László Pólos

Cascading Organizational Change

This article develops a formal theory of the structural aspects of organizational change. It concentrates on changes in an organizations architecture, depicted as a code system. It models the common process whereby an initial architectural change prompts other changes in the organization, generating a cascade of changes that represents the full reorganization. The main argument ties centrality of the organizational unit initiating a change to the total time that the organization spends reorganizing and to the associated opportunity costs. The central theorem holds that the expected deleterious effect of a change in architecture on the mortality hazard increases with viscosity and the intricacy of the organizational design.

The organizational niche.

Although the concept of niche has been extremely useful in sociological theory and research, some aspects of the concept have not been clearly developed. This article advances a theoretical reconstruction of the concept of niche, with special application to organizations. The proposed formal model unifies several active lines of sociological theory. It also extends the notion of the niche from the realm of behaviors to apply to the rules coding social identities and organizational forms. The reconstruction gives deeper insight into the niche of an organizational population as well as individual organizations. Finally, the model analyzes the (thus far) tacit assumption that niches are convex, examines the implications of convexity for commonly used measures of niche width, and provides a general sociological argument for the predominance of convex niches.

The Case for Formal Theory

This special topic forum contains seven papers that illustrate many of the ways in which management researchers can use formal tools—mathematical methods, simulation, and formal logic—to develop management research. Here we offer an overview of these methods and their advantages as tools for theory building.

Founding Conditions, Learning, and Organizational Life Chances: Age Dependence Revisited

Empirical evidence about the relation between organizational age and failure is mixed, and theoretical explanations are conflicting. We show that a simple model of organizational evolution can explain the main patterns of age dependence and reconcile the apparently conflicting theoretical predictions. In our framework, the predicted pattern of age dependence depends crucially on the quality of organizational performance immediately after founding and its subsequent evolution, which in turn depends on the intensity of competition. In developing our theory, we clarify issues of levels of analysis as well as the relations between organizational fitness, endowment, organizational capital, and the hazard of failure. We show that once organizational learning is considered, founding conditions affect the fate of organizations in ways more complex than previously acknowledged. We illustrate how the predictions of our theory can be tested empirically and evaluate the effect of aging on the mortality hazards of American microbreweries and brewpubs by estimating the parameters of a random walk with time-varying drift. We also make some conjectures about expected patterns in other empirical settings.

Back to inertia : Theoretical implications of alternative styles of logical formalization

This article applies two new criteria, desirability and faithfulness, to evaluate Péli et al.‘s (1994) formalization of Hannan and Freemans structural inertia argument (1984, 1989). We conclude that this formalization fails to meet these criteria. We argue that part of the rational reconstruction on which this formalization builds does not reflect well the substantive argument in translating the natural language theory into logic. We propose two alternative formalizations that meet both of these criteria. Moreover, both derive the inertia theorem from much weaker, so much less constraining, premises. While both new formalizations draw information only from the original statement of the inertia theory, they reflect two different interpretations of inertia accumulation. The two new formalizations are compatible with some recent theory extensions in organizational ecology. However, they lead to substantially different consequences when additional sociological considerations are added to their premise sets. The interplay between logical formalization and sociological content is highlighted using the example of Stinchcombes (1965) liability-of-newness theorem. Even modest extensions of the proposed models lead to contrary implications about the age dependence in organizational mortality rates. Even “faithful” logical formalizations of arguments ordinarily involve implicit theory building.

ALX, an action logic for agents with bounded rationality

Abstract We propose a modal action logic that combines ideas from H.A. Simons bounded rationality, S. Kripkes possible world semantics, G.H. von Wrights preference logic, Pratts dynamic logic, Stalnakers minimal change and more recent approaches to update semantics. ALX (the xth action logic) is sound, complete and decidable, making it the first complete logic for two-place preference operators. ALX avoids important drawbacks of other action logics, especially the counterintuitive necessitation rule for goals (every theorem must be a goal) and the equally counterintuitive closure of goals under logical implication.

Typecasting, Legitimation, and Form Emergence: A Formal Theory*

We propose a formal theory of multiple category memberships. This theory has the potential to unify two seemingly unconnected theories: typecasting and identity-based form emergence. Typecasting, a producer-level theory, considers the consequences of specializing versus spanning across category boundaries. Identity-based form emergence considers the evolution of categories and how the attributes of producers entering a category shape its likelihood of gaining legitimacy among relevant audiences. Both theory fragments treat the processes by which audience members assign category memberships to producers. This article develops this common foundation and outlines the arguments that lead to central implications of each theory. The arguments are formalized using modal expressions to represent key categorization processes according to the theory-building framework developed by Hannan et al. (2007).

Reasoning With Partial Knowledge

We investigate how sociological argumentation differs from classical first-order logic. We focus on theories about age dependence of organizational mortality. The overall pattern of argument does not comply with the classical monotonicity principle: Adding premises overturns conclusions in an argument. The cause of nonmonotonicity is the need to derive conclusions from partial knowledge. We identify metaprinciples that appear to guide the observed sociological argumentation patterns, and we formalize a semantics to represent them. This semantics yields a new kind of logical consequence relation. We demonstrate that this new logic can reproduce the results of informal sociological theorizing and lead to new insights. It allows us to unify existing theory fragments, and it paves the way toward a complete classical theory. Observed inferential patterns which seem “wrong” according to one notion of inference might just as well signal that the speaker is engaged in correct execution of another style of reasoning. —Johan van Benthem (1996)

Organizational Obsolescence, Drifting Tastes, and Age Dependence in Organizational Life Chances

Various patterns of age dependence in hazards of organizational failure have been documented: liabilities of newness, adolescence, and obsolescence. Prior efforts at providing a unified theory that can accommodate these patterns as special cases have not dealt properly with obsolescence. We tackle this problem by proposing a new model that builds on the most recent unification attempt while integrating the core intuition behind obsolescence: organizations have trouble adapting to drifting environments, which leads to declining performance and, in turn, to decreasing viability. In doing so, we develop a comprehensive representational framework to precisely characterize obsolescence. Our perspective builds on recent theory and research that treats categories as constructions by audiences. We characterize environmental drift as changing audience tastes in a multidimensional feature space and organizational inertia as a decreasing ability for producers to move quickly in that space. This combination creates obsolescence with aging. We then integrate this perspective with prior theory to make novel predictions regarding the age dependence in life chances over the life courses of organizations. We also show how the predictions of our theory can be tested empirically by adapting Levinthals random walk model [Levinthal DA 1991 Random walks and organizational mortality. Admin. Sci. Quart. 363:397-420] to incorporate the possibility of organizational obsolescence.

Modalities in Sociological Arguments

This article introduces modal logics for a sociological audience. We first provide an overview of the formal properties of this family of models and outline key differences with classical first-order logic. We then build a model to represent processes of perception and belief core to social theories. To do this, we define our multimodal language and then add substantive constraints that specify the inferential behavior of modalities for perception, default, and belief. We illustrate the deployment of this language to the theory of legitimation proposed by Hannan, Pólos, and Carroll (2007). This article aims to call attention to the potential benefits of modal logics for theory building in sociology.