Pankaj C. Patel’s research while affiliated with Villanova University and other places

Employee ownership literature has made significant advancements over the last four decades. However, whether higher-quality employees are more or less attracted to firms with employee stock ownership plans (ESOP) has remained a long-lasting question since Blasi et al. (1996) raised this self-selection issue. In this study, we carry out two studies with samples of 274 and 56,266 employees respectively in the United States to examine whether higher-quality employees prefer ESOP firms (i.e., the sorting effect) and what its consequences are. We theorize and find that there is a curvilinear relationship between employees’ human capital and their selection of ESOP firms. Specifically, while higher-quality employees tend to opt for ESOP firms, the highest quality employees are inclined to choose non-ESOP firms (Studies 1 and 2). We also find that ESOP firms are positively associated with higher compensation (i.e., the investment effect) as well as higher work effort (i.e., the incentive effect) (Study 2). These findings suggest that employee ownership indeed influences a sorting effect and based on it, the higher-quality employees, not the highest quality, enjoy working in ESOP firms with higher compensation.

Are green patents granted to family firms perceived more favorably by the market than those granted to non-family firms? Using a sample of 8918 green patents granted to family and non-family firms between 2014 and 2018, our study shows that it depends on the attributes of the green patent. Integrating the green innovation and family firm literatures with signaling theory, we develop a theoretical framework that highlights the need for family firms to balance their pursuit of green innovation with signals of innovation stability and due diligence so as to gain the greatest market value from their green patents. In contrast, we theorize that green patents offer nonfamily firms the greatest gain in market value when they signal innovation radicalness and newness. While our results show that the stock market reaction does not vary significantly between family and non-family firms, when we consider the attributes of green patents, we find that compared to nonfamily firms, family firms with longer green patent grant lags realize a more positive market reaction whereas those with higher patent radicalness experience a more negative market reaction. As such, our study suggests that the types of green patents that garner the greatest market value differ for family and nonfamily firms. The findings are robust to alternate family firm definitions, and additional robustness checks.

This study investigates the impact of rugged individualism, a distinctive sociocultural phenomenon rooted in cumulative frontier experiences between 1790 and 1890, on variations in small business establishments and revenues within US counties during the COVID-19 pandemic. Utilizing high-frequency weekly data encompassing 369 counties and spanning from January 4, 2020, to January 29, 2022 (31,460 weekly observations), our analysis revealed that counties with above-median frontier experience demonstrated a 5.32 percentage points smaller decline in business establishments and a 14.2 percentage points less severe reduction in small business revenues compared to counties with below-median frontier experience. Further testing validated the robustness of these effects against placebo considerations, alternate temporal frameworks, pre- and post-COVID-19 county vulnerabilities, and alternative measures of historical frontier experiences. Importantly, these relative performance advantages were not contingent on differences in employment levels or job postings. The findings provide insights into the interplay of cultural variations and entrepreneurial resilience within a national context.

When small and medium‐sized enterprises (SMEs) submit bids or tender proposals for projects, they often encounter difficulties in obtaining a surety bond, which is a financial guarantee from a third party that they will meet their contractual obligations. Drawing on transaction cost economics, this study focuses on a seldom‐studied phenomenon of third‐party bond surety programs available to small businesses. For each one‐unit increase in the bond guarantee percentage the odds of default decrease, higher project amount or subcontracting exacerbates the odds of default, and geographic distance between the business and project site does not affect default. The effect sizes are practically meaningful, and the inferences are robust to alternate specifications.

Drawing on the appropriability-appropriation framework and signaling theory, we hypothesize that post-IPO firms with higher patent quality use takeover defenses as levers to signal a willingness to allow appropriation through acquisitions. In a sample of 635 post-IPO firms with 56,605 patent approvals (1998-2014), if post-IPO firms secure approval for a high pedigree patent (cutting edge technology) or obtain a longer grant lag (tenacity), the stock market reaction is positive (negative) when anti-takeover defenses are lowered (raised) from the previous year. The findings carry implications for the appropriability-appropriation strategies of post-IPO firms and the merit of reducing takeover defenses for these firms.

Drawing on contrasting theoretical perspectives of self-interest and utilitarian/ethical motivations, we examine the degree to which a company's pace of departure from Russia after the Ukraine invasion is driven by its exposure to the Russian market. Moreover, we investigate whether firm-level political and non-political risks influence the propensity to delay or expedite the exit/withdrawal process. Contrary to utilitarian expectations advocating for ethical exit decisions irrespective of exposure and risks, firms with higher Russian exposure were less likely to exit sooner, indicating a prioritization of business interests over ethical imperatives. This self-interest effect was further amplified by heightened political risks but attenuated by non-political risks. These findings remained consistent across various model specifications, with limited discernible variations based on firm characteristics such as ranking, COVID-19 exposure and risk, past idiosyncratic volatility, or family ownership and control. In addition, an examination of post-exit effects on profitability, risk, cost of capital, and liquidity revealed no statistically significant relationships. Our study highlights the prevalence of self-interest motivations over utilitarian principles, as firms with substantial Russian exposure prioritized safeguarding their business interests in the aftermath of the Ukraine invasion, even at the potential cost of ethical and social responsibility imperatives.