Book contents
- Beyond Bad Apples
- Beyond Bad Apples
- Copyright page
- Contents
- Figures
- Contributors
- Acknowledgements
- Introduction
- Part I Risk Culture Conceptual Underpinnings
- 1 Individual Agency and Collective Patterns of Action
- 2 Risk Culture and Information Culture
- 3 A Network View of Tone at the Top and the Role of Opinion Leaders
- 4 Rethinking Risk Management Cultures in Organisations
- Part II A View of Risk Culture Concepts in Firms and Society
- Conclusion
- Index
- References
3 - A Network View of Tone at the Top and the Role of Opinion Leaders
from Part I - Risk Culture Conceptual Underpinnings
Published online by Cambridge University Press: 22 May 2020
Book contents
- Beyond Bad Apples
- Beyond Bad Apples
- Copyright page
- Contents
- Figures
- Contributors
- Acknowledgements
- Introduction
- Part I Risk Culture Conceptual Underpinnings
- 1 Individual Agency and Collective Patterns of Action
- 2 Risk Culture and Information Culture
- 3 A Network View of Tone at the Top and the Role of Opinion Leaders
- 4 Rethinking Risk Management Cultures in Organisations
- Part II A View of Risk Culture Concepts in Firms and Society
- Conclusion
- Index
- References
Summary
How does “Tone at the top” travel from the board room to the rest of the organisation? While the qualitative description of tone at the top provides a noble and virtuous vision for guiding or changing risk culture, the mechanisms for actualisation are less clear. There has been a revival and emphasis of tone at the top after the Global Financial Crisis as it became widely espoused as both an explanation and a solution for the crisis. Tone at the top continues to symbolise risk culture maintenance and improvement for firms and their regulators. However, the processes and structures that are relevant to transmitting and propagating culture and values espoused by the leadership of the firm have been less explored.
We study the impact of charisma and strength of connections on transmission and persistence of culture in a given social network structure. Specifically, we analyse the effort to change culture in a firm by looking at communication effectiveness of opinion leaders throughout the firm; while influential, they are secondary to the board but act as “repeater stations” in transmitting the tone set by the board. This is a refinement of the classical approach to culture (Schein, 1990) which tends to focus more on messages from senior leaders, consistent with tone from the top, but without accounting for the social network of the firm’s staff.
We present a risk culture model using an agent-based algorithm which considers how the structural patterning of risk culture varies with the influence levels of opinion leaders given the social network in the organisation. To complement the hypothesis, we highlight the indicative relationship between the charisma and strength of connections of opinion leaders versus the survivability of risk culture in an organisation.
- Type
- Chapter
- Information
- Beyond Bad ApplesRisk Culture in Business, pp. 73 - 102Publisher: Cambridge University PressPrint publication year: 2020
References
Acemoglu, D., Bimpikis, K. and Ozdaglar, A. (2014). Dynamics of information exchange in endogenous social networks. Theoretical Economics, 9(1), 41–97.CrossRefGoogle Scholar
Alonso, R., Dessein, W. and Matouschek, N. (2008). When does coordination require centralization? American Economic Review, 98(1), 145–79.Google Scholar
Aral, S. (2011). Commentary – identifying social influence: a comment on opinion leadership and social contagion in new product diffusion. Marketing Science, 30(2), 217–23.Google Scholar
Aral, S., Muchnik, L. and Sundararajan, A. (2009). Distinguishing influence-based contagion from homophily-driven diffusion in dynamic networks. Proceedings of the National Academy of Sciences of the United States of America, 10(51), 21544–9.Google Scholar
Ash, J. and Newth, D. (2007). Optimizing complex networks for resilience against cascading failures. Physica A, 380(C), 673–83.Google Scholar
Bandura, A. (2000). Exercise of human agency through collective efficacy. Current Directions in Psychological Science, 9(3), 75–6.CrossRefGoogle Scholar
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.CrossRefGoogle Scholar
Bergenholtz, C. and Walstrom, C. (2011). Inter-organizational network studies – a literature review. Industry and Innovation, 18(6), 539–62.Google Scholar
Burt, R. (2004). Structural holes and good ideas. American Journal of Sociology, 110(2), 349–99.CrossRefGoogle Scholar
Burt, R. S. (1992). Structural Holes: The Social Structure of Competition. Cambridge, MA: Harvard University Press.Google Scholar
Cachon, G. P., Zipkin, P. H. and Anderson, P. (1999). Complexity theory and organization science. Organization Science, 10(3), 216–32.Google Scholar
Carroll, G. R. and Hannan, M. T. (2000). The Demography of Corporations and Industries. Princeton, NJ: Princeton University Press.Google Scholar
Chandler, A. D. (1977). The Visible Hand: The Managerial Revolution in American Business. Cambridge, MA: Belknap Press of Harvard University Press.Google Scholar
Cohan, J. (2002). ‘I didn’t know’ and I was only doing my job’: has corporate governance careened out of control? A case study of Enron’s information myopia. Journal of Business Ethics, 40(3), 275–99.Google Scholar
Daily, C., Dalton, D. and Cannella, A. (2003). Corporate governance: decades of dialogue and data. Academy of Management Review, 28(477), 371–82.Google Scholar
Ethiraj, S. K. and Levinthal, D. (2004). Modularity and innovation in complex systems. Management Science, 50(2), 159–73.Google Scholar
Financial Stability Board (FSB) (2014). Guidance on Supervisory Interaction with Financial Institutions on Risk Culture: A Framework for Assessing Risk Culture. London: FSB. www.fsb.org/wp-content/uploads/140407.pdfGoogle Scholar
Forrester, J. W. (1994). System dynamics, systems thinking, and soft OR. System Dynamics Review, 10(2–3), 245–56.CrossRefGoogle Scholar
González-Bailón, S., Borge-Holthoefer, J., Rivero, A. and Moreno, Y. (2011). The dynamics of protest recruitment through an online network. Nature Scientific Reports.Google Scholar
Gordon, G. G. and DiTomaso, N. (1992). Predicting corporate performance from organizational culture. Journal of Management Studies, 29(6), 783–98.CrossRefGoogle Scholar
Guille, A., Hacid, H., Favre, C. and Zighed, D. (2013). Information diffusion in online social networks: a survey. ACM SIGMOD Record, 42(2), 17–28.CrossRefGoogle Scholar
Hanneman, R. and Riddle, M. (2005). Introduction to Social Network Methods. https://bit.ly/2JCXTjjGoogle Scholar
Hatch, M. J. (1993). The dynamics of organizational culture. Academy of Management Review, 18(4), 65793.Google Scholar
Hermanson, D. R., Ivancevich, D. M. and Ivancevich, S. H. (2008). Tone at the top: insights from section 404. Strategic Finance Magazine, 90(5), 39–45.Google Scholar
Holme, P. (2015). Modern temporal network theory: a colloquium. The European Physical Journal B, 88(234).Google Scholar
Humanities Commons (n.d.). Visualizing Les misérables. Website. https://lesmiserables.mla.hcommons.org/Google Scholar
Johnson, G., Scholes, K. and Whittington, R. (2008). Organising for success. In Exploring Corporate Strategy: Text & Cases, 8th ed. Harlow: Financial Times/Prentice Hall.Google Scholar
Katz, E. and Lazarsfeld, P. F. (2017). Personal Influence: The Part Played by People in the Flow of Mass Communications. New York: Routledge.Google Scholar
Kilduff, M. and Brass, D. J. (2010). Organizational social network research: core ideas and key debates. Academy of Management Annals, 4(1), 317–57.Google Scholar
Knuth, D. (1993). Coappearance weighted network of characters in the novel Les misérables. In The Stanford GraphBase: A Platform for Combinatorial Computing. Reading: Addison-Wesley.Google Scholar
König, M. D., Battiston, S., Napoletano, M. and Schweitzer, F. (2012). The efficiency and stability of R&D networks. Games and Economic Behavior, 75(2), 694–713.Google Scholar
Kreps, G. L. (2017). Diffusion theory in integrative approaches. In Oxford Research Encyclopedia of Communication. Oxford: Oxford University Press.Google Scholar
Lambiotte, R., Lefebvre, E., Blondel, V. D. and Guillaume, J.-L. (2008). Fast unfolding of communities in large networks. Journal of Statistical Mechanics.Google Scholar
Lin, N., Ensel, W. M. and Vaughn, J. C. (1981). Social resources and strength of ties: structural factors in occupational status attainment. American Sociological Review, 46(4), 393–405.Google Scholar
Lovejoy, W. S. and Sinha, A. (2010). Efficient structures for innovative social networks. Management Science, 56(7), 1127–45.Google Scholar
McEvily, B., Jaffee, J. and Tortoriello, M. (2012). Not all bridging ties are equal: network imprinting and firm growth in the Nashville legal industry, 1933–1978. Organization Science, 23(2), 547–63.Google Scholar
McEvily, B., Soda, G. and Tortoriello, M. (2014). More formally: rediscovering the missing link between formal organization and informal social structure. Academy of Management Annals, 8(1), 299–345.Google Scholar
Mehra, A., Kilduff, M. and Brass, D. J. (2001). The social networks of high and low self-monitors: implications for workplace performance. Administrative Quarterly, 46(1), 121–46.Google Scholar
Mihm, J., Loch, C., Wilkinson, D. and Huberman, B. (2010). Hierarchical structure and search in complex organizations. Management Science, 56(5), 831–48.CrossRefGoogle Scholar
Newman, M. (2011). Communities, modules and large-scale structure in networks. Nature Physics, 8(1), 25–31.Google Scholar
O’Connor, G. (2008). Major innovation as a dynamic capability: a systems approach. Journal of Product Innovation Management, 25(4), 313–30.Google Scholar
Onnela, J. et al. (2007). Structure and tie strengths in mobile communication networks. Proceedings of the National Academy of Sciences of the United States of America, 194(18), 7332–6.Google Scholar
Pastor, J.-C., Meindl, J. R. and Mayo, M. C. (2002). A network effects model of charisma attributions. Academy of Management Journal, 45(2), 410–20.Google Scholar
Pettigrew, A. M. (1979). On studying organizational cultures. Administrative Science Quarterly, 24(4), 570–81.Google Scholar
Powell, W. W. (1990). Neither market nor hierarchy: network forms of organization. Research in Organizational Behavior, 12, 295–336.Google Scholar
Power, M., Palermo, T. and Ashby, S. (2013). Risk Culture in Financial Organisations: A Research Report. London: Centre for Analysis of Risk and Regulation, London School of Economics.Google Scholar
Rapert, M. I. and Wren, B. M. (1998). Reconsidering organizational structure: a dual perspective of frameworks and processes. Journal of Managerial Issues, 10(3), 287–302.Google Scholar
Rombach, P., Porter, M. A., Fowler, J. H. and Mucha, P. J. (2017). Core–periphery structure in networks (revisited). Society for Industrial and Applied Mathematics, 59(3), 619–46.Google Scholar
Schein, E. (1990). Organizational culture. American Psychologist, 45(2), 109–19.CrossRefGoogle Scholar
Schwartz, M. S., Dunfee, T. W. and Kline, M. J. (2005). Tone at the top: an ethics code for directors. Journal of Business Ethics, 58(1), 79–100.Google Scholar
Smith, J. A. and England, C. (2019). An ethnographic study of culture and performance in the UK lingerie industry. The British Accounting Review, 51(3), 241–58.CrossRefGoogle Scholar
Soda, G. and Zaheer, A. (2012). A network perspective on organizational architecture: performance effects of the interplay of formal and informal organization. Strategic Management Journal, 33(6), 751–71.CrossRefGoogle Scholar
Sosa, M. E. (2011). Where do creative interactions come from? The role of tie content and social networks. Organization Science, 22(1), 1–21.Google Scholar
Sosa, M. E., Eppinger, S. D. and Rowles, C. M. (2004). The misalignment of product architecture and organizational structure in complex product development. Management Science, 50(12), 674–89.Google Scholar
Teece, D. J. (2018). Dynamic capabilities as (workable) management systems theory. Journal of Management & Organization, 24(3), 359–68.Google Scholar
Tuveson, M. et al. (2018). Risk Management Perspectives of Global Corporations, Cambridge: Cambridge Centre for Risk Studies. https://bit.ly/2BZNF8CGoogle Scholar
Valente, T. W. and Davis, R. L. (1999). Accelerating the diffusion of innovations using opinion leaders. Annals of the American Academy of Political and Social Science, 566(1), 55–67.CrossRefGoogle Scholar
Verma, T. et al. (2016). Emergence of core–peripheries in networks. Nature Communications, 7(10441).Google Scholar
Zheng, W., Yang, B. and McLean, G. N. (2010). Linking organizational culture, structure, strategy, and organizational effectiveness: mediating role of knowledge management,. Journal of Business Research, 63(7), 763–71.Google Scholar