Claudine Gartenberg

Claudine Gartenberg (2024), Corporate Purpose and Firm Strategy, Strategic Management Review.

Abstract: This paper explores the relevance of corporate purpose to strategy research. Corporate purpose can be conceived as a shared understanding of why an organization exists, made real by the beliefs of employees and tangible actions by firm leaders. While it has a long history within organization theory, law, and finance, purpose has received relatively less attention within the field of strategy. This essay argues that incorporating purpose into strategy research is both consistent with the view from practice and can open up the field to new channels by which firms compete and survive. It also outlines potential areas for future research, including links between corporate purpose and strategy at the individual, firm, and industry level.

Claudine Gartenberg and Elaine Pak (2024), Internal and Market Pay References in Firms, .

Abstract: We examine how firms balance internal and external reference points when determining employee pay. Analyzing nearly 19 million confidential U.S. employee records, our analysis reveals three key findings. First, the relative sensitivity of pay to internal over external benchmarks increases with firm innovation intensity, employee skill level, and the combination of the two. Second, this relationship appears at least partly causal: we document similar patterns using an instrumental variables analysis based on regional inflation shocks and a differences-indifferences analysis of CEO transitions. Third, firms with a stronger internal pay orientation produce more and higher-quality patents, including more breakthrough innovations. Altogether, our findings reveal that, while some firms maintain close market alignment, knowledge-intensive firms appear to decouple pay from market forces. This is particularly the case for their skilled workers, consistent with firms prioritizing internal social dynamics in contexts where cooperation and creativity are important for value creation.

Claudine Gartenberg and Elaine Pak (Under Review), Corporate Ownership and Employee Compensation.

Abstract: The rise of active corporate owners has raised questions about their influence on stakeholder outcomes, particularly regarding employee compensation. Using detailed compensation records from 20 million employees across 896 U.S. firms, we document that firms controlled by active owners—hedge funds and private equity firms—pay 2 to 4% less for comparable work relative to other firms. These differences arise through lower base pay, particularly for lower-skilled workers, as well as flatter incentive structures, particularly for higher-skilled workers. These compensation differences are concentrated among workers in routine jobs, with active owners paying 2-5 % less and 7-20% lower bonus-to-base ratio for comparable work, while showing minimal difference among workers in non-routine positions. Through analyses of private equity buyouts, matched comparisons, and lead-lag tests, our evidence suggests these patterns reflect, at least partially, an ownership treatment effect. Altogether, our results suggest that these owners either place less value on routine work or substitute financial incentives with input monitoring and control. These patterns suggest that differences in ownership structure manifest not only in firm strategy and governance, but also in fundamental approaches to motivating and managing employees.

Sinziana Dorobantu, Claudine Gartenberg, Sergio Lazzarini, Anita McGahan (2024), What Would the Field of Strategic Management Consider if We Took Stakeholders Seriously?, Strategy Science .

Claudine Gartenberg and Todd Zenger (2024), Corporate Purpose and the Problem of Social Choice in Firms, .

Claudine Gartenberg (2023), The Contingent Relationship Between Purpose and Profits, Strategy Science (in press).

Abstract: When do for-profit corporations pursue both purpose and profits and when do they prioritize one over the other? This study explores this question, measuring the strength of purpose based on the perceptions of nearly 1 million employees across 635 U.S. public companies within 14 industry categories. Two main findings emerge. First, the relationship between purpose and profits varies widely across companies and industries. Second, companies with higher levels of innovation intensity, intangible capital, or long-term investors tend to pursue both purpose and profits, whereas companies with lower levels of these factors tend to prioritize one over the other. This evidence suggests that purpose and profits are compatible in settings that rely on innovation and long temporal horizons for value creation and opposed in settings that do not.

Claudine Gartenberg and Shun Yiu (2023), Acquisitions and Corporate Purpose, Strategy Science (in press).

Abstract: Purpose is undergoing a resurgence of interest across research and practice. Yet, we know little about how it relates to strategy and specifically, how strategic actions reinforce or undermine purpose in organizations. This study explores this question in the context of acquisitions. We examine 831 transactions using data from approximately 1.7 million employees to construct our measure of purpose. We find that, on average, employees’ sense of purpose drops after acquisitions. This drop is particularly pronounced among firms that undertake unique acquisitions: those involving unusual industry combinations. This relationship suggests a possible tension between strategic and motivational consequences of boundary changes. Firms may benefit strategically from these changes, particularly those that enable expansion into unique areas. These same actions, however, may also erode the purpose of the organization, with consequences for downstream performance.

Claudine Gartenberg and Anita M McGahan (2023), Authoritarianism, Populism, and the Global Retreat of Democracy: A Curated Discussion, Journal of Management Inquiry, 32 (1), pp. 3-20.

Abstract: To the surprise of many in the West, the fall of the USSR in 1991 did not lead to the adoption of liberal democratic government around the world and the much anticipated “end of history.” In fact, authoritarianism has made a comeback, and liberal democracy has been on the retreat for at least the last 15 years culminating in the unthinkable: the invasion of a democratic European country by an authoritarian regime. But why does authoritarianism continue to spread, not only as an alternative to liberal democracy, but also within many liberal democracies where authoritarian leaders continue to gain strength and popularity? In this curated piece, contributors discuss some of the potential contributions of management scholarship to understanding authoritarianism, as well as highlight a number of directions for management research in this area.

Claudine Gartenberg and George Serafeim (2023), Corporate Purpose in Public and Private Firms, Management Science.

Claudine Gartenberg and Todd Zenger (2023), The Firm as a Subsociety: Purpose, Justice, and the Theory of the Firm, Organization Science (in press).

Abstract: Research in the “theory of the firm” tradition has often characterized firms as subeconomies, in which economic exchange is shaped by a central authority. We propose an expanded view of firms as subsocieties, in which authority is also responsible for establishing principles that shape cooperation among members. We draw on insights from political theory, sociology, and, to a lesser degree, legal theory to discuss how employees become members of subsocieties by exchanging rights, such as formal control over their work, for the benefits of membership. With this rights exchange, subsociety members develop expectations that those in positions of authority will use their control to define and sustain principles of justice and common purpose consistent with members’ moral sentiments. This view suggests expanded roles for authority and firm boundaries from what are incorporated into standard theories of the firm. These expanded roles have implications both for internal governance and for the boundary itself: When considering boundary changes, leaders must weigh both the economic and the social consequences of their decision.