Thursday, November 18, 2021

How to Use Authority: Peer Pressure Works Best

Have you encountered organizations with authority structures that don’t quite match the training and status of the people holding each position? They are more frequent than you might think. Engineers and scientists doing research and development often work in teams and departments headed by managers who know much less than they do. Waiters in restaurants want their orders to arrive on time but are at the mercy of the cooks. And importantly for this blog post, police officers have years of training and experience but are moved around by dispatchers who receive all the calls for help (911 calls, if they are in the USA) but have much less training and status.

So, are there any problems when the authority and status do not match? This was the question Arvind Karunakaran explored in a paper recently published in Administrative Science Quarterly. As you might expect, the main problem is that the higher-status workers who have lower ranking in the organization (at least for a specific function) often feel free to ignore instructions or even orders from lower-status superiors. That sounds strange when the workers are police officers who are in uniform, need others to comply with their own orders, and are supposed to be highly disciplined.

Why do they ignore instruction? First of all, they think the dispatchers do not understand their work well enough, so they resent being told how and when to work. Also, the dispatchers often keep the officers busier than they would like to be, so officers may be interested in taking a break or not responding to dispatch calls that sounds unimportant. Indeed, not responding to dispatch calls over the radio is a common way for officers to avoid complying with orders.

How can an organization handle this type of situation, where the low-status superiors give instructions that sometimes get ignored by high-status workers? The research on police officers gave some useful lessons. First, organizations often have discipline procedures that allow immediate supervisors to refer problems upwards to higher-level managers. The dispatchers did that sometimes, and the results were… not much change. So at least for police officers, this conventional approach seems to be ineffective in the long run.

Second, people often use social approaches, such as trying to build a personal connection and using informal pressure in addition to the formal commands. Dispatchers could do that, and it was especially easy because they could choose to communicate more or less formally: to use the formal shared radio channel or a direct private channel. The results of the informal approach were… not much change. That didn’t work in the long run either.

So, what did work? One simple trick that dispatchers used was to talk to the non-responding officer informally, often with some humor, and to do it over the formal shared channel. When that was done, often other officers would join in, and the non-responding officer would end up responding and complying with orders both at that moment and going forward. So that worked.

The most interesting part of this research is why it worked. Informal talk over a shared channel could be heard by other officers with the same status and rank as the non-responding one. They would join in the chat to tease the officer but also implicitly to pressure the officer to respond. Coworkers often do so, because seeing someone else ignore instructions often means that they are slacking off, which can mean more work for others or ultimately that the non-responding team member is not reliable. People are usually sensitive to such problems, and same-status coworkers like the fellow officers can put pressure on more effectively than lower-status workers such as the dispatchers.

As always, peer pressure wins the day.

Karunakaran A. 2021. Status–Authority Asymmetry between Professions: The Case of 911 Dispatchers and Police Officers. Administrative Science Quarterly forthcoming.

Monday, November 15, 2021

Learning about Hardly Ever: The Role of Storytelling

Have you encountered the senior member of the organization who always tells stories? The one who is initially fascinating but who you gradually learn to avoid longer conversations with because the same stories are repeated over and over and have nothing to do with your work? What a bore. But storytelling can actually be very important in organizational learning, especially if it involves rare and important events.

This is what Christopher G. Myers examined in a paper published in Administrative Science Quarterly. The research looked at flight nurses in helicopters, the kind of people who have dramatic work that TV series love to portray, and on TV they typically do heroic stuff that calls for a lot of knowledge about how the patient is affected. How much of that is reality?

The learning problem is obvious. Helicopter patient pickups are done as rarely as possible because they are very expensive, and the patient conditions are always urgent and critical because that’s when helicopter pickups make sense. So, the need for heroic work is not an exaggeration. But the heroic work needs to be accurate too, and here the problem is that there are so many ways that a patient can become urgent and critical that it is very difficult for a flight nurse to learn on the job. They still need to learn about “hardly ever” events because these events occur, and incorrect treatment can be very consequential for the patient.

So what do they do? Tell stories. When changing shifts, they will chat, and the chat is regularly about what has happened in the previous shift, especially if it was unusual. That way they can learn on the job using not only their own experience but also the experience of others, as told through stories. If the story is dramatic enough, it will not just spread to the next shift but will also be retold a few times to different people, who will all learn about the “hardly ever” event and how it was solved.

This is the same social mechanism as the boring senior worker who you may have encountered, but it is a great way to learn fast in work that has much variation. Come to think of it, even that senior worker could be a source of learning because the stories most often told are usually about something from the past that does not happen often these days. Are these stories relevant? Sometimes they turn out to be. It is nearly two years ago that airlines encountered a sharp drop in the passenger traffic because of Covid. Did any of them benefit from stories about the drop in passenger traffic following the 9/11 attack? Possibly so.

Stories often involve mainly socializing and bonding, and they are ways that people form ties in organizations by sharing their experiences, whether useful or not. But in some forms of work, and on some occasions, storytelling is also a crucial learning process that helps the organization deal with “hardly ever” events.

Myers, Christopher G. 2021. Storytelling as a tool for vicarious learning among air medical transport crews. Administrative Science Quarterly, forthcoming

Friday, October 29, 2021

Networking for Success: Is It Only for the Successful?

Those who do research on social networks, and most of those who are in occupations where contacts with others give ideas, opportunities, and deals, know what a network engineered for success looks like. They are brokers at the center of a web that reaches far, where many of the people they know do not know each other. In such a network, the person at the center can combine knowledge, connect opportunities, and make deals.

So how can one get such a network? The answer is simple – by being successful. Those who have proven success become attractive to others, so they can pick and choose among those who want to connect with them. But of course, here lies the problem for those who want to build a network for success because they don’t have success yet. Can it be done? This is the question answered by Yonghoon G. Lee and Martin Gargiulo in a paper published in Administrative Science Quarterly. In addition to solving a very practical problem, this research is done in a context that we all know, directly or indirectly: songwriting in the Korean pop (K-pop) industry. Yes, this is research with BTS, not BS.

The problem for people early in their careers, or even later in their careers with no proven success yet, is that it is very difficult to get the spider-web network that combines knowledge. If they cannot benefit from such a network because they are not prominent enough yet, instead they should have a close-knit network of friends who help each other, right? And naturally, these friends will also be unsuccessful – otherwise they would have formed the looser brokerage network. That means having a network of helpful people who cannot offer much help. How can they make the transition into a better network?

The songwriters in this research were more likely to improve their networks in two circumstances: if they had peers who became successful or if they were stuck in a rut of writing unsuccessful songs that were quite similar to each other. Seeing your network contacts achieve success in collaborations not involving you is a signal that you are—or your network is—not good enough. Imagine how it feels to collaborate with someone, maybe even multiple times, without writing a successful song. But then suddenly this collaborator has another project not involving you, and it becomes a success. Feels like a failure? Absolutely – and Lee and Gargiulo show that songwriters exposed to the success of peers would reach out to new distant collaborators. Getting stuck doing the same thing over and over again with no success is also a clear signal that you are—or your network is—not good enough. Songwriters in this research who kept writing songs in the same style with no success would reach out to new distant collaborators as well.

The transition to a larger network with brokerage occurred faster for songwriters who eventually became successful than for those who never succeeded. Songwriters who get these signals that either they or their networks are not good enough—and who more quickly conclude that it is their networks’ fault—seem to have a better chance to make it. It is not easy to become successful in the music industry, and many songwriters fail even after reaching out to new collaborators. But hope springs eternal, and adding a good network seems to help. 

Lee, Yonghoon G. and Martin Gargiulo. 2021. Escaping the Survival Trap: Network Transition among Early-Career Freelance Songwriters. Administrative Science Quarterly, forthcoming.

Thursday, October 28, 2021

Risk Taking in Venture Capital: Chasing Performance, using Networks, or Something Else?

Venture capital is all about risk. The firms find young ventures, or more often select from many ventures seeking funding. These ventures have in common that they are at such an early stage that their market and offerings are unproven, and they cannot succeed unless they receive the funding, and often also advice and instructions. In other words, they are all risky.

There are still ways of adjusting the risk. Some ventures are more risky than others, and even the same venture has different risk levels depending on whether the venture capital firm participates in the first round of funding or a later round of funding. But if venture capital is essentially about risk, and they need to take this risk to gain the high returns they want, what determines the risk level they take at each funding opportunity? This is what Songcui Hu, Qian (Cecilia) Gu, and Jun Xiac studied in research just published in Organization Science. The answer, or should I say answers, are very informative.

The first part is that venture capitalists chase performance: if their performance has been disappointing, they will take greater risk than if it has been good. This is not just how venture capitalists act – firms make more changes when their executives fall behind their goals, and often these changes are risky. Indeed, the most special thing about venture capitalists is that they control the risk very easily by choosing more first-stage investments when their performance is disappointing. Other firms also try to control risk, but sometimes their risk taking is unplanned.

The second part is that venture capital firms form networks with each other through participating in funding syndicates. These syndicates divide up investments and spread risk, but they also produce collaboration, information exchange, and friendship. They result in networks that look different for each venture capital firm. Some place themselves in the center of spider-web networks that spread out widely. Others find positions between different groups of venture capitalists, becoming brokers of information. And here is the main finding from their research. These networks not only determine the information available; they also influence how venture capitalists think about opportunities available. So, what is the result?

Broker venture capitalists see more investment opportunities, and greater variety of opportunities, giving them practice assessing and experimenting with risk. As a result, they can make big adjustments of risk taking according to performance. Spider-web venture capitalists also get many offers, but they are more similar to each other, and this compromises their ability to adjust risk. The result is clear: All venture capital firms try to adjust risk to reach their performance goals, but the firms that are brokers in their networks are much more able to do so.

So, risk taking is a result of chasing performance goals, and of having the right kind of networks. Some decision makers are half aware of these adjustments, but many do not know that these factors influence risk. If they were, would they more carefully consider how goals are constructed? Would they pay closer attention to how their networks are built? I think the answer to both questions is yes. Gaining and spreading this knowledge is why we do research and teach the results.

Hu S, Gu Q, Xia J. 2021. Problemistic Search of the Embedded Firm: The Joint Effects of Performance Feedback and Network Positions on Venture Capital Firms’ Risk Taking. Organization Science forthcoming.

Tuesday, October 5, 2021

How Conservative is the CEO? Two Answers with Different Implications

Researchers have spent some time documenting that political ideology creeps into CEO thinking, and through that, influences firm decision making. This is especially true for decisions that are political to begin with, such as whether to counter economic problems with downsizing or whether to retain staffing and instead let investors take more losses. But we also know that a wide range of decisions are influenced by CEO political ideology, even those that do not look so political.

What we have not known until now is that political ideologies are more complex than the liberal versus conservative spectrum that defines US politics. A paper by M.K. Chin, Stephen X. Zhang, Asghar Afshar Jahanshahi, and Sucheta Nadkarni published in Academy of Management Journal has now given a vivid demonstration of how this complexity influecnes firms. In most other nations, conservative can mean either economically conservative, as in the type of person who values competition as a source of economic strength, or socially conservative, as in the type of person who values traditional judgment and intuition over analytical thinking. And, the same person can be either economically or socially conservative, or both, or none of them.

What does this mean for the decision making? The authors looked at corporate entrepreneurship, which is a strategically important decision that is difficult to justify analytically because the uncertainty is so high. After all, corporate entrepreneurship means diverting resources from the main business of the firm in order to enter a less familiar form of business. Corporate entrepreneurship is sometimes successful, and spectacularly so, but often it leads to losses. So how do firms decide when to engage in corporate entrepreneurship?

This is where CEO ideology comes into play. The economically conservative CEO wants to see analysis that justifies corporate entrepreneurship and wants the corporate entrepreneurship sponsors to win resources through competition with the rest of the firm. But how can they? The rest of the firm already delivers results; they just have ideas and hopes. This swings decision making away from corporate entrepreneurship.

The socially conservative CEO relies more on intuition, including the intuition of other decision-makers in the leadership team, and will be less driven by numbers and unaffected by ideas of resource competition. This is exactly the winning formula for a firm to take the risk of entering the uncertain world of corporate entrepreneurship.

These propositions make sense when considering economic and social conservativism separately, and the only problem has been to realize that these are different forms of conservative (versus liberal) ideologies. Both exist, and they have independent effects. Indeed, the research spurred by these ideas found solid support for these effects when examining how firms in Iran made their decisions on corporate entrepreneurship. Using data from Iran, which is rarely studied, is another merit of this research, but it seems fair to guess that many other nations will show exactly this division between different types of political ideology.

Chin MK, Zhang SX, Jahanshahi AA, Nadkarni S. 2021. Unpacking Political Ideology: CEO Social and Economic Ideologies, Strategic Decision-Making Processes, and Corporate Entrepreneurship. Academy of Management Journal 64(4): 1213-1235.

Wednesday, September 1, 2021

Jack of All Trades, Masterful One

I know that the title abuses the old adage “jack of all trades, master of none,” but it does so for a reason. First, as a small sidenote, the full expression used to be “jack of all trades” and was meant as a compliment. “Master of none” was added to make it less flattering. Second, I want to talk about some old research on how the old version, “jack of all trades,” might be more accurate provided the knowledge of each trade is not superficial.

In research published in Academy of Management Journal, Alva Taylor and I analyzed the collector values of old comic books. You know, the type of products that today don’t come in print, but instead appear as movies based on Marvel or DC characters. I am sure you have seen some of them. Comic books are interesting for research because we can measure the quality and innovativeness easily: high quality means high average value; high innovativeness means great variation in the value. Why the latter? Because anything new and surprising can fall flat but can also become a massive hit.

We had many findings, but I am particularly interested in the effect of creators having worked in multiple genres before making a new comic book. That’s the same as learning multiple trades because each genre has its own styles and conventions, so learning a new genre is difficult. But also, it can give fuel for innovation because knowledge of multiple genres helps the creator make novel combinations. And indeed, experience with multiple genres resulted in more innovative comic books. (It also increased quality, but that’s not the point I want to emphasize today.)

Here is the part I did not tell you yet. Comic books can be created by individuals or by teams, so we can talk about one person’s experience with genres, or the sum of genre experiences by a team. Is there a difference in which one becomes most innovative? Yes. Experience with more than three genres means that an individual will become more innovative than a team although individuals start out being less innovative. Clearly, individual creators have an easier time integrating genres.

Now there is research suggesting something similar happens not with knowledge integration, but with cultural integration in new ventures. This is important because many new ventures seek to combine the organizational cultures known by their founders into something new and unique, but often they end up adhering to an industry standard instead. Recent work by Yeonsin Ahn shows that cultural integration is helped by broader cultural experience, but only if this experience is held by individuals.

I can’t help but think that there is an interesting parallel here. It is so much easier to build up knowledge by sharing the work across individuals and forming a team. But, if the goal is to combine what has been learnt, individuals are better at it.

Taylor A, Greve HR. 2006. Superman or the Fantastic Four? Knowledge combination and experience in innovative teams. Academy of Management Journal 49(4): 723-740.

Monday, August 23, 2021

One of Us: How Women’s Inclusion Hurts Women

Have you heard stories or seen TV shows about how surgeons are the bossiest of doctors, ruling operating theatres like emperors, except that everything they do is more urgent than any imperial demands? That’s an exaggerated stereotype, but some surgeons fit it, and some forms of surgery are so exacting in process and speed that surgeons cannot tolerate slack. Many surgeons get away with bossiness because their work requires it—and because doctors are at the peak of the hospital pecking order and surgeons at the peak of the doctor pecking order. Everyone looks up to them.

Except that surgeons who are women are a little less looked up to than surgeons who are men. The usual mechanisms are at work, such as men (and some women) thinking of surgery as an activity that fits manly men better (so much cutting and bleeding...) and women generally having difficulty getting accepted in the top tiers of any occupation that has traditionally been held by men. But research by M. TeresaCardador, Patrick L. Hill, and Arghavan Salles published in Administrative Science Quarterly has found another source of difficulty: nurses.

Why are interactions with nurses problematic for female surgeons? Ironically, the source of the problem is that most nurses are women, and they interact differently with other women than with men. Nurses tend to act according to the script when the surgeon is a man: he orders, they obey. He does not need to chat or be friendly to get precise and timely work done, so the only benefit of being a friendly male surgeon is that he is seen as a nice guy. The same tends to be true when male nurses interact with female surgeons: they act according to the script.

But female nurses want – even demand – to include a female surgeon in the club of womanhood, where friendly chatting is required, members must know each other’s children’s names and ages, and work is rarely done exactly according to script. “After all,” they may think, “the female surgeon is one of us. That means she should also share some of the burden of the nursing tasks in addition to her work as a surgeon. That’s only fair. If she does not accept our requirements for inclusion and instead acts bossy, we can slow down our responses to her needs and make her job more difficult.” This is what precisely happened in the hospital the authors studied.

The result is extra work for the female surgeon and the loss of some of the special position that a surgeon has in the hospital pecking order. Maybe that’s OK because hospitals are too status conscious and hierarchical to begin with. But the problem is that only women surgeons face these demands for inclusion and the extra work accompanying it. It is discrimination against women, by women.

Is this something that women who are not surgeons should worry about? It probably is. What happens in the hospital is that different occupations interact to produce a result, and the higher-status occupation depends on the lower-status occupation for its success. That should sound familiar to many workplaces: higher-status workers are expensive, so organizations become effective by leveraging them through having lower-status workers do supportive tasks. If the supportive tasks are done differently depending on the sex of the lower-status and higher-status workers, this is an important source of workplace discrimination we need to better understand.

Cardador, M. Teresa, Patrick L. Hill, and Arghavan Salles. 2021. Unpacking the Status-Leveling Burden for Women in Male-Dominated Occupations. Administrative Science Quarterly, forthcoming.