Thorbjørn Knudsen

Export strategy: : a dynamic capabilities perspective

It is argued here that traditional export strategy research (encompassing the study of internationalization processes and export performance) is characterized by weak theoretical foundations and could benefit from a reorientation towards a dynamic capabilities perspective (DCP). We seek to draw on insights from DCP in order to devise a theoretical basis that could enrich export strategy research. Although our development of DCP insights builds on previous work, it also adds a crucial distinction between knowledge stocks and informational architecture. Changes in architecture are of greater importance. Following this elaboration of the dynamic capabilities perspective, we outline some implications and guidelines for future export strategy research.

Design of Decision-Making Organizations

Starting from the premise that individuals within an organization are fallible, this paper advances the study of relationships between the organizations decision-making structure and its performance. We offer a general treatment that allows one to analyze the full range of organizational architectures between extreme centralized and decentralized forms (often referred to as hierarchies and polyarchies). Our approach furthermore allows designers to examine the change in the overall reliability of the organizational structure as the number of actors within the organization changes. We provide general proofs that show how decision-making structures can be constructed so they maximize reliability for a given number of agents. Our model can be used directly for a qualitative assessment of decision-making structures. It is thereby useful for assessment of the many complicated hybrid structures that we see in actual decision-making organizations, such as banks, purchasing departments, and military intelligence. An application from a bank illustrates how our framework can be used in practice.

Industry and firm level interaction: Implications for profitability

Abstract The purpose of this manuscript is to establish whether a firm–industry interaction effect is a codeterminant of firm-level profitability and thus complements the distinct industry and firm effects targeted in previous research. Industry- and firm-specific effects are analyzed on a sample of financial performance data [return on assets (ROA)] including 9809 Danish small- and medium-sized enterprises (SMEs) with 10–499 employees. The results show that a firm–industry interaction effect, not explored by previous authors, is significant as a codeterminant of financial performance.

Coordinated exploration: : Organizing joint search by multiple specialists to overcome mutual confusion and joint myopia.

In this paper, we use an agent-based simulation model to investigate how coordinated exploration by multiple specialists, as in new product development, is different from individual search. We find that coordinated exploration is subject to two pathologies not present in unitary search: mutual confusion and joint myopia. In joint search, feedback to one agent’s actions is confounded by the actions of the other agent. Search therefore leads to increasing mutual confusion because agents are unable to learn from feedback to correct their faulty mental models of the search space. Incorrect beliefs held by one agent lead to mistakes, and because it is unclear which agent was wrong, this confuses the other agent, either into revising (correct) beliefs or holding on to (incorrect) beliefs. Sharing knowledge aligns specialists’ mental models and counters mutual confusion by inducing coordination around particular search regions. Yet that very effort increases joint myopia, as agents prematurely reinforce each other into choosing from an increasingly narrow portion of the search space. In the extreme, high levels of shared knowledge induce agents to abandon their distinct search approach in favor of a lower common denominator. In coordinated exploration, increasing coordination efforts (such as by increasing communication) reduces mutual confusion but simultaneously increases joint myopia. Efforts to reduce joint myopia, such as by slow learning or lower levels of knowledge transfer, however, automatically increase mutual confusion. As modeled in our simulation, successful joint search needs to balance these two effects. Our results suggest that because unitary-searcher models abstract from epistemic interdependence, their predictions are potentially misleading for coordinated exploration.

Organizational Routines in Evolutionary Theory

The present article considers why the nature and function of individual habits and organizational routines render them basic elements of evolutionary theory in the social sciences.

Inertia in Routines: A Hidden Source of Organizational Variation

Traditionally, routines have been perceived as a primary source of inertia, which slows down organizational change and hinders organizational adaptation. Advancing prior research on routine dynamics, this study examines how inertia in routines influences the process of organizational adaptation, both in the absence and presence of endogenous change of routines. Contrary to conventional wisdom, our analysis suggests an overlooked mechanism by which routine-level inertia may help, rather than hinder, organization-level adaptation. We demonstrate this mechanism by using a simple theoretical model in which the organization is characterized as a configuration of interdependent routines and study the process by which this configuration adapts to cope with its task environment. We find that inertia in routines may engender potentially useful variation in the process of organizational adaptation because reduced rates of routine-level changes may lead to temporal reordering when these changes are implemented. In our nuanced perspective, inertia is not only a consequence of adaptation or selection as perceived in prior research, but also a source of variation that turns out to be useful for adaptation. This logic is helpful to better understand why apparently inertial organizations keep surviving and from time to time exhibit outstanding performance. We conclude by discussing how this advanced understanding of the role of routines in organizational adaptation helps elaborate the theory of economic evolution.

THE ENTREPRENEUR AT A CRUCIAL JUNCTURE IN SCHUMPETER’S WORK: SCHUMPETER’S 1928 HANDBOOK ENTRY ENTREPRENEUR

This essay introduces the first translation of Schumpeter’s article Entrepreneur, originally published in 1928. We describe the background of Entrepreneur and use new archival sources to situate the article in time. Entrepreneur marks a transition of Schumpeter’s conception of entrepreneurship that took place between 1911 and 1926. Entrepreneur also contains Schumpeter’s most profound vision on economic selection, a vision that Schumpeter never elaborated further. We consider the most important implications of the new material in Entrepreneur and the reasons for the apparent shift in Schumpeter’s thought.

Balancing Inertia, Innovation, and Imitation in Complex Environments

Since Thorstein Veblen, perennial themes in institutionalist writings have included the role of imitation (or emulation) and the tension between inertia (or conservatism) and innovation in individual and organizational behavior. Prior models of organizational behavior have examined two search processes that represent this tension. One is local search, in which an organization restricts experimentation to a single attribute at a time. In contrast, distant search is associated with changing all of the organization’s attributes, in other words, extreme innovativeness. In both cases, the organization adopts the new form if its fitness is thereby improved. Previous research has established that high levels of complexity favor extreme innovativeness (distant search) over a modest level of inertia (local search). However, it is unclear if organizations balancing inertia and innovativeness at intermediate levels may have an advantage over these extremes (Sorenson 2002). In order to address this gap in our knowledge, we are here concerned with balancing inertia and innovativeness in task environments of intermediate complexity, in other words, when organizational attributes are more or less interdependent. The present work is related to literature which has developed agent-based models of interacting innovators and imitators. Peter Allen and J. M. McGlade (1986) described two distinct search strategies among fishing vessels: “stochasts” who randomly seek out new areas, and “cartesians” who watch where stochasts go and then fish in the most promising areas. The fisheries model is a topical variation on the well-known exploitation-exploration problem (March 1991), with

The architecture and design of the knowledge organization

The purpose of this paper is to meet the challenge of modeling knowledge organization by introducing a new, unifying, way of thinking about the organization of knowledge. Building on ideas set forth in the behavioral theory of the firm we present a modeling framework in which the central idea is to represent the organization of knowledge as a structure that defines the flow of information among members with limited levels of cognitive skill. Such a structure is referred to as an architecture. The need to design architectures that help their members make less errors by rejecting bad alternatives and accepting good ones is an important but largely overlooked issue in knowledge management. The present article offers an approach to think about this issue in a systematic way. The use of the proposed modeling framework is illustrated through examples. The article omits a treatment of the technical details of the proposed modeling framework. A useful way of designing organizations that make less error is outlined. This paper advances a new way of thinking about knowledge organizations that may be relevant for both researchers and practitioners.

Poverty of stimulus and absence of cause: some questions for Felin and Foss

We examine an aspect of the argument of Teppo Felin and Nicolai Foss (‘The Endogenous Origins of Experience, Routines, and Organizational Capabilities: The Poverty of Stimulus’; 2011) where they reject the claim of Geoffrey Hodgson and Thorbjorn Knudsen (‘Darwinism, Causality and the Social Sciences’; 2004) that habits depend crucially on stimuli from the social environment. We argue that while rightly stressing human agency they also create a false dichotomy between agential and environmental factors in the explanation. Felin and Foss create further confusion by hinting – without adequate clarification – at an untenable notion of human agency as an uncaused cause. We raise several questions of clarification for these authors.