AbstractThe purpose of this special topic forum is to call for research on the topic of minds and institutions. I briefly discuss three specific research opportunities: (1) bounded rationalityversusmind, (2) many minds and the interfaces of institutions, (3) the affordances of institutions and arbitrage. I then briefly introduce the two special topic forum papers and highlight how they link to the topic of minds and institutions.
In this paper we develop the outlines of a theory for the firm—a theory that guides a firm's path to value creation, in response to the critique by von Hippel and von Krogh [ von Hippel E, von Krogh G (2016) Identifying viable "need–solution pairs": Problem solving without problem formulation. Organ. Sci. 27:207–221; henceforth Hippel–Krogh] of the problem-solving perspective as a theory of value creation. Hippel–Krogh argue (a) that problems and solutions cannot always be separated because they often emerge as problem–solution or need–solution pairs that are discovered serendipitously, and (b) that deliberately formulating or choosing a single, fixed problem restricts the firm from accessing the vast array of external problem solvers and restricts the firm from valuable reformulations of the problem and "rich landscape search." Although Hippel–Krogh raise interesting and important arguments, we claim that they miss what is most central about the problem-solving approach: the comparative, organizational, and strategic aspects of the theory. However, their critique is also important because it draws attention to a critical void in the problem-solving perspective, namely, the need for firms to possess a theory to guide their efforts at value creation.We argue that this theory for the firm links problem solving with a broader theory of value creation, thus responding to the concerns raised by Hippel–Krogh. We discuss how firms theorize the process of value creation by articulating an overall architecture and bundle of problems around which each firm uniquely organizes and governs as a path to value creation. We provide two brief, informal examples (Starbucks and Apple) to illustrate our points, linking these examples to the need–solution landscape proposed by Hippel–Krogh. In all, we provide a broad sketch and outline of a theory of value creation as it relates to problem finding and problem solving while concurrently responding to points raised by Hippel–Krogh.
Abstract:Sidney Winter (2011), Brian Pentland (2011), and Geoffrey Hodgson and Thorbjørn Knudsen (2011) take issue with the arguments in Teppo Felin and Nicolai J. Foss (2011), along with more generally critiquing the 'microfoundations project' related to routines and capabilities. In this rejoinder we argue that the responses of our critics reinforce a number of the points stated in our writings on the routines and capabilities literature. In response to their many points we address the following key issues in the debate: (1) lack of construct clarity; (2) universal mechanisms or comparative chauvinism; (3) models of mind and man; (4) levels of analysis; (5) agency and uncaused causes; and then further discuss (6) a rationalist alternative.
Abstract:In this paper we discuss the origins and emergence of organizational routines and capabilities. We first argue that there are theoretical and endogeneity-related concerns associated with the key antecedents and mechanisms specified by the extant routines and capabilities literature. Specifically, we explicate the behaviorist and empiricist foundations of the organizational routines and capabilities literature and the extant emphasis placed on experience, repetition, and observation as the key antecedents and mechanisms of routines and capabilities. Based on this discussion we highlight several, endogeneity-related concerns, namely: (1) the problem of origins and causation, (2) the problem of extremes, (3) the problem of intentionality, (4) the problem of new knowledge, and (5) the problem of the environment. We introduce the 'poverty of stimulus' argument and discuss how an internalist or rationalist, choice-based approach can provide a more fruitful (though preliminary) foundation for understanding organizational behavior and capabilities.
We argue that Ferraro, Pfeffer, and Sutton build on a scientifically problematic conception of the relationship between theory and social reality. Specifically, the performativity perspective that they build on makes tenuous assumptions about the role that theories, whether true or not, play in strongly constructing social reality, but the perspective fundamentally ignores central matters related to human nature and the boundaries of possibility. We argue for a more realistic approach to theory building and social science, one that recognizes the role that true theories play in helping us understand and explain reality, but also in turn shaping that reality given this better theoretical understanding.
Organizational scholars have recently argued that economic theories and assumptions have adversely shaped management practice and human behavior, not only leading to the incorporation of trust-eroding market mechanisms into organizations, but also unnecessarily creating self-interested behavior. A number of highly influential papers have argued that the self-fulfilling nature of (even false) theories provides the underlying mechanism through which economics has adversely shaped not just social science but also management practice and individual behavior. We question these arguments and argue that there are important boundary conditions to theories falsely fulfilling themselves, boundary conditions that have hitherto been unexplored in organizational research, and boundary conditions that question the underlying premises used by organizational scholars and social scientists to attack economics. We specifically build on highly relevant findings from social psychology, philosophy, and organizational economics to show how (1) objective reality and (2) human nature provide two important boundary conditions for theories (falsely or otherwise) fulfilling themselves. We also defend organizational economics, specifically the use of high-powered incentives in organizations, and argue that self-interest (rightly understood) facilitates in creating beneficial individual and collective and societal outcomes.
