Unlocking the Future of Consultancy: Building In-House AI Languages with a Deep Learning Expert

The transformative power of AI is reshaping our world. Consultancy firms are innovating by creating AI languages, a complex process of data, fine-tuning models, and continuous improvement. As a result, major consultancy companies are likely to have integrated AI models within five years, enhancing employee performance and fostering data-driven decision-making.

Author

Pietro Rapetti

Vrije Universiteit Amsterdam

30 October 2023

AI is changing the world

AI is changing the world. Maybe, experiencing these changes from the inside, as citizens of the game changer superpowers, we don’t really realize the violent impact of disruption on our daily life. The violent impact will come when, while cooking dinner for our beloved family we realize that an Artificial Intelligence, linked to the watch of our children, through monitoring pulse rate, body heat and oxygen in the blood, will be able to recommend the best cartoon for them to watch or the best vegetable to eat. And just at that point we will really think “ok, what’s happening here?”. But for now, seeing these changes in “rallenty”, reading about one “small” innovation at a time (just because we can’t read simultaneously more than one word at a time), doesn’t really seem to shake us. Well, long story short, the world (and the business world firstly) is changing and it’s changing fast.

When speaking about innovative practices, people can lag behind, Businesses can’t

We, as people, can surely remain back a few steps without risking bankruptcy. Businesses can’t. Nevertheless, when the businesses on which we focus are consultancy societies that, in order to survive, formulate strategies to make other societies stand out, within a sea of competitive societies backed up by other societies. In this mess,it is inevitable that consultancy firms must not only keep up with innovation, but even direct and guide it. Regarding this last statement I’m pretty sure they will. How? Well for two main reasons, they are constantly immersed in a network of stakeholders (clients and partners) who are informed or need to be informed regarding cutting-edge technologies and trends and because of their human-centered nature (with relatively low fixed assets) that allows them to implement new methodologies or sell new products in a fast and nimble way. Now, when we speak of implementing new methodologies and selling new products, what are we referring to? Well, in this article, we are referring to implementing and selling Artificial Intelligence languages.

It is inevitable that consultancy firms must not only keep up with innovation, but even direct and guide it.

How can new languages be created? A chat with Carlo

In order to understand how new languages are created, I interviewed my long-time friend Carlo, Master of Science in Machine Learning and Research Engineer at CISPA Helmholtz Center for Information Security. In simple words Carlos’s daily job involves adjusting leaks and improving the state of the art of AI and deep learning models. I interviewed Carlo in order to understand what it means for Consultancy Firms to create their own AI language and what are the variables involved. Speaking with Carlo I understood that there are two main protagonists in this process, the data (the oil) and the model (the engine). While the parameters of the models can be obtained and used by all, since societies such as Meta make them public and useable (we are speaking of pre-trained, large and generalized language models), the data needed to make the model speak the “consultancy language” (through the “fine-tuning” process) is more difficult to be found. For this reason it is more likely that big companies such as PwC, EY, KPMG, that already have tons of terabytes of in-house data can more easily get the engine to work. Small companies instead, are obligated to download it from public online sources such as Kaggle or Wiki English that still provide great quantities of good quality data. This doesn’t mean that small companies can’t do it, it just means that for them it’s probably going to be more costly. So once the consultancy company in object has on the one hand Meta’s pre-trained AI model and, on the other hand, the data, Carlo takes the field. His role is to use the data collected making the model speak the strategic consulting or marketing consulting or HR consulting language (depending on the data collected), delivering a product that can increase the efficiency of work within these companies. And how does he do this? Through the fine-tuning; a process that consists in training the pre-trained, large and generalized language model and making it better suited for a particular application.

While the parameters of the models can be obtained and used by all, since societies such as Meta make them public, the data needed to make the model speak the “consultancy language” is more difficult to be found.

Deep diving the apparently impossible process

This process involves the use of more than 20 GPUs (Graphic Processing Units, the billions of operations needed to train these models are performed on specialized computers built for quick and parallel processing). Once the model has been trained to serve a particular mansion or “speak” a particular language, the model can be prompted and used to generate new text or voice. What happens in this second step (called inference or prediction) is often referred to as a black box, since the human mind can’t really understand what is going on under the hood and why exactly the model is generating a single specific output (but this is another story). So once the fine tuned model is created, it needs to be put in production. Putting a fine-tuned model into production is a complex process. Through CI/CD pipelines, which means Continuous Improvement and Continuous Development, the model is updated and trained with data and questions, and every time a new output is generated, feedback on that output is feeded back to the model, to ensure the full lifecycle of the CI/CD pipeline. This helps ensure the model works effectively and doesn’t give unwanted answers (such as racist answers or information on how to conduct illegal activities). Finally, after completing this phase, the model is ready to be used by the consultancy firms (while needing continuous training with new and updated data).

Through CI/CD pipelines, which means Continuous Improvement and Continuous Development, the model is updated and trained with data and questions.

The outputs of the impossible process, the case of Lilli

This process, which seems long and expensive, is actually doable, thanks to the work of specialized engineers and consultants, such as Carlo, that concludes the interview making his own prediction: “I think the major consultancy companies, in five years, will all have ad hoc fine tuned AI models integrated into their systems. Their employees will use them to boost their performance working in a more efficient and data driven environment.” And someone already started! McKinsey, this year launched “Lilli,” an own generative AI solution that aggregates all Mckinsey’s knowledge and capabilities in one place. The data used to train Lilli relies on more than 100.000 documents and interview transcripts that the firm collected during years of hard work. For Adi Pradhan, an associate partner who specializes in technology strategy and transformations, Lilli is “a thought-sparring partner” ahead of meetings and presentations. He uses Lilli to look for weaknesses in arguments and anticipate questions that may arise, to tutor himself on new topics and make connections between different areas on the projects.

Acknowledgement Statement

This blog is part of the student writing competition in Management Consulting Master Program at the School of Business and Economics.

References

How Professionals Adapt to Artificial Intelligence: The Role of Intertwined Boundary Work, Journal of Management, 2023
[https://onlinelibrary.wiley.com/doi/epdf/10.1111/joms.12936]
How professional services firms dodged disruption, MIT Sloan Management Review, 2023
[https://sloanreview.mit.edu/article/how-professional-services-firms-dodged-disruption/]
Consultants Emerge as Early Winners in Generative AI Boom, The Wall Street Journal, 2023
[https://www.wsj.com/articles/consultants-emerge-as-early-winners-in-generative-ai-boom-8df71d38]
Killing Strategy: The Disruption Of Management Consulting, CBINSIGHTS, 2020
[https://www.cbinsights.com/research/disrupting-management-consulting/ ]
Revolutionizing Decision-Making: How AI and Data Analytics are Transforming Management Consulting Practices, Medium.com, 2023
[https://medium.com/accelerated-analyst/revolutionizing-decision-making-how-ai-and-data-analytics-are-transforming-management-consulting-94b98a8b1e1b]
Meet Lilli, our generative AI tool that’s a researcher, a time saver, and an inspiration – McKinsey Blog, 2023
[https://www.mckinsey.com/about-us/new-at-mckinsey-blog/meet-lilli-our-generative-ai-tool]

Author

Pietro Rapetti

Vrije Universiteit Amsterdam

Pietro Rapetti is a master’s student at Vrije University School of Business and Economics. After completing a Bachelor’s in Economics and Management for Art, Culture, and Communication at Bocconi University in Milan, he joined the Innovation Team of PwC Italy. Among other responsibilities, he was involved in the creation of startup incubators and accelerators.

Crafting Attention Flows in Organizations: How employees can shape communication structures

Mid-Level Employees Hold Power in Shaping Strategy and Communication. Unlike the old belief of top managers as sole decision-makers, our study shows mid-level employees wield substantial influence over how strategic issues get attention and which communication channels are used for it.

Authors

Anna Plotnikova

Vrije Universiteit (VU) Amsterdam

Krsto Pandza

Leeds University Business School

Richard Whittington

Saïd Business School and New College, University of Oxford

download the full study

Plotnikova, A., Pandza, K., & Whittington, R. (2023). EXPRESS: Bending the Pipes: Regaining Attention through Reinvention and Renewal. Strategic Organization, 0(0). https://doi.org/10.1177/14761270231184616

25 September 2023

Think of organizations as intricate networks of communication channels—meetings, reports, calls, workshops, and other interactions. Communication channels are especially important in organizations that are organized into specialized units or departments. They help to align with strategic objectives, ensuring that each unit’s efforts contribute to the organization’s overarching goals. How this network is structured significantly shapes what leaders and other members find crucial, how they direct their day-to-day efforts, and where they focus their attention. The “pipes and prisms” of this attention architecture determine when, where, and how decisions are discussed and made, involving specific individuals and adhering to certain protocols.

While this organizational architecture might seem unchanging and dictated by upper management based on their vision and preferences, our study published in the journal Strategic Organization reveals that these ‘pipes’ aren’t rigid. They respond not only to top management teams but also to other organizational actors, adding dynamism to our understanding of attention architecture and the agency of mid-level actors.

Strategic shifts within an organization lead to changes in attention architecture

When an organization alters its strategy as a consequence of new technologies, emerging players, or shifts in the external environment, the attention of leaders naturally shifts too, resulting in changes to attention structures. However, such changes can bring both positive and negative outcomes for those who work with communication channels – mid-level employees. The communication channels they contribute to can gain or lose its importance. This was evident in our study of professional strategists at Ericsson (large telecommunication firm) who, despite losing their central role initially due to strategic transformation, managed to regain their position. Two strategies aided their resurgence.

Expanding and Connecting ‘Pipes’

First, the group we studied reinvented some of the communication channels. They explored digital tools, recognizing the potential of involving new actors in established practices, such as understanding industry trends. Traditionally, this task was performed by experts. Mid-level employees also harnessed existing connections with core customers, proposing a Customer Engagement Group to align with top management’s focus on customer satisfaction. This experimental approach aims to add novel elements to existing channels, often by broadening participation through digital tools like crowdsourcing or online communities. Such experimental thinking is the underlying logic of reinvention – what is the novel aspect we can add to the existing channel? Extending the number of participants involved in a communication channel could be one of the promising ways to reinvent or expand the existing ‘pipe’. The availability of digital tools like crowdsourcing or online communities and chats are useful in it.

This experimental approach aims to add novel elements to existing channels, often achieved by broadening participation through digital tools like crowdsourcing or online communities.

Reviving and Repurposing ‘Pipes’

Another way to align communication channels with the evolving architecture is by revitalizing outdated channels. We called this renewal. To reintegrate old practices, it’s essential to identify gaps or areas where communication channels can bring value. Networking skills are crucial here. We observed how forming alliances with groups entrenched in the new attention architecture is the key. The group of professional strategists partnered with the technologists, who managed essential communication channels for top management decisions. The professional strategists’ strategic knowledge and industry expertise complemented the technological prowess of the technologists, successfully reintroducing joint strategy meetings into the new communication architecture. This approach of repurposing channels involves identifying how and when channels can be useful in addressing new strategic challenges. The selective reuse of familiar practices is the underlying logic of renewal. It is important to consider: what are the core communication channels for Top Management Team? Who is the core player in them? And what value can we add by partnering with those players? The ability to evaluate the new communication structure and clear value proposition for potential partners plays a pivotal role in reviving old ‘pipes.

This approach of repurposing channels involves identifying how and when channels can be useful in addressing new strategic challenges.

Organizational shifts might be an opportunity for different professional groups to regain their importance

Any transformation that an organization undergoes in its structure, culture, processes, strategies, or other fundamental aspects present opportunities for diverse professional groups to reclaim significance. The story of Ericsson’s strategists exemplifies how organizations can adapt to significant changes through flexibility and innovation. When traditional structures are disrupted, various employee groups, from strategy professionals to HR, Finance, and Marketing, can maintain their importance by creatively redesigning communication channels. As technologies like AI increasingly challenge professional roles, the ability to reinvent and renew communication channels empowers employees to strengthen their position, amidst major organizational changes.

Authors

Anna Plotnikova

Vrije Universiteit (VU) Amsterdam

Dr. Anna Plotnikova is Assistant Professor of Strategic Change at Vrije Universiteit (VU) Amsterdam, School of Business and Economics. Her research interests lie at the intersection of strategy practice and process research, focusing on topics such as open strategy and strategy participation.

Krsto Pandza

Leeds University Business School

Krsto Pandza is Professor of Strategy and Innovation at the Leeds University Business School. His research interests lie at the intersection of strategy, technology innovation and organizational theory.

Richard Whittington

Saïd Business School and New College, University of Oxford

Richard Whittington is Professor of Strategic Management at the Saïd Business School and New College, University of Oxford. His main current research interests are Strategy as Practice and Open Strategy.

Crisis or opportunity? Entrepreneurship and Covid-19 in Africa

The Covid-19 pandemic decreased entrepreneurial intentions in Africa, but at the same time entrepreneurs illustrated entrepreneurial resilience and innovativeness. Considering these contrasting effects, we urge practitioners to take local contextual dimensions into account and foster entrepreneurial resilience whilst designing entrepreneurial education and entrepreneurial support programmes in the aftermath of the pandemic.

Authors

Maud van Merriënboer (editor)

Vrije Universiteit Amsterdam

Hanâa Benchrifa

Université Hassan II de Casablanca

Steven Kator Iorfa

University of Portsmouth

Magnus Godvik Ekeland

Radboud University Nijmegen

Lotte-Marie Brouwer

Utrecht University

Neema Komba

Hanken School of Economics

Chanyoung Park

Hanken School of Economics

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van Merriënboer, M. (ed). (2022). Entrepreneurial Responses to Covid-19 in Africa. Utrecht: Eburon Academic Publishers.

11 September 2023

The Covid-19 pandemic and subsequent government measures decreased the number of people who wanted to or could become entrepreneurs in Africa. At the same time, the crisis yielded innovativeness and resilience among new and existing business owners. How can entrepreneurs and policy makers turn crisis into opportunity, and build back better through entrepreneurship?

The global crisis affected entrepreneurs all around the world, and Africa was no exception. Much focus was on the negative impact of the crisis: several relief funds were released by the donor community in the global North to support African entrepreneurs in these difficult times, and the pandemic was dubbed a “gendered” crisis as women entrepreneurs were said to be disproportionately affected through the increased time spent on childcare and other unpaid care tasks. There was little space for discussing the resilience demonstrated by African entrepreneurs, and the opportunities Covid-19 unlocked. The four studies in the edited volume ‘Entrepreneurial Responses to Covid-19 in Africa’ take a closer look at these two contrasting effects on entrepreneurship and Covid-19 in Africa: crisis on the one hand, and opportunity and resilience on the other.

Entrepreneurial intentions go down

Although the impact of the pandemic varied greatly across the continent, African economies generally were hit hard by the Covid-19 pandemic and subsequent measures, such as lockdowns and market closures. Entrepreneurial intentions and activities had a broad downturn due to substantial risks on both demand and supply side. Entrepreneurs were forced to downsize or (temporarily) quit their businesses, while fewer novel entrepreneurs started their own companies. Those that did engage with entrepreneurship seemingly did so out of necessity. A survey conducted by Hanâa Benchrifa and Steven Kator Iorfa amongst Moroccan university students (chapter 1), for example, found that students who felt threatened about their future due to the lockdown and subsequent scarcity of resources developed more positive attitudes towards entrepreneurial activities – considering it as the only viable option in a depleting job market.

Students who felt threatened about their future due to the lockdown and subsequent scarcity of resources developed more positive attitudes towards entrepreneurial activities – considering it as the only viable option in a depleting job market.

On the other side of the continent, Magnus Godvik Ekeland (chapter 2) spent one year in a South African township during Covid-19 times to better understand how the Covid-19 pandemic impacted the lives and livelihoods of young township residents. Specifically, his research aimed to uncover whether a government-dispensed Basic Income Grant would increase entrepreneurial intentions. Based on conversations with unemployed young men and observations on how they spent a temporary Covid-19 grant, Ekeland explains that entrepreneurial intentions are not likely to increase because of specific contextual dimensions. For these men, it was for instance less than desirable to become dependent on a (female) relative. This fear kept them from viewing entrepreneurship as a short-term solution to unemployment.

Entrepreneurial resilience and innovation go up

In both studies described above, entrepreneurship is considered second best to salaried employment in times of crisis. The final two chapters, however, shed light on a different outcome of the pandemic. These studies showcase entrepreneurs’ resilience in crisis, and the ability to come up with innovative solutions. When export numbers declined, Mercy Mwende, a Kenyan agri-business woman, developed a new product (affordable porridge) to appeal to the local community and diminish dependence on external markets. Mercy was part of a larger interview study conducted by Lotte-Marie Brouwer comprising twenty Kenyan female agri-entrepreneurs (chapter 3). Her chapter explores how these entrepreneurs demonstrated entrepreneurial resilience: “the ability of an entrepreneur to manage difficult personal and market conditions as well as destabilising events, and be future-oriented”^[1]. Short-term strategies included reducing costs and working side jobs, and long-term adaptation strategies were changing target markets and implementing digital solutions. For this specific group of entrepreneurs, the Covid-19 pandemic even provided new markets that otherwise would have been more difficult to enter as they would have had to compete with (Northern) imported products.

When export numbers declined, Mercy Mwende, a Kenyan agri-business woman, developed a new product (affordable porridge) to appeal to the local community and diminish dependence on external markets.

Similarly, two medical innovations from Tanzania and Kenya were exemplary of how innovative responses can offer coping mechanisms in times of crisis. Neema Komba and Chanyoung Park (chapter 4) show us that, rather than becoming paralyzed by the fear that was instigated by the pandemic, the entrepreneurs in these cases were able to ‘fight’ instead of ‘flight’, provided they receive proper support. This resulted in the founding of Tiba-Vent, a low-mechanical ventilator built by fifteen students of Kenyatta University in Nairobi, and the Cubic Bupiji Sauna – a steam inhalation treatment invented by George Buchafwe of Star Natural Products from Tanzania. The development cycles of these inventions were quite different due to differences in institutional or policy support. Whereas Tiba-Vent had to wait a long time to receive the proper certification, the Bipiji Sauna was endorsed by local politicians and public media instantly, and as a result the invention was adopted by hospitals a lot sooner.

From crisis to opportunity – three tips for practitioners

On the one hand, the Covid-19 pandemic decreased entrepreneurial intentions in Africa. On the other hand, entrepreneurs illustrated entrepreneurial resilience and innovativeness in responses to the crisis. Based on our findings, we end with three tips for practitioners who want to build back better through entrepreneurship.

Design proper entrepreneurial education.

In entrepreneurship education, it is important to consider the different motivations students have to engage in entrepreneurship. Students who consider entrepreneurship as the only viable option because there are no jobs, are inherently different from students who are opportunity-driven. Benchrifa and Iorfa encourage entrepreneurship educators to design educational programs such that both groups of students are activated to effectively increase entrepreneurial behaviour.

Take contextual dimensions into consideration.

Entrepreneurs come in all shapes and sizes. On a continent with more than 50 unique countries, there are many factors such as gender, class, sector, and national context that play a role in how well entrepreneurs respond to crises. Whereas schemes such as Basic Income Grants might have been proven successful in other regions to promote entrepreneurial behaviour, Ekeland’s research shows that it is important to also consider local notions of personhood whilst designing these policies. Depending on contextual perspectives of for example masculinity and dependency, programs that are supposed to increase entrepreneurial behaviour might not prove effective.

Foster entrepreneurial resilience and innovation.

Policy makers and ecosystem stakeholders have the potential to create positive framework conditions to foster entrepreneurial resilience. Brouwer, for example, demonstrates how the Northern donor community should be careful in approaching “African women entrepreneurs” as a homogenous group portraying them as “victims” during crises. Instead, they should analyse them in their specific context to uncover their particular needs while acknowledging their adaptive resilience. Komba and Park also show the importance of peer- and institutional support in fostering resilient entrepreneurial communities.

^[1] Fatoki, O. (2018). “The Impact of Entrepreneurial Resilience on the Success of Small and Medium Enterprises in South Africa,” Sustainability 10-7: 2527.

Authors

Maud van Merriënboer (editor)

Vrije Universiteit Amsterdam

Maud van Merrienboer is a PhD student at the department of Management and Organisation of the Vrije Universiteit Amsterdam. Her research focuses on the experiences of visible minority entrepreneurs in the Dutch tech start-up scene. Learn more about Maud’s research here.

Hanâa Benchrifa

Université Hassan II de Casablanca

Hanâa Benchrifa is an Assistant professor at Université Hassan II de Casablanca. Hanâa does research on entrepreneurship and corporate entrepreneurship inside SMEs.

Steven Kator Iorfa

University of Portsmouth

Steven Kator is a PhD student at the University of Portsmouth. He is a positive psychologist and researcher pioneering research in the field of value for life. His other research interests are human well-being/thriving, grief, trauma, substance abuse, environmental sustainability and climate change.

Magnus Godvik Ekeland

Radboud University Nijmegen

Magnus Godvik Ekeland is a PhD student at Radboud University Nijmegen. His research focuses on survival strategies, distribution and aspirations towards the good life in rural South Africa. The data is collected from ethnographic fieldwork conducted in several townships, before and during South Africa’s lockdown. How residents lives were impacted by pandemic and the subsequent lockdown will be given due attention.

Lotte-Marie Brouwer

Utrecht University

Lotte-Marie Brouwer is a PhD student at Utrecht University conducting research in gender and entrepreneurship among agri-businesswomen in Kenya. She is also the Women’s Entrepreneurship Lead of Bopinc. As such she helps to ensure that Bopinc’s entrepreneurship programs, innovative products and services and related business models are beneficial to everyone.

Neema Komba

Hanken School of Economics

Neema Komba is a poet, writer, and PhD student at Hanken School of Economics interested in entrepreneurship, corruption, gender and Tanzania. She is the founder of Amimeita Ventures Limited (irashoptz) making natural mosquito repellents, soaps, lotions, oils and co-founder of Lapoetista Arts Initiative.

Chanyoung Park

Hanken School of Economics

Chanyoung Park works at Hanken School of Economics and is interested in Health Psychology, Positive Psychology, Clinical Psychology, Entrepreneurial Economics, Business Economics and Business Administration.

Unleashing the Power of Managerial Translation

The emergence of influential management concepts, such as Lean, Agile, and Corporate Social Responsibility (CSR), drives organizational transformation. Recent research highlights the pivotal role of managers who strategically position themselves between top-level management and front-line employees, utilizing different modes of translation to transform these complex concepts into action.

Authors

Marlieke van Grinsven

Vrije Universiteit Amsterdam

Stefan Heusinkveld

Radboud University Nijmegen

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Van Grinsven, M., & Heusinkveld, S. (2023). Let me level with you: Brokerage work in the translation of management concepts. Scandinavian Journal of Management, 39(3).

28 August 2023

The Flow of Management Concepts

In today’s fast-paced business world, organizations strive to adapt and thrive by exploring innovative approaches. Influential management concepts like Lean, Agile, and Corporate Social Responsibility (CSR) have gained considerable attention in the past two decades and have had profound effects on our work environments. Previous research has highlighted the significance of intermediary actors who play a crucial role in driving organizational change and acting as translators. However, existing studies have offered limited insights into the diverse roles of translators and the strategies they employ to adapt concepts within organizations. Our research, published in the Scandinavian Journal of Management, takes a fresh perspective by adopting a brokerage work approach and develops a more comprehensive understanding of how intermediary actors shape the translation processes.

Unveiling the Role of Intermediary Actors

Traditionally, the role of intermediary actors in translating management concepts has been viewed as a linear process, with concepts flowing down from top-level managers to lower-level employees. In the traditional linear understanding of translation, the concept would be refined and modified by top-level managers before being communicated down the hierarchy to lower-level employees. However, our research reveals a more complex picture. We find that key intermediary actors, such as middle managers, play a crucial role in shaping the translation process. These middle managers, positioned between top-level management and front-line employees, have the unique opportunity to interact with and influence both parties. Instead of simply relaying information downward they affect the interaction between the organizational levels by which and the interpretative abstraction at which translation activities are performed, purposely drawing on each of those two to affect the other. Or in other words: intermediary actors actively use their position to affect both the way people interact within the organization and how they understand and interpret information.

Intermediary actors actively use their position to affect both the way people interact within the organization and how they understand and interpret information.

Unraveling Modes of Translation

Through in-depth interviews with intermediary actors responsible for Lean implementation in a hospital setting, our research uncovers three distinct modes of translation: stretching, shielding, and synthesizing. These modes demonstrate how managers strategically position themselves as carriers of ideas and employ specific tactics to navigate the translation process:

In the stretching mode, translation tactics focus on promoting interaction between different organizational levels, but they primarily revolve around abstract conceptualizations of the idea.
In the shielding mode, translation tactics are aimed at creating a disconnect in the interaction across hierarchical boundaries. This allows for diverse interpretations of how the concept is translated into specific local practices within the organization.
In the synthesizing mode, translation tactics are geared towards enhancing interaction across hierarchical boundaries by integrating the interpretations of different parties involved. This mode seeks to find a common ground and understanding among the various perspectives on the concept.

We delve into the conditions under which each mode is enacted and identify the translation tactics utilized within them, such as positioning, labeling, and channeling. Our findings reveal that these tactics are closely intertwined with the social positions of intermediary actors and significantly shape the translation of management concepts within organizations. Contrary to the conventional belief that alignment is the primary goal of translation, our study highlights the importance of purposeful misalignment through “shielding” between high-level management and front-line professionals.

ctices.

Shielding allows managers to intentionally create a disconnect between high-level management and front-line professionals, opening up space for diverging interpretations and the adaptation of concepts to local practices.

Conclusion: Driving Organizational Change through Effective Translation

Our research sheds light on how implementation managers, acting as intermediary actors, play a crucial role in intra-organizational translation. We present a conceptual model of brokerage work that provides insights into the three modes of translation and their associated tactics. In practical terms, our research offers valuable recommendations for individuals in change intermediary roles. By embracing the translation tactics identified in our model, middle managers can enhance their work during organizational change. One valuable recommendation is to consider using ‘shielding’, even if it goes against established norms. Shielding allows managers to intentionally create a disconnect between high-level management and front-line professionals, creating room for different interpretations and adapting concepts to local practices.

Authors

Marlieke van Grinsven

Vrije Universiteit Amsterdam

Marlieke van Grinsven is an assistant professor at the Management & Organization department of the Vrije Universiteit Amsterdam. Her research on translation and change appeared in Organization Studies, International Journal of Management Reviews and Scandinavian Journal of Management. Her work has also been published by Routledge and Cambridge University Press. m.van.grinsven@vu.nl

Stefan Heusinkveld

Radboud University Nijmegen

Stefan Heusinkveld is an Associate Professor at Radboud University Nijmegen, The Netherlands. His research appeared in British Journal of Management, Human Relations, Journal of Management Studies and Organization Studies. He is co-editor of the Oxford Handbook of Management Ideas and lead editor of the 2021 book on ‘The Flow of Management Ideas’, Cambridge University Press. stefan.heusinkveld@ru.nl

Why moral leaders are readers: how world literature can stimulate moral development in business school students

Reading and discussing world literature can contribute to the moral development of business school students. Stories with a complex moral challenge inspired students to be personally involved with the ethical side of business and stimulated to the growth of ‘moral muscle’.

Authors

Inge M. Brokerhof

Vrije Universiteit Amsterdam

Sandra J. Sucher

Harvard Business School

P. Matthijs Bal

University of Lincoln

Frank Hakemulder

Utrecht University

Paul G. W. Jansen

Vrije Universiteit Amsterdam

Omar N. Solinger

Vrije Universiteit Amsterdam

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Inge M. Brokerhof, Sandra J. Sucher, P. Matthijs Bal, Frank Hakemulder, Paul G. W. Jansen, and Omar N. Solinger (2023): Developing Moral Muscle in a Literature-Based Business Ethics Course. Academy of Management Learning & Education, 22, 63–87

3 July 2023

A new approach towards teaching business ethics

In the past decades, ethical scandals and widespread critique on shareholder based capitalism have drawn more attention to business ethics education. In the business ethics classroom, students have the opportunity to become critical moral agents. However, classical approaches to teaching business ethics – often relying on teaching abstract moral philosophy – have been criticized for not involving students on a personal level. This stimulated the development of new pedagogical approaches towards business ethics. We studied such a new pedagogical approach. In our inductive case study, published in Academy of Management Learning & Education, we explored how students experienced a course where world literature was the main source of study material. Every week students read and discussed a piece of world literature taking place in different times and cultural contexts – from ancient Greece to modern America, from colonial times in Africa to the aftermath of WWII. They analyzed the texts, applied moral theory on the different narratives, and made links to moral challenges in modern day business. For more information about this pedagogical approach see Sucher (2007).

Every week students read and discussed a piece of world literature taking place in different times and cultural contexts – from ancient Greece to modern America, from colonial times in Africa to the aftermath of WWII.

The benefits of a narrative approach

Students reported a deeper way of learning compared to regular business ethics courses, even case studies. They felt absorbed in the narratives and were emotionally involved with the protagonists and their moral predicaments. In the class room there was laughter, but also crying. Narratives also offered a safe arena in which students could explore different moral concepts and practice their moral imagination. Not only reading the narratives was beneficial for the learning experience for students – discussing the stories in a group setting illustrated how people can interpret the same moral challenge in a different way. This was often eye opening for students.

Narratives also offered a safe arena in which students could explore different moral concepts and practice their moral imagination.

Developing ‘moral muscle’

When we asked students how they experienced the course, they indicated they had developed ‘moral muscle’ – a dynamic moral capability that needs to be developed through regular reflection and practice. Moral muscle consists of a gradual increase of moral awareness, the motivation to practice moral decision-making on a day-to-day basis, and the desire to build moral character. Having a strong moral muscle means being at ease in taking a moral stance and feeling equipped to make moral decisions. Similar to regular muscle, moral muscle needs regular attention and practice to grow stronger. People showed different starting points and learning routes of moral development. Some students started the course with a rather rigid conception of ‘right versus wrong’. After the course, this group showed a stronger appreciation for the complexity of moral decision-making and the value of other moral perspectives than their own. Another group started the course from moral relativism (there is no right or wrong) and during the course this group started to realize that developing their own moral code was important in order to make moral decisions. In the context of moral development, these different learning paths illustrate that people in the same course can learn different – at times opposite – moral capabilities. This is in contrast with existing theory that assumes that all people go through similar developmental steps of moral development.

Having a strong moral muscle means being at ease in taking a moral stance and feeling equipped to make moral decisions.

Practice moral muscle

The gradual development of moral muscle and its similarity to regular muscle also suggests that without moral awareness and regular practice, moral muscle will likely decline. Students thus realized that in order to be effective moral leaders later in their future career, they would have to start now with practicing their moral decision-making. And they would have to keep paying attention to the moral complexities of organizational life. Our study suggests that exposing yourself to a variety of moral challenges via world literature – and ideally discussing this literature with other people – could be a valuable way to practice or your moral muscle and broaden your moral horizon.

Students realized that in order to be effective moral leaders later in their future career, they would have to start now with practicing their moral decision-making.

More information

Here you can find our research study, published in Academy of Management Learning and Education. (Link: https://doi.org/10.5465/amle.2020.0072)
For more pedagogical information on how to use world literature in the business ethics classroom, see the book of Sandra Sucher (Harvard Business School): Sucher, S. J. (2007). The moral leader: Challenges, tools and insights. Routledge.

Authors

Inge M. Brokerhof

Vrije Universiteit Amsterdam

Inge M. Brokerhof (i.m.brokerhof@vu.nl) (PhD, Vrije Universiteit Amsterdam) is a writer, public speaker and researcher affiliated with the Vrije Universiteit Amsterdam in the Department of Management and Organization. Her research interests are narratives, identity, rhetoric, storytelling, business ethics, and organizational change.

LinkedIn: https://www.linkedin.com/in/inge-brokerhof-phd-8299b7118/

Pure: https://research.vu.nl/en/persons/inge-brokerhof

Sandra J. Sucher

Harvard Business School

Sandra J. Sucher (ssucher@hbs.edu) is the MBA Class of 1966 professor of management practice at Harvard Business School. Her research interests are trust, moral leadership, interpersonal skills development, and workforce change.

Faculty website: https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6610

P. Matthijs Bal

University of Lincoln

P. Matthijs Bal (MBal@lincoln.ac.uk) is professor of responsible management at the Lincoln International Business School, University of Lincoln, United Kingdom. His interests concern dignity at work, fictional narratives in the workplace, and ideology.

LinkedIn: https://www.linkedin.com/in/matthijsbal/?originalSubdomain=uk

Faculty website: https://staff.lincoln.ac.uk/44aaf6fc-1da0-4324-a268-f672f8bd5ca1

Frank Hakemulder

Utrecht University

Frank Hakemulder (F.Hakemulder@uu.nl) is senior researcher at Utrecht University and affiliated full professor at the Reading Centre, University of Stavanger, Norway. He specializes in the psychology of literature and media. His research pertains to the effects of stories on reflection, well- being, and perceptions of self and others.

Faculty website: https://www.uu.nl/staff/FHakemulder

Paul G. W. Jansen

Vrije Universiteit Amsterdam

Paul G. W. Jansen (p.g.w.jansen@vu.nl) is professor emeritus at the Vrije Universiteit Amsterdam. His research interests are performance management, leadership, and organizational change.

Faculty website: https://research.vu.nl/en/persons/pgw-jansen

Omar N. Solinger

Vrije Universiteit Amsterdam

Omar N. Solinger (o.n.solinger@vu.nl) (PhD, Maastricht University) is associate professor at Vrije Universiteit Amsterdam in the Department of Management and Organization. His research interests are leadership, commitment, organizational change, and morality.

Faculty website: https://research.vu.nl/en/persons/omar-solinger

When M&A meets emotion: How emotional dynamics look like during M&A trajectories

Mergers and acquisitions (M&As) are frequently used as vehicles for growth, yet failure rates remain high. An overlooked reason are important “human factors” such as emotions that are vital to M&A performance. Our research reveals emotional dynamics and their effects during an M&A process.

Authors

Yoeri Klok

Vrije Universiteit Amsterdam

David P. Kroon

Vrije Universiteit Amsterdam

Svetlana N. Khapova

Vrije Universiteit Amsterdam

download the full study

Klok, Y., Kroon, D.P. and Khapova, S. N. (2022). The Role of Emotions during mergers and Acquisitions; A Review of the Past and a Glimpse into the Future. International Journal of Management Reviews, available at https://onlinelibrary-wiley-com.vu-nl.idm.oclc.org/doi/pdf/10.1111/ijmr.12322J

19 June 2023

Why are emotions important during M&As?

Emotions are transient feelings everyone experiences, with an identified trigger or target shaped by sensemaking practices, resulting in emotional experiences and responses. During a sensemaking process, an individual cognitively appraises emotional triggers based on positive or negative effects on their well-being. This emotional process is especially triggered by disrupting events. Therefore, particularly relevant in times of change, such as M&As.

Emotional experiences can be broadly categorized into two groups, negative emotions and positive emotions. Research shows that negative emotional experiences are associated with negative attitudes and behaviors, such as indifference and sabotage. In contrast, positive emotions are associated with positive attitudes and behaviors, such as openness and cooperation. Thus, making emotional dynamics during M&As important factors concerning alignment or resistance towards organizational set M&A goals and initiatives, thereby impacting M&A success or failure.

Thus, making emotional dynamics during M&As important factors concerning alignment or resistance towards organizational set M&A goals and initiatives, thereby impacting M&A success or failure.

Different kinds of emotions during M&As

Not much is known concerning emotional dynamics during M&A times and their effects, and what is known is mostly fragmented and incohesive. To resolve this problem, we made a review of the existing literature. First, we divided the M&A process into three phases, the pre-M&A, during-M&A and post-M&A. Secondly, we examined per phase what emotional triggers were salient, which emotions were experienced, what the emotional outcomes and attitudes were, and how these emotional dynamics were managed. Finally, we summarized the literature in a process framework.

What came to light after the review was that emotional experiences are extremely diverse and range from positive to negative and everything in between. Employees can also experience multiple (conflicting) emotions at the same time. Examples of observed emotions are happiness, excitement, frustration, indifference, anger, hostility, jealousy, fear, anxiety, stress and many more.

Interestingly, employees do not respond to emotional triggers in the same way. What is good for one might be bad for someone else. This is due to individual differences concerning emotional sensemaking. Moreover, we observed that negative and positive emotional experiences do not always have similar outcomes. For example, negative emotions are sometimes used as correcting mechanisms, whereas positive emotions sometimes result in overconfident- self-serving behaviors. Employees further exhibit huge differences in emotional resilience, coping, intelligence, labour and psychological capital, making emotions and outcomes challenging to manage and predict.

Finally, we observed that during the pre-M&A and during-M&A phases, emotions are contained within the upper echelons of an organization and are mostly positive. However, as soon as the rumour mill starts running and the M&A is announced in the post-M&A integration phase, emotions spread rapidly throughout the organization and shift from positive to negative.

As soon as the rumour mill starts running and the M&A is announced in the post-M&A integration phase, emotions spread rapidly throughout the organization and shift from positive to negative.

A bright M&A future might lie around the corner

With our article, we offer valuable insights for managers and other practitioners. Firstly, by championing the importance of emotional dynamics within an organization and the trajectory of an emotional trigger, registration, experience and response. Understanding these mechanisms makes adjusting corporate strategy towards emotional value creation easier. Focusing on the organization’s human capital reduces stress and anxiety and, ultimately, the high (human) costs associated with turnover and burnout.

Secondly, there are huge opportunities to prevent negative emotions by correctly managing emotions during the post-M&A integration phase, as emotions become endemic. Negative emotions need to be felt, heard and acknowledged. Moreover, negative emotions can act as correction mechanisms for faulty strategies. It is vital for employees to feel responsible, fairly treated, certain and in control. These states can be achieved if managers offer their employees respect, motivation, inspiration, empowerment, communication, reward, recognition, and accountability. During M&A times, it is vital to offer a clear plan in which these dimensions are touched upon, combined with describing what will happen for the foreseeable future, e.g., three years. In doing so, one of the most harmful emotions, uncertainty, will be mitigated. A valuable lesson is that negative emotions must be felt and closed off instead of lingering like the sword of Damocles.

Leaders should therefore focus on preventing negative emotions by actively fostering and cultivating positive ones.

Finally, there is much-untapped potential concerning positive emotions. The main focus of organizations and societies is oriented towards negative emotions. Our article shows positive emotions’ positive effects on M&As and employees. Positive emotions prevent and can counter negative emotions; positive emotions broaden the mind making employees open to change, and positive emotions, such as enthusiasm, make employees actively cooperate with M&A initiatives. Leaders should therefore focus on preventing negative emotions by actively fostering and cultivating positive ones. This can be done by creating a safe environment in which dialogues between employees and management result in a continuous feedback loop. Why cure a sick patient if the patient does not need to be sick in the first place?

Authors

Yoeri Klok

Vrije Universiteit Amsterdam

Yoeri Klok is a PhD student finalizing his dissertation on emotional dynamics during post-acquisition integration. He is a strategic consultant and witnessed first-hand the devastating effects that M&As can have on employees’ mental health and overall well-being. His research is in their honour and will, hopefully, lead to more emotional attention among corporate leaders during change processes.

David P. Kroon

Vrije Universiteit Amsterdam

David P. Kroon is Associate Professor of Strategy and Organization at the School of Business and Economics of Vrije Universiteit Amsterdam. He received his PhD from Tilburg University. His current research focuses on inter-organizational collaborations and organizational change with a particular emphasis on “human factors,” such as identity/identification, justice, culture, emotions, cognitive biases, and trust. More information about David’s research can be found here.

Svetlana N. Khapova

Vrije Universiteit Amsterdam

Svetlana N. Khapova is Professor of Careers and Organization Studies at the Vrije Universiteit Amsterdam. Her research focuses on contemporary issues related to individuals’ career and work. Her research has been published in various top-tier journals. She is author (together with M. B. Arthur and J. Richardson) of the book “An Intelligent Career: Taking Ownership of Your Work and Your Life” published by Oxford University Press in 2017. More information about Svetlana’s research can be found here.

The top 5 ethical transgressions in consulting

A new study has expanded the discussion on ethical practice in business consulting by reviewing media reporting, interview transcripts and jokes made on the internet to identify five common ethical transgressions made by consultants.

Author

Onno Bouwmeester

Vrije Universiteit Amsterdam

download the full study

Bouwmeester, Onno (2023) ‘What Jokes Can Tell: A Top 5 of Ethical Transgressions in Consulting.’, Management Consulting Journal, 6 (1). pp. 37-48.

5 June 2023

The research was conducted by Onno Bouwmeester, Professor of Consulting and Business Ethics at Durham University Business School, and Director of VU Knowledge Hub for Consulting and Professional Service Firms at Vrije Universiteit Amsterdam. His study finds that, whilst clients are typically portrayed within industry guidance as the biggest victims of ethical failures by consultants, media reporting, accepted industry attitudes and conversations with consulting staff reveal a very different reality.

Professor Bouwmeester says,

“The media typically positions both consultants and clients as partners in crime in various ethical scandals reported by journalists; from helping their clients to find loopholes in the law or facilitating tax avoidance practices, to links to corrupt officials. Clients are not the only, and certainly not the most vulnerable stakeholder in situations where ethical transgressions occur.”

Current consulting guidance and literature, he states, pays little attention to this, focusing instead on how to deliver a service that is up to agreed professional standards to protect clients. However, there currently is little guidance or protection in place that considers other, more vulnerable stakeholders impacted in instances when ethical behaviour falls short.

Professor Bouwmeester continues,

“In reality, client staff and junior consultants can often be the ones most impacted by such ethical dilemmas. In addition, these realities have become the theme of popular jokes within the consulting community, seemingly with little action taken on addressing these shortcomings.”

His study contributes to the business ethics debate by widening the discussion. By reviewing interviews given by more than 100 Dutch consultants, the study identifies the top five ethical transgressions commonly made in consulting. Then, by analysing a sample of almost 100 popular critical consultant jokes found on the internet, Bouwmeester illustrates each issue to provide perspective on the problematic wider attitudes.

The Top Five Ethical Transgressions are;

Being Detrimental to Client Staff: Described as situations whereclients ask consultants for an opinion on individual employees. Consultants, in attempting to avoid assessing employees behind their backs may give enough vague indicators to where they think problems within a department or team can originate, so that clients draw their own conclusions.

Jeopardising Professional Independence: Defined as instances of consultants being manipulated when preparing their assignment conclusions, either because the client may want to hear a certain outcome for which the grounds are insufficient, or when a consultant does not agree professionally with the client’s preferred approach, but overlooks this to keep the peace.

Overbilling and Selling Juniors as Seniors: Exemplified by instances where consultants overpromise in client proposals by offering more hours or delivery than they actually plan to provide, or enhancing junior staff CVs in order to secure a higher fee.

Fake it ’til You Make it: Described as consultants suggesting they have more experience, expertise, and capacity then they really have. Or taking on more work than capacity allows for, bluffing to clients and trying to catch up during the assignment. One key consequence of this is junior consultants struggling to cope with the pressure of keeping up pretences and feeling insecure with the expectations placed upon them.

Being Engaged in Unnecessary Work: For example, instances where consultants take on assignments specified as vital by clients, despite feeling such projects will lead nowhere or have minimal impact. Instead of voicing such concerns or stepping back, consultants go through the motions, agreeing with the client to secure the fee and keep the peace, but ultimately offer very little value.

Professor Bouwmeester says,

“While codes of conduct focus on the consultant-client relationship, and in particular on the primary client who pays, who owns the problem and who is mentioned in the contract between consultant and client, consultant ethics should include more stakeholders. The jokes and interviews reviewed in this study provide much evidence for this call, just like investigative journalists.”

The full study “What Jokes Can Tell: A Top 5 of Ethical Transgressions in Consulting” is available to read in the Management Consulting Journal.

Author

Onno Bouwmeester

Vrije Universiteit Amsterdam

Onno Bouwmeester is professor of consulting and business ethics at Durham University Business School. He started his career as management consultant at KPMG. He is founder of the Management Consulting MSc programme, and director of the VU Knowledge Hub for Consulting and PSF at Vrije Universiteit Amsterdam

Learning the hard way: how entrepreneurs move from overconfidence to confidence

Authors

Joeri van Hugten

VU School of Business and Economics

Wim Coreynen

Zhejiang University (ZJU) in Hangzhou, China

Johanna Vanderstraeten

UAntwerp

Arjen van Witteloostuijn

VU School of Business and Economics

download the full study

Joeri van Hugten, Wim Coreynen, Johanna Vanderstraeten, Arjen van Witteloostuijn, The Dunning-Kruger effect and entrepreneurial self-efficacy: How tenure and search distance jointly direct entrepreneurial self-efficacy, Journal of Business Research, Volume 161, 2023.

22 May 2023

You would assume that gaining experience in a domain builds confidence. However, our open access publication at the Journal of Business Research shows that it does not work like this in the context of entrepreneurship. Instead, some of the 281 entrepreneurs we studied show the Dunning-Kruger effect; that is, inexperience makes people overconfident, experience gives the awareness to correct this, and thus experience initially reduces confidence.

Helping small businesses and going beyond the simple approach

We are part of a consulting project for small businesses by the Flemish government. Small businesses who need help (e.g., with surviving, with growing, succession, and other aspects of strategic change) can sign up for a relatively small fee. The entrepreneurs that lead such a business fill in our survey, which serves as input for their coaches, as well as serving as data for us as researchers.

The resulting dataset contains people with a variety of years working as an entrepreneur, as well as a variety of confidence in their ability to do entrepreneurial tasks successfully. We go two steps beyond simply correlating those data. First, we argue that experience is more than ‘the number of years ; some entrepreneurs encounter more challenges in one year than others in their lifetime. To capture such differences, we distinguish small businesses with an ambitious strategy (i.e., often add or replace offerings) and those with a safe strategy (i.e., keep or only slightly change the same offerings). Second, we test for the possibility that the relation between experience and confidence may not be linear.

The story we see in the data

Entrepreneurs who start a venture with high confidence tend to have an ambitious strategy. Such a strategy exposes them to challenging encounters which make them lose confidence over experience for the first fifteen years. By contrast, those who start a venture with neutral confidence choose a safe strategy. They have familiar encounters which causes their confidence to be stable over experience.

At fifteen years of tenure, we see the two groups converge at neutral confidence. Thereafter, the groups diverge again. Only now, confidence starts to build for those with an ambitious strategy as their challenging encounters lead to strong learning, and they don’t have many shortcomings left to become aware of. Meanwhile, those with a safe strategy remain at the same neutral confidence.

An invitation for compassion and lifelong learning

For entrepreneurs, this means compassion when others or they themselves lose confidence when engaging in ambitious strategies. For a longer time span than one might intuit, it can still turn around! Second, to increase confidence, choosing an ambitious strategy can help, but expect to endure experiences that seem too challenging for quite some years.

The increase in confidence from experience after fifteen years affirms the importance of a mindset of lifelong learning.

For educators, this means that exposing students to entrepreneurial experiences may not help them build confidence in entrepreneurial ability. Especially challenging experiences might even harm their confidence before it starts to build their confidence (even among those who proactively choose it). Furthermore, losing confidence after such experience does not mean that entrepreneurship is not fitting for the student, because that happens even among real entrepreneurs. Finally, the increase in confidence from experience after fifteen years affirms the importance of a mindset of lifelong learning.

Authors

Joeri van Hugten

VU School of Business and Economics

Joeri van Hugten is an assistant professor of entrepreneurship at the M&O department of the VU School of Business and Economics. He is interested in how entrepreneurs’ actions result from social constructions. ‪Google Scholar, LinkedIn, PURE

Wim Coreynen

Zhejiang University (ZJU) in Hangzhou, China

Wim Coreynen is an assistant professor at the Department of Innovation, Entrepreneurship and Strategy (IES) at the School of Management of Zhejiang University (ZJU) in Hangzhou, China. He obtained his PhD at the Faculty of Business and Economics of the University of Antwerp (UA) in Belgium. He has previously also worked for Antwerp Management School (AMS) in Belgium as well as the Jheronimus Academy of Data Science (JADS), Free University of Amsterdam (VU) and Utrecht University (UU) in the Netherlands. His research focuses on service, technology, intellectual property, and entrepreneurship. ‪Google Scholar, LinkedIn

Johanna Vanderstraeten

UAntwerp

Johanna Vanderstraeten works at UAntwerp as associate professor in (International) Entrepreneurship at the Management department of the Faculty of Business and Economics (FBE). She focuses on Ambitious entrepreneurship, International entrepreneurship, Organizational sponsorship (e.g., business incubators), and Student-entrepreneurship. LinkedIn, UAntwerp profile

Arjen van Witteloostuijn

VU School of Business and Economics

Arjen van Witteloostuijn is professor and dean at the VU School of Business and Economics. He is an interdisciplinary and highly productive researcher who is also active in political debate. The question that runs through his work is why some institutions (in a broad sense) are successful while others are not. ‪Google Scholar, LinkedIn, PURE

Skidding in the global race for talent? Diversity at the top puts firms on track

As competition for the best talent takes on an international dimension, firms must find ways to attract the skilled employees. Our study shows that nationality diversity in the top management team matters for employer attractiveness – either directly or mediated via firms’ efforts to promote diversity.

Authors

Sebastian Baldermann

Vrije Universiteit Amsterdam

Tobias Dauth

HHL Leipzig Graduate School of Management

Stefan Schmid

ESCP Business School Berlin

download the full study

Dauth, T., Schmid, S., Baldermann, S., & Orban, F. (2023). Attracting talent through diversity at the top: The impact of TMT diversity and firms’ efforts to promote diversity on employer attractiveness. European Management Journal, 41(1), 9-20.

8 May 2023

What increases firms’ chances of winning the race?

The simple answer: nationality diversity! But, in order to truly have a positive impact on employer attractiveness, not only are diversity initiatives in the firm required – but an implementation of diversity at the very top of the organization, i.e., in the top management. Our empirical analyses for a sample of firms from four European countries reveal that diversity in the top management team (TMT) has a direct positive effect on employer attractiveness for job seekers from foreign countries. What is more, TMT diversity may enhance initiatives to promote diversity in the firm, which then in turn positively affects the perceived favorability of the firm for talent from abroad.

TMT diversity may enhance initiatives to promote diversity in the firm, which then in turn positively affects the perceived favorability of the firm for talent from abroad.

We argue that this is because diversity, either in the form of TMT members’ background or concrete initiatives, affects the brand of the employer, i.e. the firm’s perception. Employer branding that appears to place emphasis on diversity signals to potential employees that a firm offers a positive environment and development opportunities for them irrespective of one’s origin. As a consequence, potential employees might be more likely to apply, fueling firms in the global race for talent. However, the association between diversity and employer attractiveness may come across a bit abstract, and begs the question:

So what can firms do practically?

There are several hands-on measures firms can consider in their race strategy for talent. To begin with, be open with regard to nationality background when appointing new TMT members – and not just favor those for top positions who went through the ranks of the focal firm in a conventional “domestic career”.

But, at the same time, avoid pure signaling and lip service by introducing nationally diverse top managers only for the sake of having them. Actual initiatives to enforce a supportive climate for diversity matter as well – or might serve as a mediator that only enables an (indirect) association between TMT diversity and employer attractiveness in the first place: refocusing our empirical analyses on all job seekers, instead of just foreign job seekers, we show that TMT diversity by itself has no direct effect on employer attractiveness for the entire pool of talent. However, once again, it affects firms’ efforts to promote diversity, which may then impact favorability as an employer. In other words, for all job seekers, diversity initiatives are mandatory in order to have a positive employer attractiveness effect of diversity at all.

Given the empirically evident association between TMT diversity and firms’ efforts to promote diversity, it appears to make sense to directly tie the responsibility and ownership for diversity initiatives to individual members of the TMT. This might signal credibility of firms’ statements to foster diversity in their organizations. Examples of diversity initiatives could include, but are not limited to, mentoring programs, special trainings for people with a non-domestic background or efforts to enable equality e.g. in terms of pay.

In a nutshell: firms that depend on talent from all over the world should embrace diversity, but in a credible and long-term oriented manner. Of course, this is easier said than done, but firms appear to be the architects of their own fortune … or not?

In a nutshell: firms that depend on talent from all over the world should embrace diversity, but in a credible and long-term oriented manner.

So it’s all in the firms’ hands?

Not entirely. Indeed, firms can do a lot to signal a favorable climate for diversity in their organization. But their sphere of influence is also limited. Especially country level factors could hamper diversity efforts of firms. Is there a welcoming societal and governmental climate for foreign employees? Is the country struggling with (military) conflict? Are there protectionist measures that signal that an economy is shutting off? These could be factors preventing foreign job seekers from considering a firm as a potential workplace, despite efforts to offer an inclusive environment for people with diverse backgrounds.

However, this is not meant to discourage firms from enhancing the diversity of the top management or introducing initiatives to promote diversity. Macro level factors might be subject to change as well, and eventually, firms’ diversity focus will pay off. Or, returning to the metaphor, the winner’s rostrum in the global race for talent will be in sight.

Authors

Sebastian Baldermann

Vrije Universiteit Amsterdam

Dr. Sebastian Baldermann is Assistant Professor of International Business at the Management & Organization Department of Vrije Universiteit Amsterdam. His research focuses on how individuals and their characteristics shape organizations, with a particular focus on internationalization. Furthermore, Sebastian is interested in the internationalization strategies of Multinational Corporations (MNCs) and the implication of global trends and developments for International Management. He has published several journal articles, chapters and practitioner-oriented articles on these topics.

https://nl.linkedin.com/in/dr-sebastian-baldermann-810a34117?trk=people-guest_people_search-card

Tobias Dauth

HHL Leipzig Graduate School of Management

Prof. Dr. Tobias Dauth holds the Chair of International Management at HHL Leipzig Graduate School of Management. In his research, he focuses on strategic, organizational and cultural challenges of international firms. He is a member of the German Academic Association for Business Research (VHB), the European International Business Academy (EIBA) and the Academy of International Business (AIB). Moreover, he serves as reviewer for several international academic journals.

https://de.linkedin.com/in/tobias-dauth

Stefan Schmid

ESCP Business School Berlin

Prof. Dr. Stefan Schmid is Professor and Chair of International Management and Strategic Management at the Berlin campus of ESCP Business School, where he is also the Academic Director of the Executive MBA. He has published widely, in particular on firm internationalization and TMT internationalization. His contributions appear in a broad range of different formats, such as academic journal articles, practitioner-oriented papers, books and case studies. Learn more about Stefan Schmid: escp.eu/imsm.

https://orcid.org/0000-0002-4277-1116

Is ESG reporting ready to save the world?

ESG reporting is a mainstream topic among corporations. Standard-setters around the world seem to be trapped into the assumption that ESG reporting not only increases transparency, but also evokes more sustainable behavior. However, research shows that we lack understanding how ESG reporting can lead to real positive impact.

Authors

Rüdiger Hahn

Heinrich Heine University of Düsseldorf

Daniel Reimsbach

Nijmegen School of Management, Radboud University

Christopher Wickert

Vrije Universiteit Amsterdam

Download the full study

Hahn, R., Reimsbach, D., & Wickert, C. (2023). Nonfinancial Reporting and Real Sustainable Change: Relationship Status—It’s Complicated. Organization & Environment, 36(1), 3–16.

21 March 2023

ESG reporting, the communication of environmental, social and governance issues by business firms, has been hailed as an important solution to tackle societal challenges such as the climate crisis. Yet, while it increases transparency, the “real” effects of ESG reporting on social and ecological conditions remain unclear. To address this shortcoming, we have solicited a special issue of research papers with a call to scrutinize how ESG reporting may accelerate, or even slow down, real sustainable change in organizations. This is crucial, because a report alone can only be a first step toward such change. We need to focus on whether and how ESG reporting evokes the transformation of organizational practices that would ultimately materialize into real impact for society at large, rather than being merely a PR exercise for business firms.

The topic is timely, because ESG reporting has recently been fueled by several regulatory initiatives around the world, most notably in the EU, the USA, as well as in China. Yet, the elephant in the room that remains to be tackled is how we can causally link the outputs of ESG reporting such as higher transparency, commitments and strategies to outcomes such as absolute emissions reductions and real impacts such as meeting the 1.5° target.

In an ideal world, and as often proclaimed by many reporting companies, advisory firms, and regulatory bodies, ESG reporting is critical for generating sustainable change. The argument goes that increased transparency would lead to increased accountability, thus stimulating change in organizational practices and procedures. However, it often appears that current ESG reporting practices are rather oriented at serving the demands of reporting entities, such as reputational gains, while offering attractive new markets for advisory and auditing firms. This is problematic, because the measurable impacts on societal well-being and other beneficiaries, such as marginalized stakeholders and ecological conditions, are often only a by-products of ESG reporting, rather than their core aim. It remains unclear whether there is a robust causal link between reporting and real sustainable change. In fact, whether, why, and how sustainable outputs, such as nonfinancial reports and other information distributed to stakeholders would actually materialize into sustainability-related outcomes, such as reduced carbon emissions, enhanced biodiversity, and improved human rights, which would ultimately lead to desirable impacts at the societal level of analysis remains ambiguous at best.

With these premises in mind, we have put together a special issue in the journal Organization & Environment that presents a collection of research articles which shed important light on the phenomenon of how ESG reporting can contribute to real sustainable change, and disentangled the complicated linkages between outputs, outcomes, and impact. As the collection of research shows, it is no easy task and requires reconsidering some important assumptions of ESG reporting in companies.

The contributions to the special issue address several important themes in the ESG/nonfinancial reporting literature and collectively offer a deep dive into the state-of-the-art research in this field. The first contribution by Nicolas Garcia-Torea, Carlos Larrinaga and Mercedes Luque-Vílchez, titled “Bridging the Understanding of Sustainability Accounting and 17 Organizational Change,” reviews the literature on ESG reporting; the authors integrate research in the accounting and organizational studies domains and alert us to important blind spots in the literature. Then, two articles examine key input factors that may enable real sustainable change through ESG reporting, transparency, and voluntary versus involuntary reporting. Joel Andrus, Patrick Callery and Jake Grandy analyze The Uneven Returns of Transparency in Voluntary Nonfinancial Disclosures, and Dorota Dobija, Charles Cho, Chaoyuan She, Ewelina Zarzycka, Joanna Krasodomska and Dariouz Jemielniak investigate Involuntary Disclosures and Stakeholder-Initiated Communication on Social Media.

Another set of articles incorporates (quantitative) measures of real sustainable change as a dependent variable related to ESG reporting. For example, Limin Fu studies negative media coverage of ESG reporting, asking “Why Bad News Can Be Good News?”, and studies The Signaling Feedback Effect of Negative Media Coverage of Corporate Irresponsibility. In their work Under Pressure? The Link Between Mandatory Climate Reporting and Firms’ Carbon Performance, Tobias Bauckloh, Christian Klein, Thomas Pioch and Frank Schiemann make an important distinction between relative and absolute levels of real sustainable change, showing that firms tend to favor the former at the expense of the latter. Then, Logan Crace and Joel Gehman examine What Really Explains ESG Performance and Disentangle the Asymmetrical Drivers of the Triple Bottom Line. Finally, Koen van Bommel, Andreas Rasche and André Spicer, in their study “From Values to Value: The Commensuration of Sustainability Reporting and the Crowding Out of Morality,” show that ESG reporting shifted from an emphasis on morally charged values toward a focus on financial value creation, making it more difficult to associate sustainability issues with potential moral dilemmas.

Taken together, the research presented in this special issue takes our understanding of how ESG reporting relates to real sustainable change to the next level. Yet, the same research also alerts us to a number of important blind spots that we still need to investigate. In the introduction to the special issue, we offer a range of suggestions where future research should be heading and how open questions could be best addressed.

Authors

Rüdiger Hahn

Heinrich Heine University of Düsseldorf

Rüdiger Hahn is the Henkel-Endowed Chair of Sustainability Management at the Heinrich Heine University of Düsseldorf, Germany. He previously held chaired positions at the Universities of Hohenheim and Kassel, both Germany. His research focuses on nonfinancial reporting, stakeholder behavior, social enterprises, and the Base of the Pyramid. He has published in a diverse set of internationally renowned journals such as Organization & Environment, Business & Society, European Accounting Review, International Journal of Management Reviews, and Strategic Organization.

Daniel Reimsbach

Nijmegen School of Management, Radboud University

Daniel Reimsbach is currently Associate Professor of Accounting and Sustainability at the Nijmegen School of Management, Radboud University (The Netherlands). Much of Daniel’s research focusses on the role of accounting information in the realm of sustainability and corporate social responsibility (CSR). His research has been published in internationally renowned journals such as Organizations & Environment, Academy of Management Discoveries, Business & Society, European Accounting Review, and Strategic Organization.

Christopher Wickert

Vrije Universiteit Amsterdam

Christopher Wickert (PhD, University of Lausanne) is Professor and Chair of Corporate Social Responsibility (CSR) at Vrije Universiteit Amsterdam, The Netherlands, and Director of the VU Business & Society Knowledge Hub (www.business-society.org). He has published widely in leading scholarly journals on topics such as CSR, sustainability, business & society, and social entrepreneurship, as well as in practice-oriented outlets such as Harvard Business Review and The Financial Times. He is currently General Editor of the Journal of Management Studies, a leading scholarly journal in the field of management and organizational theory.

Unlocking the Future of Consultancy: Building In-House AI Languages with a Deep Learning Expert

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How Workplace Changes and Managerial Support Impact Employee Learning

The roots of the symbolic are key for business and management

People at the heart of the circular economy: turning trade-offs into synergies

Is funding a startup worth the risk? The answer may be found by looking in the mirror

Crafting Attention Flows in Organizations: How employees can shape communication structures

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Authors

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How Workplace Changes and Managerial Support Impact Employee Learning

The roots of the symbolic are key for business and management

People at the heart of the circular economy: turning trade-offs into synergies

Is funding a startup worth the risk? The answer may be found by looking in the mirror

Crisis or opportunity? Entrepreneurship and Covid-19 in Africa

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Authors

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How Workplace Changes and Managerial Support Impact Employee Learning

The roots of the symbolic are key for business and management

People at the heart of the circular economy: turning trade-offs into synergies

Is funding a startup worth the risk? The answer may be found by looking in the mirror

Unleashing the Power of Managerial Translation

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Authors

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How Workplace Changes and Managerial Support Impact Employee Learning

The roots of the symbolic are key for business and management

People at the heart of the circular economy: turning trade-offs into synergies

Is funding a startup worth the risk? The answer may be found by looking in the mirror

Why moral leaders are readers: how world literature can stimulate moral development in business school students

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Authors

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How Workplace Changes and Managerial Support Impact Employee Learning

The roots of the symbolic are key for business and management

People at the heart of the circular economy: turning trade-offs into synergies

Is funding a startup worth the risk? The answer may be found by looking in the mirror

When M&A meets emotion: How emotional dynamics look like during M&A trajectories

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Authors

Read the latest articles

How Workplace Changes and Managerial Support Impact Employee Learning

The roots of the symbolic are key for business and management

People at the heart of the circular economy: turning trade-offs into synergies

Is funding a startup worth the risk? The answer may be found by looking in the mirror

The top 5 ethical transgressions in consulting

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Author

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How Workplace Changes and Managerial Support Impact Employee Learning

The roots of the symbolic are key for business and management

People at the heart of the circular economy: turning trade-offs into synergies

Is funding a startup worth the risk? The answer may be found by looking in the mirror

Learning the hard way: how entrepreneurs move from overconfidence to confidence

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Authors

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How Workplace Changes and Managerial Support Impact Employee Learning

The roots of the symbolic are key for business and management

People at the heart of the circular economy: turning trade-offs into synergies

Is funding a startup worth the risk? The answer may be found by looking in the mirror

Skidding in the global race for talent? Diversity at the top puts firms on track

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Authors

Read the latest articles

How Workplace Changes and Managerial Support Impact Employee Learning

The roots of the symbolic are key for business and management

People at the heart of the circular economy: turning trade-offs into synergies

Is funding a startup worth the risk? The answer may be found by looking in the mirror

Is ESG reporting ready to save the world?

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Authors

Read the latest articles

How Workplace Changes and Managerial Support Impact Employee Learning

The roots of the symbolic are key for business and management

People at the heart of the circular economy: turning trade-offs into synergies

Is funding a startup worth the risk? The answer may be found by looking in the mirror