Pino G. Audia

The Paradox of Success: An Archival and a Laboratory Study of Strategic Persistence Following Radical Environmental Change

An archival study of the airline and trucking industries over a ten-year period and a laboratory study revealed that greater past success led to greater strategic persistence after a radical environmental change, and such persistence induced performance declines. The laboratory study also demonstrated that dysfunctional persistence is due to greater satisfaction with past performance, more confidence in the correctness of current strategies, higher goals and self-efficacy, and less seeking of information ixom critics.

Less Likely to Fail: Low Performance, Firm Size, and Factory Expansion in the Shipbuilding Industry

The behavioral theory of the firm and prospect theory predict that performance below an aspiration level increases risk taking, but researchers also propose that performance below an aspiration level decreases risk taking. These conflicting predictions primarily hinge on whether decision makers perceive negative performance as a repairable gap or as a threat to firm survival. This study examines a boundary condition of these conflicting predictions. We argue that a firms resource endowment affects decision makers risk tolerance: Managers in firms with large stocks of resources are buffered from the threat of failure and conform to the prediction of greater risk taking in response to performance decreases; managers in firms with limited resources view low performance as a step closer to failure and decrease risk taking in response to performance decreases. Using data on the risky decision of factory expansion in shipbuilding firms and firm size as an indicator of the stock of tangible resources, we find that performance below the aspiration level reduces risk taking in small firms, but either does not affect risk taking or increases risk taking in large firms. These findings are largely consistent with our predictions and also suggest that large firms are more inert than small firms.

Organizational Foundings in Community Context: Instruments Manufacturers and Their Interrelationship with Other Organizations

Combining insights from organizational ecology and social network theory, we examine how the structure of relations among organizational populations affects differences in rates of foundings across geographic locales. We hypothesize that symbiotic and commensalistic interpopulation relations function as channels of information about entrepreneurial opportunities and that differing access to such information influences the founding rate. Empirical analyses of U.S. instruments manufacturers support this argument. The founding rate of instruments manufacturers rises with the densities of organizational populations that have symbiotic and commensalistic relationships with instruments manufacturers. These factors encourage the initial foundings of instruments manufacturers in areas where such organizations were not previously found. The dominance of organizational populations tied to instruments manufacturing by symbiotic or commensalistic relations increases the rate of foundings of instruments manufacturers, whereas the dominance of organizational populations that lack these relations decreases it. Finally, we find that interpopulation relationships that hinge on direct contact have less impact on initial foundings as geographic distance increases. These results have implications for research on organizational ecology, entrepreneurship, urban sociology, and economic geography.

A Garage and an Idea: What More Does an Entrepreneur Need?

There exists a common belief that entrepreneurs commonly start businesses in garages (or basements or dorm rooms or kitchens).The garage entrepreneur is a highly popular contemporary legend, but not quite accurate. An emergent notion in academic research is that entrepreneurs are often organizational products. They typically acquire confidence, business knowledge, and social connections via prior experience at existing organizations. These psychological and social resources aid entrepreneurs informing companies. Although the belief of the garage entrepreneur contributes to the preservation of the American ideals of opportunity and upward social mobility, it offers misleading insights to would-be entrepreneurs because it suggests an under socialized view of the entrepreneurial process. Individuals, companies, policy makers, and business schools will benefit from recasting the garage as a contemporary legend and focusing instead on the lessons that can be derived from an understanding of entrepreneurs as organizational products.(Publication Abstract)

Early creativity as a constraint on future achievement

Most organizations, particularly those in volatile environments, recognize the need to stimulate creativity in their workforce because new and useful ideas can be highly profitable (Shalley & Perry-Smith, 2001). It is not surprising, then, that employees or teams that manage to develop a highly creative idea are rewarded with greater pay, recognition, and status (Merton, 1968). However, a highly successful creative idea also may lead to frustration, unmet expectations, and failed attempts to replicate success by producing poor imitations of one’s early work. In other words, early creativity may constrain future achievement as people buckle under the weight of their past success. There is abundant evidence that success can stifle creativity from biographies of eminent novelists. For instance, Ralph Ellison never produced another novel after the Invisible Man despite years of broken promises (and book contracts) that never materialized. It would appear that Harper Lee did not even make such an attempt; she retired shortly after writing her Pulitzer Prize–winning novel, To Kill A Mockingbird. This decision may have been a rational one on her part because even prolific writers seem to have trouble replicating early career success. For example, there was a 32-year gap between Norman Mailer’s iconic first novel, The Naked and the Dead (1948), and his next critical and commercial hit, The Executioner’s Song (1980). Furthermore, the constraining effects of creativity are not restricted to writers but may be a consequence of success in many fields. For instance, Art Fry, the scientist who invented the Post-It Note, also has been constrained by early success because all his subsequent inventions, such as the Post-It Flag, are incrementally related to the original Post-It idea. Almost from the inception of research on creativity, there has been a focus on the highly creative individual and an attempt to identify the traits (Helson, 1996) and social contexts (Amabile, 1983a, 1996) that give

Cultural Metaphors as Frames of Reference for Nations: A Six-Country Study

A cultural metaphor is a major phenomenon, institution, or activity in a nation with which most citizens identify cognitively or emotionally and through which it is possible to describe the national culture and its frame of reference in depth, for example, the Japanese garden (Gannon 2004). Cultural metaphors for six nations are analyzed two nations at a time. Three questionnaires based on the cultural metaphors for two nations at a time were developed so that each of the three pairs of two nations could be analyzed and compared separately. These questionnaire items were derived from the descriptions provided by Gannon (2004). Respondents were 664 college students, in accordance with Smith and Schwartz’ 1997 argument that teachers and students represent the best populations for analyzing cultural values. Results strongly support the concept of the cultural metaphor as a frame of reference.

Self-Assessment, Self-Enhancement, and the Choice of Comparison Organizations for Evaluating Organizational Performance

Abstract We examine the influence of the self-assessment and self-enhancement motives on the choice of comparison organizations in two experimental studies. Study 1 shows that: (1) self-assessment generally prevailed over self-enhancement, guiding decision makers to choose organizations that were more similar and had better performance; (2) self-enhancement was more pronounced under conditions of low performance, leading participants to more frequently choose organizations that were less similar and had lower performance; and (3) self-enhancing comparisons inhibited perceptions of failure and the propensity to make changes. Study 2 extends the results of Study 1 by showing that participants were more likely to choose comparison organizations that had lower performance and were less similar when they were in a self-enhancement mindset than when they were in a self-assessment mindset. The combined effects of self-assessment and self-enhancement on the choice of comparison organizations are discussed in relation to the broader organizational literature on learning from performance feedback.

Community Context and Founding Processes of Banking Organizations

We distinguish between two forms of local banks that build and maintain legitimacy in different ways: branches and unit banks. Branches gain legitimacy through the parent organization. Unit banks gain legitimacy through the personal reputation and social connections of the founders. Given the different ways in which legitimacy is built by these organizational forms, we think that the rural or urban nature of the community is likely to affect the founding rates of these two forms differently. Rural communities, in which personal and family relationships play an important role in both social and economic life, provide advantages to well-connected founders of unit banks. In these communities social networks serve as a demand buffer for unit banks, making the founding rate of this organizational form less sensitive to fluctuations in the demand for banking services in rural versus urban communities. In contrast, the founding rate of branches may not be greatly affected by the community context because branches gain legitimacy through a sponsoring organization whose legitimating characteristics are not local. Empirical analyses of foundings of local banks between 1976 and 1988 support these predictions. Supplemental empirical analyses also show no evidence of such buffering effect for unit retail establishments, which are expected to be less central in the social networks of rural communities than unit banks. Our results suggest that community organization channels resources to some kinds of organizations at the expense of others and that organizational research in general and organizational ecology in particular will benefit by paying more attention to community context.

The spatial diffusion of an invisible corporate practice: Revisiting stock backdating, 1981-2005

Abstract We study the spatial diffusion of stock backdating, an instance of corporate misconduct about which public information was virtually absent until 2005. Contrary to the findings of Bizjack, Lemmon, and Whitby (2009), our results reveal that this “invisible” practice did not diffuse through board interlocks. Rather, stock backdating spread through geographic proximity: firms were more likely to backdate stock options to the extent that other firms located geographically close to them had done so. Lending support to the importance of localized interactions among members of the local business elite, the effect of geographical proximity was conditional on high levels of local board interlocks. Our findings regarding the differential impact of geographic proximity and board interlocks on the diffusion of this invisible practice are analogous to the diffusion pattern of controversial practices proposed by Davis and Greve (1997).

Mission Accomplished? Attention to performance during the Iraq war

Drawing from and extending research that proposes a socially embedded view of attention, we examine the influence that audiences’ legitimacy judgments have on decision makers’ attention to performance. Using data from speeches by Pentagon officials during the Iraq war, our empirical analyses yield three findings: (1) an audience’s favorable legitimacy judgments increase decision makers’ attention to performance; (2) decision makers are more likely to attend to performance when performance is strong than when performance is weak; (3) an audience’s favorable legitimacy judgments attenuate the tendency to give less attention to performance when performance is weak. Implications of these results for organizational research on attention, legitimacy, and performance feedback are discussed.