Organization Science current issue

From the Editor

Argote, L., Kukawa, J. — Fri, 15 Jan 2010 09:21:33 PST

No abstract available.

A Recursive Perspective on Discursive Legitimation and Organizational Action in Mergers and Acquisitions

Vaara, E., Monin, P. — Fri, 15 Jan 2010 09:21:33 PST

This paper challenges the predominant view that legitimation is merely a specific phase in merger or acquisition processes. We argue that a better understanding of postmerger organizational dynamics calls for conceptualization of discursive legitimation as an inherent part of unfolding merger processes. In particular, we focus on the recursive relationship between legitimation and organizational action. We have two objectives: to outline a theoretical model that helps one to understand the dynamics of discursive legitimation and organizational action in postmerger organizations, and to examine a revealing case to distinguish the inherent risks and problems in discursive legitimation. Our case analysis focuses on the merger between the French pharmaceutical companies BioMérieux and Pierre Fabre. We adopt a critical multimethod approach and distinguish specific discursive dynamics and pathological tendencies in this case. The analysis highlights the unintended consequences of discursive legitimation, the central role of sensegiving and sensehiding in discursive legitimation, the inherently political nature of legitimation and the risks associated with politicization, the special problems associated with fashionable discourses and the role of the media, the use of specific discursive strategies for legitimation and delegitimation, and the crucial role of actual integration results. This analysis adds to the existing research on mergers and acquisitions by treating discursive legitimation as part of the merger dynamics. In particular, our case analysis provides a new explanation for merger failure. We also believe that the recursive model connecting discursive legitimation and delegitimation strategies to concrete organizational action makes a more general contribution to our understanding of organizational legitimation.

The Next Generation: Technology Adoption and Integration Through Internal Competition in New Product Development

Taylor, A. — Fri, 15 Jan 2010 09:21:33 PST

This paper examines the impact of internal competition that occurs when new technology challenges the technology in a firm's existing products. New-technology development projects are traditionally judged by market success—and most fail. If we examine their impact on existing-technology product development, a different interpretation arises. Drawing on the literature on the influence of social factors on interfirm search and adoption of new technologies, this study argues that similar processes occur intrafirm. Evidence from a field study on new-technology product development in high-technology firms shows that internal competition influences existing-technology product development groups to integrate the new technology into the next generation of their own products. The reason is twofold. First, these groups shift their search toward the new technology and allocate resources to gain a deeper understanding of it. Second, access to internal information and the mobility of workers across project boundaries benefit the existing-technology groups. The findings provide a model of innovation that illustrates an endogenous process of internal competition. This often political and contentious process can have a strong influence on technology adoption and integration.

Securities Analysts and Incumbent Response to Radical Technological Change: Evidence from Digital Photography and Internet Telephony

Benner, M. J. — Fri, 15 Jan 2010 09:21:33 PST

A large body of research has explored the factors that impede established firms' responses to radical technological changes. While it is widely acknowledged that managers face pressures from financial markets to choose strategies that maximize shareholder value, little work in the technological change literature has considered the possible influences of public equity markets and the securities analysts who mediate them on incumbent firms challenged with technological change. In this paper, I begin to address the topic by empirically exploring how securities analysts react to the different strategies undertaken by incumbent firms faced with radical technological change. I study the question in two settings: the shift to digital technology in photography and the advent of Voice over Internet Protocol (VoIP) technology in wireline telecommunications. I find evidence that analysts are more attentive and positive toward incumbents' strategies that extend and preserve the existing technology than toward strategies that respond directly to the new technology. In these settings, analysts largely ignore incumbents' strategies that directly incorporate the new technology for several years following the discontinuity. This study provides insights into the nature and direction of analysts' reactions to firms' strategies in the context of technological change, and is a first step toward better understanding of the potential role of analysts' and financial markets in incumbent adaptation.

Intraorganizational Networks, Interorganizational Networks, and the Impact of Central Inventors: A Longitudinal Study of Pharmaceutical Firms

Paruchuri, S. — Fri, 15 Jan 2010 09:21:33 PST

This paper proposes that a mechanism through which a firm's location in the interorganizational network influences the firm's internal innovation activities is modifying the amount of information flowing within the firm. Exploring a firm's internal innovation activities, I hypothesized that structural centrality of an inventor in the intrafirm coinventing network is associated with her impact on her firm's innovation activities in an inverted-U-shape relation. I further hypothesized that this relationship is moderated by the firm's centrality and span of structural holes in the interfirm network. I found strong support for these hypotheses in a longitudinal study of eight large pharmaceutical firms. The findings in this paper, apart from having managerial implications, have implications for research on alliances, network studies, and innovation processes.

External Learning Activities and Team Performance: A Multimethod Field Study

Bresman, H. — Fri, 15 Jan 2010 09:21:33 PST

This paper reports on a study of external team learning activities and their performance effects. It proposes and tests a model that consists of two sets of external learning activities: those that allow a team to learn from external experienced others about its task (vicarious learning activities) and those that allow a team to learn from external sources about its context (contextual learning activities). Qualitative data from six teams in one pharmaceutical firm are used to develop measures. Survey data from 62 additional teams in six other pharmaceutical firms are used, first to test the measurement model using structural equation modeling and second to test the relationships between external learning activities and team performance using random-effects regression models. Results show that vicarious learning activities are more strongly associated with performance when teams engage in more internal learning activities. Furthermore, vicarious learning activities in the absence of sufficient amounts of internal learning activities can hurt performance. The positive performance associated with contextual learning activities, by contrast, is unaffected by the level of internal learning activities. The paper contributes by distinguishing between two kinds of external learning activities and showing that they put different demands on teams to be effective. This is important because it helps us better understand how teams engage effectively in learning activities across their boundaries.

Different Truths in Different Worlds

Miller, K. D., Lin, S.-J. — Fri, 15 Jan 2010 09:21:33 PST

Models of organizational learning typically assume that organizations rely upon performance feedback and that an exogenous (uncontrollable) environment presents the problems that organizations seek to solve. By contrast, we consider how different epistemologies within organizations, or combinations of epistemologies, and the degree to which the environment is amenable to organizational control jointly affect learning over time. This study presents three different epistemologies expressed in interpersonal learning: pragmatism (learning beliefs from better performers), coherentism (learning beliefs that fit together), and conformism (adopting beliefs that are popular). We also examine the learning implications of a dominant coalition that can promulgate its preferred beliefs throughout an organization.

Outcomes from our agent-based model point toward key epistemological and environmental contingencies affecting the dynamics of organizational learning. Organizations filled with pragmatists learn effectively if the environment is fixed or controllable. Coherentists and conformists advance in knowledge only to the extent that they can control the environment. Adding pragmatists to organizations with coherentists or conformists produces a nonlinear (S-shaped) effect on knowledge achieved as different proportions of pragmatists alter social networks. Models involving learning from a dominant coalition affirm March's trade-off between learning speed and eventual knowledge achieved only for organizations filled with pragmatists and operating in an uncontrollable environment.

Go (Con)figure: Subgroups, Imbalance, and Isolates in Geographically Dispersed Teams

O'Leary, M. B., Mortensen, M. — Fri, 15 Jan 2010 09:21:34 PST

Research regarding geographically dispersed teams (GDTs) is increasingly common and has yielded many insights regarding the effects of spatio-temporal and socio-demographic factors on GDT functioning and performance. Largely missing, however, is research on the effects of the basic geographic configuration of GDTs. In this study, we explore the impact of GDT configuration (i.e., the relative number of team members at different sites, independent of the characteristics of those members or the spatial and temporal distances among them) on individual, subgroup, and team-level dynamics. In a quasi-experimental setting, we examine the effects of configuration using a sample of 62 six-person teams in four different one- and two-site configurations. As predicted based on social categorization, we find that configuration significantly affects team dynamics—independent of spatio-temporal distance and socio-demographic factors. More specifically, we find that the social categorization in teams with geographically based subgroups (defined as two or more members per site) triggers significantly weaker identification with the team, less effective transactive memory, more conflict, and more coordination problems. Furthermore, imbalance in the size of subgroups (i.e., the uneven distribution of members across sites) invokes a competitive, coalitional mentality that exacerbates these effects; subgroups with a numerical minority of team members report significantly poorer scores on identification, transactive memory, conflict, and coordination problems. In contrast, teams with geographically isolated members (i.e., members who have no teammates at their site) have better scores on these same four outcomes than both balanced and imbalanced configurations.

Getting There: Exploring the Role of Expectations and Preproduction Delays in Processes of Organizational Founding

Lomi, A., Larsen, E. R., Wezel, F. C. — Fri, 15 Jan 2010 09:21:34 PST

Because of preproduction delays, environmental conditions at founding cannot explain organization-building decisions taken earlier. As a consequence, environmental conditions at founding cannot explain organizational founding. Future levels of resource availability may be estimated, but not directly observed by potential entrepreneurs at the time at which they decide to enter preproduction. In this paper, we take these considerations as our starting point to build a dynamic feedback model of organization founding. According to the model, organizational founding is driven by expectations that entrepreneurs form about future levels of resources and, only indirectly, by current levels of population density. We explore the behavior of the model under a variety of experimental conditions. We show that the qualitative behavior of the model is consistent with studies that have linked the duration of preproduction stage with fluctuations in density during population maturity. Our simulation analyses sustains three main conclusions. First, historical trajectories of organizational populations that are consistent with empirical observations may be produced by mechanisms that are not directly dependent on density. Second, alternative hypotheses about how expectations are formed produce qualitatively different historical trajectories of density. Third, fluctuations in numbers of organizations are linked to specific aspects of individual organization-building decisions.

Entrepreneurial Optimism in the Market for Technological Inventions

Dushnitsky, G. — Fri, 15 Jan 2010 09:21:34 PST

How do potentially optimistic entrepreneurs attract prospective investors? We investigate an entrepreneur's decision to pursue either disclosure—where investors inspect the invention—or a contingent payment scheme (CPS) offer (e.g., salary deferral, royalty-based license)—where an invention's value is inferred from the entrepreneur's willingness to make her pay contingent on the invention's success. Using a parsimonious model, we highlight the role of optimism and demonstrate that it only affects CPS ex post. As a result, a novel trade-off unfolds ex ante: In choosing an action that maximizes the valuation of the invention, a moderately wealthy entrepreneur weighs optimism discount (affecting CPS) versus imitation discount (affecting disclosure). More broadly, the paper advances a view of entrepreneurs as optimists, thus departing from the prevailing approach, which characterizes entrepreneurs as opportunistic individuals who consciously pursue self-serving goals.

Young and No Money? Never Mind: The Material Impact of Social Resources on New Venture Growth

Khaire, M. — Fri, 15 Jan 2010 09:21:34 PST

Although growth is a desirable outcome for new ventures due to the many advantages of large size, most new firms fail to grow, largely because of their limited resources and adaptability. This paper addresses the question of how new ventures grow despite their limited financial resources. I explore the effect of two specific nonfinancial, social resources—legitimacy and status—on new venture growth. I propose that new firms can acquire legitimacy by mimicking the structures and ceremonial activities of established firms in their industry, and can acquire status by affiliating with high-status entities. Using a unique panel data set on a cohort of advertising agencies founded in New York and Chicago between 1977 and 1985, I show that legitimacy and status have favorable impacts on new firms' growth in revenues and number of employees. The paper makes important contributions to social embeddedness and institutional research by examining the strategic implications of firm-level social resources, and to the literature on entrepreneurship in general and new venture growth in particular.

Repeated Interactions and Contractual Detail: Identifying the Learning Effect

Vanneste, B. S., Puranam, P. — Fri, 15 Jan 2010 09:21:34 PST

Organizations interacting repeatedly on similar transactions may learn from prior experiences, allowing contracts to be specified in greater detail. In this study, we analyze the conditions under which this learning effect is most likely to manifest itself. We do this by focusing on different parts of a contract as well as differences across transacting parties. Using a survey of information technology procurement contracts from 788 Dutch small- and medium-sized enterprises, we show that the learning effect is stronger for technical than for legal detail in contracts and is stronger for firms with information technology expertise than for firms without such expertise.

Discovering Valuable Growth Opportunities: An Analysis of Equity Alliances with IPO Firms

Reuer, J. J., Tong, T. W. — Fri, 15 Jan 2010 09:21:34 PST

Firms often use alliances to access external resources and explore new market or technological opportunities, yet they also can face obstacles to discovering these opportunities in the first place. In this paper, we examine how firms can overcome these obstacles and form equity alliances with newly public companies to obtain valuable growth opportunities. Specifically, we build on real options theory and develop the argument that the visibility of firms having an initial public offering (IPO) can shape investors' recognition of the embedded growth opportunities and therefore channel their alliance activities. The evidence shows that firms are more likely to partner with IPO firms possessing more valuable growth opportunities. Furthermore, this relationship is magnified for IPO firms that have obtained more visibility, either through various interorganizational relationships or media coverage on going public.

The Effects of Competition on Referral Alliances of Professional Service Firms

Nam, I., Gruca, T. S., Tracy, R. — Fri, 15 Jan 2010 09:21:34 PST

The supply side of many professional service markets consists of two different pools of providers: generalists and specialists. Specialists usually gain access to new clients through referrals from generalists. To ensure a continuing stream of engagements, specialists often form referral alliances with multiple generalists. Engaging the right generalist partners and allocating resources to the resulting referral relationships are among the most important challenges facing these specialist firms. In this study, we examine how competition affects the management of referral alliances over time. Because of the high level of inseparability of the professional service engagement, the nature of competition among specialists is complex. Building on the ecological view of competition, we model the degree of niche overlap in the specialist's home markets and the generalists' markets as well as the potential overlap due to the proximity of rivals vis-à-vis generalists. Using data on visiting consultant clinics involving cardiology specialty practices and rural hospitals from a Midwestern state over a 13-year period, we find that the various aspects of niche overlap influence the involvement of these specialist professional service firms in referral alliances as well as resources they allocate to these relationships. In addition to expanding our understanding of vertical, bilateral alliances between professional service firms, this study enhances our general understanding of strategic alliances by demonstrating how partner attractiveness and the actions of rivals affect the resource allocation decisions of firms managing multiple strategic alliances over time.

Differential Gains Between Partners in Joint Ventures: Role of Resource Appropriation and Private Benefits

Kumar, M. V. S. — Fri, 15 Jan 2010 09:21:34 PST

I examine why there are differences in wealth gains between firms when they announce a joint venture (JV). Building on transaction cost economics and the resource-based view, I argue that, because JVs often involve incomplete contracts, differences in wealth gains arise due to resource appropriation and private benefits. As a result, two factors become important in understanding whether a firm earns higher/lower wealth gains than its partner: (1) its potential for earning private benefits and (2) its ability to extract private benefits. As a test of the impact of the first factor, I propose that when a JV is formed, the partner that possesses more valuable resources is likely to earn lower wealth gains whereas the partner that possesses less valuable resources is likely to earn higher wealth gains because its potential for earning private benefits over the course of the venture is also higher. I then argue that the partner with less valuable resources is likely to extract higher private benefits and gain more when it has greater bargaining power and absorptive capacity. Conversely, the partner with more valuable resources is likely to protect itself better from appropriation when it has JV capabilities. I find support for these arguments in a sample of 344 ventures. The implications are that private benefits significantly influence value creation in JVs, and that a broad array of contingencies and factors affect these benefits which need to be considered when entering into a cooperation.

Speaking Up to Higher-Ups: How Supervisors and Skip-Level Leaders Influence Employee Voice

Detert, J. R., Trevino, L. K. — Fri, 15 Jan 2010 09:21:34 PST

In this qualitative research, we enhance understanding of leader influences on employee voice perceptions by examining which leaders influence these perceptions and why these influences occur. We conducted 89 interviews in a high-tech multinational corporation with employees at multiple levels in two manufacturing and two R&D units that differed significantly on "speak up"-related items on a company-wide employee survey. Systematic analysis of the interview data led us to conclude that a broad spectrum of leaders from supervisors to senior managers influences individual employee voice perceptions in both direct and indirect ways. For example, informants referred to "skip-level leaders," those leaders two to five levels above themselves, as reasons to view voice as risky or futile nearly as often as they referred to immediate bosses. We present evidence related to "how" and "why" these patterns of influence occur by reviewing the direct and indirect modes of influence identified and by outlining the managerial functions that provide occasions for skip-level leaders to have direct influences on employee voice perceptions. We also point to differences in the specific echelons of leadership that were most influential across the units studied. We propose that multilevel, multileader influences on voice perceptions result naturally from modern workflows, the essential functions performed by skip-level leaders, and deep-seated employee attitudes about authority in hierarchical organizations. We propose further that differences in which levels of skip-level leadership are most critical to employee voice perceptions in different units depend on which leaders have the power to handle strategic contingencies and to resolve key uncertainties within particular work environments. Finally, we delve into the theoretical implications of our findings to offer a set of research propositions that can be tested in future research. Collectively, our findings point to a complex and nuanced picture of multilevel leader influences on employee voice perceptions with important practical implications for management.

Are Technology-Intensive Industries More Dynamically Competitive? No and Yes

Vaaler, P. M., McNamara, G. — Fri, 15 Jan 2010 09:21:34 PST

A substantial body of research in management and related public policy fields concludes that recent decades saw greater dynamic competition throughout technology-intensive (TI) industries, with widespread steady increase in TI industry and business performance instability as key implications. We set this conclusion within a broader framework of purportedly increasing dynamic competition among TI industry businesses, and then test for evidence of its performance implications in a large sample of U.S. businesses operating from 1978 to 1997 in 31 industries, with high average research and development expenditure-to-sales ratios. In the full sample, we find no evidence of sustained increase in TI industry and business performance instability, nor any evidence of significant cross-sectional differences in performance instability between TI and non-TI industry businesses over these 20 years. For a small segment of very high-performing businesses from TI industries, however, we do uncover evidence of declining performance stability and cross-sectional differences in performance stability. We conclude that assumptions of widespread long-term increase in dynamic competition lack robust evidentiary support. It is premature to embrace and apply broadly new theoretical perspectives, management practices, and public policies to TI industry competitive dynamics that may be slightly changed since the late 1970s. Yet, there may be increasing dynamic competition among very high-performing TI industry businesses. In that small realm, careful application of new perspectives, practices, and policies may lead to deeper insight on business behavior and performance in TI industries.

Perspective--Finding the Organization in Organizational Theory: A Meta-Theory of the Organization as a Social Actor

King, B. G., Felin, T., Whetten, D. A. — Fri, 15 Jan 2010 09:21:34 PST

Organization theory is a theory without a protagonist. Organizations are typically portrayed in organizational scholarship as aggregations of individuals, as instantiations of the environment, as nodes in a social network, as members of a population, or as a bundle of organizing processes. This paper hopes to highlight the need for understanding, explicating, and researching the enduring, noun-like qualities of the organization. We situate the organization in a broader social landscape by examining what is unique about the organization as a social actor. We propose two assumptions that underlie our conceptualization of organizations as social actors: external attribution and intentionality. We then highlight important questions and implications forming the core of a distinctively organizational analytical perspective.

About Authors

Fri, 15 Jan 2010 09:21:34 PST

No abstract available.