To describe human action as purely the product of rational calculation leaves unanswered the question of how human beings can act in the absence of any structure for calculating the likely outcome of their actions. If the answer is that they cannot, how can any such structure be stable and comprehensive enough to enable action without becoming either inert or deterministic? In this paper, we seek to understand how free will and social context can interact to produce both structure and action. This is accomplished through the development of a framework based on the notion of convention. Organizations, in this view, are grounded in “effort conventions” of what constitutes “normal” effort at work, that structure the action of those who work within the organization, and in turn reinforce these structures. We show how humans can calculate within a context of socially constructed beliefs, and how these beliefs can evolve, provided that they remain essentially nonjustified and beyond the reach of rational calculation. It is this mix of rational calculation and nonrational beliefs that form the core of our model. We begin by defining the nature of a convention and its properties. We then describe the evolutionary dynamics of conventions, and show that conventions exist in competition with other conventions and evolve over time. Our model of convention is then linked to other notions, advanced in the managerial literature, which point to a kind of ‘deep structure’ that lies at the heart of organizations. We conclude by outlining how this notion can shed new light on the analysis of organizations.

This paper develops a resource-based—knowledge-based—theory of the firm. Its thesis is that the organizational mode through which individuals cooperate affects the knowledge they apply to business activity. We focus on the polar cases of organization within a firm as compared to market contracting. There will be a difference in the knowledge that is brought to bear, and hence in joint productivity, under the two options. Thus, as compared to opportunism-based, transaction-cost theory, we advance a separate (yet complementary) answer to the question: why do firms exist? Our aim is to develop an empirically relevant and complementary theory of why firms are formed: a theory based on irreducible knowledge differences between individuals rather than the threat of purposeful cheating or withholding of information. We assume limited cognitive abilities on the part of individuals (bounded rationality), and assume that opportunistic behavior will not occur. The latter allows us to determine whether resource-based theory has independent force, as compared to the opportunism-based, transaction-cost approach. The paper predicts choice of organizational mode, identifying whether firm organization or market contracting will result in the more valuable knowledge being applied to business activity. The resource-based predictions of organizational mode are compared and contrasted with corresponding opportunism-based, transaction-cost ones. A principal point is that knowledge-based considerations can outweigh opportunism-related ones. The paper also establishes the relation of a theory of the firm to a theory of performance differences between competing firms.

The metaphor of an organization as a garbage can is often invoked as a playful insult. However, as was recognized early on by management theorists studying garbage can ideas, the unpredictability arising from garbage can decision making has the potential to be adaptively rational for organizations facing complex task environments. The chaos produced by preference conflict and fluid participation in collective decision making can aid in search by enabling organizations to escape local performance peaks or competency traps. The decades-old hypothesis that conflict and chaos could promote adaptively rational search, however, has largely been overlooked in research on organizational design. This paper uses an agent-based model to evaluate these competing views and, in the process, identify conditions under which garbage can decision making is adaptively rational for executives searching for high-quality strategies. I show that the biased and chaotic outcomes that emerge as a result of garbage can decision making—the very features of garbage cans that lead them to be perceived to be dysfunctional—can facilitate short-term exploitation and long-term exploration of uncertain technical landscapes when organizations engage in serial judgment of local alternatives if internal conflict over desired outcomes is not too extreme. I conclude that decision-making routines that encourage chaotic conflict are robust to bounded rationality and complex task uncertainty and thus should be included in the organizational designer’s portfolio. Supplemental Material: The online supplement is available at https://doi.org/10.1287/orsc.2023.1662 .

This 1.5-year ethnographic study of a U.S. medical center shows that avoiding loss of autonomy and work intensification for less powerful actors during digital technology introduction and integration presents a multisited collective action challenge. I found that technology-related participation problems, threshold problems, and free rider problems may arise during digital technology introduction and integration that enable loss of autonomy and work intensification for less powerful actors. However, the emergence of new triangles of power allows for novel coalitions between less powerful actors and newly powerful third-party actors that can help mitigate this problem. I extend the political science perspective of experimentalist governance to examine how a digital technology-focused, iterative collective action process of local experimentation followed by central revision can facilitate mutually beneficial role reconfiguration during digital technology introduction and integration. In experimentalist governance of digital technology, local units are given discretion to adapt digital technologies to their specific contexts. A central unit composed of diverse actors then reviews progress across local units integrating similar digital technology to negotiate a new shared understanding of mutually beneficial technology-related tasks for each group of actors. The central unit modifies both local routines and the technology itself in response to problems and possibilities revealed by the central revision process, and the cycle repeats. Here, accomplishing mutually beneficial role reconfiguration occurs through an experimentalist, collective action process rather than through a labor-management bargaining process or a professional-led tuning process.

Early-stage experiments are central to the design-thinking approach to organizational innovation, and they are also a core practice in evidence-based management. Organizations use experiments to test new strategies in a low-stakes setting before escalating their commitment to a new initiative. Yet organizations also use experiments to evaluate managers who will implement these strategies in a high-stakes setting. I develop a formal model to demonstrate that these two types of evaluations are fundamentally incompatible. Managers who fear replacement in response to a poor experimental outcome pervert their experiments to maximize the likelihood that they succeed. This saps early experiments of much of their informational value. I show that if an organization can observe a manager's experimental strategies and the experiment’s outcomes and can commit ahead of time to an evaluation and replacement rubric, then it can resolve this agency problem. However, if a manager's experimental strategy cannot be credibly communicated, the organization will either replace good managers to induce a desirable experimental strategy or retain bad managers to alleviate the fear of replacement. I show that in low-uncertainty environments, the control exerted by the former replacement regime offers the best results, whereas, in high-uncertainty environments, commitment to retention regardless of experimental outcomes is best.

Studies of failures in organizational information gathering, learning, and decision making highlight psychological and institutional causes. However, organizations are also political coalitions that face internal contestation over strategies, policies, and goals. The decision of whether to collect information impacts both the goals that organization members try to meet and the organization’s capacity to meet them. This paper develops a formal model that introduces political conflict into a theory of organizational learning. The model has a key insight: organizations characterized by political conflict will forego learning when leaders do not need to learn to build consensus in support of change, and will learn when leaders are unable to build such a consensus without learning. As a result, political conflict leads organizations to implement changes without first learning and to frequently learn when no changes are forthcoming. These tendencies toward ignorant decision making and educated inertia will be more pronounced when environmental variability is high, when learning about existing policies does not also teach about potential policy alternatives, and when organization members are risk averse. The model offers predictions about pathological learning behaviors that are consistent with considerable prior qualitative research. These patterns cannot be produced by experiential learning models in which political conflict is not present. The e-companion is available at https://doi.org/10.1287/orsc.2017.1164 .

This paper examines the effects of employer social responsibility on the wages workers demand through randomized field experiments in two online labor marketplaces. Workers were recruited for short-term jobs and I manipulated whether or not they received information about the employer’s social responsibility. I then observed the payment workers were willing to accept for the job. In the first experiment, information about the employer’s social responsibility marginally reduced prospective workers’ wage requirements on average and had a significant effect on the highest performers, who were willing to give up the wage differential they would otherwise demand. In the second, prospective workers submitted 44% lower wage bids for the same job after learning about the employer’s social responsibility. This paper provides causal empirical evidence of a revealed preference for social responsibility in the workplace, and of a greater preference among the highest performers. More broadly, it provides evidence that workers value purpose and meaningfulness at work, and it demonstrates that workers are willing to give up pecuniary benefits for nonpecuniary benefits. It furthermore highlights heterogeneity in worker preferences for nonpecuniary benefits by worker performance type.

Representations, such as graphs and images, have been shown to help facilitate communication and coordination across knowledge boundaries. Many studies examine representations’ effects during and after interaction, characterizing them as tools that help communicate local understandings with individuals who have differing knowledge. This study explores whether the anticipation of building representations to communicate across knowledge boundaries significantly shapes a community’s work. To explore this question, the study develops a theoretical framework that extends the concept of performativity and then presents ethnographic data from four weather research teams collaborating with different organizations to develop tailored forecasting technologies. Analysis reveals that researchers’ need to represent weather model outputs to their partners shaped the practices they used to produce those models. By uncovering the presence and influence of “anticipatory work,” the findings paint representations not as passive communicators of established knowledge but as catalysts that shape the form of routine work.

Much of the change that social movements try to accomplish requires changing practices inside organizations, yet reform implementation is difficult to achieve. This comparative case study of two hospitals demonstrates that implementing reform inside organizations may require internal reformers not only to mobilize with one another but also to stand up to internal defenders' countertactics in everyday encounters. Because reformer alliances across identity lines often require reformers with different statuses to collaborate with one another, defenders can divide reformer coalitions by linking reform practices to a status characteristic associated with lower-status reformers, denigrating higher-status reformers by associating them with these practices, and reintegrating higher-status reformers into the defender group. When status threat inside an organization is high to begin with, higher-status reformers are likely to be concerned about loss of privilege in the face of defenders' status-based countertactics and, in response, distance themselves from reform practices and align themselves with defenders to protect their identity and its rewards. This can undermine the multi-identity reformer coalition and cause change to fail. These findings regarding status-based countertactics contribute to our understanding of social movement implementation and microinstitutional change.

One of the great paradoxes of organizational culture is that even when less powerful members in organizations have access to cultural tools (such as frames, identities, and tactics) that support change, they often do not use these tools to challenge traditional practices that disadvantage them. In this study, I compare data about work practice change from my own field study of an elite teaching hospital (conducted in the early 2000s) to previously reported data from field studies of two similar hospitals (one conducted in the 1970s and one in the 1990s). I demonstrate that although cultural toolkits supporting change may allow less powerful organization members to see traditional practices as running counter to their interests, they may not be able to significantly change traditional practices unless they also have access to what I call political toolkits (including tools such as staffing systems, accountability systems, and evaluation systems) that support change. Although cultural tools allow them to reinterpret practices that disadvantage them as unfair, political tools allow them to feel optimistic that others will help them effect change. Whereas cultural tools enable them to develop a “we” feeling with other reformers, political tools allow them to coordinate their change efforts. And although cultural tools provide them with a repertoire of contentious tactics, political tools afford them a sense of security that they can battle defenders of the status quo without ruining their careers. These findings contribute to our understanding of both the cultural construction of organizational life and social movement processes.