Pamela R. Haunschild

Friends or Strangers? Firm-Specific Uncertainty, Market Uncertainty, and Network Partner Selection

In this study, we address the topic of interorganizational network change by exploring factors that affect the choice of alliance and interlock partners. While many studies have been devoted to investigating various factors driving network partner choice, there is also an interesting and unexplored tension in this body of work. On the one hand, much work emphasizes change in social structure--showing that firms expand networks by forming new relationships with new partners. At the same time, other scholars emphasize stability of social structure--showing that firms tend to choose past exchange partners. We seek to reconcile this tension by proposing that firms form new relationships with new partners as a form of exploration, and form additional relationships with existing partners as a form of exploitation (March 1991). Further, whether exploration or exploitation is chosen depends on the type of uncertainty that firms are facing: whether it is firm-specific or market-level uncertainty. We test our hypotheses using data on both interlock and alliance networks for the 300 largest U.S. firms during the 1988-1993 period. The results provide some evidence that whether networks are stable or changing depends on the type of uncertainty experienced by firms.

The Liability of Good Reputation: A Study of Product Recalls in the U.S. Automobile Industry

In this paper, we explore opposing theoretical claims about how organizational reputation affects market reactions to product defects. On the one hand, good reputation could be a disadvantage because expectations about product quality are more likely to be violated by defects in highly reputed products. On the other hand, a good reputation could be an advantage because of strong inertial effects on reputation orderings. We empirically test these competing hypotheses using data on product recalls in the U.S. automobile industry from 1975 to 1999. Our results support for the idea that reputation can be an organizational liability in that highly reputed firms suffer more market penalty as a result of their product recalls. We also propose that the reputational effects are moderated by two important factors: substitutability and generalism/specialism. Our results show that having few substitutes with an equivalent level of reputation, or a focused product identity stemming from specialism, buffers the negative market reactions to product recalls. We conclude with a discussion on the implications of these results for institutional, reputation, and status theories.

Learning from Complexity: Effects of Prior Accidents and Incidents on Airlines' Learning

Using data on accidents and incidents experienced by U.S. commercial airlines from 1983 to 1997, we investigated variation in firm learning by examining whether firms learn more from errors with heterogeneous or homogeneous causes. We measured learning by a reduction in airline accident and incident rates, while controlling for other factors related to accidents and incidents. Our results show that heterogeneity is generally better for learning, as prior heterogeneity in the causes of errors decreases subsequent accident rates, producing a deeper, broader search for causality than simple explanations like “blame the pilot.” The benefits of heterogeneity, however, apply mainly to specialist airlines. Generalist airlines learn, instead, from outside factors such as the experience of others and general improvements in technology. These results suggest a theory of learning across organizational forms: complex forms benefit from simple information, and simple forms benefit from complex information. The implications of our study for learning theories and work on organizational errors are discussed.

The Role of Volition in Organizational Learning: The Case of Automotive Product Recalls

What is the role of volition in organizational learning? Do firms learn better in response to internal procedures or external mandates? Existing literature provides conflicting answers to this question, with some theories suggesting that volition is important for learning because autonomy increases commitment and problem analyses, whereas external mandates tend to produce defensive reactions that are not coupled to the organization in any useful way. Yet, other theories suggest that mandate is important for learning because external pressures act as jolts that help overcome organizational inertia, resulting in deep exploration of problems to prevent future surprises. We investigate this issue in the context of automakers learning from voluntary versus involuntary product recalls. Using data on all recalls experienced by automakers that sold passenger cars in the United States during the 1966-1999 period, we follow the learning-curve tradition in investigating the effects of voluntary and involuntary recalls on subsequent recall rates. We find that voluntary recalls result in more learning than mandated recalls when learning is measured as a reduction in subsequent involuntary recalls. This effect is at least partly because of shallower learning processes that result from involuntary recalls. The effect of volition, however, is different for generalist and specialist automakers. The results of this study suggest an important, yet understudied, determinant of the rate and effectiveness of learning--volition. The results also add to our knowledge of the different learning processes of generalist and specialist organizations.

Organizations Non Gratae? The Impact of Unethical Corporate Acts on Interorganizational Networks

In this study, we examine the effects of illegal/unethical acts on interfirm networks. We hypothesize that the quality of network partners will decline and overall network structure will change after a firm commits an unethical act. More specifically, we posit that the decline in partner quality is primarily driven by higher quality firms leaving the network, and the focal firm being forced to replace them with lower quality ones. We also propose that partner prominence and network cohesion will be affected after these acts, and that the changes in partner quality and network structure will be greater for those acts perceived as more illegitimate. We test these hypotheses using a sample of 200 large firms in the United States and data on unethical acts by these firms. Our results show that the quality of a firms network partners declines after the firms commission of an unethical act, and that the deterioration in partner quality tends to be greater for acts of greater illegitimacy. Our results also show declines in network prominence and cohesion for firms involved in these activities. We discuss the implications of our results for the literatures on interfirm networks and unethical corporate activities.

Vicarious Learning in New Product Introductions in the Early Years of a Converging Market

Technological developments combine previously distinct technologies that result in converging markets. In converging markets, firms from different industries compete against each other, often for the first time. We propose that firms introducing new products in converging markets will learn vicariously from other firms in the market. Further, we propose that this learning will vary across the dual-technology frontier (DTF), where the high-technology frontier (HTF) and low-technology frontier (LTF) map onto innovative activities driven by technological opportunity and user needs. We propose that at the HTF, local search will dominate and firms will be influenced by HTF product introductions of similarly sized, successful firms. At the LTF, learning will occur across the DTF, vary by origin industry of the firm, and be affected by complementarities in routines and capabilities and market competition among firms. We test the proposed model of vicarious learning using panel data on new product introductions of 67 firms in the U.S. digital camera market in the 1990s. Findings generally support our proposed model of vicarious learning in this market. They show heterogeneity in vicarious learning across the technology frontier and firm characteristics---including the origin industry of target firms. Our results show that vicarious learning in new product introductions in converging markets---which includes both mimetic and nonmimetic learning---is similar in some ways, but different from more traditional markets. We conclude with a discussion of the implications of our findings for theories of organizational learning, new product development, and converging markets.

The effects of firm reputation and status on interorganizational network structure

In this article, we explore the differential effects of a firm’s reputation and status on its interorganizational network. We hypothesize that due to its stable, unitary, and relational characteristics, status has a stronger influence on partner selection than reputation, which is less stable, multidimensional, and based more on perceptions of product quality and financial performance. Results from our analyses of the director networks of the 300 largest US firms from 1985 to 1993 confirm that across multiple measures of network characteristics, it is status that is the stronger predictor. In particular, high-status firms have networks that are higher in partner quality but are less diverse and contain fewer opportunities to bridge structural holes than the networks of high-reputation firms. These results contribute to our understanding of the different effects of reputation and status on firm behavior by emphasizing the importance of studying both together in order to understand the effects of either. They also contribute to work on interorganizational networks by demonstrating how structure emerges primarily as a function of focal firm status.

Organizational Oscillation Between Learning and Forgetting: The Dual Role of Serious Errors

We know that organizations change over time as a result of their ability to learn and their tendency to forget. What we know less about, however, is why they might change back, despite evidence suggesting that this occurs. In this paper, we develop and test a model of organizational oscillation that explains why firms cycle through periods of learning and periods of forgetting. In particular, we identify a dual role for serious errors, which push firms toward a focus on safety while also pulling them away from other foci, such as efficiency or innovation. Although existing learning research recognizes errors as disruptive, this dual effect has not been theorized. We also demonstrate that, over time, the effect of a serious error on safety weakens, allowing alternative activities to emerge that lead to subsequent errors. We draw on qualitative data from the National Aeronautics and Space Administration’s Challenger and Columbia accidents to build theory about why organizations oscillate between safety and ...

CEO Demographics and Acquisitions: Network Effects of Educational and Functional Background

This study investigates the effects of CEO educational and functional background on corporate acquisitions. Educational and work-related functional backgrounds are likely to come with interorganizational networks, networks that stay with individuals over long periods of time and have the potential to affect acquisitions. We argue that these networks constitute a form of interorganizational social capital, which directs acquisition activities along certain channels. Hypotheses are tested on 449 firms and their acquisitions during the 1986–1993 period. We find evidence that the networks that come with different CEO education and functional backgrounds are related to the type of acquisition completed by that CEO’s firm. Obtaining a degree from an elite school, for example, is related to engaging in acquisitions in unrelated industries. We also find functional background effects are strengthened under conditions of uncertainty and educational background effects are weakened with tenure. These results suggest the importance of personal networks in affecting major firm strategic actions, and highlight the contextual nature of acquisition decisions.

Julianne G. Mahler: Organizational Learning at NASA: The Challenger and Columbia Accidents.MahlerJulianne G.Organizational Learning at NASA: The Challenger and Columbia Accidents.Georgetown University PressWashington, DC:2009. 238 pp.

Mahler’s book starts with a very interesting premise: given the similarities in causes in the Challenger and Columbia disasters, there may be evidence that NASA is “not a learning organization.” The book seeks to establish whether there was any evidence of learning from the Challenger (and indeed some, albeit limited learning seems to have occurred) and then to propose some analyses and lessons from the various areas in which learning was lacking. The detailed case analysis and fi ndings are useful in grounding learning processes in a real-world case—one in which the causes of one major accident are eerily refl ected in a second major accident 17 years later.