Executives’ Stakeholder Values in the Prediction of Work Process Change

• Author: Min Z. Carter,Mary F. Sully de Luque,Nathan T. Washburn,David A. Waldman
• Date: 01 December 2018
• DOI: http://doi.org/10.1111/joms.12394
• Published date: 01 December 2018

© 2018 John Wiley & Sons Ltd and S ociety for the Advancement of Ma nagement Studies

Executives’ Stakeholder Values in the Prediction of Work

Process Change

Nathan T. Washburn, David A. Waldman,

Mary F. Sully de Luque and Min Z. Carter

Utah State University;Arizona State University;Arizona State University;Southern Illinois

University

ABST RACT Stakeholder values are promoted as a gu iding principle for executives, but

researchers know very litt le about how the utilization of st akeholder values by executives

actually impact s the firms they lead. In thi s study, we propose that a positive relation-

ship exists between executive st akeholder values and work process change in organ iza-

tions. We further hypot hesize that the congr uence of CEO and top management team

(TMT) members’ stakeholder values is positively related to this ty pe of organizational

change. Results of the ana lysis confirm that CEO sta keholder values are related to

changes in work processes, but not changes to the forma l firm structure involvi ng

acquisitions or divestitu res. Additionally, we find t hat congruence between CEO and

TMT stakeholder values is a ssociated wit h changes to work processes, and that t hese

changes tend to occur more when CEO and TMT st akeholder values are aligned at

higher levels, compared to lower levels of such values.

Keywo rds: organizational cha nge, stakeholder theory, values congruence

INTRODUCTION

The idea that stakeholder values should guide executive decision making has gen-

erated considerable support in the business community. Notable CEOs like Jack

Welch, Jack Ma, Paul Polman, John Mackey, Tim Cook, Marc Benioff, and Mark

Zuckerberg are cited as promoting stakeholder values (rather than a simple focus

on profit maximizat ion) as a governing principle that executives should adopt

(Denning, 2015). In a recent letter to other CEOs from the CEO of BlackRock,

Address for reprints: Nathan T. Washburn, Mana gement Department, Jon M. Huntsm an School of

Business, Utah S tate University, 3500 Old Mai n, Logan, UT 84322-3 500 (nathan.washburn@usu.edu).

Journal of Manageme nt Studies 55:8 December 2018

doi : 10.1111/jom s.123 94

1424 N. T. Washburn et al.

© 2018 John Wiley & Sons Ltd and S ociety for the Advancement of Ma nagement Studies

Inc., Larry Fink poignantly emphasized that companies must work to benefit all

stakeholders and not simply shareholders (Fink, 2018). While this stakeholder

perspective intuitively appeals to many practising executives, academic efforts to

describe what happens in organizations when executives adopt stakeholder val-

ues have lagged (Jones et al., 2018). Indeed, there exists considerable ongoing

debate among scholars as to whether stakeholder values – characterized as bal-

ancing concern for different stakeholder groups – should be used by executives to

make organizational decisions (see Clark et al., 2016; Freeman and Phillips, 2010;

Friedman, 1970; Jensen, 2002; Margolis and Walsh, 2003; Sully de Luque et al.,

2008; Sundaram a nd Inkpen, 2004).

We contribute to the stakeholder perspective by increasing our understanding

of how executive stakeholder values influence what happens inside organizations.

More specifically, we examine the relationship between executive stakeholder val-

ues and organizational change. Three decades ago, Dutton and Duncan noted

that ‘the beliefs and characteristics of powerful individuals in organizations can

have a profound effect on the initiation and implementation of strategic change’

(1987, p. 113). Despite this recognition, Finkelstein et al. (2009, p. 57) indicated

that ‘the topic of executive values is an open field for research. For even though

values are undoubtedly important factors in executive choice, they have not been

the focus of much systematic study’. Thus, while there has long been recognition

that executive values should influence organizational change, this line of inquiry

has not been thoughtfully developed.

Hambrick (2007) suggested that one important reason for a lack of research in

this area is the difficulty of obtaining data. A direct assessment of executive values

‘requires intrusive access to large numbers of executives and TMTs, who are noto-

riously unwilling to submit themselves to poking and probing’ (Hambrick, 2007,

p. 337). As such, large scale studies that measure executive values are uncommon

and limited (for a few notable exceptions, see Adams et al., 2011; Berson et al.,

2008; Bovie et al., 2011). In other words, researchers have failed to develop theo-

ries about the relationship between executive values and important firm variables,

such as organizational change, due to the challenges associated with gathering

the data needed to test such a theory.

One of the primary contributions of our research is to theorize and test a re-

lationship between executive stakeholder values and organizational change. We

advance our hypotheses by building on the theoretical work of Huy (2001), who

developed a typology of different types of change in organizations. Further, we

argue that executive stakeholder values are related to one specific type of orga-

nizational change. We then test the hypothesized relationships with data gath-

ered from 533 CEOs and 3,367 TMT members. To our knowledge, this is the first

large-scale study that develops and tests a theory about the relationship between

executive stakeholder values and organizational change.

The data-gathering challenges mentioned above are exasperated when consid-

ering testing theory with a global sample. Hambrick (2007) notes that another

weakness of the research on executive influence in firms is that predominantly