Thursday, June 18, 2020

Between Two Chairs: The Power of the Bridging

One of the differences between practice and science is that in management practice, the person with a clear identity, focused expertise, and undivided loyalty is valued greatly. In science, we often find that this person is too narrow to respond to a complex world. Indeed, we regularly publish findings suggesting that more complex people are more useful to their organization.

Is this true also at the highest levels of management? One way to answer this question is to look at boards of directors, as Jiao Luo,Dongjie Chen, and Jia Chen did in research published in Administrative Science Quarterly. They looked at directors who had studied or worked outside China but then returned and became board members. They examined whether these board members helped introduce the novel (in China) practice of donating to corporate social responsibility (CSR) initiatives.

The reason such returnee board members might be less influential than other organizational members with complex backgrounds is simple: power. The board of directors is the most important decision-making body in an organization. It makes decisions through voting because there is no central authority, and board members may not come to agree on the right decision. That is different from what happens further down in the organization, where an idea-rich person can become recognized and promoted by someone higher up, to the benefit of both.

So are returnee board members more effective in promoting CSR than those who stayed in China? The authors found that the answer is yes butas you might expect given boards’power games—under certain conditions. First, they need allies. More returnees in a board help, and interestingly, returnee directors also become stronger when they have strong local political contacts. In an interesting twist, the directors returning from nations in which political contacts would normally be useless are especially influential if they have political contacts.

Second, the returnees are helped by conditions showing a need for CSR. As in any power game, showing that your side is the right one for helping the community, and getting potential allies that way, can help push the opposition into conceding.

The benefits of having a diverse background and seeing a decision from multiple angles are well known. Whether they translate into actually making the right decision is less well known, and it is very useful to learn that allies are necessary. After all, the main reason that the person with clear identity is trusted more is that they are more common, so they more easily form allies with those like themselves. For people with complex backgrounds, this task is harder.

Luo, J., D. Chen, and J. Chen2020. "Coming Back and Giving Back: Transposition, Institutional Actors, and the Paradox of Peripheral Influence." Administrative Science Quarterly, forthcoming.



13 comments:

  1. This is a wonderful post. Thank you Prof. Henrich, you have connected recent posts into a rich theme — The Power Game. By linking today's article with other pieces, we could look at this phenomenon from a more holistic perspective. Beyond that, the complex background is kind of tricky but interesting, it could cause mutual trust or mutual suspicion, as always — under certain conditions.

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