One of the top journals in the field of management featured a study in the summer of 2016 by Dr. Christina Carnes, assistant professor of management at the University of Nebraska–Lincoln College of Business Administration. The article, published in Strategic Management Journal
, outlined Carnes’ work on the topic of the antecedents and outcomes of complex competitive repertoires.
In sports, trick plays can result in successful results for a team even when they are not fielding the best athletes. Carnes' research demonstrates those who compete in the marketplace can garner similar results through unpredictability. Although short-term costs of implementing this strategy may harm performance, it ultimately can pay off, according to the article titled “Competitive repertoire complexity: Governance antecedents and performance outcomes”.
Using data on 1,168 firms in 204 industries, Carnes, along with Dr. Brian Connelly and Dr. David Ketchen of Auburn University, Dr. Lazlo Tihanyi of Texas A&M University and Dr. Walter Ferrier of the University of Kentucky, discovered implementing diverse and dynamic arrays of actions is beneficial to company performance.
“Using agency theory, we looked at institutional investors over time. We found dedicated institutional investors who don’t trade as frequently encourages firms to undertake this complexity. Alternatively, institutional investors who are short-term focused and tend to trade frequently don’t like the short-term cost of implementing complex strategies,” explained Carnes.
The research also found a positive relationship between levels of pay. As top managers become more competitive, they consider the controlling forces acting on them and respond to incentives.
“We used tournament theory to say when there’s a large gap in the average salary of the top management team to CEO, top managers are motivated to prove they’re ready for promotion. This large gap is associated with firms engaging in competitive complexity. It occurs as an incentive for promotion, and aligns with shareholders’ goal of long-term growth and benefits,” Carnes said.