The Folly of Blame: Why Investors Should Care About Their Managers' Culture

Posted: 19 May 2014 Last revised: 28 Dec 2016

See all articles by Jason C. Hsu

Jason C. Hsu

Rayliant Global Advisors; Research Affiliates, LLC; University of California, Los Angeles - Anderson School of Business

James Ware

Focus Consulting Group

Chuck Heisinger

Focus Consulting Group

Date Written: September 8, 2014

Abstract

A cross-sectional empirical study of 70 investment organizations conducted from 2010 to 2013 indicates that firms that have a strong culture of blame tend to score poorly on attributes of importance to stakeholders. For example, blame-oriented investment organizations tend to have poor employee engagement, client experience, and operational performance. The authors use both quantitative and qualitative methods to demonstrate the link between a culture of blame and business outcomes. Using cross-sectional regressions, they find that variations in blame in firm culture explain variations in key firm outcomes, such as employee loyalty, employee defensiveness, client service, and performance relative to competing organizations. Interviews and a database of free-form survey responses from 3,435 confidential informants allow the authors to supplement the quantitative analysis with qualitative insights into the toxic effects of blame in investment organizations, especially when the blame culture is rooted in management.

Keywords: culture, investments, blame, performance, asset management

Suggested Citation

Hsu, Jason C. and Ware, James and Heisinger, Chuck, The Folly of Blame: Why Investors Should Care About Their Managers' Culture (September 8, 2014). Journal of Portfolio Management, Vol. 41, No. 3, 2015 (Spring), pp. 23-34. Available at SSRN: https://ssrn.com/abstract=2438392 or http://dx.doi.org/10.2139/ssrn.2438392

Jason C. Hsu

Rayliant Global Advisors ( email )

Hong Kong

Research Affiliates, LLC ( email )

620 Newport Center Dr
Suite 900
Newport Beach, CA 92660
United States

HOME PAGE: http://www.jasonhsu.org

University of California, Los Angeles - Anderson School of Business

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

James Ware (Contact Author)

Focus Consulting Group ( email )

4122 Three Lakes Dr.
Long Grove, IL 60047
United States

HOME PAGE: http://focuscgroup.com

Chuck Heisinger

Focus Consulting Group

4122 Three Lakes Dr.
Long Grove, IL 60047
United States

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