Signalling theory and equilibrium in strategic management research: an assessment and a research agenda

By D. Bergh, Brian L. Connelly, Dave J. Ketchen, Lu M. Shannon. 2014

636 citations recorded by the source corpus.

Actors within organizations commonly must make choices armed with incomplete and asymmetrically distributed information. Signalling theory seeks to explain how individuals are able to do so. This theory's primary predictive mechanism is ‘separating equilibrium’, which occurs when a signal's expectations are confirmed through experience. A content analysis finds that most strategic management signalling theory studies have not fully leveraged separating equilibrium. This presents two possible paths for future research. First, some researchers may wish to incorporate separating equilibrium. We illustrate how doing so can uncover new relationships, generate novel insights, and fortify the theory's application. Others who want to theorize about signals, but not examine separating equilibrium, could integrate ideas from signalling theory with other information perspectives. Here a signal becomes one stimulus among many that corporate actors interpret and act upon. We provide research agendas so strategy scholars can apply signalling theory most effectively to meet their research objectives.

Subfields: Organizational Behavior and Human Resource Management, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/689bf906655cb0253eedaac22f0a751d141872c3

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In Organizational Behavior and Human Resource Management

In Strategy and Management

Citations in the corpus

From the crowd to the market: The role of reward-based crowdfunding performance in attracting professional investors (2017, background): “By means of this information professional investors can reduce the relative uncertainty, and thus better separate new ventures with promising market potential from those with less rosy future (Bergh et al., 2014).”
The power of positivity? The influence of positive psychological capital language on crowdfunding performance (2018, background): “Investors prefer to rely on costly signals given their ability to create a separating mechanism between higher and lower quality firms (Bergh et al., 2014).”
Better Together? Signaling Interactions in New Venture Pursuit of Initial External Capital (2016, background): “Having a product on the market might help outside investors distinguish between high- and low-quality ventures (Bergh et al., 2014), but this depends largely on investor perceptions of the product itself and the actions the firm undertook to get it to market (Song, Podoynitsyna, Van Der Bij, &…”
Are Blockchain Crowdsales the New 'Gold Rush'? Success Determinants of Initial Coin Offerings (2018, neutral): “This is a necessary step to gauge whether the signals established a separating equilibrium (Bergh et al., 2014).”