Kathleen M. Eisenhardt

Theory Building From Cases: Opportunities And Challenges

This article discusses the research strategy of theory building from cases, particularly multiple cases. Such a strategy involves using one or more cases to create theoretical constructs, propositions, and/or midrange theory from case-based, empirical evidence. Replication logic means that each case serves as a distinct experiment that stands on its own merits as an analytic unit. The frequent use of case studies as a research strategy has given rise to some challenges that can be mitigated by the use of very precise wording and thoughtful research design.

Making Fast Strategic Decisions In High-Velocity Environments

How do executive teams make rapid decisions in the high-velocity microcomputer industry? This inductive study of eight microcomputer firms led to propositions exploring that question. Fast decision makers use more, not less, information than do slow decision makers. The former also develop more, not fewer, alternatives, and use a two-tiered advice process. Conflict resolution and integration among strategic decisions and tactical plans are also critical to the pace of decision making. Finally, fast decisions based on this pattern of behaviors lead to superior performance.

Exploring the Black Box: An Analysis of Work Group Diversity, Conflict, and Performance.

In this paper we present an integrative model of the relationships among diversity, conflict, and performance, and we test that model with a sample of 45 teams. Findings show that diversity shapes conflict and that conflict, in turn, shapes performance, but these linkages have subtleties. Functional background diversity drives task conflict, but multiple types of diversity drive emotional conflict. Race and tenure diversity are positively associated with emotional conflict, while age diversity is negatively associated with such conflict. Task routineness and group longevity moderate these relationships. Results further show that task conflict has more favorable effects on cognitive task performance than does emotional conflict. Overall, these patterns suggest a complex link between work group diversity and work group functioning.

Agency- and Institutional-Theory Explanations: The Case of Retail Sales Compensation

This research evaluated when organizations use salary compensation and when they use compensation that is based on performance. Variables from agency- and institutional-theory perspectives were use...

Architectural Innovation and Modular Corporate Forms

Based on an intensive and inductive study of a Fortune 100 corporation, this article describes how dynamic capabilities that reconfigure division resources—that is, architectural innovation—may ope...

Swimming with Sharks: Technology Ventures, Defense Mechanisms and Corporate Relationships

This paper focuses on the tension that firms face between the need for resources from partners and the potentially damaging misappropriation of their own resources by corporate “sharks.” Taking an entrepreneurial lens, we study this tension at tie formation in corporate investment relationships in five U.S. technology-based industries over a 25-year period. Central to our study is the “sharks” dilemma: when do entrepreneurs choose partners with high potential for misappropriation over less risky partners? Our findings show that entrepreneurs take the risk when they need resources that established firms uniquely provide (i.e., financial and manufacturing) and when they have effective defense mechanisms to protect their own resources (i.e., secrecy and timing). Overall, the findings show that tie formation is a negotiation that depends on resource needs, defense mechanisms, and alternative partners. These findings contribute to the recent renaissance of resource dependence theory and to the discussion on the surprising power of entrepreneurial firms in resource mobilization.

Optimal Structure, Market Dynamism, and the Strategy of Simple Rules

Using computational and mathematical modeling, this study explores the tension between too little and too much structure that is shaped by the core tradeoff between efficiency and flexibility in dynamic environments. Our aim is to develop a more precise theory of the fundamental relationships among structure, performance, and environment. We find that the structure-performance relationship is unexpectedly asymmetric, in that it is better to err on the side of too much structure, and that different environmental dynamism dimensions (i.e., velocity, complexity, ambiguity, and unpredictability) have unique effects on performance. Increasing unpredictability decreases optimal structure and narrows its range from a wide to a narrow set of effective strategies. We also find that a strategy of simple rules, which combines improvisation with low-to-moderately structured rules to execute a variety of opportunities, is viable in many environments but essential in some. This sharpens the boundary condition between the strategic logics of positioning and opportunity. And juxtaposing the structural challenges of adaptation for entrepreneurial vs. established organizations, we find that entrepreneurial organizations should quickly add structure in all environments, while established organizations are better off seeking predictable environments unless they can devote sufficient attention to managing a dissipative equilibrium of structure (i.e., edge of chaos) in unpredictable environments.

The Seller's Side of the Story: Acquisition as Courtship and Governance as Syndicate in Entrepreneurial Firms

In contrast to the prior acquisitions literature, which has emphasized the buyers perspective, we examine the sellers perspective. This has important implications for understanding both the acquisition process and, more broadly, corporate governance in successful firms. Using a multiple-case, inductive study of 12 technology-based ventures, we find that acquisition occurs when sellers are pushed toward acquisition by difficult, albeit natural strategic hurdles, such as a chief executive search or funding round, and by strong personal motivations for sale, such as past failures and investments by friends. Sellers are also more likely to be pulled toward acquisition by attractive buyers that offer synergistic combination potential and organizational rapport, factors usually associated with the long-term interests of buyers. We reframe acquisition as courtship and corporate governance as a syndicate, indicating joint decision making with some common goals, and explore the generalizability of these views for private versus public firms and other contingencies. Together, courtship and syndicate suggest a behaviorally informed account of organization that belies the rhetoric of price and self-interest.

Conflict and Strategic Choice: How Top Management Teams Disagree

Substantive conflict is natural within top management teams as executives struggle with making high-stakes choices under conditions of ambiguity and uncertainty. Yet, many top management teams fail to sufficiently debate appropriate courses of action. This article reports on a field study of top management teams and examines four managerial levers that can help executives overcome the cognitive, emotional, and political barriers to engaging in conflict. These levers are: build a heterogeneous team; create frequent interactions within that team; cultivate a distinct symphony of roles such as Counselor, Futurist, and Ms. Action around fundamental tensions within managing; and use multiple-lens tactics such as competitor role playing and multiple alternatives to provide unexpected vantage points on key issues.

CROSSROADS---Microfoundations of Performance: Balancing Efficiency and Flexibility in Dynamic Environments

Our purpose is to clarify the microfoundations of performance in dynamic environments. A key premise is that the microfoundational link from organization, strategy, and dynamic capabilities to performance centers on how leaders manage the fundamental tension between efficiency and flexibility. We develop several insights. First, regarding structure, we highlight that organizations often drift toward efficiency, and so balancing efficiency and flexibility comes, counterintuitively, through unbalancing to favor flexibility. Second, we argue that environmental dynamism, rather than being simply stable or dynamic, is a multidimensional construct with dimensions that uniquely influence the importance and ease of balancing efficiency and flexibility. Third, we outline how executives balance efficiency and flexibility through cognitively sophisticated, single solutions rather than by simply holding contradictions. Overall, we go beyond the caricature of new organizational forms as obsessed with fluidity and the simplistic view of routines as the microfoundation of performance. Rather, we contribute a more accurate view of how leaders effectively balance between efficiency and flexibility by emphasizing heuristics-based “strategies of simple rules,” multiple environmental realities, and higher-order “expert” cognition. Together, these insights seek to add needed precision to the microfoundations of performance in dynamic environments.