Vibha Gaba

Organizing Far from Equilibrium: Nonlinear Change in Organizational Fields

Organizational fields undergo upheavals. Shifting industry boundaries, new network forms, emerging sectors, and volatile ecosystems have become the stuff of everyday organizational life. Curiously, profound changes of this sort receive scant attention in organization theory and research. Researchers acknowledge fieldwide flux, emergence, convergence, and collapse, but sidestep direct investigations of the causes and dynamic processes, leaving these efforts to political scientists and institutional economists. We attribute this neglect to our fields philosophical, theoretical, and methodological fealty to the precepts of equilibrium and linearity. We argue that ingrained assumptions and habituated methodologies dissuade organizational scientists from grappling with problems to which these ideas and tools do not apply. Nevertheless, equilibrium and linearity are assumptions of social theory, not facts of social life. Drawing on four empirical studies of organizational fields in flux, we suggest new intellectual perspectives and methodological heuristics that may facilitate investigation of fields that are far from equilibrium. We urge our colleagues to transcend the general linear model, and embrace ideas like field configuration, complex adaptive systems, self-organizing networks, and autocatalytic feedback. We recommend conducting natural histories of organizational fields, and paying especially close attention to turning points when fields are away from equilibrium and discontinuous changes are afoot.

Corporate Structure and Performance Feedback: Aspirations and Adaptation in M-Form Firms

In this study, we examine how business units of multidivisional M-form firms adapt their activities in response to poor performance at the corporate and business unit levels. By linking performance feedback theory with theories of attention and M-form organizations, we show that corporate structure influences the relationship between performance below aspirations and business unit adaptation. Because corporate structure vertically differentiates performance goals and problemistic search, solutions to performance problems vary across corporate and business unit levels, with divergent implications for business unit adaptation. We examine business unit adaptation empirically through new product introductions in the global mobile device industry, finding that poor performance at the business unit level leads to greater new product introductions. In contrast, corporate-level responses to performance problems have a negative cross-level effect on new product introductions. We also find that these negative effects are attenuated for strategically significant business units, which have more input into corporate responses. By linking structural and behavioral drivers of action, this paper contributes to the knowledge and understanding of adaptive behavior in multidivisional firms.

Venturing into new territory: Career experiences of corporate venture capital managers and practice variation

When organizations adopt new practices, the practices are often modified to fit the new context. We argue that managers who implement new practices modify them, and that the extent of practice variation is determined by these managers’ career experience with the practice itself, and career experience that enables fit assessment between the practice and the adopting firm. We test these arguments by observing information technology firms’ modification of venture capital practices within corporate venture capital units. This study contributes to diffusion research by developing and testing a framework for understanding the role of individuals in practice variation.

Decomposing Uncertainty and Its Effects on Imitation in Firm Exit Decisions

This study examines the effects of different uncertainty types on interorganizational imitation in firm exit decisions. We draw on herding models to conceptualize exit decisions as being based on a firms private information, which the firm updates with information inferred from observing the actions of others. We posit that different types of uncertainty differentially affect this observational learning process; in particular, we propose that certain uncertainty types attenuate rather than foster observational learning and subsequent imitation. We test this theory using a 29-year panel data set on the exit of private venture capital firms. Our results indicate that observational learning does influence imitation in firm exit decisions, and they also suggest that a common belief-that uncertainty enhances imitation-does not apply to all types of uncertainty. Specifically, we find that uncertainty fosters imitation only when it is idiosyncratic to the firm; uncertainties that are common to all firms, in contrast, actually reduce reliance on observational learning. By decomposing uncertainty into different types and explicating their effects on imitation, we demonstrate that this relationship is more nuanced than previously assumed and, in addition, highlight the role of deliberate information processing in imitation.

A comparison of milestone-based and buyout options contracts for coordinating R&D partnerships

We analyze optimal contractual arrangements in a bilateral research and development (R&D) partnership between a risk-averse provider that conducts early-stage research followed by a regulatory verification stage and a risk-neutral client that performs late-stage development activities, including production, distribution, and marketing. The problem is formulated as a sequential investment game with the client as the principal, where the investments are observable but not verifiable. The model captures the inherent incentive alignment problems of double-sided moral hazard, risk aversion, and holdup. We compare the efficacy of milestone-based options contracts and buyout options contracts from the clients perspective and identify conditions under which they attain the first-best outcome for the client. We find that milestone-based options contracts always attain the first-best outcome for the client when the provider has some bargaining power in renegotiation and identify their applicability to different R&...

The Fog of Feedback: Ambiguity and Firm Responses to Multiple Aspiration Levels

This study examines how firms respond to feedback from comparisons of a single performance indicator to multiple aspiration levels. Empirically, we compare firm performance to both historical and social aspiration levels, and examine the impact of the correlation of these two indicators on new products introductions. We argue that three types of feedback  ambiguous (weak correlations), contradictory (negative correlation), and consistent feedback (positive correlation)have different implications for firm responses. Our findings demonstrate that both contradictory and consistent feedback increase a firm’s propensity to respond to feedback. However, ambiguous feedback lowers a firm’s propensity to respond due to motivation and coordination problems that arise when performance signals are ambiguous. Our study builds and augments theories of ambiguity and performance feedback in organizations.