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  • 1.  Theoretical Support - Assessing Status through Rank Order

    Posted 09-20-2017 15:41

    Hello all, I have a question I wish to pose to the group. My co-authors are working on a study that examines the role of the Chief information Officer (CIO) in the top management team (TMT). We would greatly appreciate any insight from the expertise of the group.

     

    The vast majority of the CIO (Chief Information Officer) research in the Information Systems (IS) field has used Upper Echelons Theory (UET) to posit that the hierarchical position of the CIO is essential to deriving IS related organizational outcomes. The extant research has studied this through a limited operationalization of "hierarchy" limited to: CIO formal membership in the TMT; and b) CIO reporting distance to the CEO (e.g. directly reports to CEO, 1 reporting level between, etc).

     

    We are looking to take a more granular approach. We data have compensation rankings (we have secondary data looking at a number of years) for the CIO vis-à-vis the other executives in the organization. We are looking to use compensations as a measure of hierarchical status (really a proxy – we don't wish to make this a compensation study). So far we have the following hypotheses:

     

    Proposed Hypotheses:

    Hypothesis 1: CIO status positively impacts firm profitability (supported)

    Hypothesis 2: CIO status negatively impacts administrative costs (supported)

    Hypothesis 3: Effect of CIO status on profitability strengthened by R&D intensity (not supported)

    Hypothesis 4: Effect of CIO status on administrative costs strengthened by R&D intensity (supported)

    Other Interesting Relationship: Higher total CEO compensation predicts lower CIO status

    Measures:

    CIO status is rank of CIO relative to rest of TMT in terms of salary and bonus (reverse-coded, so 1st is highest)

    R&D intensity is R&D expenditure/Total Revenues

    Profitability is operating ROA (operating income after depreciation/total assets)

    Administrative costs are selling, general, and administrative expenditure/total revenues

    Analysis: fixed-effects regression

     

    There is a large amount of literature that is loosely related. I wanted to inquire if someone is aware of any theories that essentially support the idea that it is the rank of the executive compared to others (e.g. pecking order) that is important rather than merely being a TMT member. In other words the rank of the CIO vis-à-vis that of the other executives it was drives his/her ability to influence strategic outcomes. I have looked at hierarchical differentiation – which is related but not the tightest supporting theory for this specific question.

     

    I wanted to inquire if there are any ideas with regard to any theories or frameworks that could help work in conjunction to support the methodological approach outlined. We would greatly appreciate any insight you have. Best regards. Dave

     

     

     

    David Preston, PhD

    Professor of Information Systems

    Neeley School of Business

    Texas Christian University

    Phone: 817-257-6154

    Fax: 817-257-7227

    Email: d.preston@tcu.edu

     



  • 2.  Theoretical Support - Assessing Status through Rank Order

    Posted 09-21-2017 02:41
    Hi David,

    You could have a look at He and Huang's work on status hierarchies within boards (proxied by number of board appointments). They also develop hypotheses on the rank of the CEO, you could do the same for the CIO
    - He, J., & Huang, Z. (2011). The Informal Hierarchy of the Board of Directors and Firm Financial Performance: Exploring a Tacit Structure Guiding Boardroom Interactions. Academy of Management Journal, 54(6), 1119–1139.

    Also, while not directly on status, but on CEO narcissism, usnig pay disparity as part of a measure for narcissism
    - Chatterjee, A., & Hambrick, D. C. (2007). It's All about Me: Narcissistic Chief Executive Officers and Their Effects on Company Strategy and Performance. Administrative Science Quarterly, 52(3), 351–386. https://doi.org/10.2189/asqu.52.3.351

    We also recently published a paper on status and conformity within boards (using director peer rated status)
    Veltrop, D. B., Molleman, E., Hooghiemstra, R. B. H., & van Ees, H. (2017). Who's the boss at the top? A micro-level analysis of director expertise, status and conformity within boards. Journal of Management Studies. https://doi.org/10.1111/joms.12276

    Hopefully this helps.

    Dennis Veltrop

    On Wed, Sep 20, 2017 at 9:40 PM, Preston, David <d.preston@tcu.edu> wrote:

    Hello all, I have a question I wish to pose to the group. My co-authors are working on a study that examines the role of the Chief information Officer (CIO) in the top management team (TMT). We would greatly appreciate any insight from the expertise of the group.

     

    The vast majority of the CIO (Chief Information Officer) research in the Information Systems (IS) field has used Upper Echelons Theory (UET) to posit that the hierarchical position of the CIO is essential to deriving IS related organizational outcomes. The extant research has studied this through a limited operationalization of "hierarchy" limited to: CIO formal membership in the TMT; and b) CIO reporting distance to the CEO (e.g. directly reports to CEO, 1 reporting level between, etc).

     

    We are looking to take a more granular approach. We data have compensation rankings (we have secondary data looking at a number of years) for the CIO vis-à-vis the other executives in the organization. We are looking to use compensations as a measure of hierarchical status (really a proxy – we don't wish to make this a compensation study). So far we have the following hypotheses:

     

    Proposed Hypotheses:

    Hypothesis 1: CIO status positively impacts firm profitability (supported)

    Hypothesis 2: CIO status negatively impacts administrative costs (supported)

    Hypothesis 3: Effect of CIO status on profitability strengthened by R&D intensity (not supported)

    Hypothesis 4: Effect of CIO status on administrative costs strengthened by R&D intensity (supported)

    Other Interesting Relationship: Higher total CEO compensation predicts lower CIO status

    Measures:

    CIO status is rank of CIO relative to rest of TMT in terms of salary and bonus (reverse-coded, so 1st is highest)

    R&D intensity is R&D expenditure/Total Revenues

    Profitability is operating ROA (operating income after depreciation/total assets)

    Administrative costs are selling, general, and administrative expenditure/total revenues

    Analysis: fixed-effects regression

     

    There is a large amount of literature that is loosely related. I wanted to inquire if someone is aware of any theories that essentially support the idea that it is the rank of the executive compared to others (e.g. pecking order) that is important rather than merely being a TMT member. In other words the rank of the CIO vis-à-vis that of the other executives it was drives his/her ability to influence strategic outcomes. I have looked at hierarchical differentiation – which is related but not the tightest supporting theory for this specific question.

     

    I wanted to inquire if there are any ideas with regard to any theories or frameworks that could help work in conjunction to support the methodological approach outlined. We would greatly appreciate any insight you have. Best regards. Dave

     

     

     

    David Preston, PhD

    Professor of Information Systems

    Neeley School of Business

    Texas Christian University

    Phone: 817-257-6154

    Fax: 817-257-7227

    Email: d.preston@tcu.edu

     




    --
    dr. Dennis Veltrop
    Assistant Professor
    University of Groningen | Faculty of Economics and Business
    The Netherlands
    Phone: +31 50 363 7238