Don’t Get It Misconstrued: Executive Construal-Level Shifts and Flexibility in the Upper Echelons

Abstract

Whereas much of upper echelons research focuses on the background characteristics and traits of executives to explain their strategic choices, much less is understood about the information filtering process by which those characteristics manifest in strategic decisions. We develop theory to explain how executives process information by integrating construal level theory with upper echelons theory. Construal level theory describes how the same event can be interpreted in different ways, thus influencing the type of information people pay attention to, how they process that information, and the resulting decisions and actions. Our theoretical framework explores the dynamic nature of construal levels by developing two new constructs-construal shifts and construal flexibility. In doing so, we draw on self-regulation research to detail how executives can develop the capacity to modify how they process information to best meet changing situational demands. As an illustrative example, we apply our theory to the acquisition context and demonstrate the vital role played by construal shifts and flexibility for executives attempting to manage complex strategic actions. The end result is a framework by which executives can effectively navigate the challenging acquisition process.

Metacritiques of Upper Echelons Theory: Verdicts and Recommendations for Future Research

“…Our review of recent UET literature revealed significant activity in the area of executive cognition (e.g., Bilgili, Calderon, Allen, & Kedia, 2017; Chen & Nadkarni, 2017; Hafenbrädl & Waeger, 2016; Steinbach, Gamache, & Johnson, 2019). On the conceptual side, while most efforts do not examine the specific steps of the information-filtering process, research has grown more explicit in theorizing about the link between executive characteristics and cognitive processes as well as in specifying the impact of contextual conditions (e.g., retirement, crisis, change; Bilgili et al, 2017; Hahn, Preuss, Pinkse, & Figge, 2014; König, Graf-Vlachy, Bundy, & Little, 2020).…”

“…As such, an executive’s actions have the potential to reach further and carry greater meaning to a wider variety of stakeholders. At the same time, these once-distal groups are increasingly able to exert their influence on executives, as well (Pfarrer et al, 2019; Steinbach et al, 2019). Recent research highlights the importance of better understanding these relational processes between executives and external stakeholders (e.g., the media, analysts, investors, external peer executives; Gamache & McNamara, 2019; König et al, in press; Westphal et al, 2012).…”

How to respond to competitors' green success for improving performance: The moderating role of organizational ambidexterity

“…On the basis of upper echelons theory, firms will take strategic actions according to executives' perception of dynamic environment and their consideration of how firms' situations should be managed (Hambrick & Mason, 1984; Neely, Lovelace, Cowen, & Hiller, 2020; Steinbach et al, 2019). Executives with higher awareness of environmental risks are largely aware of negative environmental impacts and environmental pressures from legislations, stakeholders, and consumers, whereas executives with higher awareness of environmental benefits hold that environmental management practices contribute to reducing waste, saving costs, and improving product process and corporate reputation (Brammer et al, 2011; Gadenne & Mckeiver, 2009).…”

“…On the other hand, executives with higher awareness of environmental benefits will stimulate the firms' motivations of implementing environmental strategies to save costs and improve product process and corporate reputation (Bansal & Roth, 2000; Brammer, Hoejmose, & Marchant, 2011; Gadenne & Mckeiver, 2009). However, upper echelons theory holds that managers are bounded rational in decision‐making (Hambrick, 2007; Steinbach, Gamache, & Johnson, 2019; Wang, Holmes, Oh, & Zhu, 2016). If executives overemphasize environmental risks that firms are facing, they may ignore economic results of implementing green supply integration, which is detrimental to firms' sustainable development.…”

Impression Offsetting as an Early Warning Signal of Low CEO Confidence in Acquisitions

“…For example, it could be that CEOs high in narcissism (Chatterjee & Hambrick, 2007) desire that attention is focused on them and don't want to reduce scrutiny on them, making them reticent to use impression offsetting even when they are acquiring for self-interested reasons or due to social pressures. By contrast, CEOs with a high prevention focus (Gamache et al, 2015) or utilizing a low construal level (Steinbach, Gamache, & Johnson, 2018) may be particularly keen on avoiding scrutiny of an acquisition and may be more likely to use impression offsetting regardless of whether their confidence about the value-creation potential of their acquisitions is low or high.…”