Hayagreeva Rao

Caveat emptor : The construction of nonprofit consumer watchdog organizations

This article investigates how new organizational forms are constituted as cultural objects. Since new organizational forms jeopardize existing interests, institutional entrepreneurs recombine prevalent cultural materials to frame the form as necessary, valid, and appropriate. When rival entrepreneurs promote incompatible frames, the frame that enjoys greater political support from the state, professions, and other organizations becomes ascendant. Proponents of losing frames can exit, migrate, or convert to the ascendant frame. A case study of the creation of nonprofit consumer watchdog organizations demonstrates how the boundaries of an organizational form and its cultural contents are shaped by politics.

Fool's Gold: Social Proof in the Initiation and Abandonment of Coverage by Wall Street Analysts

This paper examines the dynamics of social influence in the choices of securities analysts to initiate and abandon coverage of firms listed on the NASDAQ national market. We show that social proof—using the actions of others to infer the value of a course of action—creates information cascades in which decision makers initiate coverage of a firm when peers have recently begun coverage. Analysts that initiate coverage of a firm in the wake of a cascade are particularly prone to overestimating the firms future profitability, however, and they are subsequently more likely than other analysts to abandon coverage of the firm. We thus find evidence for a cycle of imitation-driven choice followed by disappointment and abandonment. Our account suggests that institutionalization rooted in imitation is likely to be fragile.

Embeddedness, Social Identity and Mobility: Why Firms Leave the NASDAQ and Join the New York Stock Exchange

Organizations derive their social identity from membership in formal groups and strive to maintain a positive social identity. When their social identity is threatened and group boundaries are permeable, organizations defect to other groups. This paper suggests that organizations receive identity-discrepant cues when in-group members defect to an out-group, but how organizations respond to such cues hinges on their social affiliations to the in-group, out-group, and defectors. A study of organizations that migrated from the NASDAQ stock market to the New York Stock Exchange reveals that strong ties to in-group members (NASDAQ members) reduced the impact of identity-discrepant cues and diminished defections. Conversely, strong ties to out-group members (NYSE members) enhanced the impact of identity-discrepant cues and increased defection. Proximity to defectors increased cross-overs—organizations followed defectors to whom they had direct ties. Implications for the study of embeddedness are outlined.

Overcoming Resource Constraints on Product Innovation by Recruiting Talent From Rivals: A Study of the Mutual Fund Industry, 1986–1994

Although recruitment is a practical strategy young and poorly connected firms can use to overcome constraints on product innovation, it has received little attention. Younger firms and poorly conne...

Organizational Ecology: Past, Present, and Future Directions

We situate the Special Research Forum on Organizational Ecology in the program of ecological research on organizations. We begin with a broad description of organizational ecologys theoretical and...

Research Note: The Creation of Capabilities in New Ventures—A Longitudinal Study:

The role of the organizations resources and capabilities in its competitive advantage, and, by extension, its performance, has become a topic of renewed interest. Although the importance of capabilities is the basis of much of this research, there is little work which investigates how capabilities are actually created. This paper empirically assesses the role of management in the creation of capability within organizations over time. Of five hypotheses, two were fully supported, and partial support was found for a third. We find that managerial advocacy in the form of specialized directors of sub-units, and the number of executives on the top management team, influence capability creation as does the existence of formalized rules related to resource allocation. CEO background was found to have no effect. The results present the initial outlines of how competencies might be created and suggest avenues for further inquiry.

Art museum membership and cultural distinction: Relating members' perceptions of prestige to benefit usage☆

Abstract We explore members perceptions about museum membership and relate these to the usage frequency of two important membership benefits: free admission and special events invitations. We argue that the purchase of art museum membership represents the acquisition of cultural distinction for the member. Complementing existing sociological theories that associate arts consumption with the elite, we investigate how individuals perceptions of the prestige associated with membership affect the frequency of benefit usage. Controlling for demographic and membership characteristics, we found benefit usage was more frequent for members who viewed membership as a source of high prestige and who tended to participate in other ‘highbrow’ art forms. Implications of these findings for theories of cultural capital and museum practice are discussed.

Harnessing Managerial Knowledge to Implement Product-Line Extensions: How do Mutual Fund Families Allocate Portfolio Managers to Old and New Funds?

Building on the knowledge-based view of the firm, we examine the effects of experience and complexity on decisions to staff product-line extensions with shared or dedicated managers. Results suggest that new and old product lines are more likely to share a manager when the organization possesses a base of knowledge related to the extension and when the new product is low in complexity. These results extend understanding of knowledge and product platforms by focusing on implementation and resource deployment.

Managerial Power and Succession: SBU Managers of Mutual Funds:

This study applies the performance-power-succession model to the analysis of the antecedents of succession among SBU managers. We hypothesize that six socio-political factors unique to the SBU manager role will have major effects on succession and will also moderate the performance-succession relationship. Data gathered on portfolio managers of open-ended mutual funds shows the main effects of tenure, portion of revenues controlled, managerial exits and entries, and leverage on succession, but reveals no support for market share. Mediating effects were found for tenure, portion of revenues controlled, market share, leverage, and managerial exits, but not for managerial entries. We discuss the implications of these findings for extending the literature on executive succession to include SBU managers.

If It Doesn’t Kill You: Learning from Ecological Competition

Learning theory explains how organizations change as a result of experience, and can be used to predict the competitive strength of individual organizations and competitive pressures in organizational populations. We review extant learning theoretical propositions on how competitive strength is affected by experienced competition, founding conditions, and observed failures of other organizations. In addition, we propose that niche changes are an important source of learning. We test these propositions on data from the Norwegian general insurance industry. We find that historical density increases failure rates, contrary to some earlier findings, and also that the effect of founding density supports the density delay rather than trial-by-fire hypothesis. We find that failures of others before and during the lifetime of the organization reduce failure rates, and niche changes reduce failure rates for joint-stock companies but not for mutual firms. Overall the findings suggest that organizations learn more cheaply from the failures of others than from their own experiences, and that the stresses of competition can overwhelm the learning effects of competition.