Substitutes or Complements? A Configurational Examination of Corporate Governance Mechanisms
Open accessAbstract
We conduct an exploratory qualitative comparative case analysis of the S&P 1500 firms with the aim of elaborating theory on how corporate governance mechanisms work together effectively. To do so, we integrate extant theory and research to specify the bundle of mechanisms that operate to mitigate the agency problem among publicly traded corporations and review what previous research has said about how these mechanisms combine. We then use the fuzzy-set approach to qualitative comparitive analysis (QCA) to explore the combinations of governance mechanisms that exist among the S&P 1500 firms that achieve high (and not-high) profitability. Our findings suggest that high profits result when CEO incentive alignment and monitoring mechanisms work together as complements rather than as substitutes. Furthermore, they show that high profits are obtained when both internal and external monitoring mechanisms are present. At the same time, however, monitoring mechanisms evidently combine in complex ways such that there may be simultaneity of substitution and complementarity among and across the various monitoring and control mechanisms. Our findings clearly suggest that the effectiveness of board independence and CEO non-duality—governance mechanisms widely believed to singularly resolve the agency problem—depends on how each combine with the other mechanisms in the governance bundle.
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Among management researchers, it has become conventional to report the results of counterfactual analyses by distinguishing core from contributing conditions.
“Among management researchers, it has become conventional to report the results of these counterfactual analyses by distinguishing those attributes among the reported solution that are 'core' from those that are 'contributing' conditions (e.g., Crilly, 2011; Fiss, 2011; Misangyi & Acharya, 2014)”
From Embracing Causal Complexity: The Emergence of a Neo-Configurational Perspective (2017) · cites this paper as Misangyi & Acharya, 2014
Misangyi and Acharya (2014) sought to capture CEOs' and directors' equity stakes in the firms they lead, as such equity ownership is thought to help align managerial and shareholder interests.
“For example, in their study of corporate governance mechanisms, Misangyi and Acharya (2014) sought to capture CEOs' and directors' equity stakes in the firms they lead, as such equity ownership is thought to help align managerial and shareholder interests.”
From Embracing Causal Complexity: The Emergence of a Neo-Configurational Perspective (2017) · cites this paper as Misangyi and Acharya (2014)
Researchers frequently used QCA in an inductive theory elaboration effort to re-evaluate theoretical domains in a configurational manner.
“First, researchers frequently used QCA in an inductive theory elaboration effort to re-evaluate theoretical domains in a configurational manner: for example, in the domains of acquisitions (Campbell et al., 2015), of business- and corporate-level strategies (Greckhamer et al., 2008), of corporate governance (Misangyi & Acharya, 2014), of decoupling (Crilly et al., 2012), and of innovation (Meu”
From Embracing Causal Complexity: The Emergence of a Neo-Configurational Perspective (2017) · cites this paper as Misangyi & Acharya, 2014
Recent studies have shown that an iterative process between the findings and returning to empirical cases can prove to be fruitful in large-N settings even without the intimate case knowledge typical of the small-N QCA approach.
“recent studies have shown that an iterative process between the findings and returning to empirical cases can prove to be fruitful in large-N settings (Crilly, 2011; Campbell, Sirmon, & Schijven, 2015; Misangyi & Acharya, 2014) even without the intimate case knowledge typical of the small-N QCA approach.”
From Embracing Causal Complexity: The Emergence of a Neo-Configurational Perspective (2017) · cites this paper as Misangyi & Acharya, 2014
Cites
Configurational Comparative Methods: Qualitative Comparative Analysis (QCA) and Related Techniques
Rihoux, B., & Ragin, C. (2009) · SAGE Publications · doi:10.4135/9781452226569 · Cited by 3,089 · see citing works
A set-theoretic approach to organizational configurations
Fiss, P. C. (2007) · Academy of Management Review · doi:10.5465/amr.2007.26586092 · Cited by 2,225 · see citing works
Set Relations in Social Research: Evaluating Their Consistency and Coverage
Ragin, C. C. (2006) · Political Analysis · doi:10.1093/pan/mpj019 · Cited by 1,784 · see citing works
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Embracing Causal Complexity: The Emergence of a Neo-Configurational Perspective
Misangyi, V. F., Greckhamer, T., Furnari, S., Fiss, P. C., Crilly, D., & Aguilera, R. (2017) · Journal of Management · doi:10.1177/0149206316679252 · Cited by 1,099 · see citing works
Self-citationPark, Y., Fiss, P. C., & El Sawy, O. A. (2020) · MIS Quarterly · doi:10.25300/misq/2020/13879 · Cited by 300 · see citing works
Wang, L., Wang, Z., Wang, X., & Zhao, Y. (2021) · Electronic Commerce Research and Applications · doi:10.1016/j.elerap.2021.101080 · Cited by 63 · see citing works
- Authors
- Misangyi, V. F., & Acharya, A. G.
- Affiliations
- Pennsylvania State University (US)
- Singapore Management University (SG)
- ORCID
- Misangyi, Vilmos F.
- Venue
- Academy of Management Journal
- Publisher
- Academy of Management
- Published
- 2014-12
- Volume
- 57
- Issue
- 6
- Pages
- 1681-1705
- ISSN
- 0001-4273 (ISSN-L)
- 1948-0989
- OpenAlex
- W1988590372
- Cited by
- 771
- References
- 3
- Citations by year
- 2026: 83 · 2025: 80 · 2024: 106 · 2023: 77 · 2022: 70 · 2021: 84 · 2020: 69 · 2019: 50 · 2018: 44 · 2017: 54 · 2016: 28 · 2015: 21 · 2014: 4
- FWCI
- 151.63
- Type
- journal article
- Language
- en
- Open access
- Locations
- Academy of Management Journal (publishedVersion)
- Singapore Management University Institutional Knowledge (InK) (Singapore Management University) (submittedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
- Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Governance and Financial Management
- Social Sciences › Business, Management and Accounting › Accounting › Auditing, Earnings Management, Governance
- Keywords
- corporate governance mechanisms, principal-agent problem, board independence, CEO duality, monitoring mechanisms, substitutes and complements, profitability, S&P 1500 firms
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