managers, left on their own, will act as responsible stewards of the assets they
control. Stewardship theorists assume that given a choice between self-serving behavior and pro-
organizational behavior, a steward will place a higher value on cooperation than defection.

Upper Echelons Theory (Hambrick)
 Bounded rationality (Simon, 1982), is a concept proposed by Herbert Simon that challenges the
notion of human rationality as implied by the concept of homo economicus. Rationality is bounded
because there are limits to our thinking capacity, available information, and time
 Hambrick critiques the theory differently than regular, “If we want to understand why
organizations do the things they do, or why they perform the way they do, we must consider the biases
and dispositions of their most powerful actors – their top executives”
 Maini critique
- Glorifies corporate elites
- Input-output studies
- Reverse causality
- As for the criticism that upper echelons theory somehow glorifies elites, nothing could be
farther from the truth. The upper echelons perspective is entirely based on the premise that
executives are humanly finite—susceptible to fatigue, boredom, jealousy, cognitive biases,
social preening, and selfishness—just like the rest of us. In fact, upper echelons theory pokes
holes in the myth, prevalent among many management scholars (especially those in strategic
management), that executives are capable of, and committed to, technoeconomic optimization.
Let me put it this way: when I speak to executive audiences about upper echelons studies on
such topics as experience traps, seasons of a CEO’s tenure, hubris, impression management,
or narcissism—well, they don’t react as though they’ve been glorified. (Hambrick, 2007, p.
341)
-
Resource Dependence Theory
 managerial discretion executives job demands
 Four benefits directions can bring to firms
- Advice and counsel
- Channels of information
- Preferential access to resources
- And legitimacy

,Hambrick
The article, "Upper Echelons Theory: An Update" by Donald C. Hambrick, provides a comprehensive
review and development of the Upper Echelons Theory initially proposed in 1984.

The Upper Echelons Theory posits that executives’ personal characteristics—experiences, values, and
personalities—significantly influence their interpretations of strategic situations and, consequently,
their decisions. The theory builds on the concept of bounded rationality, emphasizing that uncertain
and complex situations are subjectively interpreted rather than objectively known.

Key Concepts
Bounded Rationality: Decisions are shaped by executives’ cognitive and emotional filters.
Top Management Team (TMT): Organizational outcomes are better explained by analyzing the
collective attributes of TMTs rather than focusing solely on individual leaders like CEOs.
Demographic Indicators: Executives’ demographic profiles (e.g., education, tenure, industry
experience) serve as proxies for their cognitive frames, though they present a “black box” challenge of
understanding underlying psychological processes.

Refinements to the Theory
Managerial Discretion: Proposed by Hambrick and Finkelstein (1987), it highlights the extent to
which executives can influence outcomes, varying based on environmental, organizational, and
personal factors.
 High discretion amplifies the influence of executives’ characteristics on decisions.
Executive Job Demands: Heavy demands can lead executives to rely more on past experiences and
dispositions, whereas low demands allow for more comprehensive decision-making.
Behavioral Integration in TMTs: Effective TMTs engage in mutual, collective decision-making.
This integration positively affects organizational outcomes.
Power Distributions in TMTs: Accounting for power dynamics within TMTs improves predictions
of strategic behavior.

Emerging Research Avenues
Exploring the Black Box: Investigate the psychological processes linking executives’ characteristics
to their decisions.
 Hambrick suggests a simulation-based methodology to study decision-making under information
overload.
Causality Issues: Distinguish between characteristics that drive strategic choices and those shaped by
organizational contexts (reverse causality and endogeneity).
National Contexts: Executive influence varies across national systems due to differences in grooming
practices, cultural values, and institutional constraints.
Interaction of Characteristics and Incentives: The interplay between executives’ profiles and
compensation systems can affect strategic behavior and organizational outcomes.

,Critiques and Philosophical Considerations
Do Executives Matter While executives influence outcomes, their effects are moderated by discretion
and context. Studies show they account for significant variance in firm performance when controlling
for external factors.
Glorification of Elites? The theory emphasizes the fallibility of executives, portraying them as human
actors with biases and limitations.

Critical Terminology
Bounded Rationality: The limits of rational decision-making due to information constraints.
Managerial Discretion: The freedom executives have in decision-making.
Behavioral Integration: The degree of collaboration within TMTs.
Endogeneity: The issue where executive characteristics and strategic outcomes influence each other.

Conclusion
Hambrick underscores the enduring relevance of the Upper Echelons Theory while advocating for
deeper exploration of its mechanisms and broader contextual applications. He envisions the theory as a
vital lens for understanding the interplay between leadership and organizational dynamics.

,Hillman
The article "Resource Dependence Theory: A Review" by Hillman, Withers, and Collins (2009) offers
a comprehensive review of Resource Dependence Theory (RDT), which explains how organizations
manage dependencies and uncertainties in their external environment

Key Concepts
Resource Dependence Theory (RDT): Developed by Pfeffer and Salancik (1978), it views
organizations as dependent on external resources and suggests strategies to manage these
dependencies.
Core Ideas:
1. Organizations are interconnected and constrained by their external environment.
2. Managers can take actions to reduce uncertainty and dependency.
3. Power and control over resources are central to these interactions.

Five Strategies to Manage Dependencies
Mergers and Acquisitions (M&As):
- Used to absorb competitors, manage input/output dependencies, and diversify operations.
- Empirical evidence shows M&As reduce dependency but are influenced by factors like industry
context and organizational history.
Joint Ventures (JVs) and Alliances:
- Help organizations acquire resources while maintaining partial independence.
- Research highlights mutual dependence and the dynamic nature of interorganizational
relationships.
Boards of Directors:
- Boards provide resources (e.g., advice, legitimacy, access to networks).
- Board composition and size often reflect environmental needs and influence organizational
performance.
Political Action:
- Organizations use lobbying and policy influence to shape their environment.
- Political ties and actions improve organizational performance, especially in regulated industries.
Executive Succession:
- Changing leadership aligns the organization with its environment.
- Succession is influenced by performance, environmental uncertainty, and intraorganizational
power dynamics.

Contributions and Critiques
Achievements:
- RDT has become a foundational theory in strategic management.
- It effectively explains strategies to manage dependencies and uncertainty.
Critiques:
- Limited exploration of political action and executive succession.
- Calls for integration with other theories like transaction cost economics, stakeholder theory, and
network theory.


Future Research Directions
Integration of Strategies: Investigate how strategies like M&As and JVs interact and complement
each other.
Theoretical Integration: Combine RDT with other theories (e.g., resource-based view, institutional
theory) to enhance understanding.
New Strategies: Explore modern dependency management practices like outsourcing and
technological partnerships.
Dynamic Dependencies: Study the evolving nature of dependencies and their impact on strategic
decisions.
Boundary Conditions: Define the limits of RDT's applicability across contexts and industries.

,Roberts
The article "Beyond Agency Conceptions of the Work of the Non-Executive Director: Creating
Accountability in the Boardroom" explores how non-executive directors (NEDs) enhance board
effectiveness through dynamic accountability processes. Based on interviews with directors from UK
companies, the study critiques the dominance of agency theory in corporate governance research,
which often emphasizes structural factors like independence and monitoring. Instead, the authors
advocate for understanding the behavioral dynamics within boards.

Key Points
Critique of Agency Theory:
- Agency theory overly simplifies board dynamics, emphasizing control mechanisms like monitoring
executive performance.
- This theory fails to account for collaboration and nuanced relationships between executives and
NEDs.

Role of Accountability:
- The authors propose "dynamic accountability," which balances control and collaboration.
- Effective NEDs engage in behaviors like probing, challenging, and debating to ensure
accountability without undermining executive leadership.

Effective Board Dynamics:
- Board effectiveness depends on trust and constructive relationships among members.
- NEDs' value lies in their ability to support executives while maintaining independence, offering
objective perspectives, and ensuring strategic rigor.

Practical Contributions:
- Board effectiveness hinges more on behavioral dynamics and interpersonal relationships than on
structural factors like board composition.
- The study calls for corporate governance reforms to focus on the actual conduct and accountability
processes within boards, rather than distant metrics of effectiveness.

Methodological and Theoretical Contributions:
- The research emphasizes the need for qualitative studies that delve into boardroom processes.
- The findings encourage theoretical pluralism, combining elements of agency, stewardship, and
resource-dependence theories.

The article ultimately advocates for governance reforms that prioritize actual board effectiveness
through improved understanding of boardroom behaviors and accountability mechanisms.

,Tutorial 1

To achieve goals

Self-leadership
"Self-leadership is having a developed sense of who you are, what you can do, where you are going
coupled with the ability to influence your communication, emotions, and behavior on the way to
getting there.” (Bryant & Kazan, 2012)

“Self-leadership is defined as a self-influencing process that individuals experience by maintaining the
motivation they require to enjoy their roles and responsibilities.” (Manz, 1986; Manz & Sims, 1991)

behavioral-focused, natural reward strategies, cognitive thought pattern strategies

Self-efficacy  Has everything to do with confidence
“Self-efficacy refers to an individual's belief in his or her capacity to execute behaviors necessary to
produce specific performance attainments (Bandura, 1977, 1986, 1997). Self-efficacy reflects
confidence in the ability to exert control over one's own motivation, behavior, and social environment.
These cognitive self-evaluations influence all manner of human experience, including the goals for
which people strive, the amount of energy expended toward goal achievement, and likelihood of
attaining particular levels of behavioral performance. Unlike traditional psychological constructs, self-
efficacy beliefs are hypothesized to vary depending on the domain of functioning and circumstances
surrounding the occurrence of behavior.”

Context-dependent, you can be confident on the hockey field but not in the classroom.
Social norms, attitude, self efficacy factors have an influence on intention  behavior

Self-improvement
“all the do-gooders in the world, whether they are doing good for others or doing it for themselves, are
trouble-makers, on the basis of 'Kindly let me help you or you'll drown', said the monkey putting the
fish safely up a tree.” – Alan Wats (Counter- culture philosopher)

Self-improvement is a dangerous form of vanity – Alan Wats

Big 5 personality traits (Test)
Openness to experience  maginative, independent, and interested in variety and inner feelings,
intellectual curiosity
Conscientiousness  Self-discipline, carefulness, thoroughness, organization, tendency to think
carefully before acting, and need for achievement
Extraversion  Extraverts enjoy human interaction, enthusiastic, talkative, assertive, and expressive
Introverts are more reserved, less outgoing, and less sociable
Agreeableness  Tendency to be pleasant and accommodating in social situations, empathetic,
considerate, kind, generous, and helpful
Neuroticism (Emotional stability)  Neurotic people are likely to experience feelings as anxiety,
anger, guilt, and depressed mood, interpret ordinary situations as threatening, self-conscious, shy
Emotional stable persons are calm, less reactive to stress

,Hexaco
Honesty-Humility → Ethical leadership
Emotionality
eXtraversion → Charismatic leadership
Agreeableness → Supportive leadership
Conscientiousness → Task-oriented leadership
Openness to experience

,https://survey.ucalgary.ca/jfe/form/SV_3eH9wXVMVLxCsHs?
wAtt=&wInc=&wOus=&h0to4=4.75,5.42,6.39,6.96&e0to4=4.05,5.83,6.78,5.04&x0to4=5.27,5.84,
5.23,5.64&a0to4=4.68,5.05,7.67,5.65&c0to4=3.91,5.7,4.68,4.75&o0to4=5.3,3.45,6.09,6.28&i0=6.05
&hexaco=6.25,5.67,5.68,5.98,4.59,5.28

Prioritize core values
Me
Nature- sustainability- environment
If this is last, the rest does not matter
Mental and Physical Health
If everybody is sick mentally or physically, nobody will care about community, freedom, or nature.
But be self-centered
People - Community – Society
Freedom – Autonomy- Self-determination
Money – profit - wealth


Group
Freedom – Autonomy- Self-determination
Mental and Physical Health
People - Community – Society
Nature- sustainability- environment
Money – profit - wealth

Giving in or give an compelling counter argument

, Lecture 2 Power Dynamics and Executive Hubris
- Hubris in mythology, psychology, and ethics (Petit & Bollaert)
- Whether power really corrupts (DeCelles)
- The eight criteria for thought reform (Lifton)

The relevant outcome of top executive hubris  Hubris-infected top executives are more vulnerable to
fall prey to the winner’s curse

Hubris in Mythology: The tragedy of hubris 

Hubris in Psychology, as a personality disorder  Hubris syndrome is more than just an extreme case
of other pathologies such as narcissism. I is an acquired condition, as it is triggered by accession to a
position of power and the resulting lack of constraints on the individual’s behavior (Petit& Bollaert,
2012)

Hubris in Ethics  The capacity to feel respect in the right way toward the right people and to feel
awe towards an object that transcends particular human interests

Hubrus Petit & Bollaert
Three assumptions underlying the notion of top executive hubris:
• It exists only in the context of power;
• The CEO wields the most power in an organization;
• A leader who displays unethical behavior is no leader, but is to be qualified as a tyrant.

Top executive hubris covers three dimensions:
• The hubristic CEO has a grandiose sense of self;
• The hubristic CEO considers him or herself to be above the community of humans;
• The hubristic CEO does not feel constrained by normal rules and laws, considering him or herself to
be above them.

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