Talk is Expensive: When a Competitor Has Financial Ties to Media

We understand that media ownership can be translated into power, especially when a media outlet has a dominant owner and the context is politics. Rupert Murdoch, Fox, and Donald J. Trump are keywords that come to mind. That’s just a rich guy playing around with the governance of a nation, with no connection to the world of business competition, right? Wrong. Media ownership also affects competition among firms, and the effects are seen also when the ownership structure is more dispersed.

This is the main discovery made in a paper published in Administrative Science Quarterly byMark R. DesJardine, Wei Shi, and, Xin Cheng. Their starting point is the remarkable concentration in firm ownership that has happened following the growth in institutional investments in the form of fund management firms. These investors want to (in fact, are obliged to) maximize the returns of their holdings, so they will do whatever it takes to increase the value of the firms they own.

What does “whatever it takes” mean? This is where media ownership comes into play. An interesting feature of owning media firms is that media firms are involved in news gathering and reporting, which can influence the competitive balance of an industry. Hurt one firm, and the other gains. Report selectively, and the value of firms owned by the fund that also owns media outlets will increase. As a result, media talk is expensive for the competitors of firms that have a media connection in their ownership.

Such media effects are a very big deal because they show an illicit use of media ownership that tilts valuations of firms, and corresponding access to resources and success in markets, away from the products and services they provide. They can only happen as a result of unethical actions by media executives and editors.

The research they present has plenty of evidence. Media coverage turns negative when a competitor firm has financial links with the media. This effect is stronger for competitors with more similar product lines, so relevance increases negativity. The effect is stronger for competitors nearby, so proximity increases negativity. And, most perniciously, if the media company CEO has equity-based compensation, so the CEO gets paid more when the media company value increases, the effect is also stronger. In sum, negative media coverage is a result of financial links, and it is particularly negative when the competitive relations between firms are close and when the media company CEO is for sale.

Should we worry about this? People arguing that “talk is cheap” would not be too concerned about these findings. But media coverage has significant consequences for firms, especially for their access to financial resources, so seeing it can be tilted so easily means that there is one more area of competition that requires regulatory attention. We cannot have an economy and society in which consequential, expensive talk is for sale.

DesJardine, Mark R. , Wei Shi, and, Xin Cheng. 2023. The New Invisible Hand: How Common Owners Use the Media as a Strategic Tool. Administrative Science Quarterly, forthcoming.

When Your Calling Goes Silent: Journalists React to the Decline of Journalism

Occupations differ in so many ways, and often we don’t recognize these differences. I recently discussed the emphasis on precision and process in the Singapore educational system and made the point that the job market for nuclear plant operators is limited. Nuclear plant operation is an occupation that demands precision because mistakes are exceedingly costly, but there is no benefit in that occupation from other kinds of excellence. Other occupations require attention and stamina – think of truck drivers. Yet other occupations require investments in energy and devotion that go far beyond what most people will provide – think of orchestra musicians, and of journalists. People in such occupations often refer to their work as a calling.

When an occupation that requires a calling goes into dramatic change and even decline, what happens to the people in it? Journalism is currently in such a period, and research by Winnie Yun Jiang and Amy Wrzesniewski published in Administrative Science Quarterly has documented the effects on individual journalists. It is sad reading but provides important understanding.

Journalism is threatened from all sides by digitalization. A good journalist is now someone who generates a lot of clicks on their online article. A good journalist is someone who can compete effectively with the social media types, who specialize in attracting clicks to media with very little content. A good journalist is someone who can accept low pay. After all, why should newspapers pay well when their business is to generate clicks to content pages that drop preference cookies and show advertising content?

Journalists confront these changes at every turn. Many lose their jobs, and some quit. Some try to find work that matches their skills, and others try to find work that matches their values (not necessarily the same thing). The problem is that when an occupation is a calling, it can be difficult to reinterpret work. When someone is forced to leave such an occupation, it can be painful – perhaps impossible – to reorient oneself as a worker. Some people find ways to move forward by specializing in some of the skills they have developed in that occupation. Others find that being asked to give up their focus on other skills, and to abandon the values that propelled them to seek that career, is simply too difficult, both in the thinking and the emotion.

Facing such threats, journalists are divided: some reinvent their careers by searching for meaning in new occupations, and others cannot find that meaning outside of journalism and thus face a truly unsolvable dilemma. What unites them is the sadness of realizing that their future will be different from their past and, in important ways, will be worse. For all of us who love meaningful careers in general, and journalism specifically, this is a painful story of coping and adaptation.

Jiang, Winnie Yun and Amy Wrzesniewski. 2023. Perceiving Fixed or Flexible Meaning: Toward a Model of Meaning Fixedness and Navigating Occupational Destabilization. Administrative Science Quarterly, forthcoming.

Language in Organizations: When and Why are Men Given Higher Performance Evaluations than Women?

Researchers are familiar with the gender gaps in performance evaluations of employees, and the promotion gaps that follow. Firms are aware of this too, and many of them take serious steps to become fair in their evaluations. Imagine looking inside one such firm - a Fortune 500 technology company committed to fairness - and seeing that they also differ in how men and women’s work is evaluated. How could that happen?

Research by Shelley J. Correll, Katherine R. Weisshaar, Alison Wynn, and JoAnne DelfinoWehner published in American Sociological Review shed light on how unfair evaluations happen. They looked at the scores given to men and women, and also examined the text of the performance assessments. They asked two questions: (1) Were workplace behaviors viewed similarly when done by women and men? (2) Were workplace behaviors valued similarly when done by women and men?

What is viewed and how it is valued are central components of performance assessment. And, in this firm, the answer to the two questions were “yes” to both questions for most of the nearly 90 workplace behaviors they studied. The interesting part is in the exceptions to this rule, because that is where gender bias is found.

Let’s start with what behaviors were viewed more often in men and women evaluations. For men, managing people was mentioned much more often, and nearly always positively. For women, communication style was mentioned much more often, and nearly always negatively. In fact, the (common) negative views of women’s communication style were the exact opposite of the (rare) negative views of men’s communication style. Women were too aggressive and outspoken, said the performance valuations, and men were too modest.

Does that match our everyday experience of how women and men communicate? Perhaps not, and maybe it suggests that they were held to different standards. Women are supposed to be modest and soft spoken; men are supposed to be assertive. This is so conventional that it is remarkable to find such a double standard in a firm committed to fair evaluation.

Now let’s see what behaviors were valued differently in men and women evaluations. This is also very conventional. Being a helpful person was viewed similarly often in men and women and typically produced the second-highest rating. A four out of five, so promotion possible but not a sure thing. Being a person who takes charge was much viewed more often in men and was strongly linked to a top rating in men but to a second-highest rating in women.

Again, we see the same convention play itself out. Men should communicate assertively, they should take charge, and they should be promoted for this. Women being helpful and taking charge is OK, but not great.

Language matters because it shapes thinking, which in turn affects how people are evaluated by others and given responsibilities at work. It is doubtful that a technology firm benefits from having evaluation and promotion practices that correspond to old-fashioned gender roles, and it is certain that such practices are not fair. To change them, it is necessary to change how managers view, value, and talk about behaviors at work.

Correll, S.J., K.R. Weisshaar, A.T. Wynn, J.D. Wehner. 2020. Inside the Black Box of Organizational Life: The Gendered Language of Performance Assessment. American Sociological Review 85(6) 1022-1050.