Institutional ownership and firms’ thrust to compete

Andreou, Panayiotis C.; Fiordelisi, Franco; Harris, Terry; Philip, Dennis

doi:10.1111/1467-8551.12496

Institutional ownership and firms’ thrust to compete

Andreou, Panayiotis C.; Fiordelisi, Franco; Harris, Terry; Philip, Dennis

Authors

Professor Panayiotis Andreou panayiotis.andreou@durham.ac.uk
Professor

Franco Fiordelisi

Terry Harris terry.harris@durham.ac.uk
Associate Professor

Professor Dennis Philip dennis.philip@durham.ac.uk
Professor

Abstract

This article provides evidence on the impact of transient (short-term) institutional investors on a firm’s thrust to compete. A firm’s thrust to compete, as an attribute of corporate culture, captures the relative importance of corporate values that push a firm to achieve shareholder value in the short-term by emphasizing goal achievement, fast response to external information, and enhanced competitiveness. We find that greater ownership by transient investors results in firms intensifying their future thrust to compete, suggesting that firms respond to these investors’ preferences and competitive pressures for achieving short-term value creation. In line with our expectations, this effect is not observed for firms with greater ownership by long-horizon institutional investors, who are incentivized to place their emphasis on long-term firm value, over short-term gains. Our findings reveal that the composition of institutional ownership influences the organizational culture of firms in a non-homogeneous way. As such, we provide significant empirical insights for the ongoing debate on the implications arising from the behind‐the‐scenes engagement of institutional investors with management.

Citation

Andreou, P. C., Fiordelisi, F., Harris, T., & Philip, D. (2022). Institutional ownership and firms’ thrust to compete. British Journal of Management, 33(3), 1346-1370. https://doi.org/10.1111/1467-8551.12496

Journal Article Type	Article
Acceptance Date	Jan 28, 2021
Online Publication Date	Mar 18, 2021
Publication Date	Jul 5, 2022
Deposit Date	Feb 4, 2021
Publicly Available Date	Oct 6, 2021
Journal	British Journal of Management
Print ISSN	1045-3172
Electronic ISSN	1467-8551
Publisher	Wiley
Peer Reviewed	Peer Reviewed
Volume	33
Issue	3
Pages	1346-1370
DOI	https://doi.org/10.1111/1467-8551.12496
Public URL	https://durham-repository.worktribe.com/output/1280887

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Advance online version © 2021 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.