The title is not clickbait – research on organizations can be very practical. One thing that organizations often do is to create specialized jobs. The reason is obvious – specialization means repetition and regularity, which builds skills and routines and reduces irregularities. When done well, specialization creates efficiency. The “when done well” part is important to keep in mind, because specialized jobs naturally do a smaller proportion of the organizational tasks, which means that more specialization could mean more kinds of jobs, or some jobs that are general and cover the gaps between the specialized jobs, or a combination of the two. All of this is well known to those who design and operate organizations.
But what does specialization do to worker pay? That’s the topic of research by Nathan Wilmers, a professor at MIT Sloan School of Management, published in Administrative Science Quarterly. The question is very interesting because it is commonly assumed that wages are determined in some labor market that rewards workers first by observable skills, such as training and education, and later through performance on the job. The problem with this conception is that it assumes that observable skills map cleanly onto organizational tasks. This assumption is never quite correct, and it gets worse in organizations with highly designed jobs.
Instead, consider jobs organized by the degree of task specialization, and consider wages not as set in a market but as an implicit negotiation between worker and employer. A highly specialized job usually means that there are many potential occupants and that the post-hire training to do the task is easy. Probably the specialist isn’t pre-trained before hiring, but that does not matter because the training is inexpensive. That means lower wages, because a worker occupying a specialized job is expendable. In organizations, narrow job turf means low pay.
A general job that covers the gap between specialized jobs is exactly the opposite. First, efficient job design requires having many specialists and few generalists covering the gaps, so the generalist is necessarily rare. Second, the generalist work is complex and specific to the job design of the employer. Again, the generalist isn’t pre-trained, and it takes a while for a newly hired generalist to be efficient. In the implicit wage negotiation, the generalist has a strong position. In organizations, broad turf means high pay.
Wilmers found sizable effects when analyzing the data. Workers who equally split time between tasks would lose 11 percent of their pay if they were split into groups that specialized in one task. A worker who moved from having the average level of generalization to the 95th percentile of generalization would gain more than 8 percent pay. These differences in pay levels mean that increases in job turf are well worth fighting for.
Two additional notes are worth considering. The estimates I cited above are among the more conservative estimates of how big the differences were in those organizations. Moreover, the data analyzed come from a single type of organization, which means that the effects could be bigger or smaller depending on the employer analyzed. In fact, chances are that in most firms, the advantages to having a job with broader turf are greater than in this analysis. You see, Wilmers analyzed labor union employees, and unions are known to favor pay equality.
So organizations that pursue efficiency seek specialization, and workers who want high pay seek a broad turf. Clearly this is an area of work design that involves negotiation, because smart workers will not willingly accept a more specialized job. They will fight for their turf.
Wilmers, N. Job Turf or Variety: Task Structure as a Source of Organizational Inequality. Administrative Science Quarterly, forthcoming.
Interorganizational networks can be many things, but one of the most consequential is made up of the exchange ties that follow components downstream to a firm that assembles the final product. These ties are consequential for many, because the component makers and final product assembler all rely on the cost and quality of the components, and so do the final users. Having a familiar component supplier is wonderful because “tried and true” testifies to quality, so any signs of failure in existing components is a small crisis for the assembler. This situation is also interesting to researchers because it shows how organizations make important choices.
What better place to study it than in Formula 1 racing car assembly, as David R. Clough and Henning Piezunka did in a paper published in Administrative Science Quarterly? Their study gives an interesting and surprising answer to how firms decide when to fire component makers. Firms look to the performance of their own product, which is expected, but also to the performance of competitors’ products using the same component. And here is where the research findings get surprising. If competitors using the same component are also doing poorly, the firm will stop using the “tried and true” component and switch to another supplier. Shared fate with the competitors does not make firms complacent but rather makes them more eager to improve.
Why does this happen, and especially in a race where the whole point is to do better than the competitor? If many cars slow down, your car is not slowing down more than many others. The key is that firms learn vicariously from each other, and they can be very objective in assessing their options when the stakes are high. A competitor’s car doing poorly when holding a shared component is already a warning sign that could lead a firm to drop the component from its own car, and if the firm’s own car is also doing poorly the warning gets louder. Firms learn from their own experience, learn vicariously from the experience of others, and put the two forms of learning together to make difficult choices such as replacing a key component made by a familiar supplier.
In business, interorganizational ties such as supplier–buyer relations are important because they help build trust and reputations for responsiveness when problems occur. In the end, however, what matters more is the actual quality, and then a different kind of tie may be just as effective: buyers compare themselves with each other and use the information to assess the supplier. Performance matters more than trust.
Clough, D. R., & Piezunka, H. Tie Dissolution in Market Networks: A Theory of Vicarious Performance Feedback. Administrative Science Quarterly, forthcoming.
We know several reasons that men get ahead of women as employees and entrepreneurs. There are cultural beliefs that men are better for work and more committed to it than to family life. Men in powerful positions tend to promote men because they are similar to them. And many occupations and forms of entrepreneurship are seen as archetypically male, suggesting that parents might consider advising their daughters against training to become a plumber or a computer programmer. Given all these biases, would it be possible for one more to exist?
Research by Mabel Abraham in Administrative Science Quarterly has uncovered one more form of discrimination in a sample of entrepreneurs. It is a subtle one, but the effect is strong. Suppose an entrepreneur wants to initiate a network connection with someone else in order to start resource exchange -- as a customer, supplier, or collaborator. Would it matter for a woman whether she initiates that contact directly or whether she does so by asking another entrepreneur to make a referral? The answer is yes. If the woman is engaged in a typically male activity, her contacts are much less likely to refer her to their contacts. Why? Because women would not be the usual choice for a transaction partner in that activity, and people worry about how their referrals are judged by others.
Importantly, this effect is specific to women. Men engaged in typically female activities are just as likely to be referred to contacts as women. Women and men in neutral activities are just as likely to be referred to contacts. It is only when referring women to their contacts in typically male activities that people stop and think: is she the usual choice, or is there something wrong about a woman doing this occupation or building this kind of venture? Abraham’s analysis showed that the difference in results was sizable. If an occupation was between 50 and 60 percent male, a man could expect to get about 5 more referrals than a woman would get each year, and this gap grew wider in occupations with higher percentages of men (see the graph).
This difference is important because selectivity in referrals occurs before any of the other biases. Once a woman has been referred to a contact, that contact might still hold beliefs against the suitability of women as entrepreneurs or might be a male who prefers to interact with other males. Biased referrals mean that the potential connection can’t even decide whether to discriminate (or not). The absence of a referral is already a form of discrimination.
Given these effects, no wonder women entrepreneurs have to build their own business networks: they are not getting help from others if their occupation has a majority of men – as most highly paid occupations do. Abraham’s research showed that when making direct contacts, rather than referrals, there was no difference between women and men. So contrary to one popular belief, women aren’t too shy to build networks. Instead, it is sometimes their male network contacts who are reluctant to refer them to others.
Abraham, Mabel. Gender-role Incongruity and Audience-based Gender Bias: An Examination of Networking among Entrepreneurs. Administrative Science Quarterly, forthcoming.
Firms are often targeted by social movements seeking to reform them or to get their help in changing society. The result can be a tug of war between a social movement with committed members and a clear cause but few resources, and a firm with resources and a broad agenda focused on profits. A key element of this tug of war is the people caught in between – firm employees who agree with the social movement.
Thanks to research by Rich DeJordy, Maureen Scully, Marc J. Ventresca, and W. E. Douglas Creed published in Administrative Science Quarterly, we now know more about who the likely winners are in such a situation. They looked at many dimensions of social movements, and the one that struck me most was the effect of early success versus early setback. They studied social movement organizations campaigning for domestic partner benefits to be offered by firms, an action that costs firms some money (not much) and can expose them to conservative counter-movements. Interestingly, they found that too much early success could be a bad thing.
Most people look at social movements as disconnected pieces and conclude that any social movement organization with early success is a good outcome. But this is not true. A social movement is usually an ecology of separate organizations, and these observe each other, learn from each other, and stimulate each other. The problem with early success is that it may have little to teach because the circumstances are special; it leads to stagnation if the successful movement organization has nothing left to do; and other movement organizations are less likely to interact with the successful and stagnated organization. The “one win and done” model does not sustain a social movement.
But isn’t an early win better than facing early setbacks? That depends. The authors found that opposition from target firms often led to refinement in the strategies used by movement organizations, and it kept the activism high. Repeated blocking by the target firm could make a movement organization stagnate, but often the movement organizations were able to find some approach leading to progress. These were exactly the movement organizations that stayed active and continued to wield influence over firms. Other movement organizations observed them and stayed in touch with them to learn how to overcome resistance and were stimulated by their activism and success.
The key to understanding social movements is not to focus too much on any single movement organization, but instead to look at them as an ecosystem and study their interactions. Interestingly, this is also a good way to analyze how firms overcome adversity. Learning from other firms is always central in how firms adapt to the environment, and a full view of the ecology of firms can help us learn how they overcome mistakes and adversity.
We have learnt much from looking at organizations one by one, and we will learn even more that way. We have also discovered how many more lessons are available when we look at ecosystems of organizations, and this will continue to propel our research progress. For managers, the key insight is that other organizations may already hold the key that unlocks the stagnation their organization is trying to shake off.
DeJordy, R., Scully, M., Ventresca, M. J., & Creed, W. E. D. Inhabited Ecosystems: Propelling Transformative Social Change Between and Through Organizations. Administrative Science Quarterly, forthcoming.
Can you think of an innovation that looks very promising, especially because so many others have started using it? Can you recall any such innovations that have been disappointing? In consumer markets, cold-press juicers have spread widely and have been marketed by their positive health effects, but there is now evidence that they do more harm than good. Their sales are slowing. In business markets, airlines have long known that larger airplanes were better, and were lining up to buy the giant Airbus 380 and the slightly smaller Boeing 747-8, but they stopped after realizing that the new generation wide-body aircraft were more economical.
There are many cases like this, including worse mistakes than these two. This raises the question of how firms can quickly understand that a new innovation will disappoint, and can stop themselves from adopting it. This was a question I examined in a paper in Strategic Management Journal on the fast ferry innovation, which was briefly popular but soon proved to be a very specialized type of ship. The problem with fast ferries is that they were too fast and too heavy (they carry cars as well as people). Making such a combination go fast is a significant engineering feat, but it is also very expensive, and few routes can charge high enough ticket prices to make it profitable.
Shouldn’t this have been easy to discover? Not really. Fuel prices fluctuate, and maintenance costs are hard to estimate in advance. It is a lot easier to make the cost calculation after buying and operating a ferry (or a few ferries), but then it is too late. Still, the shipping firms learnt how specialized fast ferries were, and it took “only” about five years for this knowledge to spread. Importantly, the shipping firms learnt from each other.
Here is how it happened. Each firm that started using fast ferries accumulated experience with the costs, and this experience must have leaked. We know this because sales of fast ferries made additional sales to nearby shipping firms less likely. Some firms gave up on their fast ferries and sold them in the second-hand market (at a discount, of course), and this also made additional sales less likely. Resales seem like even stronger reason not to buy, but actually the effect of giving up was about the same as the effect of using a fast ferry. Firms learn from the high costs just as much as they learn from resales.
This is a natural finding except for one important detail. If a firm is operating an expensive piece of equipment with disappointing results, it will soon be clear that selling it is the best option. But, in order to sell it without losing too much money, it is important that the costs are kept hidden. This means that the information about the high costs must have leaked from the shipping firms using fast ferries despite their best efforts to keep them hidden.
Inter-organizational learning is hard to stop. Firms learn from the mistakes of other firms, even the mistakes that they try to keep hidden!
Greve, H.R. 2011. Fast and expensive: the diffusion of a disappointing innovation. Strategic Management Journal, 32(9): 949-968.
Most people who work know that it is important to have friendly working relations with other workers, especially with managers. Researchers call these relations network ties and have found that they are great for getting work done and improving career outcomes. It is less clear to most, but very obvious to business school professors, that those who are or want to become managers are especially interested in network ties, and not only with other (higher-up) managers. They try to connect with anyone who can be useful, including various specialists in the organization.
A special version of these ties is formed between technologists making inventions and managers launching new products. They need each other, and each knows they are competing with others in the organization who are trying to use other innovations to launch other products. Out of mutual interest in their careers (and to be helpful to their employer), they may partner up, exchange information, and then – importantly – try to influence others to get their innovative product approved for launch. In a recent paper in Administrative Science Quarterly, AnneTer Wal, Paola Criscuolo, Bill McEvily, and Ammon Salter document what may be an especially good way for these partners to influence others for the sake of launching innovative products.
The authors discovered that a special structure – the woven network shown in the figure here – is best for these technologist/manager partners to pursue. In the figure, a manager and a technologist who are collaborating to advance an innovation are both connected to peers and seniors in the organization, and they are both connected to other managers and technologists. In other words, each of them is connected to people who occupy different roles at different levels. This allows them to create buzz for the innovation and to influence their bosses. What’s new about that? Here’s the key: the technologist networks with people in various role sets, and the manager networks with different people in those same role sets. The results of this specific type of influencing create a particularly strong advantage.
Technicians and managers have different knowledge, different goals, and different interpretations of an innovation. A manager always sounds more credible talking about its commercial features and less credible talking about its technological features. For the technician, it’s the other way around. By tapping into this particular kind of networking, the team helps both kinds of information reach people in different functions and at different levels of the organization. The team’s joint influence over different people within a given role/level gets reinforced when those people then talk to each other about the innovation’s potential.
How big are the effects of such interwoven networks? A modest change in the degree of this type of networking increases the likelihood of innovation launch by about 8 percent. In management studies, and especially anything that has to do with innovation, that is a big effect. It is interesting that the effect is so big and the behavior needed to get it is contrary to what many people do. A geeky technician will mostly speak to peer technicians. An instrumental technician will mostly speak to senior managers. Each of them will be missing influence with important roles in the organization, and they will have a better chance to succeed if they are paired with a manager who networks with people in a variety of roles and encourages the technician to do the same. In networking, as in so many other aspects of bringing a new product to life, teamwork is key to producing the best possible result. So let’s start talking—and not just to the people who already know what we know and think how we think.
Ter Wal ALJ, Criscuolo P, McEvily B, Salter A. 2020. Dual Networking: How Collaborators Network in Their Quest for Innovation. Administrative Science Quarterly, forthcoming
Think about this: football games are divided into two halves of 45 minutes each, and time lost during the regulation time can be added by the referee. What can go wrong? Well, to begin with, research by me, Nils Rudi, and Anup Walvekar published in PLOS ONE found that in one of the elite football leagues, most teams played 50-55 minutes on average per game, so 35-40 minutes of time were lost to game stoppages.
The loss of time isn’t fair either. Our research found that when play was stopped, teams that were ahead in the score spent more time restarting the game than teams that tied, and they in turn spent more time than teams that were behind. An advantage meant more time wasting, and this was true for goalies doing kickoffs, goalies kicking or throwing a captured ball, freekicks, throw-ins, corner kicks, and substitutions. See the figure for some examples of the time wasting (the vertical axis shows the time used).
To enforce free play, referees are supposed to prevent time-wasting, but from our research findings it is clear that they can’t do this. In fact, we analyzed the time-wasting and found that the teams were able to follow a nearly optimal (for them) time-wasting strategy, which means that that they are effectively sabotaging fair play, and they are also giving football fans fewer minutes of watching their favorite game than the fans would like to have.
What can be done? Football is special in many ways. It is the oldest organized team play that is currently big business. It is the largest sport worldwide. Larger revenue than any other, more professional players than any other, probably also more amateur players than any other (they are hard to count). And, it is the most important team sport that has a set game duration and no stopping of the game clock when the play stops. Think about it: the American Football, Ice Hockey, and Basketball stop the clock when the play stops; Baseball and Cricket do not have a clock; only Football and Rugby have a game clock and no clock stopping.
If the clock stops whenever play stops, it is impossible to take advantage of game stoppages to waste time and turn a goal advantage early in the game into a win. Most game stoppages would get shorter as a result. Goalie kicks are 80 percent slower under current rules than they would be if the clock is stopped. Goalie restarts are 24 percent slower, and freekicks are 36 percent slower when teams try to waste time. Naturally, the total game time would need to get shorter if the clock is stopped the play stops, but we can calculate how much shorter it should be for the fans to get the same number of actual play minutes.
Football is an important game for all its fans, and in fact the main irritation is when play is stopped, and the opposing team is leading and is slow to start the play. How many football fans have booed players from the opposing team who are suspiciously slow to get back up after a tackle, letting seconds tick off the clock while the whole stadium is waiting? If the clock is stopped, everyone would know that the pain is real, and the game is fair. It would be a big change in a traditional game, but maybe it is worth it?
Greve, Henrich, Nils Rudi, and Anup Walvekar. Strategic rule breaking: Time wasting to win soccer games. PLOS ONE, 14(12): e0224150.
Fans usually watch soccer games with a great deal of excitement and passion. The players look excited too, even passionate. But remember, they are professional soccer players, hired and paid well to perform at top levels. Your local team may not be all that good (it depends on where you live), but the games broadcast on television involve top league sides that can hire elite players from anywhere in the world. Has it occurred to you that they may actually be more calculating than passionate when playing the game?
They are, at least most of the time. In a forthcoming paper in Organization Studies, Nils Rudi, Anup Walvekar, and I studied how soccer players foul each other. In other words, we studied how a soccer player decides to slide down, kick down, elbow, or pull an opposing-team player so that the referee calls a foul.
Fouls are an interesting topic, for a few reasons. First, fouls are against the rules of the game, but can benefit their team. They are a good comparison with other things employees can do that are illegal or immoral but benefits their firm in the short term, such as misleading or defrauding customers. Second, fouls are risky for the player. The referee is watching, and a violent foul not only gives a free kick, but also a yellow card to the fouling player. That can be very expensive for a player who gets a per-game bonus payment, as many of them do. Finally, fouls often look like acts of passion, as when a defending player slides into the attacker to knock him down.
So how do soccer players decide when to foul? Mostly they are rational. We were able to calculate the cost of fouling as change in likelihood that the team of the fouled player will score as a result of the foul. Intuitively, this is easy – fouls lead to free kicks, which can give goals. (Mathematically it is more complicated, but it is completely doable.) We were able to show that players choose are more likely to foul more the better it is for the team to do so. Not exactly surprising, except that the effect was quite strong. Many of you know enough about the off-the-field antics of some soccer players to doubt that they are fully rational, but on the field, they are complete professionals and experts in what they do.
But there are two exceptions, and both are interesting. First, there is the organizational goal of winning the game. Players and teams hate to lose a lead, and they foul less rationally when they are defending a lead. Second, there is the individual goal of looking good. Players hate to lose the ball, and they foul less rationally when they have just lost the ball to the opposing team. In fact, they completely lose their rationality if they are near the player who stripped them of the ball.
We know this because we can measure not only whether organizational and individual goals affect the likelihood of fouling, but also whether it affects how much the cost of fouling is taken into consideration. Defending a lead and becoming hot-headed after losing the ball both make the player think less of the cost of fouling. So, we know that in one type of organization with a highly expert team, decisions are made rationally except for when it really matters to the decision maker.
Greve HR, Rudi N, Walvekar A. 2019. Rational Fouls? Loss aversion on organizational and individual goals influence decision quality. Organization Studies, Forthcoming.
The Dick’s Sporting Goods chain store stopped selling military-style semiautomatic rifles after the Marjory Stoneman Douglas High School mass shooting. No wonder: the Stoneman terrorist had bought a gun from one of their stores. Even though he didn’t use it in the attack, the store was one decision away from becoming an accessory to a mass shooting of school children.
Gun control is an issue that provokes significant anger from people on both sides. People who advocate for stricter controls express anger over the lives lost and the failure to quell domestic terrorism. People on the side of no gun control express anger over losing their right to buy any weapon they like.
Not all social movements provoke the degree of anger gun control does, but we have more to learn about those that do. A recent article by Katherine A. DeCelles, Scott Sonenshein, and Brayden G. King in Administrative Science Quarterly shows us something new about social movements that provoke anger and how organizations respond to them. The authors find that anger related to a social movement affects the response of organizational insiders who agree with the social movement, but not in the way we might expect. In the case of Dick’s Sporting Goods, the organizational insiders would be employees who agree that gun control is necessary and that the store should limit its gun sales and/or have stricter background checks.
Employees’ reaction to a social movement they agree with would seem fairly simple to predict: they would express their support of the social movement and try to influence the organization to agree to its demands. This is often the case, and employees are often successful: organizational insiders who agree with a social movement make organizations much more likely to change. In other words, a social movement often creates an opportunity to push an organization for change.
But this article points out that social movements invoking anger are different. Anger leads to a feeling of being under siege, so employees agreeing with the movement face a dilemma. They are angry too and would like to express it. Yet they also depend on the organization for work and pay, and they have reasons to fear that involvement in an angry social movement will lead to negative repercussions, whether from coworkers who disagree or from management. In other words, they have to decide whether an angry social movement is a good opportunity to punch for change.
The research showed that this conflict between anger and fear was resolved in favor of fear. While people outside the organization were more likely to act in response to the social movement when they were angry, organizational insiders were less likely to act. This was because greater anger also led them to fear negative consequences of acting. Employees often did not act on their anger but instead sought to protect themselves. In other words, they decided that the best response to an angry social movement was to block punches that might come from management, not to punch for change.
In Dick’s Sporting Goods, change happened. Not only did they stop selling the semi-automatic rifles that are favored by mass shooters, but they also destroyed them. They are considering stopping sales of guns of all types in their stores. Why did this happen? The decisive factor was that, angry or not, the CEO got on the side of the social movement. Management does matter, especially when there is controversy and anger.
DeCelles, K. A., Sonenshein, S., & King, B. G. 2019. Examining Anger’s Immobilizing Effect on Institutional Insiders’ Action Intentions in Social Movements. Administrative Science Quarterly, Forthcoming.
Let’s look at something that most of us would agree is true: People and firms that have collaborated in the past will treat each other better in the future. This behavior is widely accepted to be true in business, and plenty of research evidence backs it up. It is part of what we call network theory, where one of the central ideas is that past collaboration or contact between two people creates a tie between them that facilitates future collaborations.
Like all things we believe to be true, we think about this one only when we see that it’s not. A recent article in Administrative Science Quarterly by Jose Uribe, Maxim Sytch, and Yong H. Kim looks at collaborations among lawyers. In most collaborations, people or firms work together for their own benefit. Lawyers also seek to benefit themselves, of course, but they do so by acting as representatives for others. In this paper the lawyers represent firms involved in disputes over intellectual property, which can be a very important and potentially valuable form of legal action.
A past collaboration means that the lawyers have been on the same side in an earlier lawsuit, usually representing different firms that have the same goal. This study considers what these lawyers do when they later represent firms on opposite sides of a lawsuit. One might think that lawyers who have collaborated in the past will treat each other better and come to a better solution in a shorter time. This is possible, but if the firms they now represent are strong rivals, the opposite happens: The lawyers are more aggressive if they have collaborated in the past. That means longer time to settle the case and fewer cases settled out of court.
Does this make sense? It does not if we assume that the firms observe and care about only the final outcome of the case. This article shows that having more-aggressive lawyers on each side typically leads to worse outcomes for both sides, such as dings to their stock prices. But it turns out that firms also look at their lawyers’ history with the other side’s counsel and care about the process, not just the outcome, and that is where things go wrong. Lawyers who have collaborated with opposing counsel in the past know they need to prove their loyalty to their current client, and the easiest way to do so is to be aggressive – the firm is watching the process and will see this as a sign of loyalty.
The results of this research do not mean that what we know about collaborations is wrong – only that it is incomplete. A history of collaborating would likely make most lawyers want to collaborate, but they are trapped by the need to prove loyalty to clients that are strong rivals. There is no way out of this trap, which also hurts the client, but they can make it less serious by agreeing to act collaboratively on smaller procedural steps that simplify the case for the judge and lawyers but are not inspected closely by the client. And indeed, some lawyers did exactly that, presumably because they still wanted some level of collaboration and also knew that this would be better for the client.
So we still know that past collaborations make people want to treat each other better, but the role of representing someone else can reverse that. To represent someone you need them to trust you, and if that takes some aggression against a past collaborator you will consider doing that. At least if you are a lawyer.
Uribe, J., Sytch, M., & Kim, Y. H. 2019. When Friends Become Foes: Collaboration as a Catalyst for Conflict. Administrative Science Quarterly, forthcoming.
This blog is devoted to discussions of how events in the news illustrate organizational research and can be explained by organizational theory. It is only updated when I have time to spare.