Knowledge that Transforms

Research Summary Organizations have become increasingly ethnically diverse, and this diversity often brings together distinct technological competencies. Understanding how firms can leverage such diversity to produce valuable innovations therefore becomes essential. This study investigates how ethnic integration within inventor collaboration networks, and its interaction with ethnic diversity, influence the economic value of innovation. Using patent and co‐inventor data from 890 publicly traded U.S. firms (1990–2015), we construct a network‐based index of ethnic integration, defined as the ratio of cross‐ethnic to within‐ethnic co‐invention ties, and link it to stock market reactions surrounding patent grants. We find that ethnic integration significantly enhances patent value, particularly in firms that are both ethnically diverse and engaged in technologically complex innovation. These findings are robust to an instrumental‐variables strategy addressing potential endogeneity concerns. By distinguishing between workforce composition and collaborative structure, our study advances the literature on diversity and innovation and underscores the critical role of integration mechanisms in unlocking the full potential of diverse organizations. Managerial Summary Organizations have become increasingly ethnically diverse, and this diversity brings distinct technological competencies; yet many still struggle to translate diversity into measurable innovation outcomes. This study shows that how diverse talent collaborates is just as critical as who is on the team. Analyzing over 20 years of patent data from 890 U.S. public companies, we find that firms where inventors frequently collaborate across ethnic lines—what we call ethnic integration—generate significantly more valuable innovations. This effect is especially strong in firms tackling complex technologies, where integrating diverse knowledge is crucial. Importantly, diversity without integration offers limited returns. For leaders, the key takeaway is clear: investing in diverse talent is not enough. Organizations must also build collaborative cultures and structures—from inclusive leadership and cross‐ethnic mentorship to team design and onboarding practices—that enable integration. In high‐tech and R&D‐intensive industries, integration is not optional; it is a strategic lever for innovation performance.

Research Summary Social responsibility‐oriented (SRO) employers are widely understood to enjoy advantages in recruitment and hiring, yet most evidence comes from temporary or hypothetical employment contexts. We test for such advantages using microdata on a structured recruitment process in which startups hired full‐time employees. We find that SRO employers attract greater initial interest, especially among female candidates, and are more likely to have their job offers accepted. Among candidates with multiple offers, we estimate that they are willing to forgo 13%–18.5% of annual salary for SRO employment. However, employees hired by SRO employers exhibit neither greater retention nor higher job satisfaction. These findings validate the appeal of SRO employers in a full‐time recruitment setting and document the boundary between substantial pre‐hiring advantages and limited post‐hiring effects. Managerial Summary Employers that claim to have a positive social impact are widely believed to enjoy advantages in attracting employees, yet most evidence comes from temporary or experimental settings. We study whether these advantages hold in consequential, full‐time hiring decisions using data from a structured recruitment process in which startups hired recent college graduates. Candidates are significantly more likely to express interest in and accept offers from mission‐driven employers and are willing to forgo 13%–18.5% of annual salary to do so. This recruiting advantage is driven largely by female candidates at the initial attraction stage. However, mission‐driven employers show no advantage in retaining employees or in employee job satisfaction, suggesting that advantages may be concentrated at the front end of the employment relationship.

Research Summary Digital platforms provide arenas for global knowledge diffusion, but their underlying architecture often relies on synchronous exchange, inadvertently siloing users into distinct “time pockets” based on time zones. Using proprietary data from StackOverflow, we implement a regression discontinuity design to causally estimate that a 1‐h increase (decrease) in the temporal distance between two regions leads to a 13.6% decrease (9.5% increase) in views and a 20.9% decrease (21.0% increase) in votes between those regions. These temporal frictions disproportionately penalize interactions in niche knowledge communities (e.g., sudo, slack‐api) over those in popular ones (e.g., Python, JavaScript). Importantly, we show that a platform can mitigate temporal barriers by shuffling content representation. This paper contributes to our understanding of platform strategy, temporal distance, and global knowledge diffusion. Managerial Summary While digital platforms deliver global connectivity, time zone differences create invisible barriers that stifle user interactions and knowledge exchange. Our research shows that temporal distance between regions on StackOverflow, a global knowledge community for computer programming, significantly reduces cross‐region views and votes. These temporal silos disproportionately harm niche communities, where valuable content is less likely to be shared among users who are not online simultaneously. Popular communities, however, remain largely unaffected. For platform designers, relying solely on chronological feeds inadvertently fragments their global user base. To unlock cross‐border exchange and support specialized communities, managers could adjust algorithms to “shuffle” content representation based on dynamic triggers rather than just the posting time. Doing so bridges temporal gaps and connects out‐of‐sync users.

Research Summary We examine variation in high‐technology startups' performance based on founders' pre‐entry experiences by developing a formal model and using confidential employee‐employer linked microdata from the United States to examine the empirical consistency of the model propositions. The model posits that relative to insiders, a lack of industry‐specific experience creates greater epistemic uncertainty regarding optimal business models at time of entry for outsiders and thus, higher post‐entry adjustment costs associated with necessary pivots. Consequently, outsiders have a higher selection threshold for the value‐creation potential of the underlying technical ideas. Together, these mechanisms yield propositions that relative to insiders, outsiders have lower odds of survival on average, but higher growth and probability of being acquired. The empirical results indicate strong and robust support for these propositions. Managerial Summary Our paper showcases that individuals contemplating entrepreneurial opportunities outside their industry of employment face higher uncertainty in configuring their business model at time of entry relative to those with industry‐specific experience. This results in higher adjustment costs for implementing pivots resulting from post‐entry learning and a higher likelihood that they will terminate operations. To offset these higher risks, individuals venture outside their industry only if their technical ideas have higher value‐creation potential. This implies that outsider startups are more likely to exit (including through acquisitions), but if they survive, they will experience higher growth relative to insider startups. We provide empirical evidence in support of these propositions.

Research Summary Do multinational enterprises from developed (DMNEs) and emerging (EMNEs) economies differ in their price discrimination strategies in Sub‐Saharan Africa? Using an abductive approach, we analyze novel data from laundry detergent markets in Cameroon, Ghana, and Ivory Coast, where frugal products are widely consumed. We find that, compared to EMNEs, DMNEs charge smaller price premia for frugal relative to non‐frugal products by 21%–28%. We examine several plausible explanations and find suggestive evidence that the greater visibility of DMNEs motivates them to exercise caution in setting greater price premia for their frugal relative to non‐frugal products. Even within DMNEs, more visible firms charge smaller price premia than less visible firms. Managerial Summary Our investigation reveals an intriguing difference in the pricing strategies of multinational enterprises selling basic consumer goods in Africa. We analyze laundry detergent products sold in Cameroon, Ghana, and Ivory Coast. We find that, compared to multinational enterprises from developed economies (DMNEs), those from emerging economies (EMNEs) charge materially higher price premium on small packs relative to large packs. A key driver appears to be differences in exposure to reputational risk. DMNEs are more cautious about pricing small packs in ways that could be perceived as exploiting resource‐constrained consumers. Even within DMNEs, more visible firms charge smaller price premium than less visible ones. These findings highlight that pricing decisions for frugal products entail social considerations, as firms differ in their exposure to stakeholder scrutiny.

Research Summary What role do collaborations with a target's partners play in an acquisition, and how do these collaborations evolve post‐acquisition? Research suggests that these collaborations are an important reason to acquire but often diminish post‐acquisition. But if they tend to diminish, why are they a reason to acquire? Our analysis of acquirers’ motives of 143 acquisitions of firms that collaborate with partners on 298 open‐source projects resolves the outlined puzzle and reveals two types of acquisition motives: protection‐motivated acquisitions—where acquirers focus on protecting the complementarity with the technology and the partners, and extraction‐motivated acquisitions—where acquirers focus on extracting technology and employees. We find that protection‐motivated acquisitions are associated with an intensification of collaborations, meanwhile extraction‐motivated acquisitions are associated with a diminishment of the collaboration. We contribute to research on acquisitions, collaboration, and OSS. Managerial Summary Acquisitions don’t just change ownership—they reshape collaboration with the target's partners. We studied 143 acquisitions of firms that sponsor and collaborate with partners on 298 open‐source software projects. We track contributions before and after the acquisition. We find that the motives of the acquirers are associated with different outcomes. When acquirers aim to protect complementarities, contributions from the acquired target and its partners tend to rise. When they aim to extract resources—redeploying code or talent—contributions typically decline. Managerial takeaway: when you are a stakeholder in a particular OSS, examine how likely the acquisition of its sponsors is, and what the acquirers’ motives are.

Research Summary This paper examines how firms' adoption of artificial intelligence (AI) relates to the demand for managers and managerial skills. Using a skills‐based measure of AI adoption derived from Lightcast job postings, we show that firms with greater AI adoption post more managerial vacancies and a higher share of such vacancies than less intensive adopters. These relationships are strongest in manufacturing and among firms with higher research & development intensity. Greater AI adoption is also associated with shifts in managerial skill requirements toward interpersonal and growth‐oriented skills, including stakeholder management, creativity, and sales management, and away from routine administrative skills such as budgeting, planning, staff management, and customer service. Overall, the results suggest a reconfiguration of managerial roles toward capabilities facilitating scaling, coordination, and adaptation in AI‐enabled environments. Managerial Summary As artificial intelligence (AI) becomes more prevalent within firms, managers and executives face a practical question about how managerial roles may change. Using US job postings data from 2010 to 2022, we find that firms with higher AI adoption exhibit relatively greater demand for managerial roles, especially in manufacturing and among more innovative firms. We also find that more intensive AI adoption is associated with changes in what managers are expected to do. Demand shifts away from routine administrative skills such as budgeting and planning and toward growth‐related skills such as sales, creativity, and stakeholder management. Overall, the evidence suggests a growing emphasis on managerial roles that relate to scaling, coordination, and organizational adaptation.

Research Summary How should organizations manage learning dynamics? Strategy theories suggest “more‐is‐better”—fast, frictionless sharing enhances performance—while organizational learning theory warns that “less‐is‐more,” as fast learning causes premature convergence. We reconcile this tension by showing that the “less‐is‐more” prediction depends critically on a key assumption in classic computational models: that information about agents' performance is not continuously updated. When performance information is timely, fast learning enhances exploration. The mechanism is Target Diversity: fast learning allows many individuals to rapidly reach the performance frontier, increasing the set of imitation targets. Organizations thus learn from a diverse, shifting set of targets. The implication is that organizations achieve superior performance not by restricting information or slowing learning, but by making data on choices and performance available more quickly. Managerial Summary Innovation relies on recombining diverse knowledge, yet facilitating this is challenging. Organizations often encourage copying stars with established track records or reputations, but this can lead to suboptimal results. We demonstrate a superior approach: provide up‐to‐date performance data and spotlight emergent top performers, regardless of their history. When feedback is timely, rapid learning allows “underdogs”—employees starting from lower positions—to quickly catch up to the frontier via unique knowledge combinations. Spotlighting these emergent successes creates “Target Diversity,” providing the organization with a continually renewed and diverse set of imitation targets. Such a design enhances the exploitation of diverse knowledge and improves long‐run performance.

Research Summary Acquisitions can create synergies by combining an acquirer's and a target's pre‐existing relationships with nonmarket stakeholders. We introduce the “reset effect” as a novel mechanism that occurs when a firm with cooperative stakeholder relationships combines with a firm that has conflictual relationships, prompting the affected stakeholders to re‐evaluate their pre‐acquisition strategies. We argue that post‐acquisition conflict with nonmarket stakeholders will decline when the cooperative and conflictual stakeholders brought together by an acquisition are aligned on one or more of the three elements that characterize stakeholder fields: (1) issues stakeholders care about, (2) relationships between stakeholders, and (3) preferences for how issues should be addressed. We find support for these arguments by studying changes in Fortune 500 firms' conflict with environmental movement organizations after acquisitions. Managerial Summary Acquisitions can create synergies by resetting a firm's relationships with external stakeholders. Studying 25 years of Fortune 500 acquisitions and environmental stakeholder interactions, we find that acquisitions can reduce stakeholder conflict when one firm's cooperative stakeholder relationships complement the other firm's conflictual ones. Complementary relationships exist when cooperative and conflictual stakeholders are aligned on issues or have pre‐existing relationships with one another. Simply combining conflictual‐cooperative stakeholder relationships is not enough, however, and post‐acquisition conflict can increase when stakeholder groups are divided over how issues should be addressed. These findings can help managers understand when an acquisition will ease or exacerbate external conflict with stakeholders.

Research Summary Regulatory anticipation is a nonmarket response whereby firms, foreseeing future penalties, adjust their behavior when peers are targeted by regulators. Prior research defines peers using broad jurisdictional boundaries. Instead, I argue that regulatory anticipation may emerge locally, driven by two channels: proximity to peer scrutiny and firms' perceived sanction risks. Examining U.S. facilities' GHG emissions, I exploit variation in local‐peer scrutiny arising from a change in the EPA's High‐Priority‐Violation policy. Difference‐in‐differences estimates show that heightened scrutiny of county peers is associated with 7% lower emissions among non‐targeted firms, driven by those facing higher sanction risks. Distance‐decay analyses indicate that these anticipation patterns weaken with geographic separation. The findings encourage managerial attention to local regulatory conditions and suggest that avoiding regulatory deserts could improve policy effectiveness. Managerial Summary This paper examines how stricter regulatory scrutiny of one firm can prompt nearby, non‐targeted firms to reduce their emissions. Using U.S. data on facilities' greenhouse gas (GHG) emissions, I find that when a county peer faces heightened oversight, non‐targeted firms are associated with about 7% lower GHG emissions on average. These patterns are stronger for firms already at higher risk of environmental penalties, declining as geographic distance from scrutinized peers increases. For managers, the findings highlight the importance of monitoring local regulatory activity and the behavior of nearby peers, as local comparisons can shape stakeholder expectations. For policymakers, the results suggest that avoiding regulatory ‘deserts’ may enhance the effectiveness of climate‐related and environmental regulation.