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Institutional Ownership and Firms’ Thrust to Compete

Andreou, Panayiotis C. and Fiordelisi, Franco and Harris, Terry and Philip, Dennis (2021) 'Institutional Ownership and Firms’ Thrust to Compete.', British journal of management. .

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.

Item Type:Article
Full text:Publisher-imposed embargo
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Available under License - Creative Commons Attribution Non-commercial 4.0.
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Status:Peer-reviewed
Publisher Web site:https://doi.org/10.1111/1467-8551.12496
Publisher statement:© 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.
Date accepted:28 January 2021
Date deposited:05 February 2021
Date of first online publication:18 March 2021
Date first made open access:06 October 2021

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