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A model of adaptive organizational learning
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... The knowledge base is seen and enacted by the individual developer in a process of situated search, who as a boundedly rational actor cannot see, evaluate, and thus modify, all apps on the platform (Levinthal and March, 1981;Simon, 1955). The knowledge base is not the same for all developers, given the lack of a central design rule and the local nature of app-specific knowledge hidden inside (Carlile, 2004). ...
... He or she does not need much time to assess whether a modification is possible. This process shares similarities with the well-studied phenomenon of local search (Cyert and March, 1992;Levinthal, 1997;Levinthal and March, 1981) and deep search (Katila and Ahuja, 2002). However, such a process bears the risk that a developer might narrow their search in terms of functional knowledge, instead of diversifying it in a coherent way. ...
... Second, and somewhat as a result of that, they also focus their attention on apps whose functionalities are unfamiliar. In other words, the developer is more open to ambiguous functionalities and semantic meaning (Kellogg et al., 2006;Levinthal and March, 1981;Lingo and O'Mahony, 2010). Thus, a flexible orientation triggers a process of discovery or distant search that is not controlled as we argued earlier in the context of coherence. ...
Innovation is a cumulative process in which past knowledge created by others can be both a source for predictable outcomes and also a barrier to significant change. The recent literature on digital innovation suggests that open platforms, which encourage their developers to build upon each other's knowledge when innovating their add-on apps in the periphery, face a related paradox. Developers face the tension of either being coherent with the past, or flexible to adjust to the future. In this paper, we examine how the trade-off between coherent and flexible search mechanisms affects the individual developer's choice of innovating a certain app as well as his or her cumulative impact, i.e., the degree of modifications to the app. We study an open platform in the multi-disciplinary field of nanotechnology, in which 480 developers perform more than 30,000 problem-solving actions over a period of 10 years. We use relational event modeling to differentially assess the effect of the coherent and flexible search strategies. We find that developers are significantly more likely to choose a certain app that is consistent with both a coherent and flexible strategy. However, a coherent strategy leads to greater cumulative impact on an app compared to a strategy of being mutually coherent and flexible. Thus, our findings indicate both a complementary and a contradictory logic in how the tension between coherence and flexibility unfolds. We make contributions to the recent literature on digital innovation as well as the innovation literature more broadly. Further, our results inform innovation policy and platform design.
... Learning from failure is different than learning from success. Failure challenges current knowledge (Weick and Roberts, 1993), causes organizations to explore new options (Levinthal and March, 1981), and creates stronger reactions by the members of the organization (Kim et al., 2009;Kim and Miner, 2007), possibly providing a better learning opportunity than learning from success (Madsen and Desai, 2010). However, because of the associated costs of failure, the organization cannot rely on failures as its sole source of opportunities for learning. ...
... Based on the results of this research, policy makers could take into consideration that more profitable farms are more receptive to changes in management practices. These farms may be more open to changing farm management practices in order to increase their profitability further, or as noted by Levinthal and March (1981) profitable farms with high aspirations are more receptive to changes when their performance expectations are not being met. Therefore, this may require the presence of an agri-environmental scheme for low profitability farms. ...
The agricultural sector in Ireland contributes almost 33% of Ireland's total Greenhouse Gas (GHG) emissions with dairy cows and beef cattle being the biggest source of these emissions (EPA, 2016). Several studies exist indicating that changing the timing of slurry spreading from summer to early spring, would reduce the levels of ammonia emissions (Lalor and Schulte, 2008; Stettler et al., 2003). A knowledge gap, however, exists on the extent to which Irish farmers would be willing to change the time they spread slurry. The main objective of this paper is to investigate the influence of selected personal, farm and economic characteristics on farmers' willingness to spread most of their slurry in early spring. In order to achieve that a binary probit model was used. The results showed that 50% of slurry spread in early spring in Ireland was positively influenced by advisory contact, investment in machinery per hectare and profitability of the farm. While off-farm income and the date farmers turn their cows out to grass had a significant negative effect. The findings of this study could assist advisors and policy makers in relation to the adoption of new practices by farmers.
... Slack resources (i.e., excess inputs such as underutilised capacity, facilities, or labour, and financial reserves such as working capital or borrowing capacity) (Levinthal and March, 1981) play a dominant role in the behavioural theory of the firm (Cyert and March, 1963). It is suggested that slack resources increase experimentation and risk taking, which provides the capacity to manage emerging issues and thus should also be able to positively influence innovativeness (Nohria and Gulati, 1996). ...
There is growing research interest in understanding the impact of search and the evaluation of information on markets, customers, and technologies. If search has an explicit future focus, this paper refers to it as forward-looking search. Previous research has focussed on the firm or innovation portfolio level. Little research has investigated whether forward-looking search practices occur during innovation projects and whether they may contribute towards a project's innovativeness. This paper follows the bounded rationality assumption, which views decision makers as lacking complete knowledge and anticipation of the consequences of their decision. The current study posits that project teams must engage in forward-looking search during project development to ensure their project's innovativeness. However, this paper argues that this is only relevant if there is 1) room in project planning to facilitate forward-looking search, 2) slack resources available to implement such changes, and 3) a dynamic external environment. The data on 159 unique innovation projects from the Danish manufacturing industry show that forward-looking search significantly impacts innovativeness. Furthermore, this study finds that project planning and slack resources moderate this relationship, while industry concentration has no moderating influence. These findings suggest that to increase the innovativeness of projects, continuous forward-looking planning should retain room for flexibility and slack budgets for project adjustment during execution.
... Recently, operation management scholars have recognized that incorporating human behaviour into operation management models yields more realistic insight [54]. As regards to organizational learning, the difficulties in matching exploration and exploitation are shown in otherness made amid maturity of old technology and creation of current ones [55,56]. Operations management should not be understood as a purely technical problem but must be considered simultaneously with behavioural underpinnings [57]. ...
... This abstraction and simplification does not capture the richness of scientific innovation. The theoretical work conceives of complex problems as requiring optimization along numerous dimensions (Kauffman, 1995;Lazer & Friedman, 2007;Levinthal, 1997;Levinthal & March, 1981;J. Miller & Page, 2009;Siggelkow & Levinthal, 2003). ...
Prior research on how to design collaboration networks among scientists, engineers, and strategists surprisingly predicts that inefficient networks that slow down the rate of collaboration will lead to better performance on complex problems. However, empirical research has provided mixed evidence for these ideas. Here, we test this theory using an online Data Science Competition that experimentally manipulates the network efficiency of teams working on a complex problem. The results support the idea that less efficient collaboration networks increase collective performance on complex problems. The results have important implications for designing problem-solving teams in numerous domains.
... Recent past performance was measured using average ROA for 2009–2011. More profitable firms may devote more resources to improving their capabilities and, therefore, perceive fewer benefits from inter-firm relationships (Hill and Rothaermel 2003, Levinthal and March 1981 ). R&D was measured with a dummy variable indicating whether the firm had an R&D department (value of 1) or not (value of 0). ...
Research on buyer-supplier relationships (BSRs) has often focused on only one side of the relationship and, thus, has tended to overlook asymmetries. Yet, a buyer (supplier) may often deal with a bigger supplier (buyer) or one that has higher levels of trust, respect, and reciprocity. Therefore, we examined how two types of asymmetries-size and relational capital-affect perceived opportunism and performance. We used dyadic data from 106 buyers and their matched suppliers gathered from a survey and an archival database. The results demonstrate that the degree and direction of both asymmetries affect the BSR. Our results also reveal that an imbalance of relational capital in a firm's favor may have the opposite effect from that intended. In other words, the firm's counterpart perceives more, rather than less, firm opportunism. The results also suggest that a buyer observes lower benefits in the presence of size asymmetry, whereas the supplier's perception of benefits is unaffected. Thus, our research represents a significant step forward in understanding BSRs and asymmetries by (i) bringing attention to two key asymmetries inherent in BSRs and (ii) showing that these asymmetries are not unidirectional in their influence on perceived opportunism and performance.
A cikk a nyitott innováció hajtóerőit tárja fel, amelyben több tényező fontosságára világít rá, úgymint méretgazdaságosság, a termékportfólió innovációs foka, a pénzügyi tartalék-erőforrások megléte és a működésben megfigyelhető belső változás foka. A szerzők úgy találják, hogy a méretgazdaságosságból fakadó versenyképességi nyomás és a pénzügyi tartalékok birtoklása egy nyitottabb innovációs stratégiát idéz elő, míg az értékes, haladó technológiákat magában foglaló termékportfólió és belső folyamatok megváltoztatásának irányában való elköteleződés korlátozó erőkként hatnak abban, hogy a vállalatok nyitott innovátorként lépjenek fel. A vállalatok innovációs nyitottságának alapos megragadásához a szerzők háromféle innovációs stratégiát különböztetnek meg: nyitott, félig-nyitott és a hagyományos, zárt modellt. A nagy mintán alapuló empirikus elemzéshez a 2012-es PITEC elnevezésű, a spanyol gazdaságban készített, Közösségi Innovációs Felmérés szolgáltat alapot, amely 2.148 vállalatot ölel fel. Az ökonometriai elemzésben a multinomiális logit módszertant használják, amely képes az elméleti modell által a többféle csoportba tömörülő stratégiai válaszokat megfelelően megjeleníteni.
While reorganisation procedures aim to salvage financially distressed firms, they are often abused, as uneconomic, failing firms commence with proceedings that erode value rather than preserve it. The commencement standard for business rescue is aimed at preventing such abuse, though it is often hampered by vagueness and limited practical application. Drawing on turnaround literature and the requirements of a commencement standard, this study attempts to address these drawbacks by assessing the prospect of reorganisation on commencement. The study identifies from the turnaround literature nine liabilities that could prove fatal. Under the widely-held principle of value maximisation, the researchers then propose a ‘likelihood of liquidation’ framework to evaluate, before the commencement of proceedings, the reasonable prospect of the firm’s recovering. The analysis in this paper sets the agenda for future research and provides an opportunity to explore the practical application of the framework.
From a behavioral standpoint, a decision is the result of the adaptation of an individual to the constraints imposed by both the external environment and the limits of rationality (inner environment). This chapter presents the theoretical framework for our behavioral analysis of rational decisions within organizations. This framework will be outlined through two different levels of analysis. First, the general features of the inner environment of a decision—i.e., the psychological aspects regarding rationality in human mind. Second, the external environment of a decision—i.e., the outer shape of means and ends, provided generally by the organization.
This chapter discusses optimization and evolution in the theory of the firm. The problem of comparing sets of high level theoretical commitments is not the same as the problem of comparing particular, fully specified predictive models aimed at a particular class of quantitative phenomena. The more diversity there is in the bundle of situations in which a theoretical idea is applied, the greater are the conceptual difficulties in defining a good index number to represent the idea's performance. The chapter presents the principal objections to the use of optimization assumptions as a foundation for the theory of the firm. It reviews the case against using loosely formulated natural selection arguments as a sort of auxiliary defense for the traditional optimization assumptions. The chapter also sketches the elements of an evolutionary theory that is not a prop for, but an alternative to, the optimization approach. The prospects for major change at the foundations of the theory of the firm are also evaluated.
Five footnotes to change in organizations are suggested. They emphasize the relation between change and adaptive behavior more generally, the prosaic nature of change, the way in which ordinary processes combine with a confusing world to produce some surprises, and the implicit altruism of organizational foolishness.
Short courses, books, and articles exhort administrators to make decisions more methodically, but there has been little analysis of the decision-making process now used by public administrators. The usual process is investigated here-and generally defended against proposals for more "scientific" methods. Decisions of individual administrators, of course, must be integrated with decisions of others to form the mosaic of public policy. This integration of individual decisions has become the major concern of organization theory, and the way individuals make decisions necessarily affects the way those decisions are best meshed with others'. In addition, decision-making method relates to allocation of decision-making responsibility-who should make what decision. More "scientific" decision-making also is discussed in this issue: "Tools for Decision-Making in Resources Planning."