This paper develops grounded theory on how receiving respect at work enables individuals to engage in positive identity transformation and the resulting personal and work-related outcomes. A company that employs inmates at a state prison to perform professional business-to-business marketing services provided a unique context for data collection. Our data indicate that inmates experienced respect in two distinct ways, generalized and particularized, which initiated an identity decoupling process that allowed them to distinguish between their inmate identity and their desired future selves and to construct transitional identities that facilitated positive change. The social context of the organization provided opportunities for personal and social identities to be claimed, respected, and granted, producing social validation and enabling individuals to feel secure in their transitional identities. We find that security in personal identities produces primarily performance-related outcomes, whereas security in the company identity produces primarily well-being-related outcomes. Further, these two types of security together foster an integration of seemingly incompatible identities—"identity holism"—as employees progress toward becoming their desired selves. Our work suggests that organizations can play a generative role in improving the lives of their members through respect-based processes.
In this paper, we examine when members of underrepresented groups choose to support each other, using the context of the funding of female founders via donation-based crowdfunding. Building on theories of choice homophily, we develop the concept of activist choice homophily, in which the basis of attraction between two individuals is not merely similarity between them, but rather perceptions of shared structural barriers stemming from a common social identity based on group membership. We differentiate activist choice homophily from homophily based on the similarity between individuals ("individual choice homophily"), as well as from "induced homophily," which reflects the likelihood that those in a particular social category will affiliate and form networks. Using lab experiments and field data, we show that activist choice homophily provides an explanation for why women are more likely to succeed at crowdfunding than men and why women are most successful in industries in which they are least represented.
Using a case study of the Italian spirit grappa, we examine status recategorization—the vertical extension and reclassification of an entire market category. Grappa was historically a low-status product, but in the 1970s one regional distiller took steps that led to a radical break from its traditional image, so that in just over a decade high-quality grappa became an exemplar of cultured Italian lifestyle and held a market position in the same class as cognac and whisky. We use this context to articulate "theorization by allusion," which occurs through three mechanisms: category detachment—distancing a social object from its existing category; category emulation—presenting that object so that it hints at the practices of a high-status category; and category sublimation—shifting from local, field-specific references to broader, societal-level frames. This novel theorization is particularly appropriate for explaining change from low to high status because it avoids resistance to and contestation of such change (by customers, media, and other sources) as a result of status imperatives, which may be especially strong in mature fields. Unlike prior studies that have examined the status of organizations within a category, ours foregrounds shifts in the status and social meaning of a market category itself.
In an analysis of data on employment in the 48 contiguous United States from 1978 to 2008, we examine the connection between organizational demography and rising income inequality at the state level. Drawing on research on social comparisons and firm boundaries, we argue that large firms are susceptible to their employees making social comparisons about wages and that firms undertake strategies, such as wage compression, to help ameliorate their damaging effects. We argue that wage compression affects the distribution of wages throughout the broader labor market and that, consequently, state levels of income inequality will increase as fewer individuals in a state are employed by large firms. We hypothesize that the negative relationship between large-firm employment and income inequality will weaken when large employers are more racially diverse and their workers are dispersed across a greater number of establishments. Our results show that as the number of workers in a state employed by large firms declines, income inequality in that state increases. When these firms are more racially diverse, however, the negative relationship between large-firm employment and income inequality weakens. These results point to the importance of considering how corporate demography influences the dispersion of wages in a labor market.
Using two longitudinal panel datasets of Chinese manufacturing firms, we assess whether state ownership benefits or impedes firms’ innovation. We show that state ownership in an emerging economy enables a firm to obtain crucial R&D resources but makes the firm less efficient in using those resources to generate innovation, and we find that a minority state ownership is an optimal structure for innovation development in this context. Moreover, the inefficiency of state ownership in transforming R&D input into innovation output decreases when industrial competition is high, as well as for start-up firms. Our findings integrate the efficiency logic (agency theory), which views state ownership as detrimental to innovation, and institutional logic, which notes that governments in emerging economies have critical influences on regulatory policies and control over scarce resources. We discuss the implications of these findings for research on state ownership and firm innovation in emerging economies.
In this paper, we study the way that nascent occupations constructing an occupational mandate invoke not only skills and expertise or a new technology to distinguish themselves from other occupations, but also their values. We studied service design, an emerging occupation whose practitioners aim to understand customers and help organizations develop new or improved services and customer experiences, translate those into feasible solutions, and implement them. Practitioners enacted their values in their daily work activities through a set of material practices, such as shadowing customers or front-line staff, conducting interviews in the service context, or creating "journey maps" of a service user’s experience. The role of values in the construction of an occupational mandate is particularly salient for occupations such as service design, which cannot solely rely on skills and technical expertise as sources of differentiation. We show how service designers differentiated themselves from other competing occupations by highlighting how their values make their work practices unique. Both values and work practices, what service designers call their ethos, were essential to enable service designers to define the proper conduct and modes of thinking characteristic of their occupational mandate.
Federal agencies and universities in the U.S. promote interdisciplinary research because it presumably spurs transformative, innovative science. Using data on almost 900 research-center–based scientists and their 32,000 published articles, along with a set of unpublished papers, we assess whether such research is indeed beneficial and whether costs accompany the potential benefits. Existing research highlights this tension: whereas the innovation literature suggests that spanning disciplines is beneficial because it allows scientists to see connections across fields, the categories literature suggests that spanning disciplines is penalized because the resulting research may be lower quality or confusing to place. To investigate this, we empirically distinguish production and reception effects and highlight a new production penalty: lower productivity, which may be attributable to cognitive and collaborative challenges associated with interdisciplinary research and/or hurdles in the review process. Using an innovative measure of interdisciplinary research that considers the similarity of the disciplines spanned, we document both penalties (fewer papers published) and benefits (increased citations) associated with it and show that it is a high-risk, high-reward endeavor, one that partly depends on field-level interdisciplinarity.
We examine how directors’ political ideologies, specifically the board-level average of how conservative or liberal directors are, influence boards’ decisions about CEO compensation. Integrating research on corporate governance and political psychology, we theorize that conservative and liberal boards will differ in their prevailing beliefs about the appropriate amounts CEOs should be paid and, relatedly, the extent to which CEOs should be rewarded or penalized for recent firm performance. Using a donation-based index to measure the political ideologies of directors serving on S&P 1500 company boards, we test our ideas on a sample of over 4,000 CEOs from 1998 to 2013. Consistent with our predictions, we show that conservative boards pay CEOs more than liberal boards and that the relationship between recent firm performance and CEO pay is stronger for conservative boards than for liberal boards. We further demonstrate that these relationships are more pronounced when focusing specifically on the directors most heavily involved in designing CEO pay plans—members of compensation committees. By showing that board ideology manifests in CEO pay, we offer an initial demonstration of the potentially wide-ranging implications of political ideology for how corporations are governed.
This paper examines foundings of human services organizations after natural disasters such as floods, earthquakes, wildfires, hurricanes, and tsunamis and explains why only some communities bounce back by founding appropriate collective-goods organizations. Using natural disasters in California counties from 1990 to 2010 as shocks that exogenously impose a need for collective goods over and above the level endogenous to the community, this paper shows that a geographic community’s local organizing capacity rests on the richness of its repertoire of voluntary organizing models as reflected in the diversity of its voluntary associations. Such diversity is even more critical when the type of natural disaster is more unexpected or complex (e.g., both a wildfire and an earthquake) in an area, and the organizational challenges posed are thus more novel for the community. Associational diversity has positive effects on both the numbers and aggregate size of foundings of local (non-branch, secular) human services organizations, and the effects are generalizable to other endogenous demand conditions such as poverty. Results also show how different kinds of variety can have opposing effects on organizing capacity after a disaster, with associational diversity having a positive effect, political diversity having a negative effect, and racial diversity having no significant effect, net of other factors. The paper concludes with a call for treating community resilience as a matter of enhancing local organizing capacity over centralized planning efforts when the environment is rapidly changing.
How CEOs think and feel about time may have a big influence on their firms’ strategies. We examine how two distinct CEO temporal dispositions—time urgency (the feeling of being chronically hurried) and pacing style (one’s pattern of effort over time in working toward deadlines)—each influence corporate entrepreneurship, a key strategic behavior. We propose that CEOs’ temporal leadership—how they manage the temporal aspects of top management teams’ activities—mediates the relationships between their temporal dispositions and corporate entrepreneurship—firms’ innovation, corporate venturing, and strategic renewal activities. Using a sample of 129 small and medium-sized Chinese firms, we find that CEOs’ time urgency is positively related to their temporal leadership, which in turn is positively related to corporate entrepreneurship. We also examine the effects of three distinct pacing styles: early-action, meaning the CEO exerts the most effort early in the task process and relaxes as the deadline nears; steady-action, meaning the CEO spreads out effort evenly across the time allotted; and deadline-action, meaning the CEO is most active as the deadline nears. We find that the deadline-action style inhibits CEOs’ temporal leadership, but the steady-action and early-action styles have similar effects on their temporal leadership. This study explicates the dispositional basis of executives’ subjective views of time, demonstrating how CEOs’ temporal dispositions shape firms’ behaviors.
Salient successes and failures, such as spectacular venture capital investments or agonizing bankruptcies, affect collective beliefs about the viability of particular markets. Using data on software start-ups from 1990 to 2002, we show that collective sense-making in the wake of such vital events can result in consensus behavior among entrepreneurs. Market search is a critical part of the entrepreneurial process, as entrepreneurs frequently enter new markets to find high-growth areas. When spectacular financings result in a collective overstatement of the attractiveness of a market, a consensus emerges that the market is resource-rich, and the path is cleared for many entries, including those that do not have a clear fit. When notorious failures render a market unpopular, only the most viable entrants will overcome exaggerated skepticism and enter, taking the non-consensus route. Venture capitalists likewise exhibit herding behavior, following other VCs into hot markets. We theorize that vital events effectively change the selection threshold for market entries, which changes the average viability of new entrants. We find that consensus entrants are less viable, while non-consensus entrants are more likely to prosper. Non-consensus entrepreneurs who buck the trends are most likely to stay in the market, receive funding, and ultimately go public.
Economic transitions in countries that move from state planning and redistribution to market exchange create business opportunities but also uncertainty, because many interdependent factors—modes of exchange, types of products, and forms of organizations—are in flux. Uncertainty is even greater when the country’s political institutions remain authoritarian because the rule of law is weak and state bureaucrats retain power over the economy. This study of listed firms in China, which has recently seen economic transition but persistent authoritarianism, shows that in such contexts, firms can reduce uncertainty by developing relationships with state bureaucrats, which help firms learn how state bureaucracies operate and engender trust between firms and bureaucrats. Together, knowledge and trust stabilize operations and help persuade bureaucrats to lighten regulatory burdens, grant firms access to state-controlled resources, and improve government oversight. Our results show that as economic transitions proceed and uncertainty increases, business–state ties increasingly improve firm performance. We also investigate two likely contingencies, industry and firm size, and two important causal mechanisms, access to bank loans and protection from related-party loans, and show that the value of business–state relations varies over time, depending on the trajectory of both economic and political institutions.
I examine how different distributions of ownership and governance rights in firms affect the optimal organization of cross-functional project teams for knowledge-intensive work. I analyze multi-method data from two competing automated manufacturing equipment engineering firms with contrasting formal power structures, one a worker cooperative with ownership and governance rights distributed across occupations and the other a conventional firm with ownership and governance rights concentrated in the hands of several senior workers in one occupational group. Contrary to prior research, my findings suggest that when collective tasks are uncertain and complex, the benefits of cross-functional interactions depend on organizations’ formal power structure: cross-functional interactions improve teams’ productivity in the context of concentrated ownership and governance rights but not when ownership and governance rights are widely distributed among workers. Fieldwork at the two firms revealed three mechanisms by which dispersed formal power decreases the productivity benefits of cross-functional interaction: it reduces status distinctions among team members, increasing the labor hours required to resolve conflicts; boosts participation in oversight and coordination processes outside teams so that workers have more access to information and less need for cross-functional interactions; and increases the distribution of knowledge-management technology, which increases workers’ autonomy and reduces the value of cross-functional interactions.
We examine how organizations select some routines to be changed, but not others, during organizational search. Selection is a critical step that links an exogenous trigger for change, change in individual routines, and larger processes of organizational adaptation. Drawing on participant observation of an initiative to improve perioperative efficiency in seven Ontario hospitals, we find that organizational roles shape selection by influencing both politics and frames in organizational search. Roles shape politics by defining the role-specific goals of the people who have authority to change a routine. Organizations will not select a routine for change unless at least some elites—people with role-based authority—frame the existing routine as negatively affecting their role-specific goals. Roles also shape individuals’ frames. Because people are only partially exposed to interdependencies between routines in their day-to-day work, they may not be fully aware of the diverse impact that an existing routine can have on their goals. Proponents for change can use strategic framing to focus attention on interdependencies between routines to get elites to better see how an existing routine negatively affects their goals. They can also change elites’ goals by using strategic framing to focus attention on new and broader goals that the change in routine would promote.
This paper examines how organizations collaborate with multiple partners, such as when they develop innovative and complex product platforms like smartphones, servers, and MRI machines that rely on technologies developed by organizations in three or more sectors. Research on multipartner alliances often treats them as a collection of independent dyads, neglecting the possibility of third-party influence and interference in dyads that can inhibit innovation. Using a multiple-case, inductive study of six groups, each composed of three organizations engaged in technology and product development in the computer industry, I examine the collaborative forms and processes that organizations use to innovate with multiple partners in groups. Groups that used the collaborative forms of independent parallel dyads or single unified triads generated mistrust and conflict that stemmed from expectations about third-party participation and overlapping roles and thus had low innovation performance and weaker ties. Other groups avoided these problems by using a dynamic collaboration process that I call "group cycling," in which managers viewed their triad as a small group, decomposed innovative activities into a series of interlinked dyads between different pairs of partners, and managed third-party interests across time. By temporarily restricting participation to pairs, managers chose which ideas, technologies, and resources to incorporate from third parties into single dyads and ensured that the outputs of multiple dyads were combined into a broader innovative whole.
This paper explores whether and how social activists’ challenges affect politicians’ willingness to associate with targeted firms. We study the effect of public protest on corporate political activity using a unique database that allows us to analyze empirically the impact of social movement boycotts on three proxies for associations with political stakeholders: the proportion of campaign contributions that are rejected, the number of times a firm is invited to give testimony in congressional hearings, and the number of government procurement contracts awarded to a firm. We show that boycotts lead to significant increases in the proportion of refunded contributions, as well as decreases in invited congressional appearances and awarded government contracts. These results highlight the importance of considering how a firm’s sociopolitical environment shapes the receptivity of critical non-market stakeholders. We supplement this analysis by drawing from social movement theory to extrapolate and test three key mechanisms that moderate the extent to which activists’ challenges effectively disrupt corporate political activity: the media attention a boycott attracts, the political salience of the contested issue, and the status of the targeted firm.
This 12-month ethnographic study of an early entrant into the U.S. car-sharing industry demonstrates that when an organization shifts its focus from developing radical new technology to incrementally improving this technology, the shift may spark an internal power struggle between the dominant engineering group and a challenger occupational group such as the marketing group. Analyzing 42 projects in two time periods that required collaboration between engineering and marketing during such a shift, we show how cross-occupational collaboration under these conditions can be facilitated by a radical flank threat, through which the bargaining power of moderates is strengthened by the presence of a more-radical group. In the face of a strong threat by radical members of a challenger occupational group, moderate members of the dominant engineering group may change their perceptions of their power to resist challengers’ demands and begin to distinguish between the goals of radical versus more-moderate challengers. To maintain as much power as possible and prevent the more-dramatic change in engineering occupational goals demanded by radical challengers, moderate engineers may build a coalition with moderate challengers and collaborate for incremental technology development.
Betting on the most promising new ideas is key to creativity and innovation in organizations, but predicting the success of novel ideas can be difficult. To select the best ideas, creators and managers must excel at creative forecasting, the skill of predicting the outcomes of new ideas. Using both a field study of 339 professionals in the circus arts industry and a lab experiment, I examine the conditions for accurate creative forecasting, focusing on the effect of creators’ and managers’ roles. In the field study, creators and managers forecasted the success of new circus acts with audiences, and the accuracy of these forecasts was assessed using data from 13,248 audience members. Results suggest that creators were more accurate than managers when forecasting about others’ novel ideas, but not their own. This advantage over managers was undermined when creators previously had poor ideas that were successful in the marketplace anyway. Results from the lab experiment show that creators’ advantage over managers in predicting success may be tied to the emphasis on both divergent thinking (idea generation) and convergent thinking (idea evaluation) in the creator role, while the manager role emphasizes only convergent thinking. These studies highlight that creative forecasting is a critical bridge linking creativity and innovation, shed light on the importance of roles in creative forecasting, and advance theory on why creative success is difficult to sustain over time.
Using interviews, a laboratory experiment, and a résumé audit study, we examine racial minorities’ attempts to avoid anticipated discrimination in labor markets by concealing or downplaying racial cues in job applications, a practice known as "résumé whitening." Interviews with racial minority university students reveal that while some minority job seekers reject this practice, others view it as essential and use a variety of whitening techniques. Building on the qualitative findings, we conduct a lab study to examine how racial minority job seekers change their résumés in response to different job postings. Results show that when targeting an employer that presents itself as valuing diversity, minority job applicants engage in relatively little résumé whitening and thus submit more racially transparent résumés. Yet our audit study of how employers respond to whitened and unwhitened résumés shows that organizational diversity statements are not actually associated with reduced discrimination against unwhitened résumés. Taken together, these findings suggest a paradox: minorities may be particularly likely to experience disadvantage when they apply to ostensibly pro-diversity employers. These findings illuminate the role of racial concealment and transparency in modern labor markets and point to an important interplay between the self-presentation of employers and the self-presentation of job seekers in shaping economic inequality.
Open networks give actors non-redundant information that is diverse, while closed networks offer redundant information that is easier to interpret. Integrating arguments about network structure and the similarity of actors’ knowledge, we propose two types of network configurations that combine diversity and ease of interpretation. Closed-diverse networks offer diversity in actors’ knowledge domains and shared third-party ties to help in interpreting that knowledge. In open-specialized networks, structural holes offer diversity, while shared interpretive schema and overlap between received information and actors’ prior knowledge help in interpreting new information without the help of third parties. In contrast, actors in open-diverse networks suffer from information overload due to the lack of shared schema or overlapping prior knowledge for the interpretation of diverse information, and actors in closed-specialized networks suffer from overembeddedness because they cannot access diverse information. Using CrunchBase data on early-stage venture capital investments in the U.S. information technology sector, we test the effect of investors’ social capital on the success of their portfolio ventures. We find that ventures have the highest chances of success if their syndicating investors have either open-specialized or closed-diverse networks. These effects are manifested beyond the direct effects of ventures’ or investors’ quality and are robust to controlling for the possibility that certain investors could have chosen more promising ventures at the time of first funding.
To understand how organizations combine conflicting institutional logics strategically to create and pursue new market opportunities, we conducted an in-depth longitudinal study of the multiple efforts of the Italian manufacturer of household goods Alessi to combine the logics of industrial manufacturing and cultural production. Over three decades, Alessi developed three different strategies to combine normative elements of the two logics, using each strategy to envision and pursue different market opportunities. By combining the logics of industrial manufacturing and cultural production, Alessi was able to envision new possibilities for value creation and to enact them through innovation in product design. The three strategies triggered a common set of mechanisms through which the purposeful combining of logics enabled the pursuit of opportunity, while each strategy structured the process differently. We develop a theoretical model linking the development of recombinant strategies to the dynamic restructuring of organizational agency and the related capacity to create and pursue new market opportunities. Our findings and theoretical insights advance understanding of the processes through which organizations challenge taken-for-granted beliefs and practices to create new market opportunities, use logics as resources to enable embedded agency, and design hybrid organizational arrangements.
Jerry Davis’s (2015) question "What is organizational research for?" is ill-served by the narrow answer "settled science." Constraints of comprehension may give the illusion that organizational research represents settled science. But the experience of inquiring actually comprises a greater variety of actions that increase the meaning of present research experience and the contributions it makes. I discuss acts of conjecture, differentiation, attachment, affirmation, complication, discernment, interruption, and representation to illustrate that meaningful contributions are generated by actions associated with connecting perceptions to concepts. ASQ’s 60th anniversary is an opportune time to make these interim contributions more explicit.
We use data from a 12-month ethnographic study of two medical-surgical units in a U.S. hospital to examine how members from different occupations can collaborate with one another in their daily work despite differences in status, shared meanings, and expertise across occupational groups, which previous work has shown to create difficulties. In our study, nurses and patient care technicians (PCTs) on both hospital units faced these same occupational differences, served the same patient population, worked under the same management and organizational structure, and had the same pressures, goals, and organizational collaboration tools available to them. But nurses and PCTs on one unit successfully collaborated while those on the other did not. We demonstrate that a social structure characterized by cross-cutting demographics between occupational groups—in which occupational membership is uncorrelated with demographic group membership—can loosen attachment to the occupational identity and status order. This allows members of cross-occupational dyads, in our case nurses and PCTs, to draw on other shared social identities, such as shared race, age, or immigration status, in their interactions. Drawing on a shared social identity at the dyad level provided members with a "dyadic toolkit" of alternative, non-occupational expertise, shared meanings, status rules, and emotional scripts that facilitated collaboration across occupational differences and improved patient care.
In this longitudinal study, we build a theory of a culture of companionate love—feelings of affection, compassion, caring, and tenderness for others—at work, examining the culture’s influence on outcomes for employees and the clients they serve in a long-term care setting. Using measures derived from outside observers, employees, family members, and cultural artifacts, we find that an emotional culture of companionate love at work positively relates to employees’ satisfaction and teamwork and negatively relates to their absenteeism and emotional exhaustion. Employees’ trait positive affectivity (trait PA)—one’s tendency to have a pleasant emotional engagement with one’s environment—moderates the influence of the culture of companionate love, amplifying its positive influence for employees higher in trait PA. We also find a positive association between a culture of companionate love and clients’ outcomes, specifically, better patient mood, quality of life, satisfaction, and fewer trips to the emergency room. The study finds some association between a culture of love and families’ satisfaction with the long-term care facility. We discuss the implications of a culture of companionate love for both cognitive and emotional theories of organizational culture. We also consider the relevance of a culture of companionate love in other industries and explore its managerial implications for the healthcare industry and beyond.
In this paper, we use an agent-based simulation model to investigate how coordinated exploration by multiple specialists, as in new product development, is different from individual search. We find that coordinated exploration is subject to two pathologies not present in unitary search: mutual confusion and joint myopia. In joint search, feedback to one agent’s actions is confounded by the actions of the other agent. Search therefore leads to increasing mutual confusion because agents are unable to learn from feedback to correct their faulty mental models of the search space. Incorrect beliefs held by one agent lead to mistakes, and because it is unclear which agent was wrong, this confuses the other agent, either into revising (correct) beliefs or holding on to (incorrect) beliefs. Sharing knowledge aligns specialists’ mental models and counters mutual confusion by inducing coordination around particular search regions. Yet that very effort increases joint myopia, as agents prematurely reinforce each other into choosing from an increasingly narrow portion of the search space. In the extreme, high levels of shared knowledge induce agents to abandon their distinct search approach in favor of a lower common denominator. In coordinated exploration, increasing coordination efforts (such as by increasing communication) reduces mutual confusion but simultaneously increases joint myopia. Efforts to reduce joint myopia, such as by slow learning or lower levels of knowledge transfer, however, automatically increase mutual confusion. As modeled in our simulation, successful joint search needs to balance these two effects. Our results suggest that because unitary-searcher models abstract from epistemic interdependence, their predictions are potentially misleading for coordinated exploration.
We report the results of an ethnographic study of a natural food cooperative in which we found an inherent tension in its mission between idealism and pragmatism, and we explore the dynamics through which that tension was managed and engaged in day-to-day governance and activities. Insights from participant observation, archival data, semi-structured interviews, and surveys provide a detailed and holistic account of the intergroup and intragroup processes through which the co-op negotiated its dualistic nature, as embodied in its hybrid organizational identity. The findings suggest that the value of each side of the duality was recognized at both the individual and organizational levels. Members’ discomfort with the duality, however, led them to split the mission in two and identify with one part, while projecting their less-favored part on others, creating an identity foil (an antithesis). This splitting resulted in ingroups and outgroups and heated intergroup conflict over realizing cooperative ideals vs. running a viable business. Ingroup members favoring one part of the mission nonetheless identified with the outgroup favoring the other because it embodied a side of themselves they continued to value. Individuals who exemplified their ingroup’s most extreme attributes were seen by the outgroup as prototypical, thus serving as "lightning rods" for intergroup conflict; this dynamic paradoxically enabled other ingroup members to work more effectively with moderate members of the outgroup. The idealist–pragmatist duality was kept continually in play over time through oscillating decisions and actions that shifted power from one group to the other, coupled with ongoing rituals to repair and maintain relationships disrupted by the messiness of the process. Thus ostensible dysfunctionality at the group level fostered functionality at the organizational level.
Through archival data from 225 local banks founded between 2006 and 2009, as well as interviews with 73 bank founders, this paper explores the influence of founders’ institutional logics, specifically financial and community logics, on the degree of risk taking in the organizations they found. Local bank founders steeped in a financial logic see the bank as an investment vehicle and seek to maximize profits, while those motivated by a community logic are driven to meet community needs and focus less on profits. Despite demands from regulators and consultants that promote uniformity of operations, variation exists in banks’ risk strategies that seems connected to values and taken-for-granted predispositions inherent in such institutional logics. But such a connection is empirically demonstrated only in banks with larger founding teams. In those, increased internal representation of a financial logic is associated with higher use of risky deposit instruments to finance rapid asset growth, while a higher representation of a community logic is associated with lower use of such risky instruments. Furthering research on hybrid organizations that combine competing logics, this paper suggests that individuals are more likely to be the carriers of institutional influences especially when operating collectively in larger teams, in which one expects more group conformity and diffusion of responsibility. In smaller teams, individual discretion is more likely to dominate institutional forces.