Saturday, August 13, 2022

Stigmatize to Rehabilitate? Organizational Marking of Transgressors as Social Control

Organizations have rules, employees who break rules, and rules on how to punish employees who break rules. Often these are thought of in simplified terms as ways of making transgression costly so that employees will not transgress. The simplification is silly – we know that transgression occurs anyway, so it is necessary to think more broadly about punishment rules. If the organization keeps the transgressor in employment, can it also manage a rehabilitation that ensures good work relations and avoids repeated rule-breaking? How can this be done?

Surprisingly, these questions have not seen much investigation despite their obvious importance. But thanks to Erin Frey, Ethan Bernstein, and Nick Rekenthaler we now have research on this topic based on a military school (let’s call it the Academy) that has an honor code, cadets who break it, and a particular rule on how to punish those it retains because the violation is not too severe. The rule is interesting because it requires violators to wear a pin on their lapel indicating a rank one level lower than the lowest regular rank in the Academy for a period of many months. Given the military obsession with rank and alertness to symbols of rank, this marks them to everyone as having transgressed the honor code. In short, they are “screw-ups,” and everyone can see it. 

To an observer with some interest in history, this resembles a variety of medieval punishment methods meant to stigmatize violators and isolate them from their village, town, or city neighborhood. Stigmatization, whether intended or not, is generally quite effective in isolating individuals, attracting disdain, and preventing cooperation with others. So, can such a mark help rehabilitation?

There is a key difference between a village and an organization, and maybe especially an educational organization. Organizations have clearly defined boundaries, so it is obvious to all that the marked transgressor is still a member. Organizations have interdependent tasks, so the marked transgressor needs to communicate with others, and vice versa. This creates opportunities for explaining the transgression, expressing regret, and showing recovery.

Arguably the marking of a transgressor also creates a need to explain, express regret, and show recovery. The marked transgressor will be a stigmatized member rather than a regular one, so there is a social pressure to show signs of rehabilitation. In the Academy, there was an expectation that the marked transgressors should advocate and display even higher standards of behavior than others, and indeed they did so.

How general is this effect? Here we need to speculate a bit, but some boundaries seem obvious. What about marking transgressors in customer-facing work? I would be uncomfortable seeing a barista with a mark indicating some sort of transgression. Even more so an airline pilot. Indeed, the uniforms used in many kinds of customer-facing work (again, all pilots and many baristas) are supposed to create generalized trust that does not single out anyone as being better or worse than others.

Still, even if the effect of marking violators as a path to rehabilitation is not fully general, it is very interesting that it is possible. Organizations are hierarchies that can punish and try to rehabilitate through rules and hierarchical approaches, but they are also social systems. The marking of violators makes use of this and has an effect that is surprisingly beneficial.

Frey, Erin, Ethan Bernstein, and Nick Rekenthaler. 2022. Scarlet Letters: Rehabilitation Trough Transgression Transparency and Personal Narrative Control. Administrative Science Quarterly, forthcoming. 

Saturday, July 9, 2022

Is there a Strategic Organization in The Behavioral Theory of the Firm?

Questions are great. Sometimes I get asked questions that stimulate ideas that I would not have thought of otherwise, and that lead to research. When the editors of the 20th anniversary special issue of Strategic Organization asked me to write about the relation between the Behavioral Theory of the Firm and Strategy, it made me wonder whether there was something special about the match between this theory and this field of research.

Why this question? The behavioral theory of the firm fuels an active and growing research agenda found mainly in organization theory, but also with much important work in strategy. So, it is possible that we can simply stand by and let things develop on their own, and the synergies between research in these two fields well take care of the rest. Yet somehow, that did not look like the right answer.

The reason is that the basic interests of the fields of strategy and organization theory are different. Obviously not, because that is why they are different fields. To the Behavioral Theory of the Firm, this may not seem to matter because theory is about the mechanisms that drive outcomes in the world, not about the outcomes. It matters for research, though, because different outcomes can be studied depending on the interests of a field. This is a good reason to think of how the Behavioral Theory of the Firm and Strategy relate to each other.

The result of our thinking was a series of questions on how strategy is shaped by the mechanisms in the behavioral theory of the firm. This is the right approach because the Behavioral Theory of the Firm is made for explaining what a firm – or any kind of organization – will do. So, it is the kind of theory that can be used for explaining the origins and changes of firm strategy.

There are already partial answers to all of these questions, but still a lot of room for progress. The very short answer is that we developed a framework organized around how strategy is shaped by the 1) organizational structure, 2) organizational decision-makers, 3) organizational history, and 4) organizational environment. The Behavioral Theory of the Firm has useful ideas in each of these factors. The (slightly) longer answer? Please look for it in the short essay coauthored with Cyndi Man Zhang.

Greve, H.R., C. Zhang Man. 2022. Is there a Strategic Organization in The Behavioral Theory of the Firm? Looking Back and Looking Forward. Strategic Organization, forthcoming.

Sunday, May 1, 2022

Are you well connected? Hide it!

As anyone in business will testify to, personal connections matter a lot for success. They are the source of information and ideas, they can be used to draw in resources and capabilities, and they give rise to yet more connections. The na├»ve version of this narrative is that more connections are always better, but we know that’s not true. Personal connections are maintained through attention and care, so having too many means neglecting many. Instead, what matters most is to be connected to people who are not connected to each other: to be a broker of personal ties. The network of a broker is the most efficient one for drawing in novel, timely, and helpful information, among other things.

Except that being a broker is not a fail-safe path to success – we know it often does not work. Explaining when it works, and when it does not, was the goal of research done by Alessandro Iorio and published in Administrative Science Quarterly. His idea was simple and novel. Maybe I will see brokers as slightly suspicious characters because they know so many people I don’t know? Maybe as a result, I will hold back the information, resources, and network ties that I would otherwise provide to my contacts who I do not see as being brokers?

Making this simple idea especially neat is that I may not be right about who is a broker and who is not. Accordingly, being a broker who is not perceived as a broker is great; such brokers in disguise get all the benefits. Not being a broker but being perceived as one is a disaster; their personal connections have a poor structure and are poorly fed with information.  Iorio went ahead and tested this idea by getting data from a consulting firm and by doing experiments.

The conclusion? Consultants who were brokers in disguise were clear winners in the ratings for being top innovation performers; two-thirds of them achieved this rank. Meanwhile, being a broker while being perceived as one was no better than not being a broker and not being perceived as one either. Brokerage works when it is hidden; not otherwise. Why is that? When gauging the effect of trustworthiness of each person, it became clear that being thought of as a broker meant being seen as less trustworthy. This explained brokers’ inability to take advantage of having better personal connections than other consultants.

What does this mean for how we deal with personal connections in our career and life? Turning this evidence into advice is complicated. The benign version would be that modesty is a virtue, because dropping names of people others do not know places you at a disadvantage whether or not you really know them. The less benign version is that the successful user of personal networks is fundamentally dishonest because this person gives the impression of having a different network of contacts than the actual one. Of course, we should not be too surprised by this kind of problem. The behaviors that evidence shows to be effective when managing other people are not always the most admirable ones. 

Iorio, Alessandro. 2022. Brokers in Disguise: The Joint Effect of Actual Brokerage andSocially Perceived Brokerage on Network Advantage. Administrative Science Quarterly, forthcoming.


Sunday, March 27, 2022

The Path to Hit-Making: How Early Music Variety Helps Music Artists

The creative arts are full of one-hit wonders who produce exactly one famous hit and are never heard from again. Most famously this happens in music, but it is also true for authors, visual artists, and performing artists. Is it possible to predict which creative artists can have multiple hits? The usual answer is, “Of course not!” But if it were possible, such knowledge would be useful outside the arts as well. Organizations of all types often need to develop novel and creative products, and even those products that involve engineering or science ultimately start with creativity.

Actually, we are making some progress in understanding how multiple hits are created. Research by Justin M. Berg published in Administrative Science Quarterly looked at musical artists and discovered that a key factor in becoming a multi-hit artist is the music made before the first hit. This sounds strange but is easy to explain. Before the first hit, artists are generally ignored and can freely choose what to create, and they may end up making choices that differ a great deal from each other. After the first hit, they are under the magnifying glass of the world (and themselves) and typically try to stay in tune with what their audience wants without changing too much from their past production. Problem is, what their audience wants keeps changing.

This is where the production before fame becomes important. Some musicians make very novel music, some musicians make a great variety of music, and some musicians make music that lacks novelty and variation but hits exactly what the audience wants at the moment. Who can repeat the hits? When the question is phrased this way, it seems clear that variation is a good thing because it lets the musician adapt to new trends without changing too much from past work. That’s exactly what the research found. But interestingly, novelty before becoming popular also let the musician produce multiple hits. Maybe that’s because it creates a sense of freedom and an audience expectation of some surprises?

But wait, before we worry about how a musician can get multiple hits, maybe we should think about how to get the first hit. So here is some bad news: Novelty is great for multiple hits but bad for getting the first one. Fortunately, the same is not true for variation, which helps the chances both for a first hit and for multiple hits. Of course, if you are an artist, you know that variety is a very hard thing to achieve, maybe even harder than novelty. In fact, the main driver of variety seems to be repeated failure when doing the same thing over and over again, illustrating that it is not just hard to accomplish but also hard to attempt. Cost and benefit…

What do these findings on musicians tell organizational decision makers? More than you might assume. First, we know that creativity has similar effects on innovative work across a wide range of products, so we can actually learn about product design from successful musicians. Second, these findings directly tell us what resumes should look like when hiring someone to do development work – look for variety! It is valuable and costless, because job applicants will come with a great variety of variety levels.

Finally, and this part could be costly, the findings also tell us what type of workflow a development team should have. Unlike musicians and other creative artists, who are forced by their audiences to stay relatively close to their past production, development teams will maintain a variety of projects if they are told to do so. And we know that variety increases the likelihood of success.

Berg, Justin M. 2022. One-Hit Wonders versus Hit Makers: Sustaining Success in Creative Industries. Administrative Science Quarterly, forthcoming.



Sunday, March 20, 2022

Firms Following the Law: Legal Inequality Promotes Actual Inequality

Do firms follow the letter of the law? They are supposed to, and they usually do. Do firms follow the spirit of the law? Sometimes, and especially when their executives agree with it. These are general and obvious statements, but it was only recently that we learnt how far firms will go in following the spirit of the law. Suppose that a US firm is in a state that just passed a law banning the affirmative action practices that help minorities get hired and promoted in most of the nation. Will the firm continue to hire and promote as before, or will it make changes?

The question is important for many careers. Black and Hispanic employees are only half as likely to become managers as White employees. Affirmative action policies were put in place to even these odds, and affirmative action bans are promoted by politicians who want to counter the movement towards fair employment practices. In nine states, such bans were passed. But did the bans have any effects? Research by Letian Zhang published in Administrative Science Quarterly answers this question.

The key feature of affirmative action bans is that they don’t ban firms from doing affirmative action – they only ban the public sector from doing so. But they can still serve as normative cover for firms and executives who are against affirmative action and similar equal employment opportunity practices, and so inspire them to weaken or even roll back any affirmative action practices they are doing. Did this happen?

Yes, definitely. The proportion of Black managers in a firm is a sensitive indicator of equal opportunity practices, and it showed clear differences between firms that were in a state banning affirmative action and firms in a state that did not ban it. For comparable establishments, the proportion of Black managers dropped by 0.63 percentage point, with most of this drop experienced by Black women. When interpreting this number, keep in mind that the proportion of Black or African American people in the US is 12.4 percent, so a drop of 0.63 percentage point is roughly a 20-percent drop relative to the population.

This difference was not the same across firms, however, because the political views of the Chief Executive Officers made a difference. Most of the drop in the proportion of Black managers was a result of firms with conservative CEOs, which saw a drop of 0.93 percentage points in the proportion of Black managers, compared to firms in states without affirmative action bans. Again, compare with the drop in all firms combined (0.63) and the total proportion (12.4), and the difference is clear.

So, the law is not just a law but also a signal. But signals are not for everyone; they are followed by those who are most alert to them and friendliest to their message. That, of course, is the whole point of passing a law that only some of the many organizations in a state need to follow. Signals are symbols, and symbols matter.

Zhang, Letian. 2022. Regulatory Spillover and Workplace Racial Inequality. Administrative Science Quarterly, forthcoming. 

Tuesday, February 22, 2022

CEO Bravery? The Effect of CEO Political Statements

The current US political climate has many unusual effects, including an increase in corporate CEOs releasing statements that condemn political initiatives from right-wing activists. An example is North Carolina’s “bathroom bill” removing the right of individuals to use bathrooms that correspond to their gender identitya highly divisive piece of legislation that led to a public letter of opposition from nearly 100 CEOs. Of course, CEOs have always been free to speak and write publicly on any issue they want; indeed, this is just one of the many freedoms that US citizens enjoyand that increase opposition to laws specifically written to take freedoms away from minorities. But CEOs have rarely been outspoken in the past. Now that some of them are finding their public political voice, we may wonder why they are doing so and what this change does to their organizations.

These are the questions explored in research published in Administrative Science Quarterly by Adam J. Wowak, John R. Busenbark, and Donald C. Hambrick. They looked at the example I mentioned above, comparing the CEOs who did or did not sign the letter opposing the “bathroom bill.” To see why this research is interesting, let us start with the question of whether the CEOs signing the bill were brave. Certainly, some Republican politicians created this impression by issuing threats against outspoken CEOs. But CEOs care more about their companies than about politicians, and CEO signing could be predicted quite well by whether their employees opposed the bill. Signing was more astute than brave, one might say, though no doubt many CEOs were themselves outraged by the bill.

But a CEO of any large company will be leading many employees with different political views, so it is still fair to ask whether publicly opposing the bill might harm the company by reducing employees’ commitment to it. Fortunately, Wowak, Busenbark, and Hambrick collected data to answer exactly this question. It turns out that when the CEO signed the letter opposing the bill, their employees’ commitment to the firm was reduced if the employee population was mostly conservative, unchanged if it was moderate, and increased if it was mostly liberal. No surprise there, and a good explanation for why CEO signing was more likely if the employees were liberal. More importantly, CEO signing also influenced employees’ political views, turning liberals more liberal and conservatives more conservative. Arguably that is exactly the kind of division that CEOs don’t want in their organizations, so it is a crucial and bad outcome.

Was there any way out of this dilemma? It turns out that a CEO who can be seen as very typical for that firm becomes disproportionately influential in changing employee commitment and liberalism. By signing the bill, a highly prototypical CEO at a liberal firm strongly increased liberals’ commitment to the firm and to their own liberalism. By signing the bill, a highly prototypical CEO at a conservative firm strongly decreased conservatives’ commitment to the firm and increased their conservatism. Ideologically conservative employees may resent being represented by a CEO with the opposite political view, but perhaps they resent even more being represented by a CEO they consider similar to themselves who takes a liberal stance on a public issue.

What about CEOs who have a high personal reputation? The story here is that a CEO held in low regard who makes a political statement is more deeply divisive in both organizational commitment and liberalism than a CEO held in high regard. The less-regarded CEOs who signed the letter had a more-positive impact on liberal employees’ commitment and liberalism—and a more-negative impact on conservative employees’ commitment and liberalism—than highly regarded CEOs. If this is not surprising, consider the following: Did you ever think that the benefit of a high personal reputation would be that people would feel free to ignore what you said?

Organizational life is full of surprises. Political life is full of surprises. No wonder that combining the two can be surprising.

Wowak, Adam J., John R. Busenbark, and Donald C. Hambrick. 2022. "How Do Employees React When Their CEO Speaks Out? Intra- and Extra-Firm Implications of CEO Sociopolitical Activism." Administrative Science Quarterly forthcoming.

Monday, January 31, 2022

Lessons from the Whorearchy: What Can Sex Workers Teach Us about Stigma?

Here is one popular myth that many people hold dear: Those who are discriminated against, pursued, and stigmatized have at least one comfort in life – each other. Have we not seen many movies and heard many stories about how the downtrodden in life will band together and support each other, and may even fight back and gain the status they deserve?

In research published in Administrative Science Quarterly, Madeline Toubiana and Trish Ruebottom find a bleaker reality. They studied sex workers, meaning burlesque dancers, strippers, pornography actors, webcam actors, escorts, and dominants, who are stigmatized in society to such an extent that they typically try not to reveal the work they do. Given the difficult experiences that come as part of their work, they would seem like a group inclined to band together. Would it not be natural for them to confide in each other and help each other? Perhaps so, but as the researchers found, this is not exactly what happens.

Sex workers are united in being stigmatized by others but divided by how they stigmatize each other. They have different jobs, and the ones with greater physical exposure and contact with clients are stigmatized more. They have different backgrounds, and those who are minorities or come from poverty are stigmatized more. So, sex workers need to be careful in selecting who to interact with and how much to reveal even when they are interacting with each other, because there is always a risk that they will encounter stigma instead of support. Those who have enough initiative can still build or join groups that provide mutual support, but those groups are likely fractured and small as a result of all these divisions.

Does this seem like a specialized outcome from an unusual kind of stigmatized group? Maybe. But keep in mind that the myth of unity among the stigmatized is rarely questioned, and those of us who read online blog posts lack experience with such groups and know little about them.

In fact, we also know little about the groups who are not stigmatized but hold low-status positions in organizations we work for or buy products and services from. Are the cleaning personnel earning minimum wages (who everyone seems to ignore) at least on friendly terms with each other and willing to offer support? What about the servers working for the type of restaurant that offers little pay or tips, or the ubiquitous delivery-van drivers?

These questions are important because organizations are better off if employees at all levels work for them for a more positive reason than lack of a better alternative. If lack of a better alternative is the reason, as might be the case if pay is low and support from peers is hard to find, then employees will stay employed only as long as they have no better alternative. And usually, people are worth more to the organization than they are paid, sometimes much more, so assuming that the myth of mutual support keeps them happy can be costly.

One of the biggest changes in the US economy that has accompanied the Covid pandemic is the great resignation – a wave of resignations and retirements from industries with many low-status workers. Maybe this trend is unrelated to the research at hand. Or maybe workers in jobs with little money and no social support have found that they had a better alternative – not working.

Toubiana, Madeline  and Trish Ruebottom. 2022. Stigma Hierarchies: The Internal Dynamics of Stigmatization in the Sex Work Occupation. Administrative Science Quarterly, Forthcoming.