Organization Theory Meets Strategy: Volume 43

This volume was born out of two considerations. On the one hand, we recognized how the identity boundaries that define Organization Theory and Strategy are crucial to emphasize the distinctiveness of these different research traditions, facilitate our engagement with them, and delineate our contributions. On the other, we felt a growing need to cross those boundaries, and broaden the conversation between these fields. Our wish thus was to create a forum where Organization Theory and Strategy may meet and bring together some of the scholars who work at the intersection between these fields. In this introductory piece we share our understanding of what may distinguish Organization Theory from Strategy, and also illustrate how the research intersection between those fields looks like. In closing the chapter, we explain how the different contributions to this volume map onto one another and elaborate on several avenues of future development.

How do radical technological fields become naturalized and taken for granted? This is a fundamental question given both the positive and negative hype surrounding the emergence of many new technologies. In this chapter, we study the emergence of the US nanotechnology field, focusing on uncovering the mechanisms by which leaders of the National Nanotechnology Initiative managed hype and its concomitant legitimacy challenges which threatened the commercial viability of nanotechnology. Drawing on the cultural entrepreneurship literature at the interface of strategy and organization theory, we argue that the construction of a naturalizing frame – a frame that focuses attention and practice on mundane, “rationalized” activity – is key to legitimating a novel and uncertain technological field. Leveraging the insights from our case study, we further develop a staged process model of how a naturalizing frame may be constructed, thereby paving the way for a decrease in hype and the institutionalization of new technologies.

Organizational theorists and strategy scholars are both interested in how organizations deal with ambiguity, especially in relation to implementation. This chapter examines one source of ambiguity that organizations face, which is based on their efforts to implement moral mandates. These mandates, which are related to areas such as environmental sustainability and diversity, are inherently ambiguous, as they lack a shared understanding regarding their scope and associated practices. They are also often broad and systemic and may be unclearly aligned with an organization's strategy. Due to these challenges, in this chapter, we theorize that collective action at the field level is necessary for organizations to advance and concretize moral mandates. We examine this theorizing through the case of the implementation of sustainability in higher education. We hypothesize and find support for the idea that when an organization's members engage in collective action at the field level, those organizations have an increased likelihood of achieving sustainability implementation. To gain insight into this field-to-organization relationship, we qualitatively examine 18 years of conversations from an online forum to develop a process model of moral mandate implementation. We theorize that collective action functions as a field-configuring space, in which actors from a variety of organizations come together to (1) refine the scope of the mandate and (2) create an implementation repertoire that actors can draw on when seeking to bring sustainability to their own organizations. Overall, our study provides a model of how ambiguous moral mandates can be implemented by highlighting the important role of collective action across organizations in concretizing those mandates and providing actors with the tools for their implementation.

Our prior work has identified a trade-off that new entrants face in obtaining favorable market reception, whereby initial entrants suffer from a deficit of legitimacy whereas later entrants suffer from a deficit of authenticity. This research has also proposed that a single mechanism is responsible for this trade-off: the tendency for customers and other stakeholders to assess the entrant's claim to originality based on the visible work that it has done to legitimate the new product or organizational form. This chapter extends and deepens our understanding of such “legitimation work” by showing how it can illuminate cases that seem in the first instance to defy this trade-off. In particular, we focus on two “off-diagonal” cases: (a) when, as in the case of “patent trolls” and fraudulent innovators, early entrants are viewed as inauthentic despite having a credible claim to originality; (b) when late entrants, as in the case of Dell Computers, mechanical watches and baseball ballparks, are viewed as authentic despite obviously not being the originators. We clarify how each off-diagonal case represents an ‘exception that proves the rule’ whereby audiences attribute authenticity on the basis of legitimation work rather than on the order of entry per se. The last case also leads to an opportunity to clarify why “cultural appropriation” can sometimes project authenticity and sometimes inauthenticity, why audiences bother to make inferences about a producer's authenticity on the basis of visible legitimation work, and why legitimacy is a universal goal of early movers whereas authenticity varies in its importance.

In this chapter we develop a new approach, based on the identification of strategy classes, to study how firms face multiple demands. The procedure that we propose (called Relational Class Analysis) stems from an analysis of the similarity of associative patterns across multiple observable outcomes, which reflect the underlying set of choices firms make to similarly address demands. Empirically, the study of 18 financial and extra-financial performance outcomes for 3,655 firms shows the existence of three main strategic classes. Drawing on our analysis, we redefine strategy as the set of committed decisions undertaken to resolve trade-offs between multiple concurrent objectives and discuss the implications of our approach for eight core questions for strategy and organizational theory.

In this study, we develop understanding of factors that shape the propensity of market incumbents to collaborate in response to the threat posed by new market entrants. We are particularly interested in instances when a market's competitive structure becomes unsettled by new entrants who engage in nonconforming strategic tactics. In such situations, we propose two factors – strategic similarity among competitors and market-share instability – will systematically shape competitors' collaborative response to new entrants. To test our theory, we use data on strategic tactics and collaborative dynamics in the US airline industry from 1989 to 2010. We demonstrate that greater strategic similarity among a market's incumbents increases the likelihood of cooperation in response to the threat of a nonconforming new entrant, while greater market-share instability reduces cooperative response. Through this study, we extend existing understanding of the contextual circumstances under which established competitors recognize their mutual interests and band together.

The purpose of this chapter is to review the accumulated research on a strategically important intangible asset – organizational reputation – and articulate promising research pathways forward. To do so, I first provide definitional clarity by comparing reputation to the related constructs of status, celebrity, legitimacy, and social approval and highlight the codifiable, cumulative, and beneficial nature of reputation. I then discuss three developments in reputation literature: (1) conceptualizing reputation as a multidimensional, rather than generalized, construct; (2) theorizing about reputational malleability rather than its path dependence; and (3) focusing on the costs of a high reputation in addition to its benefits. Based on these developments and the increasing role of social media in affecting and reflecting stakeholder perceptions, I discuss three pathways for future reputation research. Specifically, I focus on the decrease in credibility of powerful intermediaries and increase in stakeholder empowerment, conceptualization of reputation as a flow rather than a stock, and the role of strategic reticence. My hope is that this chapter will stimulate conceptual and empirical work on the role of reputation in the complex and dynamic era of social media.

We study ceremonial adoption of voluntary standards, where participants adopt the standard in principle but do not change their practices. Ceremonial adoption can benefit individual participants, who may be able to reap the benefits of association with the standard at lower cost, but it can be problematic for overall levels of adoption. We conceive of ceremonial adoption as an interaction between strategic incentives of participants and social ties to their audiences, such that not all participants are likely to ceremonially adopt. Our setting is the Leadership in Energy and Environmental Design (LEED) certification for sustainable construction. We study the conditions under which projects register for LEED certification, allowing them to claim affiliation with LEED, but then do not actually finish certification. While our data are correlational in nature, our results suggest that studying the competition for audience members (in our case, occupants) can provide greater understanding of certification behavior as well as overall levels of adoption. Our findings have implications for organizations that design and maintain voluntary standards and for organization theorists who wish to understand field-level change. Thus, we provide more evidence that strategy and organizational theory interact in important and often unexamined ways.

Corporate misconduct carries significant social and economic costs, and therefore regulators and other stakeholders seek to deter it. Despite the significant costs and deterrence efforts, corporate misconduct is widespread and our understanding of it is limited. As argued in this chapter, one key reason for this is the lack of understanding of the benefits and penalties of misconduct for the companies and individuals involved, as well as the detection of such behavior. This chapter seeks to advance our understanding of corporate misconduct and builds on the rational choice model (RCM) – where the decision to engage in misconduct hinges on a calculation of the expected costs and benefit – and links it to research in organization theory and strategy. Specifically, it sets a research agenda at the intersection of organizational and strategic perspectives, to deepen our understanding of corporate misconduct and shed light on opportunities for empirical and theoretical research which can potentially aid in developing effective deterrence strategies.

Strategy scholars have theorized that a firm's strategic leaders play an important role in firm dynamic capabilities (DCs). However, little research to date has studied how leaders shape the development of DCs. This inductive theory-building study sheds new light on the multilevel architecture of DCs by uncovering that the three core DCs – sensing, seizing, and reconfiguring – operate through distinct individual, group, and organizational processes. Further, the role of strategic leadership is critical as organizational processes create DCs only when they are purposefully designed by firms' strategic leaders to enable change and opportunity pursuit. Whether strategic leaders design processes for change and opportunity pursuit, in turn, reflects the extent to which they view change as positive and desirable. Our insights about the role of strategic leaders' positive attitude toward change as an important aspect of firm DCs uncover new interconnections between strategic leadership, organizational design, and the micro-foundations of DCs. Collectively our findings about the role of positive attitude toward change, the purposeful design of processes for change, and the varying manifestations of these processes at different levels of analysis reveal the coupling of strategic and organizational processes in enabling strategic dynamism and change.

Firm identities are central and enduring aspects of organizations. However, when firms develop unique identities, they also face an obvious paradox: strategic decisions that are inconsistent with those identities are likely to generate internal and external resistance. Indeed, decisions that entail identity-violating changes may have destabilizing consequences. Furthermore, firms typically face the demand of multiple audiences (or stakeholders) and, therefore, must conform to them in order to be seen as legitimate and have access to symbolic and material resources. Recognizing the influence of multiple audiences in identity construction opens the door to another paradox: what expectations should a firm heed while making those binding commitments that ultimately define its “identity”? These two paradoxes are at the heart of extant research on organizational identity, and addressing them requires a genuine engagement in conversations between disciplines, particularly among scholars working at the intersection between organization theory and strategy.