A life in research: the genius and the simplicity of Robert E. Hoskisson

Citation

Ibarreche, S. and Mesquita, L. (2010), "A life in research: the genius and the simplicity of Robert E. Hoskisson", Management Research, Vol. 8 No. 2. https://doi.org/10.1108/mrjiam.2010.50608bab.001

A life in research: the genius and the simplicity of Robert E. Hoskisson

Article Type: A life in research From: Management Research: The Journal of the Iberoamerican Academy of Management, Volume 8, Issue 2

Executive overview

Robert E. Hoskisson[1] (RH) is one of the most influential scholars in Business and Economics of our times. At a recent list produced by Thomson Reuters’ Web of Science (www.timeshighereducation.co.uk/story.asp?sectioncode=26&storycode=411310&c=1), his name appears alongside those of many Nobel Prize Laureates, such as Joseph Stigler and Gary Becker, as well as prominent strategic management thinkers such as Don Hambrick, Michael Hitt, and Michael Porter. To most, he is known for his prolific and provocative views on issues spanning from acquisitions and divestitures to the organization of multidivisional firms, corporate and international diversification, business groups, agency theory and corporate governance, and so forth. He is also the co-author of one of the best selling textbooks in the field of strategic management[2]. To a lucky few, he is known simply as “Bob”. In this interview, he ponders on his past, present, and future career milestones, and the role of management scholars in modern society. He also shares his ideas on current and future trends in management research for emerging economies, as well as his political and ideological thoughts on Latin America. Most interestingly, along the way, he reveals some of his professional secrets on how to become a successful scholar. He also speaks of his daily work and routines. “Bob” comes out as a soft-spoken, caring, passionate, and well-balanced person who certainly has a lot to teach us about career development and scholarship productivity. This interview also makes evident why there is such a consensus among all of those who know Bob personally and professionally when it comes to his graciousness and personal warmth.

Interviewers’ biographies

RH was interviewed by Luiz Mesquita and Santiago Ibarreche (LM & SI). Luiz Mesquita is an Associate Professor of Strategy and Organization, at the W.P. Carey School of Business, Arizona State University, with a joint appointment at Insper Institute of Education and Research, in São Paulo, Brazil. He holds a PhD in Strategic Management from the Krannert Graduate School of Management, Purdue University. Santiago Ibarreche is a Professor of Management at the Department of Marketing and Management, and has been Director of the Center for Hispanic Entrepreneurship, Centers for Entrepreneurial Development, Advance, Research and Support, at University of Texas at El Paso.

LM & SI – as you think back about how your career developed, what pathways and milestones come to mind?

RH – there were really three milestones that helped shape my career. The first one occurred when working on a final master’s program internship report I realized I truly enjoyed writing. At that time, I realized that I desired to follow a career where I would be able to think and write critically about ideas. The second event occurred when I ran into two pieces of literature that had a transformative effect on me. The first was a book by Dick Rumelt, and the second was the work by Rumelt (1974) and Williamson (1975). Both of these scholars pointed to the performance advantages that larger organizations attain when choosing to organize its management ranks through the multidivisional structure or the M-form, as opposed to the functional form. At the time I thought “wow! Those are really interesting, and I want to study that”. And so I did, as this initial interest ultimately led to the topic of my dissertation. I had not realized back then, but I was also lucky because there were many changes taking place in the 1980s, especially in regards to organizational restructuring of highly diversified firms, and I actually ended up with plenty of material to study these processes subsequent to my dissertation. A funny fact that I remember is that I invested a lot of effort collecting data, to test my main hypothesis, but to my disappointment, I found no significant effects! (laughs). I then decided to explore interaction effects, and I found them to be very significant. I obviously thought, “Thank goodness for interaction effects” (laughs)[3].

Finally, the third one was when I realized that I did not necessarily have to simply follow and synthesize the work of others; rather I found that I had the capacity to look critically at it. For instance, working with colleagues, I found counter intuitively that R&D expenditures and diversification were negatively related, even if economists predicted a positive relationship between innovation and diversification (Hoskisson and Hitt 1988; Baysinger and Hoskisson, 1989; Hoskisson and Johnson, 1992). Moreover, albeit there was much praise for the M-form back then, my colleagues and I presented the Achilles Heel of the M-form, in that it biased firms towards over diversification, and myopic behavior among top-level managers (Hoskisson and Hitt, 1994; Hoskisson and Turk, 1990). All the while, there was all this restructuring going on in the economy and lots of acquisitions taking place, so I actually enjoyed it, in that I somehow thought, “Wow, this is really important stuff!” Mike Hitt and I summarized this body of research in a book published by Oxford University Press entitled Downscoping: How to Tame the Diversified Firm.

One other great positive in my life, which is not really a milestone, but has been part of my entire research career is the work I have developed with several doctoral students. In fact, since moving to Rice University, I have been able to help get a doctoral program in strategic management approved by the faculty, along with the other business disciplines. We are excited here to be able to recruit our inaugural class, to begin in the Fall of 2011.

LM & SI – it is interesting to note how, as a young scholar, you leveraged your empirical observations to drive your theoretical questions, towards a well-rounded research portfolio. In contrast, many newly minted scholars these days seem to rely more on the “count” mentality, where they reason on how many “A-hits” are needed for tenure.

RH – well, when I was a young professor, I probably was somewhat in the mode of counting. I actually wondered many times whether I was going to make it or not (laughs). You know, let me tell you something I think is really important; in fact what I am going to tell you was pivotal in regard to my career, I think. What I found was that the more I practiced this “count” mentality, rather than focusing on the research questions, the more unsure I became about what I was doing and whether I was going to make it. So I came to a point where I said “look, I cannot control whether I am going to make it or not; all I can do is ask interesting questions and do the best research that I can do”.

LM & SI […] you actually emphasized this, during a recent doctoral consortium presentation in Buenos Aires, right?

RH – yes, this is all about focusing on interesting research questions rather than on whether you are going to make it or not. I believe that in life there is some 10 per cent that we cannot control; I mean, I cannot control if there is an earthquake, or if the sun comes up or does not. But what I can control is my reaction to things, and what I decide about the events. If something happens in my family for instance, if there is an accident, I can choose whether to respond negatively or positively. I can for instance react negatively to my children if they cause an accident, and they can have a lousy day, and I can have a lousy day, or I can instead choose to respond with patience and love, and try to make everything better. So for most of the things that happen to us, it is all about how we respond to them. In regard to research, the same principle applies. You choose how you are going to respond if you get a rejection. Obviously it is always discouraging at first, but my response is to try and focus on things I can control. And I can control the questions I ask, I can control my response to reviewers, even if I cannot control what they are going to say. But if I try to do really good research and ask interesting questions – and I mean interesting questions are those that I am really curious about, or those I think are really important, and have an influence on businesses or industries around me – then ultimately people will benefit from that quality, and even if I were not to make tenure in my school, I knew I was going to make it some place else. So that mentality change made all the difference for my career. That was definitely a watershed event for me. My teaching got better, my personal life got better, and everything else got better (laughs).

LM & SI – what is your daily routine like?

RH – over time that has changed, but it is important to tell you this first – everything revolves around my family. When I started as a doctoral student, my wife and I had three children, and before I finished my studies, we had our fourth. And it was always very important to me to make sure my family was taken care of, and that they were getting the attention they needed. This relationship with my family has always brought balance and peace into my life. So in regards to daily routines, it is funny that I began noticing very early that other colleagues that were not married were always asking me “How can you make it, with so many time limitations, and all the attention you give at home?” I guess that it really helps that I am an early morning person. So my daily routine always starts early in the morning, when I am fresh. In fact, I usually think about things before I go to bed; I prioritize what I am going to do the next day, with a little list that I order with numbers. When I get up in the morning, I recheck that, and then I do the “high priority” in the morning. This means I write in my mornings. After an early morning period, I often take a break, exercise, and eat. Then I have a late morning period. Next I have lunch, and go into the office, where I take care of the other stuff, such as correspondence, meeting with doctoral students, and colleagues. I go back home, at the end of the day and mingle with my family. When we lived in College Station, I would wait until the kids went to bed. I then work in the evening late again, say 8 or 9 pm till about 11 pm or something like that. Now, because I do not drink coffee, if I get tired, either at home or at work, in the afternoon or right after lunch, I may take a 20 minutes nap. For example, I may just quickly lay down, and put a book under my head. When I do that, my whole afternoon becomes much more productive.

LM & SI – and what about your teaching days? Are they the same?

When I have a teaching day, I will get ready the night before, and then pour my entire self into teaching for that day. I know some people are able to mix activities, but it is really hard for me to do anything else when I teach. If I can manage my teaching schedule, I will try and have a two-day teaching week, even if I were to teach more than one section on the same day. If I have a three-day teaching schedule during the week, I am unable to be as productive on research.

LM & SI – how do you select your collaborators?

RH – well, to be honest, I started my career in College Station, at Texas A&M, and the management department there, at least I thought so, was really the collaboration capital of the world. We had a very dynamic environment where it was hard not to run into someone, even if you just went down the hall to get your print outs. This is obviously a bit harder to have in an urban school; people do not come in as much. But I guess my life is still full of collaboration today as much as it used to be in College Station, except that I am collaborating with people all over the world. I continue to work with most of my doctoral students who wish to remain active, and other people who put up with me, like Luiz (laughs). But usually collaborations just evolve naturally; I meet people, we have an idea, and we write together. It is that easy. It is always the case that you may develop more complementarities with some collaborators than others, but I always try and be a good colleague, that is, I try and respond as quickly as I can to inquiries, and create real value in the paper. If I have some serious time constraints, I will always be quick to let my colleagues know.

LM & SI – what are your thoughts on emerging economies, and how has your research addressed issues in such regions of the world? What are, in your view, the pressing research questions for the coming years?

RH – I have co-edited a couple special issues in emerging economies, one published in 2000, in Acadamy of Management Review, and the other in 2005, in Journal of Management Studies (Hoskisson et al., 2000; Wright et al., 2005). In these publications, we tried to emphasize the theoretical contribution, rather than just writing an introduction and summary to the pieces selected for the special issue. I believe because of that, those articles are really highly cited today.

In general, if you think about why international management is interesting – and this is the reason I became interested in it at first, and then later began studying emerging economies – is that international diversification created a new context for studying M form issues, beyond the traditional domain of product diversification. So for instance, one can explore the relationship between international diversification and R&D expenditures. One can ask, for example: does R&D lead to international diversification? Or alternatively, does international diversification lead to learning and more investment in R&D?

Another area of interest is that of Business Groups; this organizational form is different from the – now ubiquitous – M form. So if this is different, what form is it? Is it a network, or is it an M form transitioning into or from a network form? One can think that these different shapes may actually vary across contexts. In fact, some colleagues and I address this very issue, in a paper that just came out in 2007 (Yiu et al., 2007). Another set of questions may relate to international expansion. Do business groups facilitate international expansion of emerging economies? Or do they hinder it? Does business group feasibility go away, as market institutions and emerging economies develop? Should their portfolios of affiliated firms become more related, or less related as market institutions begin to mature? There are just an infinite number questions, across all areas. If you think about it, business groups, and that is a conservative estimate, manage or influence 40 per cent of the global gross domestic product. They are everywhere, not only in the developing world, but also in the developed world as well, for instance, across southern Europe, France, Italy, Spain, and Portugal, as well as in Germany, Sweden, and Japan. Of course, they are present all over Latin America and across all of Southeast Asia, including China.

LM & SI – according to some scholars, business groups amass greater volumes of resources overtime to overcome institutional failures in labor and capital markets: “bigger and more diversified” means “better protected from such failures”. Yet, some recent research has demonstrated that many business groups diversify to actually take advantage of government sell out opportunities, whereas the institutional failure rationale did not seem to have taken part of the thinking of chief executive officers. What is your view on that?

RH – it seems to me we could use the entrepreneurship literature much more often than we do, to study business groups. Though that literature has clarified a lot in regards to the management of smaller startups, we could still learn a lot more in regard to opportunity recognition, at the corporate level. One could explore for instance the LBO initiatives in larger organizations. At times, corporate managers may wish to reduce diversification, privately, from the larger firm, and this may happen through a management buyout, especially when division managers are able to detect opportunities in the market place which the corporation is unable to see, perhaps because the division is seen only as a source of cash flow. Some colleagues and I wrote about how this opportunity recognition literature could be useful for examining this issue, and I believe this theoretical perspective could be applied to studying business groups more often (Wright et al., 2000). In regards to institutional voids, I think business groups can actually work as institutional fillers as well. For instance, my colleagues and I are working on a piece where we look at Chinese business groups; we see that the government created such groups to instill harder budgetary responsibilities on managers who were used to running government owned divisions based on soft budgets. In this case, China is creating business groups to foster a market-oriented economy. This in turn contrasts with the traditional “institutional void” view, where business groups are presented as organizations that help diffuse the lack of market-oriented forces.

LM & SI – this is rather interesting. In fact, across many other emerging economies we are seeing an opposite trend, whereby governments are taking more active roles in the economy, not only as a regulator, but as an investor as well. Take the case of Venezuela, Bolivia, or even Argentina. Recently, this also became the case across some industries in the USA, under the Obama administration. Do you believe government ownership, or even public-private partnerships can work?

RH – I think political science has a lot to contribute here. There are many institutional theories that can be applied to the study of management – government relationships. Historically there has been a large volume of research on the privatization process. I, however, do not think we have seen as much on the reverse side of the phenomenon, that is, the instances when privatization gets reversed. In some contexts, such as we observed in Eastern Europe, privatization might not have worked very well because the process was not accompanied by the creation of strong market institutions. On the other hand, in countries like Hungary, where there was a vibrant stock market, privatization functioned a lot better, in part because the Hungarian process involved new capital coming into the market.

In some places, privatization can also suffer from how the people perceive the process. In these instances, privatization is often believed to involve “give-aways” to those with sweet relationships with government officers. And that is when it is open to political reversal in my opinion.

On the other hand, I do not know of very much research that suggests that government ownership leads to positive results, so it would be very interesting to examine examples where there are positive results for firms who are publicly owned. In this regard, I do not know much about the Latin America situation, but in Korea for instance the government was the active agent, in creating business groups. China also seems to be following the same development model. But in the Korean case, the government targeted certain industries and helped finance them. It gave opportunities to certain family owned business groups to develop these industries strategically, and that led to the chaebols[4]. Overtime as these things began to work strategically, the government pulled away, and the supporting institutions developed. But to this day, Korea still has many large, family owned, business groups.

LM & SI – But one can also expect that governments may be tempted to retain ownership, given that this represents a source of power and influence onto society. This may be especially so in Latin America. How do you see this?

RH – I believe that market oriented reforms have to be part of the process. For example, in 1993 there were many changes that resulted from Korea becoming a member of the GATT Uruguay round agreement. Then, in 1997, with the devaluation and market reforms, further changes occurred that helped institutionalize market forces. Of course, till this point research had shown that there was a lot of tunneling going on –, i.e. the process by which families controlling the businesses siphon resources out to their private benefit, in detriment of other stockholders – but with the growing institutionalization of market forces, business groups had no other choice but to restructure, and increase transparency. It was then that business groups became an important element in Korea’s internationalization[5].

LM & SI – how do you perceive Latin America, in general?

RH – well, I kind of look at Latin America, and contrast it with where it was, many years ago. In the past, one barely had enough fingers to count the number of dictators, from the left to the right sides of the political spectrum, sprawling across Latin America. But now, what I see is democracy. And yes, some of them are moving left, and some are moving right, but it is obvious that Latin America is moving towards stronger democracy, as a whole. The people are more engaged and able to actually exercise their vote, thereby having a say on what goes on. Regardless of whether one may be a more liberal economy and another a more conservative one, it seems like the people are able to participate. This situation can only lead to much better government policies than Latin Americans have had in the past.

That being said, political and economical progress does not seem to be going on at the same pace everywhere. Take Argentina or Venezuela, for instance; these countries are so richly endowed with natural resources. Argentina in particular has significant potential as far as natural resources go, and they also have an educated population. But somehow populist governments – even if democratically elected – seem to have been dragging them down, and slowing their progress. In other places, in contrast, things seem to be developing at a faster rate. Even if you consider countries such as Chile, for instance, which suffered a right wing military coup in the 1970s, and was run by an iron-fist government for many years. Recently, not only is a representative democracy back in shape in that country, but the Chilean people seem to have found their way, where different parties and government officials take turns at the helm, based on transparent elections. The case of Brazil is also noteworthy. They too have had their own problems, but Brazil’s society and its political institutions have matured. Lately, they just seem to be firing up in all cylinders. I think that Argentina is doing much better as well, but there is just some kind of populist mentality that the government seems to want to play to, and that tends to slow down economic growth potential. Interestingly, history can be ironic at times. Given our debt situation in the USA, we run the danger of ending into the same problems that Greece for example is facing at this very moment. We also seem to be reversing a historic antipathy for government ownership at least in the short term.

LM & SI – as we approach the end of our interview, what roles and responsibilities would you suggest the management and economics researcher could take in influencing these societal changes, for the positive?

RH – I think that we should do what we do best, that is, doing critical and good quality research in important research venues, be it business groups, diversification, or even in how politics and government policy influence managerial behavior. The so-called public private partnerships can be an interesting area of research. Look at Chile for instance. They managed their pension system to create massive investments funds, and that has made all the difference in the advancement of the market institutions in that country. And as I said, they came from a horrible background. They certainly did not have good democracy, but they made some good decisions along the way, and they ended up in a good place, it seems to me.

One area of research that must certainly be tackled is that of corporate governance, in these economies. I believe that getting that issue in the right balance – for instance, the structure of ownership, board of directors, and compensation, or even the control of subsidiaries by headquarters – is very important. And when I say corporate governance I do not refer exclusively to for-profit organizations; I actually mean the whole corporate governance structure, from top to bottom. For instance, we need further investigation on how the market is structured, how the government deals with it, or what public policies are, or should be. I think for instance in the USA we might have gone too far, in trying to govern our firms, and now the governance structure is part of the problem it seems to me. If you over regulate, then you may create excessive costs and disincentives for organizations to act appropriately. You eventually create a disincentive for investments, since these become too risky. By addressing these issues in emerging economies, and this is no different in Latin America, we scholars will be able to help organizations and governments become more efficient and effective.

LM & SI – it is interesting that you mentioned the need for a better understanding of governance issues, spanning the public-private domain. In Brazil for instance, some companies have become symbols of this trend; Petrobras, the oil giant, is one example. Although the market has cheered recent findings of deep-sea oil reserves ((The) Economist, 2010), it has also been concerned about recent initiatives by the Brazilian government, who controls some 55 per cent of the shares, to steer executive decisions towards politically motivated goals, rather than market-oriented ones. What would modern theories of effective corporate governance have to say about this?

RH – it is interesting that you mentioned that case. In a recent paper – which by the way is winning the best paper award by a doctoral student in the IACMR meetings in Shanghai, in June, 2010 – we find that business groups that were dominated by government ownership tended to focus on employment rather than efficiency (White et al., 2008). Basically they employ more people, because that is what they are politically motivated to do. In contrast, those that were not owned by the government and did not have that political interference tended to focus on efficiency. Interestingly, the firms without government interference spent more investment dollars on R&D and ended up in a much better market situation globally. Thus, depending on the orientation of the top managers and the ownership structure, firms may evolve in very different ways. So that is a vivid example with some empirical research that suggests that when you get politics involved, you are going to change the dynamic and the purpose of the organization to fulfill political objectives rather than economics and efficiency objectives. That I do not think is good for business or economic growth and development, and competition. In that sense, Petrobras is going to be facing tough competition in global markets. In fact, all you have to do to predict the future here is to look at Venezuela, and the downturn in productivity at PDVSA, or even Mexico’s Pemex. Pemex has not seen capital investments for new development in a long time, because the government has been very busy milking it. Although Mexico used to be one of the big oil producers in the world, they now import oil. That is really unfortunate.

Now, back to Brazil, the country really seems to be at an interesting crossroads, regarding its government becoming active again as a shareholder in the economy, while at the same time a lot of things seem to be falling into the right places. When I visited Brazil last December, I had a chance to ask Sergio Lazzarini, at INSPER[6]: are all the migrants coming into São Paulo likely to find employment? And for that question, I was contrasting Brazil with the rest of the world, where everyone seems to be in a huge downturn. To my surprise, his answer was “yes, they are”. To me the economy in São Paulo looked so good and vibrant, with all these incoming people making a better life there, even in the downturn in the rest of the world. That really spoke volumes to me. In fact, looking at all the new buildings springing up everywhere, around Insper, it made me wonder whether the crane had been instituted as the new national bird (laughs)[7].

Santiago IbarrecheUniversity of Texas at El Paso, El Paso, Texas, USA, and

Luiz MesquitaDepartment of management, W.P. Carey School of Business,Arizona State University, Phoenix, Arizona, USA

Notes

1. 1.

   RH is the George R. Brown Professor of Strategic Management, at the Jesse H. Jones Graduate School of Business, at Rice University, in Houston, Texas.

2. 2.

   Strategic management: competitiveness and globalization. SouthWest-Cengage learning.

3. 3.

   This initial work by RH can be found in Hoskisson (1987) and Hill and Hoskisson (1987).

4. 4.

   Chaebols is the term used to refer to Korean business groups. See for example, Kim et al. (2004).

5. 5.

   For research on this topic see Kim et al. (2010).

6. 6.

   INSPER the Institute of Education and Research is a leading business school and economics think tank in São Paulo, Brazil.

7. 7.

   Here, RH was making a pun on the word “crane” which stands both for heavy machinery used for construction and a bird with long legs.