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This chapter introduces the symbolic management perspective as a comprehensive and integrative alternative to conventional economic theories of governance. It describes key tenets of the theory, including the proposition that there is a pervasive pattern of decoupling, or a symbolic separation between appearances and reality, at each level of the governance system, from micro-level interactions between leaders inside firms to the corporate governance system as a whole. It introduces the major forms of symbolic management, including symbolic organizational policies and structures, symbolic social and organizational processes, and collective forms of symbolic management that cross organizational boundaries. Also, it describes the social and psychological processes that facilitate symbolic management, including social influence processes, social network processes, group- and community-level biases, and the social psychological dynamics of firm leadership.

In this chapter we summarize and synthesize key tenets of the symbolic management perspective on corporate governance and strategy. We discuss opportunities for future research on the forms and processes of symbolic management. We call for research on different audiences of symbolic management (e.g., lower-level managers and employees), different subjects of symbolic management (e.g., corporate transparency, executive succession, and various aspects of the decision-making process, such as the use of performance feedback), and different forms of symbolic management (e.g., cooperative and competitive forms). We then propose symbolic management theory as a powerful and comprehensive approach to the study of organizational behaviour more broadly, and conclude by describing managerial and public policy implications of our theory.

In this chapter we examine the symbolic management of social processes in firm leadership and governance. We explain how firm leaders engage in verbal impression management about their strategic advice network, and how such communication is decoupled from their actual advice-seeking behavior. We go on to describe how firms gain legitimacy by adopting participative strategic decision-making programs that ostensibly use cutting-edge information technology to solicit input, despite decoupling the programs from actual strategic decision making. We then consider how and when firms manage impressions about the diversity and inclusiveness of firm leadership, and how such rhetoric may also be decoupled from actual decision-making processes. We conclude that the symbolic management of social and organizational processes in firm leadership is among the most efficient and effective means of increasing the legitimacy of firm governance and strategy.

We describe forms of symbolic management that cross organizational boundaries, including symbolic management by firm leaders about the leadership, strategy, and governance of particular other firms, and symbolic management by and for larger groups of leaders and their firms. We suggest how such “symbolic management support” not only has a significant impact on how constituents evaluate particular firms and their leaders, but over an extended period of time it has had a deeper influence on the normative assumptions of journalists and analysts about leadership and governance, contributing to a historical shift in the institutional logics of governance. Finally, we reveal how firm leaders have engaged in symbolic management about the social structure of corporate leadership elite as a community and how these communications have contributed to a growing decoupling between the social structure of corporate leadership as it appears to constituents, and the actual social networks of firm leaders.

In this chapter we examine social network ties among firm leaders as a key determinant of symbolic management. After reviewing extant theory about the role of board interlock ties in symbolic management, we explain how other kinds of ties between firm leaders facilitate various forms of symbolic action and decoupling, including (1) director ties between informal groups of firm leaders, (2) social exchange ties between leaders, (3) personal friendship ties between leaders, and (4) mutual ties to management consultants. In suggesting how network ties facilitate decoupling, we also reveal a separation between appearances and reality with respect to the social structure of corporate leadership, wherein corporate stakeholders tend to underestimate the prevalence of social connections among firm leaders, and the resulting frequency of leader communication, cooperation, and collusion.

In this chapter we review theory and research suggesting that over a period of several decades, a series of policies and structures emerged as potent forms of symbolic management as a new economic logic of governance referred to as the agency logic became institutionalized in the financial community. We argue that the institutionalization of the agency logic not only led to the reinterpretation of particular governance policies and structures, but it increased the symbolic importance of corporate governance at large. We go on to explain how the institutionalization of the agency logic contributed to a lasting increase in symbolic management activity by firm leaders, both with respect to the frequency of symbolic management and the variety of its forms.

This chapter examines contemporary theory and research on boards of directors in strategic management. After briefly reviewing the evolution of research on corporate boards and strategic management, we describe contemporary theoretical perspectives and emerging topics in the literature, and identify a variety of future research opportunities. We then turn to recent research in the rapidly growing literature on venture boards and strategy. Our review of recent work on boards of public companies and new ventures reveals a common emphasis on behavioral processes in the boardroom, in dyadic CEO-board interactions outside the boardroom, and in relations between directors and external constituents. We describe numerous opportunities to extend these complementary literatures by linking behavioral processes in boards to issues of diversity, technology and innovation, culture and institutions, and competitive strategy.

While previous chapters described dyad-level and group-level behavioral processes of symbolic management, in this chapter we examine processes of symbolic management at a more micro-level of analysis. We describe a kind of self-regulated cognition in which managers and directors reflect on personal and social characteristics held in common with colleagues, and avoid thoughts about attributes not shared, prior to interaction. We explain how such cognitions increase the efficiency and efficacy of social influence behavior toward powerful colleagues within the firm, security analysts, and powerful institutional investors. We further describe how managers engage in self-regulated cognition about firm strategy and governance prior to social influence opportunities with security analysts and institutional investors, and how such cognitions enhance the efficacy of impression management. We also reveal important side benefits of self-regulated cognition, including reduced symptoms of burnout in top executives, and reduced interpersonal conflict in diverse top management teams.

In this chapter we examine group-level social and psychological processes that support symbolic management. We describe how social distancing, a kind of social influence in which groups isolate individuals who deviate from group norms, operates at multiple levels of the governance system: within boards, in relations between leaders and information intermediaries, and within larger professional communities. We then describe how pluralistic ignorance occurs at multiple levels of governance. Pluralistic ignorance is a systematic tendency for group members to underestimate the extent to which their concerns about a policy or practice are shared by other members. We explain how this bias occurs in small groups within the firm, including top management teams and boards, and among professional communities outside the firm, including security analysts. We go on to explain how these processes contribute to suboptimal firm strategies, policies, and practices, including various forms of symbolic decoupling.

In this chapter we describe common social influence processes in relations between firm leaders and external stakeholders, with particular attention to ingratiation, favor rendering, and negative reciprocity, which our research suggests are the most impactful micro-level influence processes in leader–constituent relations. We contend that the inconspicuous nature of these processes complements the more public forms of symbolic action described in Part I. They maintain the appearance of objective evaluation and control by financial market actors, while protecting managerial discretion over firm strategy and governance, thus supporting the ceremonial inspection and evaluation that makes symbolic decoupling possible, and preserving the dominance of corporate elites.