Organization Science current issue

Enabling Courageous Collective Action: Conversations from United Airlines Flight 93

Quinn, R. W., Worline, M. C. — 2008-07-26

On September 11, 2001, the passengers and crew members aboard Flight 93 responded to the hijacking of their airplane by organizing a counterattack against the hijackers. The airplane crashed into an unpopulated field, causing no damage to human lives or national landmarks beyond the lives of those aboard the airplane. We draw on this story of courageous collective action to explore the question of what makes this kind of action possible. We propose that to take courageous collective action, people need three narratives—a personal narrative that helps them understand who they are beyond the immediate situation and manage the intense emotions that accompany duress, a narrative that explains the duress that has been imposed upon them sufficiently to make moral and practical judgments about how to act, and a narrative of collective action—and the resources that make the creation of these narratives feasible. We also consider how the creation of these narratives is relevant to courageous collective action in more common organizational circumstances, and identify how this analysis suggests new insights into our understanding of the core framing tasks of social movements, ways in which social movement actors draw on social infrastructure, the role of discourse and morality in social movements, the formation of collective identity, and resource mobilization.

Culture and Coworker Relations: Interpersonal Patterns in American, Chinese, German, and Spanish Divisions of a Global Retail Bank

Morris, M. W., Podolny, J., Sullivan, B. N. — 2008-07-26

This paper examines coworker networks in the American, Chinese, German, and Spanish divisions of a global retail bank. Because the bank has standardized structure and policies across countries, it is possible to examine how norms rooted in national culture impact on various features of informal ties. We propose that cultures vary in the models on which coworker interaction norms are based, with market, family, law, and friendship relations serving as alternative templates. In elucidating these templates, we generate hypotheses about how each culture's norms influence the content and structure of employees' interactions with coworkers. Results from an egocentric network survey largely support the hypotheses. We discuss implications for organizational behavior research on culture as well as practical implications for multinational firms.

E Pluribus Unum: Framing, Matching, and Form Emergence in U.S. Television Broadcasting, 1940-1960

Perretti, F., Negro, G., Lomi, A. — 2008-07-26

Recent research holds that new organizational forms emerge from the identity of candidate organizations that enter a domain. In this study we argue that emergence of a new form, which is ultimately based on validation by external audiences, depends on two mechanisms: identity framing, i.e., how audiences perceive and frame the identity of an emerging organizational domain, and identity matching, i.e., the match between the identity of the domain and the identity of candidates. Accordingly, form emergence is best characterized as contextual rather than as an inherent attribute of the categories of candidate organizations. Using data on the U.S. commercial television industry from 1940 to 1960, we explore how entry rates of TV stations were affected by audiences' expectations about the identity of the nascent domain and by the densities of organizations with different origins. We find evidence that focused expectations expressed through public discourse about media, and the number of stations coming from radio broadcasting increased entry rates. We reconcile our findings with existing theory on the emergence of organizational forms by pointing to the joint relevance of domain-related and candidate-related identities.

Moving Closer to the Action: Examining Compensation Design Effects on Firm Risk

Devers, C. E., McNamara, G., Wiseman, R. M., Arrfelt, M. — 2008-07-26

We examine the influence of CEO equity-based compensation on strategic risk taking by the firm. Building off the Behavioral Agency Model, Agency Theory, and Prospect Theory, we develop arguments about when equity-based compensation elements will increase or decrease executive risk propensity and, in turn, strategic risk taking. Incorporating a behavioral perspective into our models of incentive alignment provides us with new and potentially more accurate predictions about how individual elements of CEO pay will influence risk selection, as well as how equity compensation interacts with cash compensation and with other factors to influence risk preferences. In general, this study provides evidence that CEO equity-based compensation significantly influences strategic risk, but that this influence is more nuanced and complex than conventional treatments of executive compensation assume. In particular, we find that different forms of equity-based pay exhibit dissimilar influences on strategic risk and that their influence changes as their value and vesting status change. Second, we find that cash-based forms of pay moderate the incentive properties of equity-based pay, indicating that cash-based pay may affect how executives perceive risks associated with equity pay. Finally, we find that stock price volatility and board actions each also moderate the incentive effects of equity-based pay. In sum, our results argue for increased recognition of a behavioral perspective on executive compensation and greater precision in how we measure and model the incentive alignment properties of CEO compensation.

Too Risky to Hold? The Effect of Downside Risk, Accumulated Equity Wealth, and Firm Performance on CEO Equity Reduction

Matta, E., McGuire, J. — 2008-07-26

Although the alignment effect of equity ownership is often studied with emphasis on changes in firm strategy, the exposure of CEOs' firm-specific wealth to firm risk is more easily controlled by changing their level of equity holdings than by changing firm strategic risk. We rely on prospect theory and the behavioral theory of the firm to examine the antecedents of CEO equity reduction and investigate whether it serves to decouple CEO wealth from firm risk. Given its central role in loss avoidance, we underline the effect of the firm's downside risk and distinguish the total loss potential on equity holdings from the loss potential due to firm-specific factors. Allowing for own-performance referents, we also consider firm performance and the value of a CEO's equity holdings in the analysis. Based on a sample of 208 U.S. CEOs for the years 1997–1999, we find empirical support for the role of downside risk and firm performance in CEO equity reductions. Implications on incentive alignment through equity ownership are presented.

The Asymmetrical Influence of Sex Dissimilarity in Distributive vs. Colocated Work Groups

Chattopadhyay, P., George, E., Shulman, A. D. — 2008-07-26

Data from 101 Australian research scientists were used to examine the relationship between sex dissimilarity and work group identification, and task and emotional conflict. Based on social identity and self-categorization theories, these relationships were argued to vary between men and women, and between colocated and distributive work groups. Women reported lower levels of work group identification and higher levels of task and emotional conflict in conjunction with higher levels of sex dissimilarity. Men reported lower levels of task conflict in conjunction with higher levels of sex dissimilarity. No parallel effects on identification or emotional conflict were observed. Sex dissimilarity was found to have a stronger influence on work group identification, and task and emotional conflict in colocated work groups than in distributive work groups.

Constrained Growth: How Experience, Legitimacy, and Age Influence Risk Taking in Organizations

Desai, V. M. — 2008-07-26

Poor performance indicates that an organization's routines are not well suited for its environment and prompts decision makers to search for solutions. However, results conflict regarding how this search process influences risk taking in organizations. Managers in some organizations facing actual or expected performance shortfalls tend to take risks, while managers in other poorly performing organizations avoid risky changes. This conflict is interesting because some level of risk taking appears necessary for organizations to remain competitive, adapt to their environment, and improve performance. This study examines several mechanisms that moderate risk taking following performance shortfalls. First, I draw from organizational learning theories to argue that organizations with limited operating experience are less buffered from failure, and hence that poor performance constrains risk taking at these organizations. Second, I argue that organizations with poor legitimacy are also less buffered, and hence that performance shortfalls also lead to risk aversion at these organizations. Third, I draw from structural inertia theory to suggest that older organizations are less able to support risk taking following performance shortfalls. A test of these hypotheses on the capacity expansion behavior of U.S. railroad companies generally supports these hypotheses, although the effect of age is weaker. The findings contribute to theories of organizational learning and to several perspectives in organization theory more broadly.

Determinants of Firms' Backward- and Forward-Looking R&D Search Behavior

Chen, W.-R. — 2008-07-26

This study develops and operationalizes a behavioral forward-looking search model by incorporating prospect theory, organizational risk literature, and the logic of the behavioral theory of the firm. With recognition of the bounded rationality of decision makers and the goal-directed, rule-based nature of organizations, this model suggests that a comparison between firms' performance expectation and performance target translates the cognitive representation of the firms' future into their subsequent actions. By examining the research and development (R&D) expenditures of U.S. manufacturing firms from 1980 to 2001, this study explores how performance, aspirations, expectations, and slack affect decision making about firms' R&D search investments. The findings show that both performance feedback and performance prospect are important determinants of firms' search behavior after controlling for firm, industry, and time effects. In addition, backward- and forward-looking determinants have interactive effects on search behavior. Firms' problem-driven search activity further increases when firms feel unlikely to achieve the performance target for another year. In contrast, search intensity is reduced when firms expect to improve their performance from an underperforming situation to an outperforming situation. The findings suggest that future research on performance feedback and experiential learning should also consider the effect of forward-looking prospects on firm behavior.

Alliance Portfolio Internationalization and Firm Performance

Lavie, D., Miller, S. R. — 2008-07-26

Alliance research has traditionally focused on structural and relational aspects of the networks in which firms are situated, paying less attention to the inherent characteristics of their partners. This study introduces the notion of alliance portfolio internationalization (API), which refers to the degree of foreignness of partners in a firm's collection of immediate alliance relationships. We develop a framework to explain how API impacts firm performance. We suggest that as a firm's API increases, financial performance is expected to initially decline, then improve, and finally decline again. This sigmoid relationship between API and financial performance is ascribed to evolving learning effects that shape the net benefits of API. When the firm's alliance portfolio, on average, consists of proximate foreign partners, the firm may fail to recognize latent national differences, but at moderate levels of API, its absorptive capacity and specialized collaborative routines support the exchange of valuable network resources. Nevertheless, high levels of API undermine firm performance because of the failure of collaborative routines and mounting liabilities of cross-national differences. We test the framework using data on the alliance portfolios of U.S.-based software firms from 1990 to 2001. The results provide support for the sigmoid relationship as well as for our predictions that firms, which have gained experience with foreign partners and maintained wholly owned subsidiaries in their partners' countries of origin, can overcome some of the liabilities of API and better leverage its benefits.

Drivers and Performance Outcomes of Trust in International Strategic Alliances: The Role of Organizational Complexity

Robson, M. J., Katsikeas, C. S., Bello, D. C. — 2008-07-26

Trust between partners has become a key construct in interfirm relationship management. However, elucidating the precise nature of the trust-performance link in international strategic alliances remains an important theoretical and empirical challenge for management scholars. Discordant findings evident in existing alliance research raise concerns that interpartner trust does not always enhance venture performance. To investigate this issue, we build and test a theoretical framework that integrates different perspectives of alliance functioning by focusing on the social and bureaucratic forces critical to cooperative processes. The model (1) identifies organizational complexity mechanisms underlying the development of trust in international strategic alliances, (2) points to alliance size as an important factor that conditions the trust-performance relationship, (3) incorporates a new, third-order conceptualization of interpartner trust in alliances, and (4) suggests a theory-based multidimensional assessment of alliance performance. Based on data collected through personal interviews in 177 international strategic alliances, the results suggest that, while interpartner trust is positively associated with alliance performance, this relationship becomes stronger when alliance size declines. We find that both distributive fairness and partner similarity are central to the achievement of a trusting alliance partnership. Managerial insights into developing successful trust-based international alliance exchanges are offered, and fruitful avenues of research are discussed.

About Authors

2008-07-26

No abstract available.