The ecology of management concepts

How does the popularity of a concept depend on how it contrasts with and complements existing concepts? We argue that being similar to existing concepts, being located in a popular domain, and being combined with similar existing concepts are important for gaining attention early on but less important and even negative for sustaining popularity. To examine this question, we focus on the rise and fall of management concepts. We analyze data on the rise and fall of keywords in the Harvard Business Review between 1922 and 2010. Multiple tests confirm our hypotheses. The implication is that lessons learned from studies of popular concepts can be misleading as guides for how to make novel concepts popular

The Economics of Strategic Opportunity

As emphasized by Barney (1986), any explanation of superior profitability must account for why the resources supporting such profitability could have been acquired for a price below their rent generating capacity. Building upon the literature in economics on coordination failures and incomplete markets, we suggest a framework for analyzing such strategic factor market inefficiencies. Our point of departure is that a strategic opportunity exists whenever prices fail to reflect the value of a resource's best use. This paper examines the challenges of imputing a resource's value in the absence of explicit price guidance and suggests the likely characteristics of strategic opportunities. Our framework also suggests that the discovery of strategic opportunity is often a matter of serendipity and access to relevant idiosyncratic resources. This latter observation provides prescriptive advice, although the analysis also explains why more detailed guidance has to be firm specific.

When more selection is worse

We demonstrate a paradox of selection: the average level of skill among the survivors of selection may initially increase but eventually decrease. This result occurs in a simple model in which performance is not frequency dependent, there are no delayed effects, and skill is unrelated to risk-taking. The performance of an agent in any given period equals a skill component plus a noise term. We show that the average skill of survivors eventually decreases when the noise terms in consecutive periods are dependent and drawn from a distribution with a “long” tail—a sub-class of heavy-tailed distributions. This result occurs because only agents with extremely high level of performance survive many periods, and extreme performance is not diagnostic of high skill when the noise term is drawn from a long-tailed distribution

When reinforcing processes generate an outcome-quality dip

When does market success indicate superior merit? We show that when consumer choices between products with equal prices depend on quality but also on past popularity, more popular products are not necessarily of higher quality. Rather, a medium level of popularity may be associated with lower quality than lower levels of popularity. Using a formal model, we show that this kind of nonmonotonic association occurs when reinforcing processes are strong. More generally, a dip can occur when outcomes depend on both quality and resources and the latter are allocated bimodally, with some being given a lot of resources and most receiving little. Empirically, we illustrate that such a dip occurs in the association between movie theater sales and ratings. The presence of a dip in the outcome-quality association complicates learning from market outcomes and evaluation of individuals and new ventures, challenges the legitimacy of stratification systems, and creates opportunities for sophisticated evaluators who understand the dip

Strategizing with biases : engineering choice contexts for better decisions using the Mindspace approach

We introduce strategists to the Mindspace framework and explore its applications in strategic contexts. This framework consists of nine effective behavioral interventions which are grounded in the public policy applications, and focuses on how changing the context can be more effective than attempts to de-bias decision-makers. Behavioral changes are likely when we follow rather than fight human nature. Better decisions can be achieved by engineering choice contexts to “engage a bias” to overcome a more damaging bias. We illustrate how to engineer strategic contexts through two case studies and outline directions and challenges when applying Mindspace to strategic decisions

Illusory Correlations as the Outcome of Experiential Sampling

Individuals are typically more likely to repeatedly select alternatives they have a positive impression of. This paper shows that this sequential sampling feature of the information acquisition process might lead to the emergence of illusory correlation between attributes of multi-attribute alternatives. This suggests an alternative explanation for illusory correlation that does not rely on biased information processing. The model also shows that illusory correlation can emerge even when the attributes are independently distributed and the distributions are not skewed