Title: When Do Evaluators Publicly Express Their Legitimacy Judgments? An Inquiry into the Role of Peer Endorsement and Evaluative Mode

Authors: Tijs van den Broek, David J. Langley, Michel L. Ehrenhard, Aard Groen

Abstract: Legitimacy theory describes how individuals evaluate an organization’s behavior, form propriety evaluations, and subsequently decide whether to publicly express their legitimacy judgments. These individual judgments are influenced by sources of collective validity, for example, from recognized authority or from peer endorsement. Whereas most research on this topic has focused on the effects of authority, we study the influence of peer endorsement on the public expression of legitimacy judgments. Additionally, we assess evaluators’ preparedness to expend cognitive effort, that is, their evaluative mode, as an important condition under which judgment expressions are made. We present a set of three vignette experiments and one field study, all situated in social media that are quickly becoming the dominant setting for the expression of legitimacy judgments. This research provides new evidence that peer endorsement stimulates evaluators to express their judgments, particularly for evaluators who expend limited cognitive effort. Additionally, we find that evaluators in the active and passive evaluative modes act differently when their propriety evaluations are based on instrumental, moral, or relational considerations. These findings extend current legitimacy theory about how peer endorsement functions as a source of validity and when individual evaluators decide to publicly express their legitimacy judgments. This is important because individuals’ public expressions can bring about a cascade of judgments that change the consensus on an organization’s legitimacy, potentially contributing to institutional change.

Title: Collateral Damage: The Relationship Between High-Salience Events and Variation in Racial Discrimination

Authors: Andreea Gorbatai, Peter Younkin, Gordon Burtch

Abstract: To what extent are individual or organizational biases affected by racially salient events? We propose that acts of discrimination and the individual biases that undergird them are sensitive to high-salience events and will oscillate with the salience of the focal attribute. In short, that the propensity to discriminate reflects both individual and environmental differences, and therefore a given person may become more prone to discriminate in the aftermath of a high-salience event. We test our hypothesis in three online experiments that examine how varying the salience of race affects the evaluation of in-group or out-group founders. We find that respondents evaluate their in-group members more favorably, and out-group members less favorably, when exposed to a high-salience event, which translates into a significant disadvantage for the minority (African American) group. We complement these studies with an assessment of how police shootings affect fundraising outcomes on Kickstarter to confirm the external validity of our findings. Together, these studies indicate that racially salient events depress the quality evaluations and success odds of African American entrepreneurs relative to others. Hence, discrimination levels can be affected by salient yet unrelated events, and such events are consequential for the economic fortunes of individuals belonging to minority and disadvantaged groups.

Title: Social Exchange and the Reciprocity Roller Coaster: Evidence from the Life and Death of Virtual Teams

Authors: Jérôme Hergueux, Emeric Henry, Yochai Benkler, Yann Algan

Abstract: Organizations are riddled with cooperation problems, that is, instances in which workers need to voluntarily exert effort to achieve efficient collective outcomes. To sustain high levels of cooperation, the experimental literature demonstrates the centrality of reciprocal preferences but has also overlooked some of its negative consequences. In this paper, we ran lab-in-the-field experiments in the context of open-source software development teams to provide the first field evidence that highly reciprocating groups are not necessarily more successful in practice. Instead, the relationship between high reciprocity and performance can be more accurately described as U-shaped. Highly reciprocal teams are generally more likely to fail and only outperform other teams conditional on survival. We use the dynamic structure of our data on field contributions to demonstrate the underlying theoretical mechanism. Reciprocal preferences work as a catalyst at the team level: they reinforce the cooperative equilibrium in good times but also make it harder to recover from a negative signal (the project dies). Our results call into question the idea that strong reciprocity can shield organizations from cooperation breakdowns. Instead, cooperation needs to be dynamically managed through relational contracts.

Title: Cooperation with Strangers: Spillover of Community Norms

Authors: Mario Molina, Victor Nee, Hakan Holm

Abstract: Why do leaders of organizations cooperate with players with whom they may never transact again? Such transactions can involve the incentives to exploit the other party because these interactions are not recurrent or embedded in networks. Yet, in a market economy, organizational actors learn to cooperate with strangers; otherwise, they risk closure from new ideas and business opportunities outside of their local community. With a large random sample of CEOs of manufacturing firms in the Yangzi River Delta region of China, we measured social norms using vignettes that describe hypothetical situations illustrating the social mechanisms of norm enforcement in respondents’ local communities. Several years later, in a laboratory-in-the-field experiment, we asked the same participants to play a one-shot Prisoner’s Dilemma (PD) game with a complete stranger. Our findings suggest that belief in the reliability of robust norm enforcement is positively associated with a higher probability of cooperation with strangers. To our knowledge, this mixed-method study is the first to explore the relationship between social norms and cooperation with strangers using a large sample of leaders of organizations outside the environment of the laboratory. Finally, to explore the generalizability of our behavioral findings, we experimentally manipulated norm vignettes and study the PD game in online experiments with managers in the Yangzi River Delta region.

Title: Building an Equilibrium: Rules vs. Principles in Relational Contracts

Authors: Robert Gibbons, Manuel Grieder, Holger Herz, Christian Zehnder

Abstract: Effective collaboration within and between organizations requires efficient adaptation to unforeseen change. We study how parties build relational contracts that achieve this goal. We focus on the “clarity problem”—whether parties have a shared understanding of the promises they make to each other. Specifically, (a) a buyer and seller play a trading game in several periods; (b) they know their environment will change but do not know how; and (c) before any trading occurs, they can reach a nonbinding agreement about how to play the entire game. We hypothesize that pairs whose initial agreement defines a broad principle rather than a narrow rule are more successful in solving the clarity problem and in achieving efficient adaptation after unforeseen change. In our baseline condition, we indeed observe that pairs who articulate principles achieve significantly higher performance after change occurred. Underlying this correlation, we also find that pairs with principle-based agreements were more likely to both expect and take actions that were consistent with what their agreement prescribed. To investigate a causal link between principle-based agreements and performance, we implement a “nudge” intervention that induces more pairs to articulate principles. The intervention succeeds in coordinating more pairs on efficient quality immediately after the unforeseen change, but it fails to coordinate expectations on price, ultimately leading to conflicts and preventing an increase in long-run performance after the shock. Our results suggest that (1) principle-based agreements may improve organizational performance but (2) high-performing relational contracts may be difficult to build.

Title: Context and Aggregation: An Experimental Study of Bias and Discrimination in Organizational Decisions

Authors: Michael Christensen, Christian M. Dahl, Thorbjørn Knudsen, Massimo Warglien

Abstract: This paper addresses a notable gap at the intersection of organizational economics and organization science: how does organizational context influence aggregation of individual behavior in organizational decisions? Using basic centralized versus decentralized organizational structures as building blocks for our experimental design, we examine whether assignment of organizational positions, incentive schemes, and structural configuration induce endogenous adaptation in the form of change in reservation levels (bias) or modified discrimination capability in subjects’ behavior. We found that evaluators adapted their reservation and discrimination levels in centralized structures, whereas they did not generally adapt their reservation and discrimination levels when placed in decentralized structures. We identify mechanisms that explain these findings; explain how they influence aggregate, organizational behavior; and discuss implications for research and practice.

Title: Social Movements, Collective Identity, and Workplace Allies: The Labeling of Gender Equity Policy Changes

Authors: Cynthia S. Wang, Jennifer A. Whitson, Brayden G King, Rachel L. Ramirez

Abstract: Social movements seek allies as they campaign for social, political, and organizational changes. How do activists gain allies in the targeted institutions they hope to change? Despite recognition of the importance of ally support in theories about institutional change and social movements, these theories are largely silent on the microdynamics of ally mobilization. We examine how the labeling of organizational policies that benefit women influences potential workplace allies’ support for these policies. We theorize that one barrier to mobilizing workplace allies is a misalignment of the labels that activists use to promote new policies and employees’ affiliation with collective identities. We conducted five experiments to test our hypotheses and 26 qualitative interviews to provide illustration of our core concepts. We demonstrate that employees high in feminist identification are more likely to support feminist-labeled (feminist and #MeToo) than unlabeled policies, whereas those low in feminist identification are less likely to support feminist-labeled than unlabeled policies (Studies 1–3). However, we find that participants for whom organizational identification was high (whether measured or manipulated) and feminist identification was low supported organizationally labeled policies more than feminist-labeled polices (Studies 4 and 5). This illustrates that policies whose aims may not align with one collective identity can still garner support by activating another relevant collective identity. Within our studies, we provide evidence that these effects are mediated via feelings of pride in the organization (and not fear or anger), suggesting that positive emotions are a central mechanism in mobilizing workplace allies.

Title: Attentional Engagement Predicts Problem-Solving Strategies: Evidence from Think-Aloud Protocols and Behavioral Experiments

Authors: Daniella Laureiro-Martinez, Jose Arrieta

Abstract: N/A

Title: Microfoundations of Adaptive Search in Complex Tasks: The Role of Cognitive Abilities and Styles

Authors: Carsten Bergenholtz, Oana Vuculescu, Ali Amidi

Abstract: N/A

Title: Network Centralization and Collective Adaptability to a Shifting Environment

Authors: Ethan S. Bernstein, Jesse C. Shore, Alice J. Jang

Abstract: We study the connection between communication network structure and an organization’s collective adaptability to a shifting environment. Research has shown that network centralization—the degree to which communication flows disproportionately through one or more members of the organization rather than being more equally distributed—interferes with collective problem-solving by obstructing the integration of existing ideas, information, and solutions in the network. We hypothesize that the mechanisms responsible for that poor integration of ideas, information, and solutions would nevertheless prove beneficial for problems requiring adaptation to a shifting environment. We conducted a 1,620-subject randomized online laboratory experiment, testing the effect of seven network structures on problem-solving success. To simulate a shifting environment, we designed a murder mystery task and manipulated when each piece of information could be found: early information encouraged an inferior consensus, requiring a collective shift of solution after more information emerged. We find that when the communication network within an organization is more centralized, it achieves the benefits of connectivity (spread of novel better solutions) without the costs (getting stuck on an existing inferior solution). We also find, however, that these benefits of centralization only materialize in networks with two-way flow of information and not when information only flows from the center of the network outward (as can occur in hierarchical structures or digitally mediated communication). We draw on these findings to reconceptualize theory on the impact of centralization—and how it affects conformity pressure (lock-in) and awareness of diverse ideas (learning)—on collective problem-solving that demands adaptation.

Title: Effects of Social Information on Risk Taking and Performance: Understanding Others’ Decisions vs. Comparing Oneself with Others in Short-Term Performance

Authors: Sabine Pittnauer, Martin Hohnisch, Andreas Ostermaier, Andreas Pfingsten

Abstract: When a problem leaves decision makers uncertain as to how to approach it, observing others’ decisions can improve one’s own decisions by promoting more accurate judgments and a better insight into the problem. However, observing others’ decisions may also activate motives that prevent this potential from being realized, for instance, ego concerns that prompt excessive risk taking. Our experimental study investigates how two features of the social environment influence the effect of observing others’ decisions on individual risk taking and performance. We manipulated (1) the psychological distance to others whose decisions could be observed (and thereby the tendency to seek self-enhancing social comparison) and (2) the opportunity for interaction (and thereby for a cumulative effect of any such tendency on decisions over time and for an effect on social information itself). Because the two features covary in real-world settings, we designed two treatments corresponding to the two natural combinations. Both treatments provided participants with two other participants’ period decisions in a multiperiod problem under uncertainty. No new objective information about the problem could be inferred from these decisions. We predicted that participants who observed the decisions of distant others (who had solved the same problem earlier) would perform better than participants in a control sample without any information about others’ decisions and that participants who observed the decisions of proximal others (with whom interaction could arise) would take more risk and perform worse than those who observed distant others’ decisions. The data corroborate our predictions. We discuss implications for organizational learning.

Title: Iterative Coordination and Innovation: Prioritizing Value over Novelty

Authors: Sourobh Ghosh, Andy Wu

Abstract: An innovating organization faces the challenge of how to prioritize distinct goals of novelty and value, both of which underlie innovation. Popular practitioner frameworks like Agile management suggest that organizations can adopt an iterative approach of frequent meetings to prioritize between these goals, a practice we refer to as iterative coordination. Despite iterative coordination’s widespread use in innovation management, its effects on novelty and value in innovation remain unknown. With the information technology firm Google, we embed a field experiment within a hackathon software development competition to identify the effect of iterative coordination on innovation. We find that iterative coordination causes firms to implicitly prioritize value in innovation: Although iteratively coordinating firms develop more valuable products, these products are simultaneously less novel. Furthermore, by tracking software code, we find that iteratively coordinating firms favor integration at the cost of knowledge-creating specialization. A follow-on laboratory study documents that increasing the frequency and opportunities to reprioritize goals in iterative coordination meetings reinforces value and integration, while reducing novelty and specialization. This article offers three key contributions: highlighting how processes to prioritize among multiple performance goals may implicitly favor certain outcomes; introducing a new empirical methodology of software code version tracking for measuring the innovation process; and leveraging the emergent phenomenon of hackathons to study new methods of organizing.

Title: When Reflection Hurts: The Effect of Cognitive Processing Types on Organizational Adaptation to Discontinuous Change

Authors: Marlon Fernandes Rodrigues Alves, Vincenzo Vastola, Simone Vasconcelos Ribeiro Galina, Maurizio Zollo

Abstract: Technological breakthroughs, institutional disruptions, and natural disasters often alter the course of organizations and entire industries. Such discontinuous changes threaten organizations’ survival by affecting the value of the knowledge accumulated in routines and capabilities. Although it is widely acknowledged that managerial cognition is a critical antecedent of organizational responses to discontinuous change, the role of type 1 (intuitive) and type 2 (reflective) processing in the adaptation of shared patterns of behavior, that is, routines, remains understudied. Drawing on dual-process theory, we propose that particular features of type 1 processing render this approach superior to type 2 processing, especially in highly ambiguous environments in which information is limited and difficult to verify. We tested our hypotheses in a longitudinal experiment linking individual-level factors with organizational-level practices of routine adaptation. Experienced managers, paired in 80 groups, developed routines in a first round of a simulation game; in a second round, we then introduced a discontinuous change making previous routines obsolete in order to observe how they adapted. The data show that priming type 1 processing facilitates organizational adaptation more than type 2 processing by providing faster, more routinized, efficiently coordinated, and optimal responses. In addition, type 1 appears to be more functional in highly ambiguous environments, whereas type 1 and type 2 processes yield similar levels of performance under low levels of ambiguity. Overall, our study advances the understanding of the nondeliberative dimension of organizational adaptation to discontinuous change.

Title: Gender Differences in Responses to Competitive Organization? A Field Experiment on Differences between STEM and non-STEM Fields from an Internet-of-Things Platform

Authors: Kevin Boudreau, Nilam Kaushik

Abstract: N/A

Title: To Stem the Tide: Organizational Climate and the Locus of Knowledge Transfer

Authors: Giada Di Stefano, Maria Rita Micheli

Abstract: Prior work has maintained that organizations benefit from managing the transfer of proprietary knowledge. Transfer is often advantageous within organizational boundaries but may be harmful across them, because it might erode competitive advantage. Hence, we ask: How can organizations affect the direction in which knowledge flows? We examine the role of organizational climate as a governing mechanism for knowledge transfer. Our empirical strategy consists of a mixed-methods approach leveraging qualitative and experimental data over two cycles of theory building and theory testing. We start with an extensive field study of the European Organization for Nuclear Research (CERN), leveraging the insights from desk research, field observations, 53 interviews, and a laboratory-in-the-field experiment involving 518 physicists. We then provide a causal test of the emerging framework by means of two laboratory experiments with 389 participants. Our findings suggest employees are more likely to transfer knowledge to their colleagues when they identify as an integral part of the organization, but they would rather transfer knowledge to outside competitors when their organization encourages them to outperform coworkers. In the presence of an organizational climate that is unfavorable to preventing knowledge spillovers, we argue, organizations can redirect the locus of knowledge transfer internally by acting upon an individual employee’s job design and socialization regime.

Title: Managing Uncertainty: An Experiment on Delegation and Team Selection

Authors: John R. Hamman, Miguel A. Martínez-Carrasco

Abstract: We study how organizations use team selection and delegation of authority jointly to navigate uncertain environments. To do so, we model a managerial decision environment in which a manager both determines the skill heterogeneity of the workers and determines whether to retain or delegate the ability to allocate tasks. Delegation enables better-informed workers to allocate tasks more efficiently when uncertainty is high relative to the incentive conflict between manager and worker. Our novel approach allows us to illustrate that this conflict is endogenously determined by the team selection decision. Experimental data support—although not globally—the direction of our theoretical hypotheses and offer insight into how and why choices deviate from expected behavior. Notably, we identify behavioral characteristics that aid decisions along each dimension. Deliberative thinking improves all decisions under low uncertainty and improves team selection regardless of the level of uncertainty. Risk tolerance improves all decisions in highly uncertain situations and helps managers optimally delegate decision rights in all settings. The results highlight potentially costly ways in which managers seek to simplify their decisions but show how deliberative thinking and risk tolerance can improve performance in a complementary manner.

Title: The (Bounded) Role of Stated-Lived Value Congruence and Authenticity in Employee Evaluations of Organizations

Authors: Vontrese Deeds Pamphile, Rachel Lise Ruttan

Abstract: A growing body of research documents that audiences reward organizations perceived to be authentic with positive evaluations. In the current work, we adopt a mixed-methods approach—using data collected from Glassdoor.com and two experiments—to establish that perceptions of authenticity are elicited by perceived congruence between an organization’s stated values (i.e., the values it claims to hold) and its lived values (i.e., values members perceive as embodied by the organization), which in turn lead to more positive organizational evaluations. We then explore the conditions under which audiences are less likely to respond favorably to organizational authenticity, finding that the positive effects of stated-lived value congruence on evaluations are attenuated when audiences have a lower preference for stated values. Although scholars have often explored whether and how organizations can successfully make themselves appear authentic to reap rewards, our findings suggest that the perceived authenticity that results from stated-lived value congruence may not prove fruitful unless the audience holds a higher preference for an organization’s stated values.

Title: Organizing Entrepreneurial Teams: A Field Experiment on Autonomy over Choosing Teams and Ideas

Authors: Viktoria Boss, Linus Dahlander, Christoph Ihl, Rajshri Jayaraman

Abstract: Scholars have suggested that autonomy can lead to better entrepreneurial team performance. Yet, there are different types of autonomy, and they come at a cost. We shed light on whether two fundamental organizational design choices—granting teams autonomy to (1) choose project ideas to work on and (2) choose team members to work with—affect performance. We run a field experiment involving 939 students in a lean startup entrepreneurship course over 11 weeks. The aim is to disentangle the separate and joint effects of granting autonomy over choosing teams and choosing ideas compared with a baseline treatment with preassigned ideas and team members. We find that teams with autonomy over choosing either ideas or team members outperform teams in the baseline treatment as measured by pitch deck performance. The effect of choosing ideas is significantly stronger than the effect of choosing teams. However, the performance gains vanish for teams that are granted full autonomy over choosing both ideas and teams. This suggests the two forms of autonomy are substitutes. Causal mediation analysis reveals that the main effects of choosing ideas or teams can be partly explained by a better match of ideas with team members’ interests and prior network contacts among team members, respectively. Although homophily and lack of team diversity cannot explain the performance drop among teams with full autonomy, our results suggest that self-selected teams fall prey to overconfidence and complacency too early to fully exploit the potential of their chosen idea. We discuss the implications of these findings for research on organizational design, autonomy, and innovation.

Title: Converging Tides Lift All Boats: Consensus in Evaluation Criteria Boosts Investments in Firms in Nascent Technology Sectors

Authors: Xirong (Subrina) Shen, Huisi (Jessica) Li, Pamela S. Tolbert

Abstract: Although previous studies show that the emergence of evaluation criteria for a new technology improves the life chances of well-performing firms, we theorize that consensus in such criteria among technology experts increases investments to all firms in the new sector. We provide a variety of supportive evidence for this claim. First, in an experiment with 80 Chinese investors (Study 1), we provide evidence of a causal relation between evaluation consensus and investments. We follow this with a second experiment with 412 U.S. participants (Study 2), showing that evaluation criteria consensus increases participants’ propensity to view a firm as technologically competent and to expect others to favor investing in the firm. Analyses of longitudinal archival data on investment in artificial intelligence technology firms in the United States (Study 3a) and China (Study 3b) support the generalizability of our findings. By exploring the social-cognitive processes that link evaluation criteria consensus to investors’ decisions to invest in firms in nascent technology fields, this paper advances the scholarly understanding of the microfoundations of the institutionalization processes in new market sectors.