Integrating Time Into Family Business Research: Using Random Coefficient Modeling to Examine Temporal Influences on Family Firm Ambidexterity

Organizational ambidexterity refers to a firm’s ability to pursue both exploitation and exploration orientations. Despite research that suggests ambidexterity is a critical phenomenon in family firms, few studies directly examine the role of ambidexterity over time in family business. This study examines how family firm ambidexterity changes over time as a result of temporal-, firm-, and industry-level factors. We find that family firm ambidexterity is stable over time, punctuated by dramatic changes. We also find that the level of innovation required to compete in an industry is a predictor of changes in exploration versus exploitation over time among family firms.Yeshttps://us.sagepub.com/en-us/nam/manuscript-submission-guideline

Discretion within constraint: Homophily and structure in a formal organization

H omophily in social relations results from both individual preferences and selective opportunities for interaction, but how these two mechanisms interact in large, contemporary organizations is not well understood. We argue that organizational structures and geography delimit opportunities for interaction such that actors have a greater level of discretion to choose their interaction partners within business units, job functions, offices, and quasi-formal structures. This leads us to expect to find a higher proportion of homophilous interactions within these organizational structures than across their boundaries. We test our theory in an analysis of the rate of dyadic communication in an email data set comprising thousands of employees in a large information technology firm. These findings have implications for research on homophily, gender relations in organizations, and formal and informal organizational structure. Key words: social networks; homophily; informal structure; organizational structure; gender History: Published online in Articles in Advance February 12, 2013. Introduction Social interactions are notoriously homophilous In the organization theory literature, scholars have observed the uneven distribution of members of social groups across jobs and ranks in organizations and have argued that homophily tends to subtly reinforce social stratification by providing more beneficial social capital to members of majority groups In this paper, we argue that interaction patterns are strongly influenced by a firm's organizational structure and by its geography: unsurprisingly, people are far more likely to interact if they are assigned to the same business unit, job function, or office building, as well as if they share overlapping affiliations in work groups and other quasi-formal structures. But within the constraints established by organizational structures and physical locations, actors often have discretion to exercise choice homophily. We argue that much homophily arises from discretionary choice within the boundaries of the firm's formal and quasi-formal structures. These structures script the set of interactions that are necessary to carry out the business of the organization, and they determine which interactions are likely to arise out 1316 Kleinbaum, Stuart, and Tushman: Homophily and Structure in a Formal Organization Organization Science 24(5), pp. 1316 -1336 INFORMS 1317 of the convenience of physical proximity. Therefore, the organization bridges the mechanisms of homophily by establishing the consideration sets within which choices are exercised. Furthermore, we extend this theory in two ways. First, we argue that larger organizational structures afford greater freedom in selecting communication partners because they imply larger consideration sets, which will result in a higher level of choice homophily. Therefore, larger groups impose fewer constraints on who communicates with whom. As a result, we expect that the within-group homophily effect that we predict will be larger in magnitude in large groups than in small groups. Second, we argue that the role of geography differs theoretically from that of organizational structure: whereas organizational structure defines the boundaries of one's social sphere beyond a given geographic place, offices create convenience samples of local interaction partners. We argue that within-office interactions are much more likely to be infused with social content than are other communications within companies, and the preference for homophily will be strongest for socially laden exchanges. To measure homophilous interaction, we study the incidence of same-gender communication in electronic mail data. The results reveal a consistent pattern of interaction effects in which same-gender communications occur at a significantly higher rate in dyads assigned to the same business unit, job function, or office, relative to those dyads that do not. Upon deeper inspection, we find these effects to be strongest in large business units, job functions, and offices. As an extension to our analysis, we explore gender-specific differences in communication behavior. We find that the networks of both men and women exhibit some patterns consistent with our theory of discretion within the constraints given by formal structures, but we also highlight significant gender differences that merit future research. These findings have implications for research on homophily, gender in organizations, and organizational design. First, research has long distinguished opportunities for interaction from a preference for within-group ties as alternative mechanisms that generate homophily Homophily in Organizational Settings In a range of relationship types and across a diverse set of contexts, researchers have demonstrated that people associate more with others who are similar to themselves. Why is this so? One possibility is that actors have an underlying psychological preference to interact with others who are like themselves. There is evidence of such choice homophily in friendship networks among children Although the notion that homophily is both chosen and induced is not novel, our contribution lies in teasing There has been, of course, influential research on homophily in corporate settings (e.g., The Mechanisms of Homophily in Organizational Settings For individual preference to be a significant source of homophily in communication relationships within organizations, actors must have latitude to choose their interaction partners. To what extent do they have this in present-day organizations? And, across what dimensions of organizational structure are individuals most likely to have the greatest discretion to choose their contacts? After all, the formal structure of the organization is designed to execute a set of tasks, and therefore the structure itself induces a great deal of interaction. The question we explore is, where within the organization is discretion, as manifest in homophilous interaction, most apparent, given the multitude of interactions that are induced by the organization's formal and quasi-formal structures? We rely on several, classic lines of organization theory to describe the conditions under which actors are more likely to be free to choose with whom to interact. The earliest research on this question dates back to Within any organizational context, however, the discretion to select communication partners occurs within an organizationally defined choice set. The task structure of the firm, embodied in its formal organizational structure and geographic configuration (Galbraith 1973, Tushman and Business Units. Chandler (1962) famously characterized many of the large organizations since the turn of the last century as adopting M-forms, in which operational decisions occur within business units and strategic decisions are managed at the headquarters level. In this view, individuals whose task requirements necessitate reciprocal interdependence are organizationally colocated within a task-oriented business unit, which minimizes the costs of coordination within the organization When actors communicate across business units, we suspect that such communications are likely to be episodic and driven by a narrow, nonrecurrent set of task requirements. This suggests that individuals will be less likely to know a broad set of colleagues with the authority, responsibility, or expertise for the task at hand. Because these cross-unit interactions are more likely to be narrowly prescribed by the formal task responsibility, and because knowledge of the set of potential collaborators is limited, individuals often will communicate with a specific alter, rather than choose someone from among a set of possible, redundant exchange partners. Given that their choice set may be limited to those relatively few people whom they happen to know, they have less discretion in choosing their interaction partners in cross-unit communications. We therefore expect to observe less choice homophily across business unit boundaries than will occur within them. We hypothesize the following. Hypothesis 1. The rate of homophilous interaction will be higher for dyads in which members are employed in the same business unit than for dyads in which members work in two different business units. Functional Units. Within multidivisional firms, business units are further subdivided along functional lines (Galbraith 1973, Hrebiniak and Job functions, however, differ from business units in one important respect concerning their potential influence on the incidence of within-versus acrossorganizational-unit interaction. Like business units, job functions are a structural means to achieve a division of labor; however, unlike business units, job functions are explicitly designed to be interdependent Hypothesis 2. The rate of homophilous interaction will be higher for dyads in which members are employed in the same job function than for dyads in which members work in two different job functions. Quasi-Formal Organizational Structures. Of course, business unit and job function are the major categories of formal structure that organize people and tasks within organizations, but in contemporary organizations, there are myriad less permanent and less formal subdivisions and structures that further shape interaction patterns. For example, project-based work groups, committees, task forces, and line reporting structures are a few of the many substructures that mold interactions within the suprastructures of business unit, function, and office Within the context of the quasi-formal structure and its raison d'être, interactions may be prescribed. But participation in such structures allows individuals with little other basis for interaction to meet, thus creating opportunities for discretionary interaction in other contexts that are not available to otherwise similar dyad members who Such discretionary interactions will, other things being equal, be subject to choice homophily. Therefore, we hypothesize the following. Hypothesis 3. The rate of homophilous interaction will be higher for dyads in which members share affiliations in quasi-formal organizational structures than for dyads in which members do not. Geographic Units. In addition to formal and quasiformal organizational structure, there is abundant evidence of spatial effects in the formation of social relationships. Studies have found that ties are much more likely when two individuals live or work near one another (e.g., Whereas business units, job functions, and quasiformal structures focus interaction by prescribing specific job tasks, geographic proximity operates differently: it creates a convenience sample of possible exchange partners. Indeed, Zipf (1949) referred to the mechanism behind the proximity effect as "the principle of least effort," which underscores that the lowest cost interactions tend to be among colocated individuals. In formal organizational contexts, geographic colocation is a residual category of social organization. It may coincide with business unit and functional memberships, as organizations often choose to geographically group individuals who share common structural units. After accounting for affiliations to particular organizational units, however, colocation captures the ease of interaction. 1 Net of common organizational affiliations, we expect that colocated individuals will have a high degree of discretion in selecting interaction partners. Hypothesis 4. The rate of homophilous interaction will be higher for dyads in which members are employed in the same office location than for dyads in which members are employed in two different offices. Indeed, there is reason to expect that the greatest levels of homophily will occur within office boundaries. This is because of the nature of within-office ties: relative to other interactions that occur within organizations, we conjecture that intraoffice interactions are more likely to be informal and infused with social content. Why? Coffee and lunch breaks, casual banter, office and company gossip, and so forth all are forms of interaction that are greatly facilitated by physical proximity. Communications that are purely social in nature are indications of what Allen (1977) calls neutral social interactions: even if these interactions are not themselves generating productive output for the company, they indicate to the analyst-and reaffirm to the individuals themselves-an existing interpersonal relationship that makes each person a potential candidate to help the other person meet her discretionary informational needs (Kleinbaum 2012). Although the myriad incidental interactions that occur within offices begin as social ties, ultimately many of these connections become components of the productive effort of the enterprise. Regardless of where they fall on the continuum between social and work communications, we suspect that, as a proportion of total communications, interactions of a social nature are more prevalent within geographic office spaces than across them. In establishing informal interactions of this nature, individuals are relatively unconstrained by the organization's formal task structure relative to when their interactions are strictly task based. This leads us to postulate the following. Hypothesis 5. The rate of homophilous interaction for dyads in the same office will exceed the comparable rates for homophilous dyads in the same business unit, job function, or quasi-formal structures. Theoretical Extension: Group Size. In Hypotheses 1-4, we identified four organizational boundaries and argued that individuals will have greater discretion in the choice of partners when they are interacting within boundaries relative to when they are communicating across them. We extend this argument by positing that within each of these organizational units, the level of discretion in the choice of communication partners will be greater in large groups than in small groups. In each case, our argument is that, to a large extent, the formal and quasi-formal structures in large organizations determine the boundaries of individuals' social spheres: within these structures, people have many, often redundant, contacts; across them, interaction is less prevalent and less open to discretionary choice. If this line of reasoning is correct, we would further anticipate that one's ability to select into homophilous exchanges will be strongest within larger organizational units, for the simple reason that there is a greater availability of potential contacts from whom to select. Consequently, our theory suggests that the homophilous communication premium that we hypothesize to exist within business units, job functions, and offices should be more pronounced within large organizational units relative to small ones. 2 Hypothesis 6. The effect of homophily on the rate of interaction will be greater in magnitude in large business units, job functions, and offices than in small business units, job functions, and offices. Data and Methods Sample and Data Collection Data for this study were collected from "BigCo," a large information technology and electronics company. BigCo has 29 product divisions, organized into four primary product groups: hardware, software, technology services, and business services. Overlaid across the business unit structure is a formal lateral organization, in which each person is also assigned a job function. Within this formal structure, the employees of BigCo are widely dispersed geographically, with a relatively loose coupling between formal structure and geography. The data we analyzed include the complete record, as drawn from the firm's servers, of email communications among 30,328 employees. These data are well suited to test our hypotheses. First, because we can collect electronic communication data for large numbers of individuals at low cost, we can explore the determinants of homophilous interaction in a larger, more complex organization than those studied previously. Given our interest in the influence of organizational structure on shaping interaction, greater insights are possible from the study of a multibusiness, multifunction, multioffice organization (cf. All internal email information that was on the server at the time of data collection, spanning an observation period from September 2006 to December 2006, was included in our sample. BigCo provided the data in the form of 30,328 text files, each representing the communication activity of a single person, which we cleaned and parsed. To protect the privacy of individual employees, BigCo stripped all messages of their content, leaving only the metadata (e.g., sender and recipient, both encrypted to protect individual privacy; time stamp). We consolidated these files and expanded each multiple-recipient message to include one entry for each unique dyad. The final file contains 114 million dyadic communications. In the core models, we excluded "blind carbon copy," or Bcc, recipients (but results are robust to their inclusion), mass mailings (defined as messages with more than 4 recipients; results are robust to alternative thresholds of 1, 6, or 10 recipients), and direct interactions with administrative assistants. Imposing these screens shrinks the data set by almost an order of magnitude to 13 million emails. 3 For confidentiality reasons, BigCo would not disclose many sociodemographic variables such as employees' race, ethnicity, or age, but the company did provide gender and human resource (HR) information about each employee, which we were able to link to the communication data through encrypted employee identifiers. The HR data include each employee's business unit, major job function and subfunction, salary band, and office location code. Because it is available to us and because it has been the most studied dimension of homophilous interaction in the organizational theory literature, we used same gender as our measure of homophily. Numerous studies of homophily (e.g., Overall, BigCo's nonadministrative U.S. workforce is 69.9% male and 30.1% female. 4 The four major product groups of the company are similar in their gender composition, ranging from 25% to 28% female. The corporate sales organization and corporate headquarters have higher proportions of women than other units, at 32% and 39%, respectively. There is also some gendered sorting into job functions: in addition to administration, women are overrepresented in finance and form a majority of employees in the communications and human resource functions. Conversely, men are overrepresented in general executive management and in research and development. The two largest functions within the company, sales and services, have gender distributions similar to the company as a whole. The proportion of women at BigCo decreases with increasing rank. 5 The full sample contains 24% of BigCo's total U.S. employee population 6 but differs from that population in several respects. Therefore, the possibility exists that use of the full sample could produce findings that are biased in unknowable ways relative to the true patterns of interaction in BigCo. To guard against the risk that our findings are driven by sampling issues, we exploit our large sample size and our knowledge of the firm's population of U.S.-based employees to create a stratified random subsample of employees. Our subsampling approach, which maximizes the correspondence between the subsamples we draw and a set of population parameters, yields a subsample consisting of 15,240 employees. To assemble the representative subsample, we created a three-dimensional matrix of salary band (rank and file; middle managers; and each of band 11, 12, 13, and 14), function (general executive management, marketing, sales, services, and everyone else), and business unit (corporate headquarters and everyone else). For each of the 60 cells of this 6 × 5 × 2 matrix, we calculated the sampling probability that would be needed Kleinbaum, Stuart, and Tushman: Homophily and Structure in a Formal Organization 1322 Organization Science 24(5), pp. 1316 -1336 to achieve a subsample rate of 12.1% of the U.S. population of the firm. We chose to make our subsample representative of only selected groups to maintain a large sample size; had we made our subsample representative across all variables, we would have diminished our sample to just 2.9% of the U.S. population of the firm. Once we had these probabilities, we randomly determined whether each person in the overall sample, given her salary band, job function, and business unit, would be included in the subsample. Importantly, the gender distribution of both the full sample and subsample are representative of the employee population. The analyses we will present are based on the more conservative, random subsample, but the findings do not substantively change from the full sample or in various random draws of the subsample. Estimation Approach Scholars have proposed a number of methods to infer social networks from email data (e.g., Random sampling from the set of the 116 million dyads is one potential solution to this problem. However, this approach ignores the fact that the realized (nonzero) ties provide most of the information to identify the parameter estimates Our dependent variable is CommunicationFrequency, a count of the number of emails exchanged within each dyad. 7 To accommodate the case cohort data structure, we use a weighted quasi-maximum likelihood (QML) Poisson model. Because the Poisson is in the linear exponential family, the coefficient estimates are co

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