Yuval Deutsch

The theory of exploration and exploitation is based on the logic of trade-offs and yet empirical research has rarely investigated these trade-offs as manifested between different dimensions of performance. In the context of start-ups, getting acquired is an additional performance dimension previously ignored in the ambidexterity literature. This paper utilizes the recently completed Kauffman Firm Survey data to investigate the relationship between exploration and the profitability, survival, and acquisition likelihood of start-ups simultaneously. A balance-is-best relationship is found for profitability of survived firms and for the acquisition likelihood of high tech firms, while an exploitation focus is found to maximize the survival chances of low and medium tech firms. For low and medium technology start-ups we find evidence of a trade-off between survival likelihood and profitability-given-survival, and for high tech start-ups we find evidence of a differently shaped trade-off between acquisition likelihood and profitability-given-survival.

Insight into organizational responses to stakeholder claims and influence attempts is critical to understand the challenges currently facing managers and organizations. Drawing on Kelman’s (1958) model of social influence, we advance the field’s understanding of the factors driving firm-level prioritization of competing stakeholder claims by developing a theoretical framework that accounts for both the stakeholder attributes that are important to relevant decision makers, and the decision makers’ motivations for accepting or rejecting the influence attempts of varying stakeholders. Our framework distinguishes itself from existing research by focusing on stakeholder prioritization, not salience, recognizing that stakeholder-related decisions result from group interaction and that important decision makers are not limited to those found within the classic boundaries of the firm. Consequently, we argue that decision makers are simultaneously stakeholders with attributes that might be relevant to other decision makers involved in prioritization. In addition, we identify a more extensive set of stakeholder attributes that includes powerlessness and illegitimacy.

Two obvious trends in corporate governance include broadening board accountability beyond shareholders’ interests and paying outside directors with equity compensation (stock and stock options). By integrating common agency and instrumental stakeholder theories, we examine the effect of stock compensation on secondary stakeholders and a firm’s participation in social issues, two areas where interests are less aligned with shareholder value. Consistent with our predictions, we found that while stock compensation may be an effective way to align directors’ goals to those of shareholders, it has adverse effects on important non-shareholder constituencies in the company’s operating environment.