Knowledge that Transforms

Research Summary The success of skunkworks often involves nurturing an identity at odds with the parent firm, which may cause de‐identification with the firm and hamper reintegration of team members post‐project. This identity work could lead to market success but organizational failure as skunkworks' members distance themselves from the parent firm tasking the innovation. To explore the when and how of identity work throughout a skunkworks' lifecycle, we studied a skunkworks at an international consumer products company over a 35‐month research window and through post‐hoc interviews some 15 years later. Using a grounded theory approach, we documented the interplay between product (needs) and process (decisions) over the skunkworks' lifecycle, and constructed an inductive model providing important insight to the micro‐foundations of the identity‐based view of competitive advantage. Managerial Summary This study examines how identity work unfolds over time in a skunkworks team created to spur breakthrough innovation. Such teams can develop a strong sense of identity that may in part involve opposition to the parent firm. While this can motivate the team to galvanize around the task at hand, such “othering” may cause de‐identification with the parent and hamper reintegration of team members after the skunkworks is dissolved. Thus, identity work within a skunkworks can lead to both market success and organizational failure. We ground our model in a 35‐month study of an international consumer products company, documenting the interplay between product (needs) and process (decisions) over the skunkworks' lifecycle. We provide prescriptions as to how to mitigate the possibility of these negative outcomes.

Research summary This study examines the impact of financial analysts on a firm's corporate social performance (CSP). We integrate research on time horizons with stakeholder theory and argue that, in response to short‐term pressure from financial analysts, firms and their managers become more short‐term focused and limit investment in socially responsible activities. Using broker mergers and closures in the United States as exogenous shocks to analyst coverage and a difference‐in‐differences research design, we find that an exogenous decrease in analyst coverage leads to better CSP, establishing a causal relationship between analyst coverage and the level of a firm's CSP. The impact of financial analysts on a firm's CSP is exacerbated if the terminated analyst works for a larger brokerage house and has more general‐ and firm‐specific experiences. Managerial summary This study looks at the relationship between financial analysts, a key stakeholder group of the capital market, and a firm's socially responsible activities. Using a sample of U.S. publicly listed firms during the period of 2001–2013, our study finds novel evidence that the pressure to meet earnings target set by financial analysts hinders a firm's socially responsible performance. In addition, this pressure is more salient for firms with analysts that work for large brokerage houses and have more experiences. This study provides new insights to corporate social responsibility research by evaluating the impact of financial analysts on firms' social engagement.

Research Summary Violation severity represents an important contextual factor in explaining the extent to which top actor performance is a benefit or burden following a negative event. Research often conflates how observers perceive an event with its objective severity, however, while ignoring the potential divergence between both types. We therefore introduce the severity gap, which reflects the degree to which perceived and objective violation severity diverge, and we theorize about how it informs the degree to which top actor performance offers benefits or burdens for these actors. We hypothesize and find that internal stakeholders shield strong performing top actors when the severity gap is high, but that performance is less salient to external stakeholders who distance themselves from these top actors. Managerial Summary Organizations embroiled in violations are often subject to formal assessments of the severity of the event as well as the court of public opinion. Yet researchers have largely conceptualized objective and perceived violation severity as mirrors of each another. We question if this captures what actually unfolds in the marketplace, particularly given the myriad examples of when violations resonate more strongly with observers than the objective severity would suggest, or vice versa. We examine how the gap between perceived and objective violation severity influences how much insiders and outsiders are concerned with top actor performance when considering which outcomes top actors encounter after the negative event. Our results suggest that insiders shield top performers as the severity gap increases, but that outsiders remain increasingly skeptical.

Research Summary Here, I document the governing copyright law and process of digitizing print records with specific application to the Jaques Cattell directories of U.S. R&D. This novel dataset covers 2,805 companies with 8,525 facilities, including location, reporting line within the organization, numbers of professional staff and technicians, and R&D fields over the years 1975–1998. The dataset includes a match to the Compustat identifier, gvkey. As an illustration, I use the new dataset to investigate the effect of organization structure on innovation. By contrast with previous research based on smaller samples, I find no significant relation between organization structure and innovation. Managerial Summary Here, I document the governing copyright law and process of digitizing print records with specific application to the Jaques Cattell directories of U.S. R&D. This novel dataset covers 2,805 companies with 8,525 facilities, including location, reporting line within the organization, numbers of professional staff and technicians, and R&D fields over the years 1975–1998. The dataset is matched to Compustat. It can be used to study novel issues including (a) the effect of complementary manufacturing and marketing assets on how a company exploits its technological capabilities; (b) the relation between the centralization of the R&D organization and productivity of innovation; (c) how clusters influence the location of R&D facilities; and (iv) how state law affects the geography of R&D. Resources This article has earned an Open Data badge for making publicly available the digitally‐shareable data necessary to reproduce the reported results. The data is available at http://five.dartmouth.edu/datasets and https://doi.org/10.25540/3wd8-dffw . Learn more about the Open Practices badges from the Center for Open Science: https://osf.io/tvyxz/wiki .

Douglas P. Hannah and Kathleen M. Eisenhardt were recognized as a runner up for the 2019 Ralph Gomory Best Industry Studies Paper Award.

Research Summary Strategic use of codified knowledge across borders can be a vital component for project‐based work. Analyzing 237 global consulting projects, we examine the performance effects of drawing upon different types of codified knowledge. We argue and find that using principle‐based forms of knowledge is likely to improve a project's customer responsiveness, whereas using template‐based knowledge increases a project's cost effectiveness. We also explore what drives project managers to select different forms of knowledge in the first place. Specifically, we find that manager experience drives knowledge principle use, whereas institutional distance drives knowledge template use. Taken together, our findings suggest that organizations need to carefully consider the performance implications of different types of codified knowledge that get used and understand what drives managers to use them. Managerial Summary Managers understand the importance of knowledge management systems for project‐based work. Efforts are often made to ensure that knowledge is codified and disseminated throughout the firm so employees can draw upon them to complete their projects. Unfortunately, however, such efforts often lead to stockpiles of information that remain untapped and underutilized. This study seeks to answer two questions. First, how can managers influence workers to utilize different types of codified knowledge in the first place? Second, do different types of codified knowledge have differential effects on performance? We find that increased individual experience drives the use of knowledge principles, whereas workers that are more distant are more likely to use knowledge templates. At the same time, we find that when individuals draw upon knowledge principles it increases the customer responsiveness of their projects, whereas the use of knowledge templates increases cost effectiveness. This suggests that project‐based firms should carefully consider codifying both knowledge templates as well as knowledge principles and consider how to incentivize workers to draw upon these different forms of knowledge.

Research Summary Managers at multiple levels of a firm influence resource allocation but most research focuses on senior rather than middle managers. We study involvement of middle managers in decision making, focusing on how rewards and controls shape resource allocation. We argue that higher income growth uncertainty (rewards) and lower monitoring (controls) increase resource allocation most strongly when middle managers are more involved in decisions. We test the arguments for ATM and bank branch allocations in Indian banks from 2011 to 2014. We assess causal mechanisms by comparing more and less favorable conditions for allocation, as well as considering a poststudy exogenous shock. The results suggest that the rewards and controls have different associations with resource allocation depending on the involvement of senior and middle managers. Managerial Summary The study examines how rewards and controls shape resource allocation decisions by middle managers, focusing on rewards arising from uncertainty about employee income and controls based on monitoring. The work suggests that rewards and controls that influence resource allocation by one level of managers may have less effect for another level. Hence, a firm's plans for resource deployment need to include rewards and controls that are relevant for both senior and middle managers.

Research Summary Firms exhibit heterogeneity in size, productivity, and internal structure, and this is true even within the same industry. Our paper provides evidence of a link between an organization's culture—specifically the trust environment—and its level of specialization. We show experimentally that exogenously‐imposed culture endogenously leads to variation in organizational form. We prime trust and demonstrate that the level of trust within an organization affects division of labor and consequently productivity in nonhierarchical teams. This evidence is consistent with a cross‐country link between trust and the division of labor that we observe in data from the European Social Survey. Managerial Summary Firms vary among many dimensions such as culture and internal organization even within the same industry. Trust is one component of corporate culture that is crucial for cooperation within organizations. In this paper, we show that the trust dimension of corporate culture can affect firm performance through internal structure, in particular the degree of division of labor. Using evidence from a game‐theoretic model, a lab experiment, and country‐level data, we show that an increase in trust leads to increased worker specialization. Our results suggest that increasing trust in work environments where division of labor is beneficial is one way to boost team productivity. RESOURCES This article has earned an Open Data badge for making publicly available the digitally‐shareable data necessary to reproduce the reported results. The data is available at https://osf.io/pr39h/ . Learn more about the Open Practices badges from the Center for Open Science: https://osf.io/tvyxz/wiki .