Preliminary Conference Programme

Executive personal liability for corporate social misconduct increases compliance but also reduces shareholder value. To causally demonstrate this tradeoff, I exploit a landmark court ruling that strengthened executives’ criminal liability for water and air pollution in the Ninth Circuit. I study U.S. public firms matched to their polluting plants nationwide in a difference-in-difference framework. After the ruling, firms with one standard deviation higher water and air pollution exposure to Ninth Circuit experienced an immediate 0.5% decline in equity value relative to control firms, while firms with higher ground pollution exposure did not. Toxic emissions released into water and air decreased by 8% in plants located in Ninth Circuit. Lack of any impact on ground emissions as well as a spatial regression discontinuity analysis support causality. The pollution reduction was achieved by reducing production volume, increasing abatement, and reallocating pollution to unaffected plants. These costly compliance responses reduced firm-level pollution but also reduced cash flows and increased their volatility. At the executive level, CEO compensation increased in affected firms.

How can locally dependent organizations detect global issues from local cues? Global issues such as climate change carry profound local implications. For locally dependent organizations – whose competitiveness relies on local natural resources – detecting global issues is essential. We address this topic inductively using rich ethnographic data from Norlha Textiles, an enterprise on the Tibetan Plateau that bridges local nomadic knowledge with global luxury markets through yak-wool textiles production. We find that Norlha cultivated deep local connections, which enabled two complementary attentional processes: connecting, through which decision makers identify patterns among cues, and contrasting, through which they discern salient cues. These processes unfolded continuously and simultaneously, allowing decision makers to recognize global issues without overlooking critical information or exceeding attentional limits. Our findings advance research in two ways. First, we theorize a bottom-up attention mechanism that enables local organizations to detect global issues, whereas prior literature largely investigated a top-down approach. Second, we offer a ‘strong’ process account of organizational attention.

Research on entrepreneurial cognition assumes that greater interpretive capacity (IC) reduces uncertainty and promotes business ownership. This expectation, we argue, holds only when uncertainty is informational and yields to additional interpretation. When prescriptions across policy domains are misaligned, a condition we term residual institutional ambiguity (RIA) and measure as state-level entropy in enforcement, integration, and benefits regimes, additional interpretation reveals that prescriptions across domains contradict, and coherent expectations cannot be constructed. This matters especially for business ownership, which requires sustained multi-domain engagement and forecloses selective decoupling. High-IC actors rationally defer commitment, a pattern we term competence-induced caution. Dense co-ethnic communities independently compress IC returns by generating collective interpretations of institutional conditions that partially substitute for individual judgment. Using 2001–2020 ACS microdata on immigrant business ownership across U.S. states, we find that the positive association between IC and ownership attenuates as cross-domain contradiction increases, and co-ethnic density independently compresses IC returns. We contribute to entrepreneurial cognition and institutional theory by distinguishing informational uncertainty from specifying a boundary condition on the view that institutional contradictions are generative, and recasting dense co-ethnic communities as collective interpretive systems that compress returns to individual interpretive capacity.