Knowledge that Transforms

Learning from experience is a central mechanism underlying organizational capabilities. However, in examining how organizations learn from past experiences, much of the literature has focused on situations in which actors are facing a repeated event. We direct attention to a relatively underexamined question: when an organization experiences a largely idiosyncratic series of events, at what level of granularity should these events, and the associated actions and outcomes, be encoded? How does generalizing from experience impact the wisdom of future choices and what are the boundary conditions or factors that might mitigate the degree of desired generalization? To address these questions, we develop a computational model that incorporates how characteristics of opportunities (e.g., acquisition candidates, new investments, product development) might be encoded so that experiential learning is possible even when the organization’s experience is a series of unique events. Our results highlight the power of learning through generalization in a world of novelty as well as the features of the problem environment that reduce this “power.”

Although successful commercial entrepreneurship has beneficial consequences for the economy, it is unclear whether it is unequivocally good for broader society. We shed light on this macro issue by delving into a specific micropathway linking commercial entrepreneurship with positive spillover effects for broader society. We ask which commercial entrepreneurs who have experienced economic success through a financial exit event from their for-profit venture engage in philanthropy—defined as systematically stimulating, supporting, and shaping social change efforts—after exit. Utilizing the status characteristics framework, we conceptualize how hierarchical positions on ascribed social status characteristics (caste and gender in our setting) and achieved social status characteristics (eliteness of Indian tertiary educational attainment and overseas tertiary educational attainment in our setting) regulate successful commercial entrepreneurs’ subsequent involvement in philanthropy. We argue that successful commercial entrepreneurs from disadvantaged ascribed-status groups or privileged achieved-status groups are more likely to transition to philanthropic activities because they more keenly perceive the need for societal change and are also more motivated to take action. Quantitative analyses on a sample of 673 Indian entrepreneurs who experienced a successful financial exit from their for-profit venture during 2003–2013, supplemented by qualitative interviews, support our theorizing. We advance management research by highlighting founder transitions from successful commercial entrepreneurship to philanthropy as a hitherto understudied mechanism driving positive social change. We thus open up new research avenues around the less-studied exit stage of entrepreneurship that allows for the integration of currently unconnected literatures around corporate philanthropy, elites, entrepreneurship, and social impact.

Team research typically assumes that team performance is normally distributed: teams cluster around average performance, performance variability is not substantial, and few teams inhabit the upper range of the distribution. Ironically, although most team research and methodological practices rely on the normality assumption, many theories actually imply nonnormality (e.g., performance spirals, team composition, team learning, punctuated equilibrium). Accordingly, we investigated the nature and antecedents of team performance distributions by relying on 274 performance distributions including 200,825 teams (e.g., sports, politics, firefighters, information technology, customer service) and more than 500,000 workers. First, regarding their overall nature, only 11% of the distributions were normal, star teams are much more prevalent than predicted by normality, the power law with an exponential cutoff is the most dominant distribution among nonnormal distributions (i.e., 73%), and incremental differentiation (i.e., differential performance trajectories across teams) is the best explanation for the emergence of these distributions. Second, this conclusion remained unchanged after examining theory-based boundary conditions (i.e., tournament versus nontournament contexts, performance as aggregation of individual-level performance versus performance as a team-level construct, performance assessed with versus without a hard left-tail zero, and more versus less sample homogeneity). Third, we used the team learning curve literature as a conceptual framework to test hypotheses and found that authority differentiation and lower temporal stability are associated with distributions with larger performance variability (i.e., a greater proportion of star teams). We discuss implications for existing theory, future research directions, and methodological practices (e.g., need to check for nonnormality, Bayesian analysis, outlier management).

We build on deontic justice and moral foundations theories to shed light on responses to sexual misconduct at work by proposing a model that explains why some third parties punish accusing victims and support alleged perpetrators. We theorize that when third parties are given conflicting he-said, she-said information, they intuitively evaluate organizational injustice based on moral values. We further theorize that binding moral foundations (loyalty, authority, purity) give rise to sympathy toward men accused of sexual misconduct and anger toward female accusers. Across five studies (total n = 5,413) utilizing archival, field, and vignette designs, we examined third-party responses to sexual misconduct accusations ranging in severity across several industries. Third-party endorsement of binding moral foundations was linked to increased perpetrator-directed sympathy and victim-directed anger (Studies 1–4). These emotions jointly mediated the relationship between binding values and credibility perceptions of the accusing victim and the alleged perpetrator (Studies 2 and 3). Moreover, victim credibility was negatively associated with social sanctions and punishment severity levied toward the accusing victim, and perpetrator credibility was negatively associated with the same punishment outcomes for the alleged perpetrator (Studies 3 and 4). In Study 5, we found that managers framing the accusing victim as disloyal exacerbated negative judgments and emotions toward the victim and positive judgments and emotions toward the perpetrator for individuals who highly ascribe to binding moral foundations. We discuss the theoretical contributions and practical implications of moral concerns on third parties’ emotions, judgments, and motivations to punish actors involved in sexual misconduct allegations.

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. History: This paper has been accepted for the Organization Science Special Issue on Experiments in Organizational Theory.

Prior research, primarily based on laboratory experiments of children and students, suggests that women might be more averse to competition than are men; women might, instead, be more inclined toward collaboration. Were these findings to generalize to working-age men and women across the workforce, there could be profound implications for organizational design and personnel management. We report on a field experiment in which 97,678 adults from a wide range of fields of training and career stages were invited to join a product development platform. Individuals were randomly assigned to treatments framing the opportunity as either involving competitive or collaborative interactions with other participants. Among those outside of science, technology, engineering, and math (STEM) fields, we find differences in the willingness of men and women to participate under competition. Thus, patterns in non-STEM fields conform to the usual claims of gender differences. However, among those in STEM fields, we find no statistical gender differences. Results hold under a series of alternative specifications, controls, and stratified analyses of 17 narrowly defined STEM subfields. The results are consistent with sorting into fields on the basis of competitiveness, as suggested by prior research, as well as other explanations we discuss. Overall, heterogeneity among women and heterogeneity among men appear to be at least as important as population-wide gender differences. History: This paper has been accepted for the Organization Science Special Issue on Experiments in Organizational Theory.

Employees in organizations are frequently subject to performance goals such as sales or publication targets. However, often employees do not know what actions will allow them to meet these goals. To perform such tasks effectively, employees need to explore to quickly learn from experience which among the available alternatives offers the higher reward potential, so that they can concentrate subsequent efforts on exploiting it. Prior work models such explore-exploit problems as an adaptive learning process, where employees sequentially sample various options and learn from feedback. However, we currently do not know how performance goals influence this adaptive learning process. We argue that performance goals influence the adaptive learning process by modifying how feedback is perceived. Individuals subject to challenging goals are more likely to interpret feedback from poor alternatives as failures. Therefore, they quickly develop high belief strength that the inferior alternative is worse than the superior alternative, enabling them to reduce “useless exploration,” but also making them slow to adapt to environmental shocks. We test our predictions in a series of laboratory experiments and find that decision makers subject to challenging goals exploit more (relative to those with moderate goals). We also show that such an exploitation focus, while beneficial in stable environments, is detrimental in unstable ones. Our finding that challenging performance goals improve performance in learning tasks stands in contrast to prior findings that such goals inhibit performance in search tasks, an insight that warrants further study to improve our understanding of goal setting in the knowledge economy. History: This paper has been accepted for the Organization Science Special Issue on Experiments in Organizational Theory.

Strain theory has long been invoked to explain organizational misconduct, with underperformance creating pressure for firms to engage in morally objectionable activities. In this paper, I examine whether underperformance increases the risk of organizational misconduct. Drawing on institutional arguments about professions and social learning, I further predict that when experiencing performance strain, legal professionals will push the boundaries of the law, increasing the risk of misconduct if they have influence over decision making. However, industry peers caught engaging in misconduct should serve as negative role models, reducing the risk of the firm resorting to misconduct to overcome performance shortfalls. I test and find support for these predictions using longitudinal data on material legal claims filed against S&P 1500 firms between 2000 and 2017. The study extends the strain theory of organizational misconduct, identifying how legal professionals and negative role models shape firms’ strategic responses to performance pressure.

Increasing the social category diversity of work teams is top of mind for many organizations. However, such efforts may not always be sufficiently resourced, given the numerous resource demands facing organizations. In this paper, we offer a novel take on the relationship between social category diversity and team performance, seeking to understand the role resources may play in both altering and explaining the performance dynamics of diverse teams. Specifically, our resource framework explains how the effects of social category diversity on team performance can be explained by intrateam resource cognitions and behaviors and are dependent on team resource availability. We propose that in the face of scarcity in a focal resource (i.e., budget), diverse (but not homogenous) teams generalize this scarcity perception to fear that all resources (i.e., staff, time, etc.) are scarce, prompting performance-detracting power struggles over resources within the team. We find support for our model in three multimethod team-level studies, including two laboratory studies of interacting teams and a field study of work teams in research and development firms. Our resource framework provides a new lens to study the success or failure of diverse teams by illuminating a previously overlooked danger in diverse teams (negative resource cognitions (scarcity spillover bias) and behaviors (intrateam power struggles)), which offers enhanced explanatory power over prior explanations. This resource framework for the study of team diversity also yields insight into how to remove the roadblocks that may occur in diverse teams, highlighting the necessity of resource sufficiency for the success of diverse teams.

The extant creativity literature suggests that creative projects evolve in organizations through either formal or informal channels. This article advances creativity research beyond these two limited single-channel conceptualizations by exploring why and how creative projects evolve by accessing both formal and informal channels. In a study of a creative communications campaign in a subsidiary of a Fortune 500 multinational corporation, we find that switching from the formal to the informal channel allows the creative project to bypass organizational barriers and secure strategic autonomy, whereas switching from the informal to the formal channel allows the creative project to preserve its legitimacy and secure resources. Our analysis reveals that these bidirectional channel-switching transitions are propelled by four versatile subprocesses: selective concealment; strategic use of time; exploitation of hierarchical and knowledge gaps; and shared wins framing. Drawing on our findings, we develop a dual-channel process model of creative evolution that provides a missing theoretical link between, on the one hand, the variable conditions that impel creative projects to follow at times formal and at other times informal channels, and on the other hand, the differential mechanisms through which the two directions of channel switching allow creative projects to further evolve.