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Innovators and imitators: Organizational reference groups and adoption of organizational routines
Abstract
Firms vary greatly in their rates of creating and adopting technological and organizational innovations, in part because of their choice of reference group. We argue that the selection of a reference group is a crucial and neglected source of firm heterogeneity. Comparisons to the average of other firms in a population cause most firms to adopt innovations once they are widely accepted. A distinctive feature of the minority of innovating firms that create innovations or adopt them early is that they compare themselves with, compete with, and try to differ from other innovating firms, whereas the majority of firms compare themselves with, and conform to, a broader group of firms. We elaborate this argument based on the behavioral theory of the firm and institutional theory, and test it on a two-period survey on adoptions of innovative organizational forms in Europe and the US. The analysis shows the predicted differences in the adoption patterns of innovating and imitating firms.
... When firm-performance is below their aspiration level, firms take more risk in searching for probable solutions to mitigate the gap than when performance exceeds the aspiration level. Here, the study computes both firm's own historical performance and its social performance (Massini et al. 2005) based performance-aspiration gap for short-term (1 year) and long-term (5 years). The study does this to find whether there is any discrepancy in its main results due to this longitudinal computational difference (see Ruefli 1990;and Henkel 2000). ...
... When firm-performance is below its aspiration level, firms would take more risks in searching for solutions to mitigate the gap than when performance exceeds firm aspiration. Here, the study computes both firm's own historical performance and its social performance (Massini et al. 2005) based performance-aspiration gap for short-term (1 year) and longterm (5 years). This would incorporate the longitudinal impact on measures used if any (see Ruefli 1990;and Henkel 2000). ...
... low performing firms) would be risk-seeking. In line with behavioural theory (Cyert and March 1963), this study computes both firm's own historical performance and its social performance (Massini et al. 2005) based performance-aspiration gap for short-term (1 year) and long-term (5 years). This study's social performance-aspiration gap measure would also capture the weak decision-making abilities of managers who would pursue higher risk strategies with lower returns (see Anderson et al. 2007). ...
Prior empirical research emphasises ‘troubled’ firm context and ‘quality management’ perspective as reasons for a ‘paradoxical’ or negative risk-return association for firms. But, to the best of our knowledge, no studies examine the role of individual corporate governance mechanisms in influencing such a ‘paradox’. Therefore, the study investigates this issue by classifying 675 sample Indian firms over the period 2000-2017 into high performing and low performing firms in line with the strategic reference point theory and the behavioural theory. To fulfil study objectives, it uses four different firm-return measures and estimate firm-level risk with standard deviations of each return measures previous 5 years’ values on a rolling basis. In the univariate model, the study uses the notion of target (reference) return level under firm’s own and social aspiration levels in time-variant and market cycles contexts, and then compute Kendall’s correlations in between distance from such targets and their standard deviations. The study also carries out a multivariate regression model with necessary controls to further validate its univariate findings. The study results report significant influential role that board size and women directors’ presence play in both high and low performing firms’ ‘paradoxical’ risk-return association. On the contrary, board meetings, busy board and board tenure develops a risk-return ‘paradox’ for high performing firms only. These results hold true across my return measures, strategic reference points, market cycles and corporate governance regimes after controlling for firm- and industry-level heterogeneities under both univariate and multivariate analyses.
... Further studies document the critical influence of internal factors (e.g., size and age of the firm (Short and Palmer, 2003); slack (Audia and Greve, 2006); leadership (Baum and Locke, 2004;Guney et al., 2018;Guo et al., 2019); and external factors (see Gooding et al., 1996) on firm aspiration. Past studies also document individual organisational and industrial drivers of firm risk in relation to firm fundamentals (see Jensen et al., 1992;La Porta et al., 2000;Autio, 2005;Delmar and Wiklund, 2008;Lu et al., 2019); firm performance (see Fisher and Hall;1969;Bowman, 1980;Greve, 1998;Massini et al., 2005;DasGupta and Deb, 2020); and corporate governance (see Fama and Jensen, 1983;Brick and Chidambaran, 2008;Cheng, 2008;Kumar and Sivaramakrishnan, 2008;Adams and Ferreira, 2009;Pathan, 2009;Bhagat et al., 2015;Hutchinson et al., 2015). However, all these divergent results from past empirical studies appear to be conditional on industry, economic condition, time period, or selection of the social comparison group. ...
... The behavioural theory (Cyert and March, 1963: 115) argues that firms are expected to establish an aspiration based on 'a weighted function of' the past goal, own past performance, and past performance of others (peers) (see also Greve, 1998;and Massini et al., 2005;Guney et al., 2018;Guo et al., 2019). It is theorized that failing to achieve such an aspiration level would prompt firms to initiate problematic search, resulting in organizational changes. ...
... This is because risk-taking is a strategic behaviour, and the performance-aspiration gap guides this type of firm behaviour (see Cyert and March, 1963;Ansoff, 1979;and Fiegenbaum et al., 1996), which is why most early researchers use aspiration to explain risky choices of firms (Bromiley, 1991;Guney et al., 2018;Gao et al., 2019). However, the influence of firm fundamentals (see Venkatesh, 1989;Autio, 2005;Delmar and Wiklund, 2008;and Lu et al., 2019); firm performance (see Cyert and March, 1963;Ansoff, 1979;Bowman, 1980;Fiegenbaum et al., 1996;Greve, 1998;Massini et al., 2005;DasGupta and Deb, 2020;etc.); and corporate governance (through strong (see Fama and Jensen, 1983;Brick and Chidambaran, 2008;Kumar and Sivaramakrishnan, 2008;Adams and Ferreira, 2009;Pathan, 2009) and effective boards (see Yermack, 1996;De Andres and Vallelado, 2008;Cheng, 2008;Coles et al., 2008;Pathan, 2009;Erkens et al., 2012;and Bhagat et al., 2015)) on firm risk is well-documented. ...
We examine the strength and nature of firm aspiration and expectation as strategic mediators in the association of risk antecedents and firm risk, after exploring the possible impact of such antecedents on firm aspiration, and firm aspiration’s preliminary influence on firm risk. Empirical literature is mostly silent about risk antecedents of firms in an emerging market or cross-country context, and to the best of our knowledge, the mediators proposed in this study are yet to be explored. We report strong significant positive mediating effects of firm aspiration and expectation in association of risk antecedents and firm risk. Our results also validate that all studied risk antecedents, except corporate governance- composition, significantly influence aspiration and expectation mediators and firm risk in line with our hypotheses. Our results also hold true after controlling for firm-level and country-level heterogeneities and conducting two additional robustness tests.
... When organizational members become involved, they learn to recognize the actions that they must take in order to effectively work towards achieving their business goals [9]. The adoption of new technologies and innovation by such businesses generally differs because of the difference in their selection of reference groups [99]. However, routines may cause inertia, obstruct adaptation, and delay organizational change [100]. ...
... In addition, this study proved that digital transformation could play a role in change and have an impact on organizational routines, as demonstrated at the university. It was previously found that organizational adaptation, as a result of the adoption of technological innovations, played a role in transformation within organizations in competitive environments [99]. Power was also an important element in this case, showing that power struggles could arise during digital transformation, inhibiting efforts towards digital transformation. ...
This study was undertaken in response to the current lack of research identifying organizational routine influences that are exerted on organizations, including in relation to digital transition. Digital transformation refers to the integration of digital technologies, such as data analytics and automation, into an organization, engendering changes in its work routines, processes, structure, and culture. However, digital transition is a strategic process involving significant structural and procedural changes in the shift from one technology to another. Therefore, understanding the effect of organizational routines is essential for understanding how digital transformation impacts an organization, and how best to manage this transition. This study explores the impact of organizational routines on digital transition, in order to understand how they can facilitate a successful digital transformation. It employs a single case study of a university that recently implemented digital technologies, including big data analytics and automation, in some of its managerial services for its employees. It marked a significant technological shift for this public university, and the study specifically explores how the organizational routines affected this digital transition, particularly in terms of managerial and administrative issues. In modern times, many universities worldwide have undergone significant changes, and it is therefore essential to document the impact of organizational routines on digital transition, especially in developing countries where universities play a crucial societal role. The complexity of universities as organizations, and the interaction between organizational routines and digital transition highlight the importance of a case study approach for understanding this complexity. The university with which this study is concerned is a leading public university that holds considerable influence and a leadership role within the higher education sector, and which has adopted various technologies and information systems. The success of the digital transformation at this university may have a significant impact on other universities in the region and encourage them to adopt similar approaches to digital transition and digital transformation in the future, if they understand the impact of organizational routines in such transitions. The results show that organizational routines play a leading role in digital transformation transition; moreover, some aspects can explain the ways in which these routines influence digital transformation transition, such as inherited status, the adaptation of technology and changes to current organizational settings, and power. This study can contribute toward the successful implementation of digital transformation and influence the strategies adopted for the transitions required by digital technologies.
... Some prior research explains under which circumstances managers attend to different social reference groups; Blettner et al. (2015) relate attention to reference groups and other reference points to the stage in a firm's life cycle and Hu et al. (2017) argue that political considerations drive the shift in attention among reference groups. Other researchers refer to how motives affect attention to social reference groups (Massini et al., 2005;Moliterno et al., 2014). Audia, Brion, & Greve (2015) find evidence of two different self-evaluation motives (self-enhancement and self-assessment) in the choice of social reference groups. ...
... Audia, Brion, & Greve (2015) find evidence of two different self-evaluation motives (self-enhancement and self-assessment) in the choice of social reference groups. Massini et al. (2005) differentiate the motive of innovation vs. imitation. We extend this literature by adding the firm's generic strategy as an organizational information filter that affects how managers selectively attend to reference group and, consequently, adapt their firm aspirations to performance feedback. ...
When managers set aspirations for their firms, they typically compare their own firms' performance to past aspirations as well as to the performance of social reference groups. We explore how firm generic strategy affects managers' adaptation of firm aspirations in response to feedback from three social reference groups that vary in terms of breadth (population average, strategic group, and one direct rival).
We propose that firm generic strategy (low-cost or differentiation) functions as an organizational information filter through with managers interpret performance feedback. We test for whether generic strategy has a moderating effect on the influence of performance feedback from social reference groups.
Based on a longitudinal sample of U.S. airlines, our study shows that all firms are influenced most strongly by their strategic groups. Low-cost and differentiation generic strategies differ in terms of which social reference group motivates a larger reaction when overperforming: low-cost firms are more influenced by the population average which is contributed to by the entire industry than are differentiating firms, while differentiating firms are more swayed by the narrow focus of their direct rivals than are low-cost firms. Although firm strategy represents a core decision at the firm level, to the best of our knowledge, performance feedback research, surprisingly, has not yet integrated generic strategy into its models.
... Few past empirical studies document individual organisational and industrial drivers of firmrisk in relation to firm fundamentals (see Jensen et al., 1992;La Porta et al., 2000;Lu et al., 2019;etc.); firm performance (see Fisher and Hall;1969;Massini et al., 2005;DasGupta and Deb, 2020;etc.); and corporate governance (see Fama and Jensen, 1983;Brick and Chidambaran, 2008;Bhagat et al., 2015;etc.), ...
... These findings contribute to the existing scant firm-risk and managerial risk-taking literature in regard to their antecedents in the emerging market contexts. We extend the importance of firm performance (see Massini et al., 2005;DasGupta and Deb, 2020;etc.); corporate governance (see Brick and Chidambaran, 2008;Bhagat et al., 2015;etc.); ...
Firm-risk and managerial risk-taking though distinct are used interchangeably in empirical literature. Here, we identify these two distinctly by examining different proxies for them. We use income stream uncertainty and accounting beta to proxy firm-risk, and market risk and capital intensity ratio represent managerial risk-taking. Once defined, our objective is to find the antecedents of both these by using the most advanced structural equation modelling (SEM) approach from created constructs of performance, psychological, corporate governance, shareholding patterns, fundamental valuation and firm’s characteristics drivers. We formulate seven hypotheses based on empirical literature representing these constructs. We use data of 269 Indian firms for 18 (1999-2017) years to run SEM and then analyse our results individually and combinedly. SEM is used here to test the unidimensionality of the seven constructs (consisting of 19 drivers) and to analyze these drivers (i.e. antecedents) influence on firm-risk and managerial risk-taking i.e. firm’s risk-play. Results prove that present firm-performance, corporate governance drivers, promoters’ shareholding and firm’s characteristics are driving firm’s risk-play. However, fundamental valuation drivers have no role to play in influencing income stream uncertainty, systematic operating risks and managerial risk-attitudes. Psychological drivers and foreign shareholdings act only as a catalyst of firm-risk.
... It entails a mental model of how resource inputs can lead to start-ups' possible market outputs (Foss et al., 2008;Nicholls-Nixona et al., 2000). Startups can learn the value of a particular resource, i.e., develop stronger mental models, through trial-and-error learning processes or imitation Massini et al., 2005;Wang and Chugh, 2014). Trial-and-error learning is often inefficient (Bandura, 1977;Huber, 1991) and costly for start-ups (Wang and Chugh, 2014). ...
... This is largely a process of experimentation, self-discovery, and improvisation (van Weele and Van Rijnsoever, 2017). Imitation is a more efficient form of learning and entails mimicking the behavior of successful role models (Massini et al., 2005), or directly acquiring knowledge from other sources, such as incubator managers or coaches . However, relying solely on imitation might be poorly suited because the resources involved are unlikely to be inimitable (Alvarez and Busenitz, 2001). ...
According to the resource-based view, for start-ups to gain a sustainable competitive advantage their resources should be valuable, rare, inimitable, and non-substitutable (VRIN). However, early-stage entrepreneurs often do not have the capability to properly value resources. Incubators are popular tools for supporting early-stage entrepreneurs. Many entrepreneurs initially prefer that incubators provide tangible non-VRIN resources such as funding and office space. While in incubators, entrepreneurs increasingly learn to value intangible resources as VRIN. It is unknown whether this change in resource valuation is caused by the incubator or a learning process common to all entrepreneurs. The aim of this study is to discern whether the change in valuation of resources is a result of the incubation experience or a consequence of a normal learning process. This contributes to a better understanding of the impact of incubation on start-up development. We pose the following research question: What are the effects of incubation experience on start-up entrepreneurs' valuation of different tangible and intangible resources offered by incubators? We develop hypotheses about how incubators change the valuation of specific resources. We test these hypotheses using data from 935 entrepreneurs in North America and Western Europe who completed a survey containing a discrete choice experiment in which entrepreneurs with and without incubation experience were asked to choose between two hypothetical incubators that offer different resources. Our results reveal that incubators indeed contribute to entrepreneurs’ capacity to value resources. First, we find that entrepreneurs of incubated start-ups value non-VRIN resources less than entrepreneurs of non-incubated start-ups. Second, start-up entrepreneurs generally value most VRIN resources more than non-incubated start-up entrepreneurs.
... Few past empirical studies document individual organisational and industrial drivers of firmrisk in relation to firm fundamentals (see Jensen et al., 1992;La Porta et al., 2000;Lu et al., 2019;etc.); firm performance (see Fisher and Hall;1969;Massini et al., 2005;DasGupta and Deb, 2020;etc.); and corporate governance (see Fama and Jensen, 1983;Brick and Chidambaran, 2008;Bhagat et al., 2015;etc.), ...
... These findings contribute to the existing scant firm-risk and managerial risk-taking literature in regard to their antecedents in the emerging market contexts. We extend the importance of firm performance (see Massini et al., 2005;DasGupta and Deb, 2020;etc.); corporate governance (see Brick and Chidambaran, 2008;Bhagat et al., 2015;etc.); ...
Firm-risk and managerial risk-taking though distinct are used interchangeably in empirical literature. Here, we identify these two distinctly by examining different proxies for them. We use income stream uncertainty and accounting beta to proxy firm-risk, and market risk and capital intensity ratio represent managerial risk-taking. Once defined, our objective is to find the antecedents of both these by using the most advanced structural equation modelling (SEM) approach from created constructs of performance, psychological, corporate governance, shareholding patterns, fundamental valuation and firm’s characteristics drivers. We formulate seven hypotheses based on empirical literature representing these constructs. We use data of 269 Indian firms for 18 (1999-2017) years to run SEM and then analyse our results individually and combinedly. SEM is used here to test the unidimensionality of the seven constructs (consisting of 19 drivers) and to analyze these drivers (i.e. antecedents) influence on firm-risk and managerial risk-taking i.e. firm’s risk-play. Results prove that present firm-performance, corporate governance drivers, promoters’ shareholding and firm’s characteristics are driving firm’s risk-play. However, fundamental valuation drivers have no role to play in influencing income stream uncertainty, systematic operating risks and managerial risk-attitudes. Psychological drivers and foreign shareholdings act only as a catalyst of firm-risk.
... HA refers to an organization's internal self-comparison, which is associated with the organization's own past experience (Greve, 2003a;Lant, 1992). SA refers to an organization's external peer-comparison, which is obtained by consulting peer organizations' performance (Baum et al., 2005;Greve, 1998;Massini et al., 2005). Thus, both internal and external referents can significantly influence the setting of aspiration levels of organizations (Wiseman and Bromiley, 1996). ...
... IJOPM the weight of HA. Specifically, SA is the industry average performance of an organization's reference groups, while HA represents an organization's past performance(Baum et al., 2005;Massini et al., 2005). ...
Purpose
This study investigates the relationships between environmental performance feedback and green supply chain management (GSCM). It explores how environmental performance above or below aspirations affects the implementation of GSCM practices (specifically sustainable production [SP] and sustainable sourcing [SS]) through the lens of the behavioral theory of the firm (BTOF), which has received scant attention in the operations management literature.
Design/methodology/approach
The study used data from the sixth round of the International Manufacturing Strategy Survey (IMSS). It employed hierarchical linear regression to test the proposed hypotheses. Moreover, the study tested an alternate model to rule out the possible role of financial performance aspirations in explaining the implementation of SP and SS.
Findings
The results indicate that organizations determine their efforts put into the two GSCM practices according to environmental performance feedback: the greater the aspiration–environmental performance discrepancy, the stronger the efforts put into implementing GSCM practices.
Originality/value
This study contributes to the GSCM literature by revealing the impact of environmental performance aspirations on the implementation of GSCM practices through the lens of the BTOF. It also extends the BTOF by applying it in the GSCM context and indicating that performance feedback is based on environmental performance instead of financial performance in this specific context.
... In contexts ranging from binge-drinking to contraceptive use, belonging to a group has been shown to influence intentions, over and above aspirations and behavioral control (Fekadu & Kraft, 2002;Johnston & White, 2003). In the context of organizations, the behavior of referent organizations has been shown to influence the adoption of organizational routines (Massini et al., 2005) and to act as a basis for performance evaluation (Greve, 2003). Here, the important reference group for performance is likely to comprise other firms in the focal firm's industry (and location)-that is, their peers (Capelleras et al., 2019). ...
Research Summary
Following a growing body of research indicating that most high‐growth entrepreneurial firms are “one hit wonders,” this article leverages Canadian survey and administrative data to investigate the relationship between recent entrepreneurial income and growth barriers, on the one hand, and the growth intentions of established firms, on the other. We draw on the theory of planned behavior to develop hypotheses on how salient information resulting from entrepreneurial experience may shape growth intentions. As anticipated, we find that higher incomes negatively associate with intentions. The picture for barriers is more mixed, such that recently experienced human resources and financial barriers positively associate with growth intentions and barriers related to competition and regulations negatively associate with intentions. The implications for policy and for further research are discussed.
Managerial Summary
Our study investigates factors associated with growth expectations among small firms, utilizing descriptive and multivariate analyses. In doing this, we extend the theory of planned behavior into a study of established firms, recognizing that intentions are dynamic and will be shaped by experience of entrepreneurship. Key findings indicate that past performance significantly affects future growth expectations, while higher personal income correlates with lower growth intentions, suggesting entrepreneurs become “satisficers” as income increases. In addition, perceptions of external barriers are negatively associated with future expectations, while internal barriers do not significantly hinder them. This result implies that entrepreneurs perceive external challenges as beyond their control, affecting their confidence in future growth.
... 또 낮은 지위의 파트너로부터 더 많은 노력과 기여를 취한다 (Castellucci & Ertug, 2010 (한준, 2000). 경쟁을 국지화하는 다양한 요인 중에 대표적인 것은 조직 크기와 (Hannan et al., 1990;Wholey, Christianson & Sanchez, 1992;Ranger-Moore et al., 1995), 지역적 근접성이다 (Baum & Mezias, 1992 (Kraatz, 1998;Lee & Pennings, 2002;Massini, Lewin, & Greve, 2005;Porac, Wade, & Pollock, 1999;Williamson & Cable, 2003 Organizational deviation that does not conform to institutional norms has long been discussed as necessary in organization studies. Discourses such as the neo-institutional legitimacy discourse and organizational learning theory's imitative learning discuss why organizations become similar and conformity. ...
Organizational deviation that does not conform to institutional norms has
long been discussed as necessary in organization studies. Discourses such
as the neo-institutional legitimacy discourse and organizational learning theory's
imitative learning discuss why organizations become similar and conformity.
On the other hand, it describes variation and deviation behavior from the
perspective of organizational and evolutionary theory. Based on the theoretical
discourse on organizational status and organizational ecology, this study explores
differentiated behaviors according to organizational status and the ecological
factors that regulate them. To this end, the Korean hotel industry
data from 2012 to 2021 was used to empirically analyze the effects of factors
such as position in the organizational group and local competition on organizational
deviance. The times series logistic regression analysis non-request for
hotel rating review, that is, deviation from regulations as a dependent variable,
resulted in the nonlinear effect of status within the organization group and
the control of local competition based on accessibility. It was confirmed that
all hypotheses predicting the effect were significantly supported. The results
of this study provide theoretical implications that market status and localized
competition may affect conformity to and deviation from institutional norms
such as government laws, in addition to internal characteristics of organizations
suggested by previous studies. In addition, we paid attention to the differentiated
motivation, behavior, and differentiated impact of ‘middleness’ level organizational
characteristics, which have not been discussed much theoretically or
empirically, and explored the non-linear impact of middle-level characteristics.
It has practical implications in that it reminds policymakers and practitioners
of organizations that compete based on region and accessibility to the importance
of localized competition
... Recall that we did not select the metaroutine managing adaptive tension since it lies at the intersection of internal and external absorptive capacity routines. Further, this metaroutine involves comparison with the external environment and entails selecting a comparison group, obtaining external information, and weighting that external information (Lewin et al., 2011;Massini et al., 2005). ITC does not facilitate this metaroutine because, by definition, ITC lies within the organization and therefore does not help the firm obtain external information and compare its goals with the external environment. ...
Innovation is vital for the growth of small and medium-sized enterprises (SMEs). However, SMEs face deficiencies that hinder their innovation output. This study examines how Information Technology (IT) helps SMEs address two salient deficiencies: technological deficiency (deficiency in internal technical knowledge and skills) and government support deficiency (deficiency in favorable government policies and incentives). Although IT can be used in a closed manner (within the firm’s boundary) or open manner (beyond the firm’s boundary) to enable innovation, the closed and open approaches to IT-enabled innovation pose advantages and challenges for SMEs, resulting in a tension regarding which approach better addresses these two deficiencies. In this study, we investigate how IT Use for Closed Innovation Activities (ITC) and IT Use for Open Innovation Activities (ITO) help SMEs overcome these two deficiencies to achieve innovation output. Drawing on the theoretical concepts of internal and external absorptive capacity metaroutines, we hypothesize that ITC and ITO reduce the harmful effects of technological deficiency and government support deficiency on innovation output. Further, we hypothesize that ITC is more effective than ITO in reducing the harmful effect of technological deficiency on innovation output. In contrast, we hypothesize that ITO is more effective than ITC in reducing the harmful effect of government support deficiency on innovation output. Our empirical analysis of a unique multi-year archival dataset of 319 manufacturing SMEs in Mexico broadly supports our hypotheses. We conduct further exploratory analysis that sheds light on several underlying mechanisms included in our theorization. Our main contributions lie in addressing the tension between ITC and ITO and highlighting that neither approach to IT-enabled innovation outperforms the other in combating technological deficiency and government support deficiency of SMEs. Rather, SMEs achieve greater innovation output by appropriately orienting their IT-enabled innovation efforts in a closed or open manner to address specific deficiencies.
... Historical aspiration levels, on the one hand, refer to the past performance of the firm and can inform prediction about future performance (Joseph & Gaba, 2015). Social aspiration levels, on the other hand, reflect performance comparisons with comparable peer organizations (Massini et al., 2005). The firm's aspirations may rise either when their current performance exceeds their past performance or when their performance exceeds the performance of comparable peer organizations. ...
Integrating the behavioral theory of the firm into the discussion on why firms behave in socially responsible ways, the study here develops and empirically tests hypotheses articulating when and how past corporate financial performance (CFP) might lead to more or less engagement in corporate social responsibility (CSR). Rather than treating historical and social aspirations as comparable performance benchmarks that yield similar behavioral responses, as most prior studies do, these two modes of performance comparison may induce signals that executives interpret differently, and therefore may lead to conflicting firm responses towards CSR initiatives. Using panel data pertaining to a large sample of U.S. firms, the study finds that historical and social performance comparisons have differential effects on CSR engagement. The findings describe how different interpretations of achievement influence firm’s engagement in secondary activities concerning environmental and social issues—a topic that has received very little attention in prior empirical research.
... Author(s) Classifications (Miles & Snow, 1978) Prospector, defender, analyzer, reactor (Gilbert, 1994) Reactive innovation strategy and proactive innovative strategy (Hultink & Robben, 1995) Technological innovator, rapid copier, cost reducer (Manu & Sriram, 1996) Product innovator, process innovator, late enterer, noninnovator, original initiators (Burgelman, Maidique, and Wheelwright, 2001) Technological leadership or followership, market position, timing of market entry (Hickman & Raia, 2002;Gundry&Kickul, 2007) Improving core business, exploiting strategic advantages, developing new capabilities, creating revolution change (Massini, Lewin, and Greve, 2005) Innovators, imitators (Venkatraman, 1989;Akman & Yilmaz, 2008) Aggressive, analyzer, defensive, futuristic, proactive, risk taking (Guan, Yam, Tang, and Lau, 2009) Leading innovator, follower, imitator, defender, technology importer (Kylaheiko, Jantunen, Puumalainen, Saarenketo, and Tuppura, 2011) Domestic and international innovator, domestic and international replicator ...
Innovation strategy is the basis of success in innovation and performance improvement. This paper represents a model related to the most important innovation strategies which have a significant impact on performance of industries. Then, it examines the relationships between innovation strategies and diversity and development of the performance. So, the empirical research was carried out in Iranian construction industry and practical data were gathered out of7main industry institutions and 93 construction SMEs by questionnaires to examine paper objectives. The findings show that innovation strategies such as proactive, analyzer, futuristic and aggressive strategies influence on the performance development of the industry. Also, strategies such as proactive, risk taking and futuristic ones are the most effective innovation strategies in the performance diversity. Results of this study suggest that to achieve performance diversity and development, construction industry's policy makers and top managers should implement and promote pro active and futurity strategies, simultaneously, across the industry.
... Some PFT papers refer to the industry leaders' performance (Askin and Bothner, 2016, Blettner et al., 2019, Boyle and Shapira, 2012 and, less frequently, to top ranked firms as striving groups that firms would like to emulate (Labianca and Fairbank, 2005). While there are some empirical PFT studies that include highly ambitious reference groups (e.g., Labianca et al., 2009, Massini et al., 2005, it is unclear how organizations respond to performance of self-improvement groups. ...
The performance feedback theory (PFT) proposes that organizations compare their performance to other organizations (i.e. their social reference group) and initiate responses based on this comparison. While social comparison represents a core element of the PFT, it is not well understood how organizations select social reference groups and how this selection may affect organizational responses (e.g. risk‐taking, change, innovation). We propose that the motives that organizations use to select their social reference groups impact their responses to performance feedback. Our meta‐analysis of 99 empirical PFT studies focuses on two motives underlying the selection of social reference groups for performance feedback: self‐assessment and self‐improvement. While self‐assessment through comparison requires the selection of a relevant set of referent organizations, self‐improvement relies on the selection of the highest performing referent organizations. Our results show that organizational responses to performance feedback differ depending on which motive‐based reference group is selected for comparison. These differences are more evident when performance is above aspirations. This finding has important implications for PFT researchers to predict organizational responses more precisely.
... Decision-makers make sense of performance by comparing actual performance to a previously set aspiration (i.e., the target), and this comparison drives future aspiration (Cyert & March 1992;March and Simon, 1958). While Gavetti and Levinthal (2000) have advanced the thinking about forward-looking aspects of adaptation, only a few PFT researchers have discussed these to date (e.g., Chen, 2008;Labianca, Fairbank, Andrevski, & Parzen, 2009;Massini, Lewin, & Greve, 2005;Shinkle, 2012). The extent to which decision-makers are oriented toward the future varies across cultures (House et al., 2004). ...
The organizational response to performance feedback is a collective process in which groups of decision-makers face uncertainty about the future when making organizational decisions based on past performance feedback. Culture is an important variable to explain the context of collective decision processes, but it is not well understood by Organizational Performance Feedback Theory (PFT) research. The current internationalization trend of PFT research poses the question if empirical results are comparable across different cultural settings, and whether culture is a general condition of organizational performance feedback. We analyze the role of national culture as a proxy for collective interpretive processes that influence the organizational decision-making process in response to performance feedback, and we resolve some of the unexplained variances in the empirical results. We use a meta-analysis to understand if national culture poses a general condition for the organizational performance feedback process. We analyze the empirical results of 153 PFT studies covering organizations from 16 countries, and we examine the impact of four dimensions of national culture: uncertainty avoidance, performance orientation, future orientation, and institutional collectivism. We demonstrate that national culture is an important concept for PFT development.
... Another characteristic of SMEs compared to larger firms, is its internal behaviour and conditions supporting innovation activities such as entrepreneurship, high responsiveness, and flexibility (Massini et al., 2005). According to Raguraman (2019), SMEs have the adaptability and agility to exploit new technological innovations or business opportunities, which large enterprises find challenging to utilize due to limited flexibility. ...
Firms need to be innovative and adaptive in competitive business environments subject to technological advancement and rapid changes in regulations and customers’ preferences. To do so, companies traditionally innovate their products or services, processes, marketing or organization. Since the advent of the Internet, business model innovation (BMI) has emerged as a new conceptual focus and a critical point to innovation. Compared to other traditional innovations, BMI is associated with high risk and uncertainty since it involves fundamental changes to the core components and/or the architecture of a firm’s business model (BM). Therefore, if not handled properly, a well-formulated BM may fail to improve performance. Therefore, knowing how and when to innovate a BM is a severe challenge for managers/owners of firms. Although most studies that combine strategic and innovation management with BMs mainly focus on large enterprises, the vast majority of firms worldwide (99%) are small and medium-sized enterprises (SMEs). To fill the gap, our research objective is: “To develop and test a conceptual model for implementation of Business Model Innovation in SMEs that focuses on “human and organizational” factors to improve performance.
This research adopted a mixed-method approach consisted of five phases, e.g., two literature reviews, two quantitative studies (Survey, Structural equation modeling using SmartPLS 3) and one qualitative research (Case study, Cross-case analysis using Atlasti.9) to fulfil the research objective.
Our research comprehensive conceptual model helps researchers understand the causal mechanism under which BMI influences the overall firm performance and serves as the grounding for empirical research in different types of companies, e.g., start-ups, SMEs, and large enterprises. On a practical level, our results give SME owners and managers insight into potential contingency factors on expected performance effects of business model innovation. Overall, this research analyzes BMI from different angles and develops a model to maximize business model innovation’s impact on a firm’s performance, especially from human and organizational perspectives.
While the business world is constantly changing in terms of technology, regulations, and customer needs, these results advance BMI research by opening the black box of the causal relationship between BMI and a firm’s overall performance to better understand the BMI phenomenon.
... Innovation and imitation have been conceptualized as dichotomous and treated as mutually exclusive in studies of R&D resource allocation (Scherer, 1967;, market entries (e.g., Ofek & Turut, 2008), top management teams , and adoption of routines (Massini, Lewin, & Greve, 2005), among others. ...
Strategic imitation occurs when a firm purposefully attempts to reproduce, in whole or part, other firms’ products, processes, capabilities, technologies, structures, and/or decisions in its pursuit of competitive advantage. Imitation is a pervasive firm behavior, and the literature relating to imitation is growing rapidly. In the resource-based view, for example, imitation is core because it is assumed to undermine inter-firm performance heterogeneity and erode leaders’ competitive advantage. We argue that work on imitation is circumscribed by a core set of assumptions: imitation is easy, weak firms imitate, uncertainty promotes imitation, and there is only one imitation strategy. We review the origins and implications of these assumptions in the extant literature, and, more importantly, expose a set of emerging counter-assumptions. In light of these counter-assumptions, we propose foundations for a new conceptual model of imitation that focuses on evolutionary dynamics. We suggest that imitation may be a key source of dynamic capabilities and innovation, and in turn it gives rise to competitive advantage.
... As Greve (1998) suggests, the likelihood of change or risky behaviour drops rapidly for firms that enjoy performance that exceeds the industry average. Accordingly, a sizable body of empirical work has shown that there is a link between strong performance compared to the industry average and persistence with current businesses (e.g., Fiegenbaum & Thomas, 1995;Hu, Blettner, & Bettis, 2011;Massini, Lewin, & Greve, 2005). Such a performance may lock firms into previously successful businesses, because it increases their confidence with respect to potential organizational outcomes (Lant & Hurley, 1999;Lant, Milliken, & Batra, 1992;Levinthal & March, 1993;Milliken & Lant, 1991). ...
Unprecedented environmental shocks, like the outbreak of COVID-19, sometimes trigger firms to adjust to the new environment, by expanding quickly into new—relevant to the shock—product lines, as a means to capitalize on the booming demand of urgently needed supplies. This study examines the role of firm corporate liabilities, as the ones enclosed to firm age, in influencing the number of new product lines a firm introduces in response to the pandemic, and its reaction time to the shock. The way in which performance aspirations interfere in these managerial decisions is also examined. In testing hypotheses, we employ a novel multivariate matching approach, namely entropy balancing, which allows researchers to create balanced samples and accounts for the existence of non-random factors influencing the results. Using a sample of 973 manufacturers that introduced new product lines in response to COVID-19, our hypotheses, positively linking firm age to product line introductions, and negatively to response time to the environmental shock, are supported. Our results indicate that for firms with higher levels of performance above industry average, the positive influence of firm's age on the number of new product lines introduced is weaker than for firms with lower levels of performance above industry average.
... The available data do not allow addressing these issues in a manner meeting the state of the art of diffusion research (e.g. Massini et al., 2005). Future research should exploit the increasing availability of more detailed and sophisticated observational data in team sports industries. ...
Research question
The paper asks to what extent team tactics qualify as internal sources of competitive advantage in team sport industries. Team tactics are complex routines for situated action, which require highly skilled actors to perform them. However, in an industry structure facilitating a highly unequal allocation of athletic talent, the potential of tactical routines to create competitive advantage is limited and incentives to exploit new routine options are dulled.
Research methods
The paper addresses the research question on the basis of a quantitative case study on empty goal tactics in German professional league handball.
Results and findings
There is evidence for a strong quality hierarchy between teams. Superior teams perform significantly better in standard tactic situations. A new tactical option is used primarily to resort to standard routines. New routines are avoided when incompatible with already established routines and do not promise a competitive advantage.
Implications
In a highly hierarchical team sports industry, the key resource heterogeneity, which creates competitive advantage, remains athletic talent. Creating new tactical options will not suffice to increase competitive balance. Teams have to develop key upstream higher-level routines before team tactics become relevant.
... . 이러한 전략적 방향성은 다양한 기업 활동의 적절성을 판단하는 기준이 되며, 올바른 조직관리의 근거를 제공할 수 있다 는 점에서, 경영관리의 중심이 되는 최상위의 목표를 제공하는 역할을 담당한다 (Chandler, 1962;Child, 1972 (March & Simon, 1958;March, 1962 (March, 1962 (March, 1962;Frost & Egri, 1991 (Sapolsky, 1967;Daft, 1978, Kimberly & Evanisko, 1981 (Cohen & Levinthal, 1990;Jansen et al., 2005;Chesbrough, 2006 (Dyer, 1996;Doz & Hamel, 1998 (Constant et al., 1996). 이처럼 협력과 교류의 네트워크는 기업이 기존의 사업 분야에서 축적한 지식과 자원에서는 얻어지기 어려운 부분을 보충하는 역할을 하기 에, 기술혁신의 시도와 성공 가능성을 예측하는 중요한 요인으로 다루어진다 (Child & Faulkner, 1998;Belderbos et al., 2004;Chesbrough, 2006 (Grant, 1996;Cohen & Levinthal, 1990 (Uzzi, 1996;Massini et al., 2005 (Chandler, 1962;Child, 1972 (March, 1962;Frost & Egri, 1991 Professor of Business Administration, Duksung Women's University ...
... We selected this attribute because newer firms potentially have different priorities such as early scaling challenges or a more intense search for resources and so interpret a challenge differently than older firms (Sørensen & Stuart, 2000). In addition, younger firms are more likely to scan their external environment to identify threats to search for the routines employed by other successful firms (Gong, Baker, & Miner, 2005;Haveman, 1993;Massini, Lewin, & Greve, 2005). Second, we examine the U.S. versus non-U.S. ...
How managers respond to their business challenges is central to studies on strategy and organizational theory, but how those challenges are interpreted has garnered far less analysis. While literature on strategy examines managerial responses from a performance-oriented perspective, organizational scholars typically theorize that actions are selected to maintain legitimacy in the eyes of relevant audiences. Responding to recent literature calling for a rapprochement between these two views, we propose that the way challenges are interpreted depends on the lenses through which managers interpret the challenge-either from a performance perspective or a legitimacy seeking viewpoint. We employ latent Dirichlet allocation topic modeling to analyze 1,648 written challenges and cause interpretations from chief executive officers and executive officers who attended executive education programs during a twenty-three-year period (1996-2018) at Stanford University. We examine the time behavior of the types and mix of challenges and their associated contemporaneous root cause interpretations over this twenty-three-year span. A key finding is that while there are sizable shifts in the business challenges during this extended period, there is no comparable shift in the mix of business root cause interpretations. We highlight how the findings add to the debate on how managers interpret challenges.
... Firms that are performing below their aspirations exhibit markedly different behavior from high performing firms (Massini, Lewin and Greve, 2005). Specifically, poor performance (1) stimulates increased risk taking (Harris and Bromiley, 2007, Kotlar et al., 2014, Mishina et al., 2010, (2) serves as a catalyst to identify new practices (Alexy, Bascavusoglu-Moreau andSalter, 2016, Kotlar, et al., 2014), and (3) motivates the replacement of existing, poorly performing capabilities with new capabilities that enhance innovation March, 1963, Singh, 1986). ...
Leveraging resources to develop innovation is central to exploiting market opportunities yet doing so is complex and fraught with challenges. This study explores some of this complexity by theoretically detailing and empirically examining the critical role that synchronization plays in the process of leveraging resources to create innovation. Specifically, we integrate resource orchestration with the behavioral theory of the firm to investigate the joint effect of synchronization and leveraging strategies on innovation under different performance conditions. Using policy capturing methodology resulting in 3,600 observations from 120 managers, we find empirical evidence that synchronization can enhance innovation outcomes of all leveraging strategies. Yet, this positive synergistic effect occurs in high performing firms that use the resource advantage and market opportunity leveraging strategies and in low performing firms that use the entrepreneurial leveraging strategy. Our theory and results offer important contributions to the innovation and resource orchestration literatures. First, our study offers a contextually rich examination of innovation, suggesting that it is not only resources, but also managerial actions and a firm’s relative performance that drive innovation outcomes. Specifically, this study adds to our knowledge of the relationship between resources and innovation strategies by investigating the impact of synchronization – a key contingency in understanding the effects of resources on innovation. Second, we examine boundary conditions of synchronization’s influence by integrating behavioral logic in the context of relative firm performance. Mixed evidence exists on the synergistic effect of valuable capabilities, with some studies showing increased gains and others finding evidence of a neutral relationship. This study begins to disentangle these findings by suggesting that resource leveraging strategies and synchronization together enhance innovation when the strategy aligns with the firm’s relative performance aspirations, answering calls for the development of a more nuanced understanding of the pursuit of innovation.
... In identifying targets comparison and imitation researchers have generally assumed a fixed set of comparison institutions. For example, when testing for the importance of a strategic reference point on innovative behaviors, Massini et al. (2005) assume an organization's comparison group is their strategic group and test against that hypothesis. They conclude that organizations mimic their strategic group because such groupings predict imitative behavior, however, it is possible that these organizations also imitate others outside their grouping. ...
http://deepblue.lib.umich.edu/bitstream/2027.42/134375/1/pvicinan.pdf
... Laroche, Bergeron & Goutaland, 2003;Baker, Hunt, & Scribner, 2002). Innovative firms are considering benchmarks for comparison with counterparts who are less on innovation(Massini et al., 2005). Because of the risk involved in institutional buying, certain areas i.e. relationship of buying and selling firms, placement of service, etc., may be affected(Webster and Keller, 2004) whereas Knowledge, risk perception, and risk attitude of buyers play important role in decision-making process when buying store brands and national brands(Erdem et al., 2004). ...
Purpose of the study: The purpose of this study was to highlight factors that affect buying practices in higher education institutions. Methodology: A questionnaire was used to collect primary data from respondents of higher education institutions of Khyber Pakhtunkhwa (Pakistan). Correlation & Regression tests were applied with the help of SPSS for checking association and cause and effect relationship between predictors and criterion variables. Main findings: Findings of the study reveal that institutional goals, objectives, policies & procedures regarding the purchase, relationship with the suppliers & their credibility, product knowledge, and intangibility are some key factors that affect the buying behavior of individuals in institutions. Applications of the study: Study will help institutional buyers in particular and others in general to reduce brand sensitivity & risk associated with the purchase by following established procedures and policies. The study will help marketers in devising corporate and marketing strategies in different environments to overcome competition. Novelty/Originality of this study: The area of institutional buying in terms of branding has been largely ignored by researchers and academicians previously due to which this area remained underdeveloped theoretically. The study reveals the importance of various factors in institutional buying context and knowledge of these factors will help institutional buyers in particular and others in general, in reducing risk and uncertainty, by overcoming the complexity involved in institutional buying patterns.
... According to research on categorization, audiences value entities based on their similarity to either established prototypes or salient features associated with success (Massini, Lewin, & Greve, 2005;. In the IPO market, each IPO is unique and shares similarity with its industry peers (typicality) but pertains also to the broader set of all prior IPOs. ...
This dissertation examines whether the different categorization processes shaping audiences’ valuations in markets bring stability or variability to audiences’ valuations. While seminal research on categorization emphasized the stabilizing role of market categories, recent research suggests that audiences’ valuations can vary substantially even in markets which are well-structured by pre-existing categories. This variability notably results from audiences’ heterogeneous preferences for typical offerings, from shifts in categories’ meanings or from audiences’ reliance on multiple models of valuation. Taking stock of these new results, this dissertation asks why audiences’ valuations are so variable and explores in more details the role that market categories play in this phenomenon.This dissertation proposes that i) ambiguous categories, ii) the influence of temporary attractions among audiences alongside more stable categories and iii) the co-existence of different types of evaluators all contribute to produce variability in audiences’ valuations. The first two empirical essays use data from publicly listed firms in the U.S. In these essays, firms’ similarity to existing category prototypes or audiences’ temporary attractions toward certain features are measured using semantics extracted from large corpora of annual reports and IPO prospectuses. The third essay is a theoretical model. This dissertation contributes to the literature on market categories, to the burgeoning research on optimal distinctiveness and to computational approaches to the study of organizations.
Reference points form an essential element of organizations’ problemistic search and adaptation behavior. Yet, if search is triggered by shortfalls compared with peers but alternatives are discovered on the fly, it is not clear whether and when peer comparison leads to better search outcomes. We contribute to the literature by studying how reference points guide search and which outcomes they allow organizations to achieve. Specifically, we develop a model of search in complex landscapes in which agents’ search behavior is guided by an upper (aspiration-level) social reference point and a lower (survival-point) social reference point. In our model, agents move across a subjective “terraced” landscape that is a simplified transformation of the “real” one. The vertical positions and shapes of these terraces are determined by the agents’ reference points and change over time as a result of their own and their peers’ performance evolution. In turn, these terraces define the search space that is navigated and the outcomes that can be reached. We show that the upper and lower bounds play fundamentally different roles in the search process, with the upper bound being more important in the short run and the lower bound more important in the long run. Studying heterogeneous populations, we find that reference points drive dynamic trade-offs between how easily decision makers can reach their aspiration level and how much they benefit from doing so. We highlight the importance of both internal fit between reference points and external fit with environmental factors.
Supplemental Material: The online appendix is available at https://doi.org/10.1287/stsc.2023.0072 .
Ao longo dos séculos, os setores produtivos agrícolas têm passado por diversas transformações. Desde as primeiras revoluções industriais até a atual quinta revolução, ocorreram mudanças significativas na sociedade. Essas transformações afetaram tanto os métodos de produção no campo quanto os hábitos e comportamentos de consumo nas cidades. O surgimento e o avanço das tecnologias foram responsáveis por uma grande fragmentação e por mudanças de paradigmas na sociedade rural, permitindo inúmeras inovações tecnológicas, como a conexão de sistemas embarcados por meio de sensores de campo, além da digitalização e do armazenamento em larga escala de dados produzidos nos empreendimentos rurais. Diante desses fatores, este trabalho apresenta algumas tecnologias que impulsionaram a transformação dos setores produtivos agrícolas com o uso das tecnologias 4.0 e 5.0, que serviram de base para o avanço da digitalização e a evolução da aquicultura tropical.
Innovation is vital for the growth of small and medium-sized enterprises (SMEs). However, SMEs face deficiencies that hinder their innovation output. This study examines how information technology (IT) helps SMEs address two salient deficiencies: technological deficiency (deficiency in internal technical knowledge and skills) and government support deficiency (deficiency in favorable government policies and incentives). Our findings suggest that SME managers can achieve greater innovation output by orienting their IT-enabled innovation efforts in an open or closed manner to address specific deficiencies. They can address technological deficiency by focusing their IT efforts on promoting innovation within the firm, that is, using IT to support closed innovation. In contrast, SMEs that face government support deficiency should give preference to IT Use for Open Innovation Activities to collaborate with external constituents such as customers and suppliers. Furthermore, because of the emergence of digital platforms (e.g., crowdsourcing), managers may be overly biased toward the use of open innovation. Our results suggest that both open and closed IT-enabled innovation have value. We exhort SME managers not to disregard either form of IT-enabled innovation but rather to tailor their approach to suit their organizational context based on specific deficiencies that their firm faces.
We investigate born-global firms as early adopters of internationalization—that is, companies that expand into foreign markets and exhibit international business prowess and superior performance, from or near their founding. Our explication highlights the critical role of innovative culture, as well as knowledge and capabilities, in this unique breed of international, entrepreneurial firm. Case studies are analyzed to better understand the early internationalization phenomenon and reveal key orientations and strategies that engender international success among these innovative firms. Case findings are then validated in a survey-based study. Despite the scarce resources typical of young firms, our findings reveal that born-global firms leverage a distinctive mix of orientations and strategies that allow them to succeed in diverse international markets. Findings have important implications for the internationalization of contemporary firms.
Research indicates that there are many pathways to innovation and knowledge appropriation for SMEs. However, to what extent is this heterogeneity in SME resources and organisational competences reflected by existing SME innovation policies? Within the VIVA-KMU project funded by the German Federal Ministry of Education and Research, 23 national and four European SME innovation policy instruments were analysed. The systematic analysis comprises documents of regulations, evaluation reports, calls and other publications. The findings illustrate that existing SME policy instruments still predominantly focus on the R&D-based mode of innovation. Other important innovation modes of SMEs, such as deep process expertise, customisation, tacit knowledge or non-technological innovation, are not considered. Additionally, most policy instruments do not meet the specific needs of SMEs in terms of agility, feasibility or the possibility of transferring existing technologies into new fields of application. By integrating existing empirical findings on the heterogeneous innovation patterns of SMEs in the German manufacturing industry and the findings on the existing SME policy landscape, the paper suggests several approaches to a targeted, demand-side-oriented SME innovation policy scheme.
Purpose
Taking an organizational perspective, this paper aims to understand how organizations respond to such strong and concurrent societal effects, and to answer the question, “How should researchers conceptualize the symbiotic relationship between society and business during a catastrophic societal event?”
Design/methodology/approach
The authors highlight through numerous examples, the impact of COVID-19 on society is well-evidenced in the research. They also draw on such evidence of the effects of catastrophic societal events like COVID-19 to support the appropriateness of this conceptualization.
Findings
The authors found that organizations that use both short- and long-term activities concurrently are better able to tackle the concurrent short- and long-term effects of catastrophic events like COVID-19.
Originality/value
The authors use ambidexterity theory, supported by evidence derived from organizational responses to COVID-19, to offer a new and more comprehensive conceptualization that frames the concurrent and interrelated short-term and long-term organizational response to a catastrophic societal event. Further, they highlight the importance of studying such organizational responses in the context of the organization’s referent groups.
This study examines the effect of performance feedback on strategic change with a focus on internal social comparison in a business group context. We argue that group affiliates are more responsive to internal social comparison with group peers than to external social comparison with industry peers. However, the salience of internal social comparison is subject to institutional contingencies. We test these arguments using panel data from 1449 group affiliates in China during the period 2005–12. We find that internal social comparison has a greater effect on a group affiliate's strategic change than does external social comparison. Moreover, this effect differential is smaller in groups located in regions with more developed market institutions but larger in state‐owned groups and groups managed by internally promoted CEOs.
Purpose
This study investigates whether carbon media legitimacy is influenced by carbon performance and/or carbon disclosure using a direct measure of carbon media legitimacy in UK context.
Design/methodology/approach
To test this study's hypotheses, the authors employ Tobit regression analysis of 95 UK companies listed in FTSE350. The authors use balanced panel data (475 observations in total) to reduces the noise introduced by unit heterogeneity.
Findings
The authors find that while corporate carbon performance is not reflected in carbon media legitimacy, carbon media legitimacy is positively and significantly affected by voluntary carbon disclosure (irrespective of its quality). Thus, voluntary carbon disclosure is shown to be an effective tool in legitimising corporate activities.
Research limitations/implications
The results show a certain degree of naivety on the part of the media in assessing corporate carbon behaviour, since it values carbon disclosure (irrespective of its quality) more than carbon performance. Such media behaviour may hinder future improvement in carbon performance of firms.
Practical implications
This study's results indicate that the existing UK carbon disclosure policy does not address the heart of climate change and global warming. Thus, tougher regulations should be considered by policy-makers in relation to voluntary carbon disclosure in the UK.
Originality/value
To the best of the authors' knowledge, this is the first study to examine whether carbon media legitimacy is associated with both carbon performance and carbon disclosure using a direct measure of carbon media legitimacy, and to use the UK context when addressing this association. It also examines the effectiveness of quality of carbon disclosure as legitimation tool.
We provide evidence that in certain contexts, firms set upward-striving goals and that this upward striving yields significant performance and visibility benefits. We develop a model of variable attention in which, as firms’ performance levels approach cognitively salient round numbers, managers strategically shift their focus from easier-to-reach goals based on historical and social reference points to more challenging goals that provide external visibility and capital market benefits. As one specific yet important instance of an upward shift in attention, we document a significant increase in revenue growth rates as firms’ annual revenue approaches 10 million, 1 billion. This study recasts behavioral theory of firm research in an open systems perspective, highlighting the externally directed aspects of firm goal setting.
Supplemental Material: The online appendices are available at https://doi.org/10.1287/orsc.2021.15148 .
Previous studies provide evidence of learning from the mobility of scientists for the source and the hiring firms. However, we have a limited understanding of the competitive implications of such inter-firm mobility and associated learnings. Using a difference–in–difference approach on matched patents in the semiconductor industry in 1981–2010, we find that mobile scientists' patents receive more citations from rival firms after the mobility vis-à-vis before the mobility and vis-à-vis other similar patents. We conclude that rival firms respond to mobilities across other firms by attributing more attention to mobile scientists. Furthermore, the context of the mobility can determine the extent of response from rival firms. Rival firms are more likely to build on a mobile scientist's patents after mobility when the mobility occurs between technologically distant firms, the source firm or the hiring firm has low research experience, or the mobile scientist has considerable experience.
Purpose
Although manufacturer-initiated rewards are widely used to secure distributors’ compliance, the spillover effect on unrewarded distributors (i.e. observers) in the same distribution channel is under-researched. Using insights from social learning theory, this paper aims to investigate how manufacturer-initiated rewards affect observers’ expectation of reward and shape observers’ compliance toward the manufacturer. Furthermore, this paper explores how such effects are contingent upon distributor relationship features.
Design/methodology/approach
To test the hypotheses, hierarchical multiple regression and bootstrapping analyses were performed using survey data from 280 Chinese distributors.
Findings
The magnitude of a manufacturer-initiated reward to a distributor stimulates expectation of reward among observers, which enhances compliance; observers’ expectation of reward mediates the impact of reward magnitude on compliance. Moreover, network centrality (of the rewarded peer) negatively moderates the positive impact of reward magnitude on observers’ expectation of reward, whereas observers’ dependence (on the manufacturer) positively moderates this dynamic.
Practical implications
Manufacturers should pay attention to the spillover effects of rewards. Overall, they should use rewards of appropriate magnitude to show willingness to recognize outstanding distributors. This will inspire unrewarded distributors, which will then be more compliant. Furthermore, manufacturers should know that specific types of distributor relationship features may significantly vary the spillover effects.
Originality/value
This study illuminates the spillover effects of manufacturer-initiated reward by opening the “black box” of the link between reward magnitude and observers’ compliance and by specifying the effects’ boundary conditions.
The purpose of this study is to search the mediator roles of unique product development and global technological competence in the effect of international entrepreneurial orientation on company performance in international markets for born global companies. The study was conducted on born global companies which started its international activities in its first 7 years and operate in technoparks in Turkey. Data was collected by a questionnaire from 158 born global companies. According to the method proposed by Baron and Kenny, three models were created and compared with each other. The Structural Equation Modeling (SEM) method was applied because it is more appropriate for complex models. According to the findings of the study, unique product development and global technological competence do not have mediator roles in the effect of international entrepreneurial orientation on company performance in international markets. However, there is a direct effect of international entrepreneurial orientation on company performance in international markets. Global technological competence has a direct effect on performance in international markets. On the other hand, unique product development does not have a direct effect on performance in international markets but unique product development has a direct effect on global technological competence.
Research on managerial responses to poor performance suggests performance shortfalls lead managers to search for solutions to the shortfalls. Managers in smaller or financially distressed firms may also perceive existential threats to their organizations, causing them to avoid expending resources searching for solutions to poor performance. Until now, this research has assumed that managers search for solutions to performance shortfalls without considering expectations on the future business environment. We posit that positive expectations about the near future business environment will enhance the intensity with which managers search for solutions to poor performance in the form of advertising investments. We also posit that positive expectations about the near future business environment will reduce the likelihood that smaller or financially distressed firms avoid increases in advertising investments. Results in the context of public non-manufacturing firms from 1986 through 2019 in Japan lend support for these ideas.
We investigate the extent to which competitors’ presence in a given export market has an impact on a firm's decision to enter such a market and, more precisely, under what conditions imitation is more likely to take place. We show that firms with greater export knowledge are more likely to enter those countries where their competitors are already present. Furthermore, experiential knowledge seems necessary to absorb valuable information provided by the presence of competitors in those markets. Thus, imitation should not be regarded as the option best suited for firms with reduced expertize that follow blindly their competitors into new markets. Through a panel analysis of Brazilian exporters during the 2001–11 period, our study contributes to research on market entry decisions, especially stressing the critical role of prior relevant knowledge in facilitating imitation among players.
The Naturally Optimised Revenue Demand in Communities (NORDIC) model was employed to improve the flow of physical and intangible utilities through entities of different kinds, such as producing companies and nations. The applied economic instrument also improved the ecological footprint of organisations. The case study demonstrated how to create an economic incentive to reduce costs and increase efficiency in Sweden's health care, education, and social services. The model shows utility for various entities, such as public sectors, within nations. Citizens of the ever more integrated global market get a better life, and improved health, due to a better economy when the results in this study are implemented. There is potential to apply the model to the global context.
To improve education, the Naturally Optimised Revenue Demand in Communities (NORDIC) model was used. Dropout is a major issue. Dropping out has an impact not just on the student who drops out, but also on the university and society as a whole. Based on the NORDIC model, this paper presented a novel and effective economic instrument for enhanced dropout management. This case study demonstrated how the NORDIC model may be used to improve education in Swedish society. Governments have access to a tool for monitoring, managing, and evaluating the education sector. End users could include school administrators and legislators looking for a complete tool to rethink education policy. To reduce the qualification age, the NORDIC model should be applied to education difficulties. Further study will focus on designing algorithms for certain student groups.
This study investigates how performance feedback––the discrepancy between aspiration and actual performance––relates to firms’ relative strategic emphasis on value-creation (VC) versus value-appropriation (VA). With a sample of 7460 firm-year observations collected from 1558 publicly-listed Chinese companies during 2011–2017, we find that negative performance feedback boosts firms’ relative strategic emphasis on VC versus VA, while positive performance feedback has an inverted U-shaped effect. Explicitly, a low to medium level of positive performance feedback increases firms’ relative emphasis on VC, while a medium to high level of positive feedback decreases it. We find that two monitoring mechanisms—board independence and media coverage—moderate these influences. Specifically, board independence weakens the boosting effect of negative performance feedback and strengthens the inverted U-shaped effect of positive performance feedback; media coverage strengthens the boosting effect of negative performance feedback and weakens the inverted U-shaped effect of positive performance feedback.
O objetivo deste estudo foi verificar se existe complementaridade da Inovação Organizacional (IO) com a Inovação Tecnológica (IT). Para a análise empírica, utilizou-se como base de dados as edições de 2008 e 2011 da Pesquisa de Inovação (PINTEC), realizada pelo Instituto Brasileiro de Geografia e Estatística (IBGE). Os resultados da análise empírica realizada nas empresas situadas no Brasil evidenciam que: i) a quantidade de empresas que realizaram IO concomitantemente com outro tipo de inovação (produto, processo ou marketing) são superiores ao grupo de empresas que realizaram apenas IT (produto ou processo); ii) as empresas que realizam mais de um tipo de inovação apresentam um perfil diferenciado, no que se refere aos indicadores: relações de cooperação, capital estrangeiro, grupo, exportação, apoio do governo e P&D contínuo, nas atividades inovativas, superiores aos grupos e empresas que realizam apenas um tipo de inovação; e iii) a análise de correlação mostra a existência de correlação positiva e fraca entre IO e IT.
Research on value relevance of reported selling, general and administrative expenses (SG&A) generally employs historical SG&A as reference point for assessment. This practice tends to ignore the interpretational ambiguity that surrounds the economics of SG&A expenditure and what it means for future profitability and firm value. Organizational theories stress the importance of peer-based benchmarking as an aid for assessment, especially when assessment uncertainty is high, and argue that similarity to peers holds information by lending sensibility, appropriateness and technical value to observed behaviour, thereby reducing assessment uncertainty. Using a sample of listed US firms, we investigate whether SG&A similarity to an industry-specific peer-based benchmark conveys value-relevant information, reducing information asymmetry between firms and investors. We find that only for firms with SG&A exceeding the peer-based benchmark in the previous period, SG&A similarity is associated with higher future financial performance and reduces information asymmetry between firms and investors. We also find that both contemporaneous stock returns and future firm value impound this uncertainty-reducing information conveyed by SG&A similarity. Results further show that the value-relevance of SG&A similarity mainly holds for firms with a Defender-type business strategy and firms from peer groups where business strategies are more similar.
Purpose
The purpose of this paper is to examine different processes four organizations use to achieve best practices. There is an apparent contradiction between projects designed to create innovation and rigid rule following used for productivity. While both contribute to best practices this study describes a third source. Employees disobeyed rules and, in some cases, the results became best practices. This study identifies three management responses to deviant employee behaviors.
Design/methodology/approach
This study uses a multi-case field study design built upon organizational theory in the area of work structures. It uses qualitative methods based on grounded theory. Interviews, observations and archival data were used to triangulate findings. Four firms were selected to participate. One global and one regional accounting firm were compared and contrasted with one global and one regional manufacturing firm.
Findings
The paper provides insights about how change occurs not only from intentional innovation but also from disobeying rigid rules designed to enhance productivity. It also highlights three specific management responses to deviant behavior and the conditions under which each is selected.
Research limitations/implications
Because of the chosen research approach, this research may not be easily generalized. Therefore, researchers are encouraged to further test the proposed conclusions. The paper expands organizational routine theory to examine how improvisation may change the structure of a formal work process.
Practical implications
The paper includes management implications. It suggests that rigid conformance to rules may inhibit a possible source of best practice innovation and gives management potential reasons to rethink imposed constraints.
Social implications
Relationships of supervisory action to employee performance and productivity become more important when innovation and efficiency are sought in an organization. These relationships should be examined with a specific outcome in mind. There may be a choice between control and discovery that will require further consideration by management.
Originality/value
Many studies look at processes, procedures and organizational routines, most assuming that what is designed is implemented. Others consider deviant behavior usually in a negative light. This paper provides insights into non-conforming actions by employees and the positive unexpected results that can occur, taking into consideration the studies that took this approach to innovation.
For anyone concerned with the connection between technology and economic progress, the diffusion of innovation must be of central concern. Indeed any economic study which relates growth or development to technological change involves implicit or explicit assumptions about the way innovations, once originated in some points of the economic system, spread over the system itself. Schumpeter (1911) identified two driving forces for diffusion, namely selection and imitation. The first one refers to the competition between "innovative" and "traditional" firms, the former having introduced the innovation, the latter being linked to old technologies and therefore subject to the progressive erosion of their market shares; in this case diffusion could be ideally measured by the relative market shares of the two kind of firms. The second force, refers to the possibility for traditional firms to abandon the old technology in favour of the new one, so that diffusion is better measured by the rate at which adoption (imitation of innovative firms) occurs. While the perception of the importance of the subject was derived from Schumpeter and other major economists, the analytical tools were borrowed to some extent from other social sciences, where innovation diffusion was already established as a traditional topic. Actually, the economists' contribution was chiefly an empirical one. Together with the new tools, a redefinition of the subject occurred, which initially greatly reduced the scope of the research. The latter was mainly directed to imitation rather than selection, and confined to the confirmation and explanation of the following empirical regularity. For some reason innovations, which are assumed to be advantageous if compared to the existing technology, are not immediately adopted by all potential users; on the contrary, there is always a lapse of time, often considerable, between when the innovation appears on the technological horizon and when it is adopted by the first consistent group of users. Another relatively long period of time follows in which the innovation is gradually adopted by all the agents who are interested in it. An S-shaped (sigmoid) "diffusion path" can be drawn, which means that after the initial lag the diffusion rate is at first quite a sustained and increasing one, but after a while it turns to be decreasing and finally tends to zero as the totality of adopters is approached. At the end of the Seventies economists had cumulated substantial empirical evidence about the sigmoid shape of diffusion paths , and a related "stylized fact", namely that diffusion speed differs widely across innovations, industries, and countries or regions. A few key variables had been found to be significative in explaining differences in diffusion speed, chiefly the "adoption profitability" and the average firm size.
This study tested a model of firm risk-return relations in which risk was conceptualized in terms of downside outcomes. Drawing on the behavioral theory of the firm, we developed a set of hypotheses involving downside risk, return, and organizational slack, The hypothesized risk and return relations were tested using both downside risk and the conventional standard deviation of returns. The results indicate downside risk results in improved subsequent performance, Performance shows a negative relation with subsequent downside risk.
The study reported here uses learning theory to examine how performance feedback affects the probability of risky organizational changes that are consequential to an organization's performance. The theory predicts how decision makers interpret organizational performance by comparing it with historical and social aspiration levels. Empirical analysis of the consequences of performance short-falls on the probability of strategic change in the radio broadcasting industry shows clear sensitivity to social and historical aspiration levels. It also shows that changes seen or done by the station predict future change, suggesting that the recent experiences of organizations cause differences in capabilities and perceived opportunities, leading to differences in organizational inertia.
This paper challenges the prevalent notion that American managerial discourse has moved progressively from coercive to rational and, ultimately, to normative rhetorics of control. Historical data suggest that since the 1870s American managerial discourse has been elaborated in waves that have alternated between normative and rational rhetorics. We sketch out the surges and contractions in the rhetorics of industrial betterment, scientific management, welfare capitalism/human relations, systems rationalism, and organizational culture/quality. Standard theories of ideological change are shown to be inadequate for explaining either the general pattern or the timing of the surges. We propose and find preliminary support for a theory that combines cultural constraints and material forces. Specifically, the tendency for innovative surges of managerial theorizing to alternate between rational and normative rhetorics of control appears to be rooted in cultural antinomies fundamental to all Western industrial societies: the opposition between mechanistic and organic solidarity and between communalism and individualism. The timing of each new wave is shown to parallel broad cycles of economic expansion and contraction.
The multidivisional (M-form) structure has been variously characterized as the most significant organizational innovation in the twentieth century (Williamson, 1985) and as an organizational fossil that is increasingly irrelevant in the modern world (Bettis, 1991). Against this background, the purpose of this paper is threefold. First, to critically evaluate three perspectives, including transaction cost, strategic management and sociological, relating to the M-form firm. Second, to examine what the empirical evidence finds about relationships proposed by these perspectives. Finally, to develop a model that summarizes the relationships proposed among these perspectives and make suggestions about future theory building and areas where further empirical work is needed.
The multidivisional form is the favored form of organization for the large firms that dominate the American economy. This study takes up the causes of the dissemination of that form among large firms from 1919 to 1979. Five theories are initially proposed as possible explanations for the changes observed and these theories are operationalized and tested. The model that seems most consistent with the data emphasizes the ability of key actors to alter structure under three circumstances: when the firm has a product-related or -unrelated strategy (which is consistent with Chandler's [1962] theorizing); when the corporate presidents have a background in sales or finance; and when other firms in the industry alter their
structures. The implications of these results for theories of organizational change are discussed with special reference to the importance of conceiving how actors operate with varying rationalities in this process.
This paper applies evolutionary economics reasoning to the strategic alliance context and examines whether and how routinization processes at the partnering-firm level influence the performance of the cooperative agreement. In doing so, it introduces the concept of interorganizational routines, defined as stable patterns of interaction among two firms developed and refined in the course of repeated collaborations, and suggests that partner-specific, technology-specific, and general experience accumulation at the partnering-firm level influence the extent to which alliances result in knowledge accumulation, create new growth opportunities, and enable partnering firms to achieve their strategic objectives. We also consider how governance design choices at the transaction level shape the effectiveness of interorganizational routizination processes. Based on a sample of 145 biotechnology alliances, we find that only partner-specific experience has a positive impact on alliance performance, and that this effect is stronger in the absence of equity-based governance mechanisms. We interpret these results to support the role of interfirm coordination and cooperation routines in enhancing the effectiveness of collaborative agreements.
This paper addresses three weaknesses in the literature on new organizational forms: the limited mapping of the extent of contemporary organizational change; confusion about how contemporary changes link together; and the lack of systematic testing of the performance consequences of this kind of change. Drawing on a large-scale survey of organizational innovation in European firms, the paper finds widespread but not revolutionary change in terms of organization structure, processes, and boundaries. Using the economics notion of complementarities, the paper develops contingency and configurational approaches to suggest that organizational innovations will tend to cluster in particular ways and that the performance benefits of these innovations depend on their clustering. Complementarities in performance are explored from both inductive and deductive perspectives. Consistent with the expectations of complementarity theory, high-performing firms appeared to be innovating more and differently than low-performing firms. Again consistent with complementarities, piecemeal changes-with the exception of IT-were found to deliver little performance benefit, while exploitation of the full set of innovations was associated with high performance. Though few European firms were found to exploit the complementarities of new organizational practices, those that did enjoyed high-performance premia.
We examine the blending of informational and political forces in organizational categorizations in the context of chief executive officer (CEO) compensation. By law, corporate boards are required to provide shareholders with annual justifications for their CEO pay allocations that contain an explicit performance comparison with a set of peer companies that are selected by the board. We collected and analyzed information on the industry membership of chosen peers from a 1993 sample of 280 members of the Standard and Poor's (S&P) 500. Our results suggest that boards anchor their comparability judgments within a firm's primary industry, thus supporting the argument that boards' peer definitions center around commonsense industry categories. At the same time, however, we found that boards selectively define peers in self-protective ways, such that peer definitions are expanded beyond industry boundaries when firms perform poorly, industries perform well, CEOs are paid highly, and when shareholders are powerful and active.
This paper combines organizational ecology and neoinstitutional theory to explain the process of diversification, specifically, how the structure of markets affects rates of market entry. I extend the density-dependence model of competition and legitimation, which has been used to study organizational founding and failure, to the process of organizational change through entry into new markets. I argue that the number of organizations operating in a particular market will have an inverted-U-shaped relationship with the rate of entry into that market. I also examine propositions, drawn from neoinstitutional theory, that organizations will follow similar and successful organizations into new markets. I assess the link between entry into new markets and (1) the number of organizations operating in those markets similar to a potential entrant and (2) the number of successful organizations in those markets. I also explore whether these two mimetic processes act in concert by examining whether successful potential entrants to a market are influenced by the presence of other successful organizations. I test these hypotheses on a population of savings and loan associations. I find that these firms imitate large and profitable organizations, but I find only limited evidence of imitation of similarly sized organizations, as large organizations copy the actions of other large organizations.
Changes in corporate governance practices can be analyzed by linking the adaptations of individual firms to the structures of the networks in which firms' decision makers are embedded. Network structures determine the speed of adaptation and ultimate patterns of prevalence of governance practices by exposing a firm to particular role models and standards of appropriateness. The authors compare the spreads of two governance innovations adopted in response to the 1980s takeover wave: poison pills (which spread rapidly through a board-to-board diffusion process) and golden parachutes (which spread slowly through geographic proximity). The study closes with a discussion of networks as links between individual adaptation and collective structures.
"Howard Aldrich and Martin Ruef’s tour de force shows us how the evolutionary approach can explain change not only in organizational populations, but within sectors and within organizations. Aldrich and Ruef display an astonishing command of the management literature, using vivid illustrations from cutting edge research to show how the processes of variation, selection, retention, and struggle operate within organizations and across them. A lucid and engaging book that should appeal both to the newcomer to organization theory and to the old pro."- Frank Dobbin, Harvard UniversityA keenly anticipated Second Edition of an award winning classic, Organizations Evolving presents a sophisticated evolutionary view of key organizational paradigms that will give readers a unified understanding of modern organizations. This Second Edition is up-to-date in its survey of the literature, as well as an overview of the new developments across organization studies. It contains new sections on organizational forms, community evolution and methods for studying organizations at multiple levels. The field of organization studies contains many contending paradigms that often puzzle and perplex students. This book is a stunning synthesis of the major organizational paradigms under the umbrella of organizational theory. Scholars and students will find it an excellent guide to the strengths and weaknesses of the various approaches, as well as an outstanding review of the best recent empirical research on organizations. The book includes many helpful features, such as: " Review questions and exercises that will consolidate reader's learning " A methodological appendix that assesses common research methods " Engaging cases that bring principles and concepts to lifeThis Second Edition is a rich resource for study, discussion and debate amongst organizational scholars and postgraduate students of organizations.
Recent neoinstitutional analyses have associated the rapid diffusion of due-process governance mechanisms in the American workplace with government pressure for equal employment opportunity and affirmative action. We carry the argument forward in three ways. First, we focus on grievance procedures and employment-at-will clauses to show that the legalization process produces both rights-enhancing and rights-negating rules. Second, we focus on the private for-profit economic sector to test more effectively the efficiency and labor-control theories that have fared poorly in previous neoinstitutional studies. Third, we explore the interactions among personnel professionals, lawyers, and the state in the adoption of legalistic governance mechanisms. Results sustain the neoinstitutional argument, but also offer new support for efficiency and labor-control hypotheses.
Organizations can learn from the innovations made or adopted by other organizations. I present a framework for interorganizational learning that allows study of how learning is affected by the characteristics of the origin and destination organizations and their relationship. I survey recent findings within this framework and develop new propositions on the population-level consequences of interorganizational learning from innovations. I identify areas of work that have received insufficient attention and make new proposals for research.
Replication, a familiar phenomenon sometimes referred to as the “McDonalds approach,” entails the creation and operation of a large number of similar outlets that deliver a product or perform a service. Companies pursuing this strategy are now active in over 60 industries. Although replicators are becoming one of the dominant organizational forms of our time, they have been neglected by scholars interested in organizations. As a result of this neglect, replication is typically conceptualized as little more than the exploitation of a simple business formula. Such a view clouds the strategic subtlety of replication by sidestepping the exploration efforts to uncover and develop the best business model as well as the ongoing assessment that precedes large-scale replication of it. Empirical evidence supports an alternative view of replication strategy as a process that involves a regime of exploration in which the business model is created and refined, followed by a phase of exploitation in which the business model is stabilized and leveraged through large-scale replication.
In this paper we present the key elements of a theory of replication strategy. We discuss key aspects of a replication strategy, namely the broad scope of knowledge transfer and the role of the central organization, and the analytical concepts of template and Arrow core as a preamble for specifying hypotheses about the conditions under which a replication strategy is more likely to succeed in a competitive setting. Replication strategy provides unusually transparent examples of the process of leveraging knowledge assets; we exploit this in our concluding discussion.
9 Academy of Management Journal 1991, Vol 34. No 1. 37- 59 TESTING A CAUSAL MODEL OF CORPORATE RISK TAKING AND PERFORMANCE PHILIP BROMILEY University of Minnesota The determinants of organizational risk taking and its impact on eco- nomic performance are critical issues in strategic management. Using a model that included risk, performance, performance expectations and aspirations, slack, and industry performance, this research addressed how past performance and other factors influence risk taking and how risk taking and other factors influence future performance. Not only did poor performance appear to increase risk taking— risk taking ap- peared to result in further poor performance, even when past perfor- mance, industry performance, and organizational slack were con- trolled. Overall, the results favor a model in which low performance and lack of slack drive risk taking, but the risks taken have poor re- turns. Although risk has long been considered an important aspect of strategic choice, it is only in recent years that researchers in strategic management have become directly concerned with research on risk. Sparked by Bowman (1980, 1982, 1984), many recent studies of strategy have included risk mea- sures. Part of the attention has focused on what Bowman described as a paradox. Using a capital markets analogy. he predicted that risky projects and investments would need to offer higher earnings than other projects to be attractive and that by extension, variable income flows would be associ- ated with high average income Instead, he found negative associations be- tween variance in returns and the level of returns in some industries Since Bowman [1980], numerous studies have investigated risk—return connections. Fiegenbaum and Thomas (1985, 198r3] found some industries with positive associations between returns and varrance lI1 returns and some with negative associations. They also found that the associations varied over time. Fiegenbaum and Thomas (1988) reported a positive association be- Funding from the Graduate School of the University of fVllI1:lBSOia and the National Science Foundation under grant number SES—8618355 is gratefully acknowledged I thank Vi]ay Nayak and the St Paul Computing Center staff for assistance in executing this research Thanks are also due to Morison Asset Management and Lynch, Jones and Ryan for data on analysts’ fore- casts and to Maureen McNir.hols and John Hassell for data on th - association between corporate and analysts’ forecasts Comments from Raphael Arnit, Ned ltowman. Michele Govekar, Ian Maitland, ]im March. Alfred Marcus. Elaine lVl[)Scli(()\‘\/Slkl, l{tLl‘l.tI‘(l Saavedra, and this ;oiirnal‘s referees on previous versions of this article are gratefully (lCkn iwlvdged 37 Copyright © 2001. All rights reserved.
There has been rapid growth in the study of diffusion across organizations and social movements in recent years, fueled by interest in institutional arguments and in network and dynamic analysis. This research develops a sociologically grounded account of change emphasizing the channels along which practices flow. Our review focuses on characteristic lines of argument, emphasizing the structural and cultural logic of diffusion processes. We argue for closer theoretical attention to why practices diffuse at different rates and via different pathways in different settings. Three strategies for further development are proposed: broader comparative research designs, closer inspection of the content of social relations between collective actors, and more attention to diffusion industries run by the media and communities of experts.
Long a fruitful area of scrutiny for students of organizations, the study of institutions is undergoing a renaissance in contemporary social science. This volume offers, for the first time, both often-cited foundation works and the latest writings of scholars associated with the "institutional" approach to organization analysis. In their introduction, the editors discuss points of convergence and disagreement with institutionally oriented research in economics and political science, and locate the "institutional" approach in relation to major developments in contemporary sociological theory. Several chapters consolidate the theoretical advances of the past decade, identify and clarify the paradigm's key ambiguities, and push the theoretical agenda in novel ways by developing sophisticated arguments about the linkage between institutional patterns and forms of social structure. The empirical studies that follow--involving such diverse topics as mental health clinics, art museums, large corporations, civil-service systems, and national polities--illustrate the explanatory power of institutional theory in the analysis of organizational change. Required reading for anyone interested in the sociology of organizations, the volume should appeal to scholars concerned with culture, political institutions, and social change.
This paper examines how organizational changes of market position are motivated by comparison of organizational performance with historical and social aspiration levels and facilitated by change experience and observed changes by competitors. The analysis supports all effects and gives evidence on the form of aspiration-level effects on risk taking.
To compare and contrast institutional theories used in organizational analysis, the theoretical frameworks and arguments of leading contributors to institutional theory are reviewed and recent empirical studies using institutional arguments are examined. Both approaches reveal considerable variation in the types of concepts and arguments employed, and it is argued that further improvement and growth in institutional theory is dependent upon analysts dealing more explicitly with these differences. In addition, the relation between institutions and interests is explored to show that institutional features of organizational environments shape both the goals and means of actors. Attention is called to the two primary types of actors shaping institutional environments in modern societies- the state and professional bodies-and to the way in which their interests and mode of action shape institutional patterns and mechanisms.
Drawing on neoinstitutional and learning theories, we distinguish three distinct modes of selective interorganizational imitation: frequency imitation (copying very common practices), trait imitation (copying practices of other organizations with certain features), and outcome imitation (imitation based on a practice's apparent impact on others). We investigate whether these imitation modes occur independently and are affected by outcome salience and contextual uncertainty in the context of an important decision: which investment banker to use as adviser on an acquisition. Results of testing hypotheses on 539 acquisitions that occurred in 1988-1993 show that all three imitation modes occur independently, but only highly salient outcomes sustain outcome imitation. Uncertainty enhances frequency imitation, but only some trait and outcome imitation. The results highlight the possible joint operation of social and technical indicators in imitation, illuminate factors that moderate vicarious learning processes, and show asymmetries between learning from success and failure.
While the "new institutionalism" has emerged as a dominant theory of organization-environment relations, very little research has examined its possible limits. Under what circumstances might the neoinstitutional predictions regarding organizational inertia, institutional isomorphism, the legitimacy imperative, and other fundamental beliefs be overshadowed by more traditional sociological theories accentuating organizational adaptation, variation, and the role of specific global and local technical environmental demands? We analyze longitudinal data from 1971 to 1986 for 631 private liberal arts colleges facing strong institutional and increasingly strong technical environments. Our findings reveal surprisingly little support for neoinstitutional predictions: (1) Many liberal arts colleges changed in ways contrary to institutional demands by professionalizing or vocationalizing their curricula; (2) global and local technical environmental conditions, such as changes in consumers' preferences and local economic and demographic differences, were strong predictors of the changes observed; (3) schools became less, rather than more, homogeneous over time; (4) schools generally did not mimic their most prestigious counterparts; (5) the illegitimate changes had no negative (and often had positive) performance consequences for enrollment and survival. Our results suggest that current research on organization-environment relations may underestimate the power of traditional adaptation-based explanations in organizational sociology.
Much writing in the field of strategic management remains an exercise in comparative statics. Cross-sectional research designs are combined with the static metaphors of contingency thinking to analyse the fit between the positioning and resource base of the firm and its performance in differing environments. However, the inadequacies of this tradition are increasingly recognised even by scholars who have created it (Porter 1991). Strategy can no longer be conceived through the static language of states or positions and must now be understood as an innovation contest where the bureaucratic and inflexible will not survive.
This paper takes up the challenge to explore the dynamics of industry and firm strategy development. The empirical focus of the paper is the U.K. insurance industry in a period of upheaval between 1990 and 1996. By means of an innovative cross-correlational time series analysis, we are able to show the ebb and flow of strategic change in the industry and the patterns of initiation and imitation as certain firms lead areas of strategy and others follow. These findings are interrogated and interpreted by drawing on and developing theoretical ideas from three literatures which historically have not talked to one another. These are the literatures on innovation, institutionalism, and contextualism.
The empirical results show firms pursuing multiple strategies at one point in time and also altering the strategic agenda over time. A cross-correlational analysis of nine firms in the U.K. insurance industry reveals the existence of leaders and laggards in the development of a variety of strategic initiatives. Theoretically the paper examines the mixture of external conditions and internal context and processes which contribute to the development of early and later adopters of strategies in an industry over time.
Argues that the formal structure of many organizations in post-industrial society dramatically reflect the myths of their institutional environment instead of the demands of their work activities. The authors review prevailing theories of the origins of formal structures and the main problem which those theories confront -- namely, that their assumption that successful coordination and control of activity are responsible for the rise of modern formal organization is not substantiated by empirical evidence. Rather, there is a great gap between the formal structure and the informal practices that govern actual work activities. The authors present an alternative source for formal structures by suggesting that myths embedded in the institutional environment help to explain the adoption of formal structures. Earlier sources understood bureaucratization as emanating from the rationalization of the workplace. Nevertheless, the observation that some formal practices are not followed in favor of other unofficial ones indicates that not all formal structures advance efficiency as a rationalized system would require. Therefore another source of legitimacy is required. This is found in conforming the organization's structure to that of the powerful myths that institutionalized products, services, techniques, policies, and programs become. (CAR)
To examine the consequences of a period of extraordinary success for the long-term adaptive capability of a firm's strategy-making process, this comparative longitudinal study of Andy Grove's tenure as Intel Corporation's chief executive officer (CEO) documents how he moved Intel's strategy-making process from an internal-ecology model to the classical rational-actor model during 1987-1998. His creation of a highly successful strategy vector pursued through an extremely focused induced-strategy process led to coevolutionary lock-in with the personal computer market segment, in which Intel's strategy making became increasingly tied to its existing product market. Intracompany analysis of four new business development cases highlights the inertial consequences of coevolutionary lock-in. The paper examines implications of coevolutionary lock-in in terms of its effect on balancing induced and autonomous strategy processes and exploitation and exploration in organizational learning.
Ikujiro Nonaka e Hirotaka Takeuchi establecen una vinculación del desempeño de las empresas japonesas con su capacidad para crear conocimiento y emplearlo en la producción de productos y tecnologías exitosas en el mercado. Los autores explican que hay dos tipos de conocimiento: el explícito, contenido en manuales y procedimientos, y el tácito, aprendido mediante la experiencia y comunicado, de manera indirecta, en forma de metáforas y analogías. Mientras los administradores estadounidenses se concentran en el conocimiento explícito, los japoneses lo hacen en el tácito y la clave de su éxito estriba en que han aprendido a convertir el conocimiento tácito en explícito. Finalmente, muestran que el mejor estilo administrativo para crear conocimiento es el que ellos denominan centro-arriba-abajo, en el que los gerentes de niveles intermedios son un puente entre los ideales de la alta dirección y la realidad caótica de los niveles inferiores.
The multidivisional (M-form) structure has been variously characterized as the most significant organizational innovation in the twentieth century (Williamson, 1985) and as an organizational fossil that is increasingly irrelevant in the modern world (Bettis, 1991). Against this background, the purpose of this paper is threefold. First, to critically evaluate three perspectives, including transaction cost, strategic management and sociological, relating to the M-form firm. Second, to examine what the empirical evidence finds about relationships proposed by these perspectives. Finally, to develop a model that summarizes the relationships proposed among these perspectives and make suggestions about future theory building and areas where further empirical work is needed.
This theory-development case study of the quality circle management fashion focuses on three features of management-knowledge entrepreneurs' discourse promoting or discrediting such fashions: its lifecycle, forces triggering stages in its lifecycle, and the type of collective learning it fostered. Results suggest, first, that variability in when different types of knowledge entrepreneurs begin, continue, and stop promoting fashions explains variability in their lifecycles; second, that historically unique conjunctions of forces, endogenous and exogenous to the management-fashion market, trigger and shape management fashions; and third, that emotionally charged, enthusiastic, and unreasoned discourse characterizes the upswings of management fashion waves, whereas more reasoned, unemotional, and qualified discourse characterizes their downswings, evidencing a pattern of superstitious collective learning.
Since the publication of the Bass model in 1969, research on the modeling of the diffusion of innovations has resulted in a body of literature consisting of several dozen articles, books, and assorted other publications. Attempts have been made to reexamine the structural and conceptual assumptions and estimation issues underlying the diffusion models of new product acceptance. The authors evaluate these developments for the past two decades. They conclude with a research agenda to make diffusion models theoretically more sound and practically more effective and realistic.
A survey is given of trends in research on aspiration level since the first experiments around 1930; also suggestions are offered for profitable further work. The level of aspiration is considered in detail in its field-theoretical setting. Bibliography. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Previous studies on strategic groups have mainly focused on their static characteristics in order to test the theory of strategic groups and intraindustry performance differences (Porter, 1979; Cool and Schendel, 1988; Fiegenbaum and Thomas, 1990). In contrast, this study takes a longitudinal, dynamic perspective and describes the forces driving strategic group membership and structural evolution. It proposes that a strategic group acts as a reference point for group members in formulating competitive strategy. A partial adjustment model of strategic mobility is then developed which incorporates the idea of a strategic group as a reference group. It models strategic change in an industry both within and across strategic groups. The model is tested in the context of an in-depth industry analysis of the more significant firms in the insurance industry over the 1970-84 time period. The results suggest that strategic groups act as reference points for firm strategies and that predictions of future firm strategies and industry/group structures may also be successfully derived.