Research
Publications
Mazzelli, A, Nason, R, Foley, A. [title omitted for peer-review]
Revise & Resubmit (Strategic Management Journal)
The paper explores the relationship between family ownership and the use of offshore financial companies (OFCs).
Foley, A. [title omitted for peer-review]
Under Review (Organization Science)
This paper explores how norms of reciprocity among venture capitalists influence whether indirect ties to competitors or benefical or burdensome for new ventures.
Working Papers
Foley, A., Sine, W., Coles, R. - "The Family that Builds the Iron Cage Together, Stays Together… or Does It? An Intervention Assessing the Impact of Formal Structure for Family Ventures in Peru"
Manuscript in preparation for submission
Prior research has highlighted that firm formalization generally improves the performance of new ventures through the purging of particularism – or, the bending of rules, standards, and criteria to accommodate personal relationships and motives. However, few empirical studies have considered how the involvement of an entrepreneur’s family in their ventures influences these dynamics. We build on this work by integrating the literatures on firm formalization and family business. Specifically, we highlight that whether purging particularism improves the performance of young firms will be contingent on the extent to which the firms maintain clear boundaries between their business and family systems. In contrast with prior work, we theorize that purging particularism within young firms which do not maintain clear boundaries between these systems will result in decreased performance. This argument builds on the view that particularism within family firms is often a means by which family members leverage unique, family-centered assets such as altruism and an intergenerational commitment to the business. Interfering with this process should thus reduce performance. Results from a randomized controlled trial (RCT) of 1,401 new ventures in Peru support our hypotheses. Implications for the formal structure of family-controlled ventures are discussed.
Foley, A., Ahuja, G. "Recombination & Rank: The Role of Status Configurations on Tertius Iungens Brokerage in Creative Projects"
Manuscript in preparation for submission
In this paper, we systematically integrate the literatures on status and structural holes to develop a theoretical model of tertius iungens (TI) brokerage in creative projects. Our model contributes to the literature on structural holes in creative projects in four ways. First, it calls attention to the fact that the TI model, with its focus on coordinating diverse alters, explicitly raises issues of status differentiation in ways that other models of brokerage - such as the Tertius Gaudens (TG) - do not. Second, it explicitly accounts for the fact that TI brokerage in creative projects is not simply an event, but is rather a multi-staged process. Third, our model accounts for and explains the risks associated with brokerage strategies at each phase of the brokerage process; these risks stem from the uncertainty associated with convening diverse actors of different skill and rank together from across a structural hole. Fourth, we also explain how differences in status among a broker and their alters exacerbate or mitigate these risks. In so doing, we draw greater attention to the role that alters - and not just the broker - play in the dynamics of brokerage in creative projects.
Hiatt, S., Coles, R., Foley, A. "From Incentives to Impediments: Social Capital and the Curvilinear Impact of Income Distribution on Entrepreneurship"
Manuscript in preparation for submission
The prevailing view in the management literature is that income inequality fosters entrepreneurship by providing both incentives and resources for individuals who engage in risk-taking and innovative activities. [MOU1] tHowever, we contend that this view overlooks the potential negative effects of high levels of income inequality on entrepreneurship. We develop and test a curvilinear theory of income inequality and entrepreneurship that posits that the relationship between inequality and entrepreneurship shifts from positive to negative as inequality increases beyond a certain threshold. We further propose that this nonlinear effect is mediated by social capital, which is undermined by excessive inequality. Social capital enables entrepreneurship by reducing transaction costs. We examine our theory empirically by looking at data on entrepreneurial activity across all Mexican municipalities over a 12-year period (2000-2011). Our results support our curvilinear hypothesis and our mediation mechanism, and thus advance the understanding of income inequality, social capital, and entrepreneurship.
Foley, A., Choi, J., Sine, W. - "Interorganizational Endorsements or Golden Handcuffs? The Role of High-Status Ties on Startup Pivoting"
Manupscript in preparation for submission
High-status ties are often referred to as “interorganizational endorsements” for young ventures. Prior work has found, for instance, that such ties can help young firms overcome the “liability of newness” by granting them legitimacy and higher perceived status in the eyes of potential resource providers; this legitimacy, in turn, should increase their survival rates. However, much of this prior work has tended to assume that the new venture would continue to pursue the strategic direction it undertook at the time the high-status tie was formed. In this paper, we suggest that high-status ties may have a detrimental effect on young ventures by restricting their propensity to “pivot” and pursue new opportunities, thereby reducing their survival rates. These effects will be strongest in nascent or turbulent industries in which uncertainty – and hence a need to experiment - is highest. These relationships are also mediated both by the feelings of overconfidence and greater fear of loss that such ties instill in entrepreneurs. We test our hypotheses via a novel combination of archival and laboratory studies. Analyses are still underway, but we currently find broad support for our claims.
Research in-progress
This project attempts to reconcile theoretical tensions between social exchange theory (Blau, 1964; Cropanzano et al., 2016) and the embeddedness view of networks (Granovetter, 1985; Uzzi, 1996). This tension stems from the fact that, while exchange theory suggests that individuals often form ties through a process of social exchange in which one sends the tie and the other receives it, the majority of the embeddedness literature takes any level of relational embeddedness as given. In other words, the embeddedness literature tacitly ignores the process of exchange that leads to various levels of embeddedness. In response, I build theory suggesting that the effects of relational embeddedness on economic action – which generally stem from shared norms and ease of information transfer - will be contingent on whether a single actor in a group has initiated a majority of the ties within the group. I test these hypotheses in the context of VC syndication data over a 20-year period and observe how relational embeddedness (the number of times two investors have previously coinvested) and patterns of exchange (who has sent more deals to whom) interact to influence: 1) rates of deal failure within syndicates and 2) the primary mode of exit pursued by a syndicate’s investments. This paper aims to contribute to the embeddedness literature by suggesting that the effect of relational embeddedness on economic behavior will often be contingent on the patterns of exchange and reciprocity that generated it.
Foley, A, Huang, R. (Alphabetical Authorship). Balancing the Ties that Bind: A Study of the Role of Kinship Ties in Multiplex Exchange Relations Using Thai Village Data
Data collection complete; writing manuscript
Multiplex exchange relations—interactions that span multiple and overlapping spheres between individuals or entities—are recognized for their ability to create both opportunities and tensions. However, how kinship ties shape these relations remains poorly understood, particularly in terms of how they influence the effective layering of different types of exchanges. We argue that while multiplex ties can enhance the resilience of family firms by enabling resource sharing and mutual support during external shocks, they can also heighten the spread of vulnerabilities in highly interconnected networks. To examine this, we use longitudinal panel data from 11 Thai villages across 4 provinces from 1998 to 2012, which provide detailed information on economic and social transactions between households. In particular, our sample includes data from 5,544 unique exchange dyads that span 696 households exchanging 7 distinct types of goods, services, and favors. Our findings reveal that kinship ties affect multiplex exchange relations differently depending on the specific combination of exchanges between actors. In some cases, kinship ties serve as a source of strength, while in others, they act as a conduit for risk. These results offer valuable insights into how small firms can strategically manage their exchange relations to balance these trade-offs effectively, especially when doing business with family. Implications for our understanding of entrepreneurship in emerging markets are discussed.