Teppo Felin

Teppo Felin
University of Oxford | OX · Saïd Business School

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107
Publications
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Publications

Publications (107)
Article
Full-text available
In this paper we contrast bounded and ecological rationality with a proposed alternative, generative rationality. Ecological approaches to rationality build on the idea of humans as “intuitive statisticians” while we argue for a more generative conception of humans as “probing organisms.” We first highlight how ecological rationality’s focus on cue...
Article
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The literatures on bounded and ecological rationality are built on adaptationism-and its associated modular, cognitivist and computational paradigm-that does not address or explain the evolutionary origins of rationality. We argue that the adaptive mechanisms of evolution are not sufficient for explaining human rationality, and we posit that human...
Preprint
Full-text available
In this paper we contrast bounded and ecological rationality with a proposed alternative, generative rationality. Ecological approaches to rationality build on the idea of humans as “intuitive statisticians” while we argue for a more generative conception of humans as “probing organisms.” We first highlight how ecological rationality’s focus on cue...
Article
Full-text available
Teppo Felin, Alfonso Gambardella, and Todd Zenger argue that managers and entrepreneurs should develop their own theory of value. They present Value Lab, a tool which provides the framework to help businesses create such theories. Their purpose is to help startups and established firms to be more scientific and experimental in creating new value.
Article
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The search for new resources is costly and difficult within the resource‐based view. Because search is costly, a common prescription is for firms to focus on their endowments—the resources they already possess. However, is there a way for firms to somehow find value amongst the “vast reservoirs” of external resources? We review existing forms of re...
Chapter
Search is a pervasive phenomenon of biological and economic life. But search is hard, especially in uncertain and dynamic environments. In this chapter we directly address the hard problem of search. We develop a generalized form of question-answer probing as a way of simplifying search, with implications for understanding biological and economic n...
Article
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To truly create new value, you need a theory. A theory helps you see what others can’t see. Contrarian or unique beliefs provide the underlying raw material of a firm’s theory of value. But beliefs are just rhetoric and cheap talk, unless you identify the specific obstacles and problems that stand in the way of realizing your contrarian beliefs. Th...
Chapter
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The concept of bounded rationality—and the work of Herbert Simon, Daniel Kahneman, Richard Thaler, and many others in behavioral economics—has provided a much-needed counterweight to rational expectations theory in economics. In this chapter we revisit the contrast between rational expectations and bounded rationality, specifically as they relate t...
Preprint
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Where do new resources come from? We build on the premise that environments feature vast reservoirs of latent resources, uses and resource combinations. However, identifying this value can be costly and difficult. In this paper we consider the thought experiment of an endowment-less firm and how it might search for and develop latent resources. We...
Article
We argue that strategic management in general—and capability theory in particular—suffers from problems of infinite regress that can be traced to an unsatisfactory specification of initial conditions. We argue, first, that this has led to an overemphasis on path dependence, experience, and history, without sufficient attention on initial conditions...
Article
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Forward-looking behavior is central to the concept of strategy and strategic management (Barnard, 1938; Hamel and Prahalad, 1994; Mintzberg and Waters, 1985; Tsoukas and Shepherd, 2004). Yet, ironically, mainstream theories and assumptions (e.g., environment that changes in an unpredictable manner, managerial cognition that is characterized by boun...
Article
Strategic Entrepreneurship: Human Capital and Knowledge ABSTRACT The knowledge and skills of founding members lie at the heart of heterogeneous performance outcomes for new organizations. This panel symposium explores how we can incorporate the dynamics of founder human capital and knowledge in understanding new organizations, including their fo...
Article
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Lean startup and the idea of a business model have become popular in the context of startup experimentation, innovation and strategy. In this paper we discuss and critique the assumptions behind lean startup, specifically how the approach conceives of hypothesis development and startup experimentation. While the scientific aspirations of the approa...
Article
Full-text available
Search is a pervasive phenomenon of biological and economic life. However, search is hard—especially in uncertain and dynamic environments. In this paper we directly address this hard problem of search. We develop a generalized form of question-answer probing as a way of simplifying search, with implications for understanding biological and economi...
Article
Full-text available
This paper outlines the theory-based view of strategy and markets. We argue that novel or “great” strategies come from theories. Entrepreneurs and managers originate theories and hypotheses about which activities they should engage in, which assets they might buy, and how they will create value. A firm’s strategy, then, represents a set of contrari...
Article
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Seeing—perception and vision—is implicitly the fundamental building block of the literature on rationality and cognition. Herbert Simon and Daniel Kahneman’s arguments against the omniscience of economic agents—and the concept of bounded rationality—depend critically on a particular view of the nature of perception and vision. We propose that this...
Article
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This article features an interdisciplinary debate and dialogue about the nature of mind, perception, and rationality. Scholars from a range of disciplines — cognitive science, applied and experimental psychology, behavioral economics, and biology — offer critiques and commentaries of a target article by Felin, Koenderink, and Krueger (2017): “Ratio...
Article
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The purpose of this article is to suggest a (preliminary) taxonomy and research agenda for the topic of “firms, crowds, and innovation” and to provide an introduction to the associated special issue. We specifically discuss how various crowd-related phenomena and practices—for example, crowdsourcing, crowdfunding, user innovation, and peer producti...
Preprint
Seeing—perception and vision—is implicitly the fundamental building block of the literature on rationality and cognition. Herbert Simon and Daniel Kahneman’s arguments against the omniscience of economic agents—and the concept of bounded rationality—depend critically on a particular view of the nature of perception and vision. We propose that this...
Article
Full-text available
In this Article we critically examine the use of Big Data in the legal system. Big Data is driving a trend towards behavioral optimization and "personalized law," in which legal decisions and rules are optimized for best outcomes and where law is tailored to individual consumers based on analysis of past data. Big Data, however, has serious limitat...
Article
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Satisficing is a central concept in both individual and social multiagent decision making. In this paper we first extend the notion of satisficing by formally modeling the tradeoff between costs (the need to conserve resources) and decision failure. Second, we extend this notion of “neo”-satisficing into the context of social or multiagent decision...
Article
How can organizations put dynamic capabilities into practice? This article focuses on the power of organizational design, showing how managers can harness new organizational forms to build a capacity for sensing, shaping and seizing opportunities. Fast-moving environments favor open organization and self-organizing processes that quickly convert in...
Article
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In this paper we develop the outlines of a theory for the firm-a theory that guides a firm's path to value creation, in response to the critique by von Hippel and von Krogh [von Hippel E, von Krogh G (2016) Identifying viable "need-solution pairs": Problem solving without problem formulation. Organ. Sci. 27:207-221; henceforth Hippel-Krogh] of the...
Article
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Valve Corporation represents an intriguing case study of flat structure and self organization (Puranam & Håkonsson, 2015; Valve, 2012). The structures and practices of Valve of course are not new. But the company provides an interesting experiment and illustration that powerfully highlights how organizational design can impact individual and collec...
Article
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The purpose of this special topic forum is to call for research on the topic of minds and institutions. I briefly discuss three specific research opportunities: (1) bounded rationality versus mind, (2) many minds and the interfaces of institutions, (3) the affordances of institutions and arbitrage. I then briefly introduce the two special topic for...
Article
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Microfoundations have received increased attention in strategy and organization theory over the past decade. In this paper, we take stock of the microfoundations movement, its origins and history, and disparate forms. We briefly touch on similar micro movements in disciplines such as economics and sociology. However, our particular focus is on the...
Article
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In this article, we challenge the notion of the efficiency of factor markets and provide an alternative. We specifically identify both the environment- and actor-related origins of heterogeneity in markets. We first discuss how environments have an exaptive nature, where new uses and possibilities emerge continuously and are poised for the taking....
Article
Full-text available
How can organizations put dynamic capabilities into practice? We focus on the power of organizational design, showing how managers can harness new organizational forms to build a capacity for sensing, shaping and seizing opportunities. Fast-moving environments favor open organization and self-organizing processes that quickly convert individual cap...
Article
Institutions and the incentives they create can be designed or redesigned to produce desired outcomes. But design does not work if social and economic dynamics are " creative. " If it is impossible to know in advance how an institution will change behavior and incentives—and what interests it may serve or harm in the future—then it is impossible to...
Article
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The complexity and speed of change in the competitive landscapes of organizations have always been a driving force behind the adoption of new forms of governance. Simultaneously, the developments in fields like communications, computing, and finance have made coordination and control easier, allowing for the emergence of novel structures of product...
Article
Scholars and practitioners have recently focused on the possibilities associated with more “open” forms of governance and innovation. The purpose of this proposed panel symposium is to take stock of this movement toward increased openness. Each of the panelists will discuss the what, why (and why not), when and how of open governance and innovation...
Article
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The nature of economic opportunity has recently received significant attention in entrepreneurship, organization science and strategy. The notion of boundedly rational search on an (NK) opportunity landscape has been particularly relevant to these conversations and debates. We argue that the focus on bounded rationality and search is highly problem...
Article
In this paper I discuss the role of manager as choice architect. The notion of nudging and choice architecture has received significant interest in law, economics and public policy. But the behavioral insights from this literature also have important implications for managers, HR professionals and organizations. In essence, employees are consumers...
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The notion of dynamic or organizational capability has received much attention in the strategy, organizational and entrepreneurship literatures. However, there are wildly divergent opinions about the nature of capabilities, and particularly their origins. The purpose of this proposed panel symposium is to bring scholars together to discuss and deba...
Article
With the continued interest in routines, this panel will present both theoretical and empirical work that helps to further our understanding of routines and their creation, development, and use. In particular, given the importance of human agents as the repositories of firm knowledge, we focus on how environmental changes that a firm may face impac...
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Drawing on current biology, we argue that the phase space of economic evolution is not stable. Thus, there are no entailing laws of economic dynamics. In this sense, economic dynamics are creative and the economy is not a causal system. Because economic dynamics are creative, the implicit frame of analysis for the econosphere changes in unprestatab...
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In response to Pelikan, Witt, Foster, and Colander, we reiterate our main contributions: (1) our more careful demonstration of why ‘mechanistic’ models have limited application, (2) our account of novelty as a system-level phenomenon, and (3) our identification of ‘novelty intermediation’ as important to creative economic dynamics. We also address...
Article
This symposium will address the recent trend in the strategy literature to take more micro perspectives on strategy, examining the impact of individuals’ cognitions, dispositions and activities in the strategy process. These perspectives include Behavioral Strategy, Behavioral Theory of the Firm, Cognitive approaches, Microfoundational approaches a...
Conference Paper
Full-text available
The purpose of this proposed symposium is to bring scholars together to discuss and debate the origins of organizational capabilities. The question of origins has been a sticky one to resolve, specifically due to the problem of infinite regress and the multi-level nature of capabilities. For example, should explanation of capabilities be reduced to...
Article
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In the extant organizational, management, and strategy literatures there are now frequent calls for microfoundations. However, there is little consensus on what microfoundations are and what they are not. In this paper we first (briefly) review the history of the microfoundations discussion and then discuss what microfoundations are and are not. We...
Article
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NEOCLASSICAL NONCOOPERATIVE GAME THEORY IS BASED ON A SIMPLE, YET POWERFUL SYNTHESIS OF MATHEMATICAL AND LOGICAL CONCEPTS: unconditional and immutable preference orderings and individual rationality. Although this structure has proven useful for characterizing competitive multi-player behavior, its applicability to scenarios involving complex socia...
Article
The origins of novelty and nature of economic opportunity have recently received significant attention in organization science, strategy and entrepreneurship. The notion and metaphor of search on an (NK) opportunity landscape — or “phase space” — has been particularly relevant to these conversations and debates. While the landscape and phase space...
Article
Full-text available
Scholars have recently highlighted the promise of open innovation. In this paper, we treat open innovation—in it's different forms and manifestations—as well as internal or closed innovation, as unique governance forms with different benefits and costs. We discuss how each governance form, whether open or closed, is composed of a set of instruments...
Conference Paper
This paper describes how a nascent collective of individuals can coalesce into a complex social system. The systematic study of such scenarios requires a mathematical framework within which to model the behavior of the individual members of the collective. As individuals interact, they develop social relationships and exchange resources – that is,...
Article
Scholars have recently highlighted the promise of open innovation. In this paper we treat open innovation — in it’s different forms and manifestations — as well as internal or closed innovation, as unique governance forms with different virtues and costs. We discuss how different organizational forms, whether open or closed, are essentially instrum...
Article
Full-text available
For decades, the literatures on firm capabilities and organizational economics have been at odds with each other, specifically relative to explaining organizational boundaries and heterogeneity. We briefly trace the history of the relationship between the capabilities literature and organizational economics, and we point to the dominance of a "capa...
Article
In this paper, we develop a theory and model of organizational founding and the emergence of collective beliefs and strategies. We explicate how collective beliefs, resulting in the formation of new organizations, emerge via three social mechanisms: sorting or matching, interaction, and selection. We specifically highlight how value homophily, soci...
Article
The ability—or 'capability'—to do something has much to do with the nature of the individuals involved and the aggregate and emergent outcomes of their interactions. I focus on the endogenous origins of capability in organizations and markets, in response to cosmologies of capability and organization that focus on the exogenous environment (selecti...
Article
For decades, the literatures on firm capabilities and organizational economics have been at odds with each other, specifically relative to explaining organizational boundaries and heterogeneity. We briefly trace the history of the relationship between the capabilities literature and organizational economics and point to the dominance of a “capabili...
Article
We discuss the microfoundations of routines and capabilities, including why a microfoundations view is needed and how it may inform work on organizational and competitive heterogeneity. Building on extant research, we identify three primary categories of micro-level components underlying routines and capabilities: individuals, social processes, and...
Article
This paper models organizational strategy as a social choice. We model how individual preferences for a course of action are aggregated toward an organizational choice and strategy. To accomplish this aggregation we specifically highlight the role of conditional (rather than categorical) preferences. We emphasize the role that two factors play in t...
Article
In this short essay we respond to Jepperson and Meyer’s (2011) critique of “action theories” and methodological individualism in sociology. We highlight fundamental problems with their argument, notably their misunderstanding of methodological individualism(s) and the belief that this explanatory principle ignores-and is somehow invalidated by-the...
Article
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Winter (2011), Pentland (2011), and Hodgson and Knudsen (2011) take issue with the arguments in Felin and Foss (2011), along with more generally critiquing the “microfoundations project” related to routines and capabilities. In this rejoinder we argue that the responses of our critics reinforce a number of the points stated in our writings on the r...
Article
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In this paper we discuss the origins and emergence of organizational routines and capabilities. We first argue that there are theoretical and endogeneity-related concerns associated with the key antecedents and mechanisms specified by the extant routines and capabilities literature. Specifically, we explicate the behaviorist and empiricist foundati...
Article
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A central role of the entrepreneur-manager is assembling a strategic bundle of complementary assets and activities, either existing or foreseen, which when combined create value for the firm. This process of creating value however requires managers to assess which activities should be handled by the market and which should be handled within hierarc...
Article
More than sixty-five years ago Friedrich Hayek parenthetically remarked that while "man has learned to use [the market]...he is still very far from having learned to make the best use of it" (1945: 528). The ensuing years have seen significant innovation in the structure and use of markets, including the infusion of market mechanisms into organizat...
Article
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We respond to Jack Vromen’s (this issue) critique of our discussion of the missing micro-foundations of work on routines and capabilities in economics and management research. Contrary to Vromen, we argue that (1) inter-level relations can be causal, and that inter-level causal relations may also obtain between routines and actions and interactions...
Article
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Organization theory is a theory without a protagonist. Organizations are typically portrayed in organizational scholarship as aggregations of individuals, as instantiations of the environment, as nodes in a social network, as members of a population, or as a bundle of organizing processes. This paper hopes to highlight the need for understanding, e...
Article
We discuss the behaviorist and empiricist foundations of the organizational routines and capabilities literature, specifically the extant emphasis placed on experience, repetition and observation as the key inputs and mechanisms of behavior, learning and change in organizations. Based on this discussion we highlight several concerns associated with...
Article
Organizational ambidexterity has emerged as a new research paradigm in organization theory, yet several issues fundamental to this debate remain controversial. We explore four central tensions here: Should organizations achieve ambidexterity through ...
Article
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Comparative organizational analysis once dominated American organizational sociology, grounded in rich case studies about organizational processes and outcomes. The Columbia school's approach to organizational research was exemplary in this regard. Following the publication of Robert K. Merton's (1940) essay, “Bureaucratic Structure and Personality...