The Triad that Binds: How the Social Structure of Analyst and Journalist Performance Evaluations Influences Relations among Corporate Leaders and Their Strategic Decision Making.

Abstract

This dissertation develops a social structural perspective on multiple social ties among corporate leaders and external firm constituents to examine how the triadic structural embeddedness of corporate leader-constituent relationships can influence relations among corporate leaders themselves and their strategic decision making. I first examine how relations among corporate leaders indicated by board interlock ties are affected by their common network ties to a group of financial analysts who are simultaneously following the board interlock companies (Chapter 2). In particular, I explore whether similarities in stock recommendations from the common analysts influence the maintenance of board interlock ties as result of top executives’ concerns about social comparison or cognitive dissonance in a triad. I then address how ties between two different constituent groups of analysts and journalists can constrain corporate leaders with respect to their strategic decision making (Chapter 3). I analyze how a triadic closure indicated by a perceived tie between an analyst and a journalist increases the likelihood of a focal firm’s strategic change in response to poor firm performance, by constraining the managers’ structural brokerage opportunities and increasing the subjective uncertainty about their current strategic choice. Overall, results of archival analyses, supported by CEO surveys, and interviews with Investor Relations executives provide supportive evidence for the theoretical perspectives developed in the two studies. Taken together, this dissertation contributes to the organization theory and strategic management literature by developing a more fully developed social structural and psychological perspective on the relations between organizations and the external environment in the context of board interlock ties maintenance and corporate strategic change.