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2008 | Book

Introduction Read chapter Read first chapter

A Contingency-Based View of Chief Executive Officers’ Early Warning Behavior

An Empirical Analysis of German Medium-Sized Companies

Author: Andreas Kirschkamp

Publisher: Gabler

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

Foreword With early warning of CEOs in small and medium-sized companies, Andreas Kirschkamp has found a highly relevant and, up to this point, mainly unexplored research area as a field for his dissertation thesis. In a first step, he confirms the results of traditional contingency theory which show a strong link between environmental uncertainty and strategic sensemaking. In a second step and as the actual core of this study, he elaborates on the link between personality traits of CEOs and their strategic sensemaking. Thus, he sees his study in the tradition of an “extended contingency theory”. The underlying framework originates from Lewin/Stephens 1994 who distinguish eight attitudes as determinants of organizational design. Kirschkamp empirically shows that six of these attitudes have significant explanatory influence on the design variables. However, egalitarianism and degree of moral reasoning do not have any explanatory power within this context. Regarding the relationship between early warning behavior and success, Kirschkamp finds that successful CEOs differ in their use of sources from their less successful peers. They use internal, impersonal and external, personal sources more than managers of organizations with low success in early warning do. The managers with effective early warning behavior scan with a broader scope, delegate less, interpret with more and different partners, and more intensively. However, no difference can be observed as for the frequency of scanning, tool support and fixity of time for interpretation.

Table of Contents

Frontmatter
A. Introduction
Abstract
“Organizations depend on the environment [...] and often must cope with unstable, unpredictable external events.”1 They can anticipate these events that affect the organization by early warning,2 a two-step process that comprises scanning the environment3 and interpreting these data into information about opportunities and risks for the organization.4
B. Understanding of Early Warning in Literature and Definition of Important Terms
Abstract
According to the research questions presented above, the analysis focuses on how the individual manager anticipates future risks and chances for the organization. The manager uses the process of early warning. Therefore, the early warning behavior of the individual manager is analyzed. Within this process data and information have to be distinguished. Managers are confronted with general data about the organizational environment. Then, this “[d]ata is given meaning”43 and transformed by interpretation to information relevant for the organization. In order to answer the research questions about the early warning behavior of the individual, first, German literature about early warning is presented and analyzed whether it is suitable for this purpose.
C. Contingency Theory as an Approach to Explain Early Warning Behavior
Abstract
Now the underlying theory of this work will be introduced. According to the research questions not only the early warning behavior of CEOs of medium-sized companies has to be assessed in general but also factors that influence this behavior have to be analyzed. Therefore, in the following the contingency theory which aims to explain organizational structure and design by considering contextual variables will be presented. First, the classical approach will be explained, followed by its extension. Then, the criticism of the contingency theory is presented and discussed. After that, it will be discussed whether this theory is appropriate to answer the research questions. In part four, the research model and its variables will be deduced by combining the classical approach of the contingency theory and its extension with the model of DAFT and WEICK. Finally, in part five the state of empirical research will be presented.
D. Deduction of Hypotheses
Abstract
The classical contingency theory and its extension are the basis for the following deduction of hypotheses. These theories assume an influence of environmental uncertainty and personal attitudes on organizational design. As seen above, the process of early warning is part of organizational design and therefore is also influenced by environmental uncertainty and managerial attitudes. The hypotheses are deduced on the basis of relevant literature. Numerous studies already exist about the relationship between environmental uncertainty and scanning behavior. These studies developed hypotheses and empirically examined them.311 In order to put forth hypotheses about the relationship between managerial attitudes and design variables of early warning, psychological literature is consulted. Additionally, hypotheses already proposed by LEWIN and STEPHENS are discussed. The facts that empirical research has already been done in this area and that LEWIN and STEPHENS have already developed hypotheses on the basis of their model lead to a confirmatory procedure, i.e. first hypotheses are deduced from literature, next they are empirically examined. Otherwise an explorative procedure, e.g. a case study, would have been appropriate because this method is only based on empirical data and generates new hypotheses from them.312
E. Operationalization of the Research Model
Abstract
The following chapter presents the operationalization of the research model. First, basic aspects of the operationalization are described, and then the operationalization of the design variables of early warning behavior follows with its two steps, scanning and interpretation. The third paragraph explains the operationalization of the contingency variables. These are environmental uncertainty and managerial attitudes. Finally, the operationalization of success measures used in this work is presented.
F. Methodological Conception of the Analysis
Abstract
This section is about the methodological aspects of this work. The first part describes which data is collected and how it can be characterized. After this, the basis of the quantitative analysis is shown. It comprises amongst others an introduction to modeling structural equations and the fit criteria for constructs. The following part deals with the concrete measurements of constructs and the application of the fit criteria to the measurements presented before. Finally, the cluster analysis is presented.
G. Results of the Empirical Analysis
Abstract
In this section the results of the empirical analysis are presented. The introductory analysis deals with possible differences between industry sectors and shows the average early warning behavior of German CEOs in the manufacturing industry who participated in this survey. Part two and three of the introductory analysis present the early warning behavior as dependent on success of early warning and on organizational size. The following paragraph deals with the empirical valuation of the research hypotheses deduced in section D. First, the three different types of hypotheses are explained and the adequate methods of analysis are presented. Then, the hypotheses deduced within the context of the classical contingency approach and of its extension are valuated. Relating to the latter mentioned hypotheses, an additional analysis shows to which degree each attitude explains the design variables of early warning. The last paragraph of this section is the concluding analysis. Here, the classical contingency theory is combined with its extension and the explanatory power of both is compared. Then, the relationship between success of early warning and the economic success of the organization is analyzed. Finally, a cluster analysis is conducted in order to obtain groups of CEOs characterized by specific attitudes and early warning behavior.
H. Final Thoughts and Outlook
Abstract
The starting point of this analysis was the importance of early warning, i.e. scanning and interpretation, for organizations. The anticipation of future trends is an important asset to survive. Based on literature and the resulting gap of research four research questions were deduced:
1)
How do CEOs of medium-sized companies design their early warning behavior?
 
2)
Do contingency variables influence the early warning behavior of CEOs of medium-sized companies?
 
3)
What is the relationship between the early warning behavior of CEOs of medium-sized companies and the success of early warning of medium-sized companies?
 
4)
What is the relationship between the success of early warning of medium-sized companies and their overall economic success?
 
To answer these research questions an empirical analysis was conducted across the five most important sectors of the German manufacturing industry. Based on the definition of the European Union of ‘Mittelstand’, organizations with a size of 50 to 249 employees were chosen as objects for analysis. For these organizations early warning is already relevant and they are influenced by their CEOs to a high degree. A questionnaire was sent to 4,500 CEOs of German medium-sized companies. From the responses 597 questionnaires could be used for the empirical analysis which corresponds to a return rate of 13.3%.
Backmatter
Metadata
Title
A Contingency-Based View of Chief Executive Officers’ Early Warning Behavior
Author
Andreas Kirschkamp
Copyright Year
2008
Publisher
Gabler
Electronic ISBN
978-3-8350-5504-9
Print ISBN
978-3-8350-0656-0
DOI
https://doi.org/10.1007/978-3-8350-5504-9