Categories and Classification

This theory or framework examines how markets and products are grouped into categories. This grouping serves many useful purposes, including communicating in simple terms what the product is because of the shared understandings. In some instances, products are very general and thus span multiple categories. This has been shown to have a negative impact. Another potential issue is the legitimation of (new) categories or products.

These are some important concepts:

• Market category is defined as a market identity, an exchange relation labeled with meaning, or a market specialization.
• Product categories are often given (for example movie genres) sometimes generated. 
• There are different types of market interactions. For example buyer-seller or critic-seller.
• In this case, the market intermediaries are the third parties (critics). 
• Unit of analysis: characteristics of product, organization, target audience.

Some papers in strategic management pertaining to categories and classification include:

• Zuckerman 1999
• Hsu, Hannan and Kocak 2009
• Navis and Glynn 2010
• Kim and Jensen 2011

(Adapted from course notes)

(Flashcards and other resources here)

Organizational Identity

Organizational Identity is defined as the members' collective, shared sense of who they are as an organization, collectively understood by an organization's members to be central, distinctive and enduring, collective-level, emergent and aspect of firm.

Identification, on the other hand, is the degree to which a member defines him or herself by the same attributes that he or she believes define the organization. The images that members hold of their organizations are unique to each member. It is also important to note that a person's beliefs may or may not match the collective organizational identity.

Both internal perception and perceptions of external opinions are formed through a process of ambiguity and sensemaking.

Key papers include:

• Dutton, Dukerich and Harquail 1994 
• Elsbach and Kramer 1996
• Pratt 2000
• Corley and Gioia 2004

(Adapted from course notes)

(Flashcards and other resources here)

Social Movements

There are many definitions for the concept of social movements. For instance, one definition focuses on social movements as a set of opinions that represents preferences for changing the social structure and or the reward distribution of a society (McCarthy & Zald, 1977). Another definition focuses on a collective attempt to change individuals or societal structures and institutions (Zald & Ash, 1966). A different definition is a lot more broad, discussing social movements as a large number of people making efforts to solve a problem they feel they have in common (Toch, 1965). There are more definitions of social movements than discussed above. Some are broad and others are narrower. However, there are a few aspects these definitions have in common. First they all refer to a group of people. Second, they all discuss collective action. And third, they all mention some form of outcomes.

In strategic management, we are concerned with social movements because organizations are target of, actors in, sites for, and manifestations of social movements. In addition, the market can also viewed as outcomes of social movements (Davis et al. 2008).

Key papers in social movements and organizations include:

• Davis et al. 2008
• McAdam and Scott 2005
• Haveman, Rao, Paruchuri 2007
• King and Soule 2007
• Lounsbury 2001
• Biscoe and Safford 2008

(Adapted from course notes)

(Flashcards and other resources here)

Social Network Theory

Social Network Theory (SNT) focuses on the relationship between two or more actors. The main concepts, then, are the actors also called nodes, and their relationship, or tie.  SNT is unique in that it is considered both a theory and a method.

Network Analysis Image from my methods class

It is a theory since it helps explain how social structure, network position, and overall network composition impacts behaviors and outcomes. Since this theory is focused on relationships, the have been measures developed to capture the nature of the relationships, which is why this is also a method. For example distance measures the paths between actors, centrality describes how important an actor is, and equivalence focuses on actors that occupy similar positions within a network.

This theory is focused on interpersonal relations, networks of organizations, location in a network of relations as well as the structure of the network affect organizational behavior and outcomes (White, Boorman & Breiger 1976). Furthermore, this theory vies the he activities of individual actors as inseparable from the context of relationships that they are embedded within (Granovetter, 1985).

As it is evident, the unit of analysis for this theory is the connection between to actors (which can be defined as individuals, organizations, countries, etc.).

This theory requires the use of unique vocabulary:

• Node: the unit of analysis
• Centrality: overall measurement of a node importance in the network 
• Distance: number of hops between a node and a specified other 
• Dyadic concepts: aspects of the relationship between two units 
• Tie strength: ties can be valued 
• Weak ties: indirect connections between nodes that are brokered by a third node 
• Structural concepts: aspects of the relationship between unites across the network
• Centralization: the extent to which ties are consolidated to a few key nodes
• Subgroups/communities: the existence of identifiable sub-clusters within the larger network
• Structural holes: gaps in the network structure that are bridged by a single factor
• Structural equivalence: idea that structurally similar positions well create similar outcomes
• Density: percentage of potential ties that actually exist

(Adapted from course notes)

(Flashcards and other resources here)

Institutional Theory

The institutional analysis of organizations has a long history (Parsons, 1956; Selznick, 1948, 1949, 1957).  Selznick focused on empirical analysis of organizations and their institutional environment and Parsons discussed how institutions integrate organizations in society by the use of authority, rules, and contracts (Powell, 1991; Scott & Davis, 2007). Often referred to as “old institutionalism,” scholarly work was focused on the importance of vested interests, informal structures, as well as values, norms, and attitudes (Powell, 1991; Selznick, 1996).

A new approach to the study of institutions and organizations, called “new institutionalism”, emerged with the work of Meyer and Rowan (1977). Their work emphasized the role of culture and rules leading organizations to look alike. Later, DiMaggio and Powell (1983) elaborated on this idea and by defining the three kinds of pressures on organizations to be similar to one another. These pressures, referred to as isomorphic forces, include coercive, normative, and mimetic. Coercive or regulative pressures make organizations adopt similar structures or rules. Normative pressures force organizations to adopt particular forms. And mimetic pressures compel organizations to copy one another, often due to uncertainty (DiMaggio & Powell, 1983).

Key concepts put forward by institutional theory include the definition of institutions, the role of institutional environments, and the importance of legitimacy. Institutions provide stability and meaning to social life, and are composed of “cultural-cognitive, normative, and regulative elements” (Scott, 1995). The institutional environments are the formal systems that shape and constrain an organization’s behavior. In addition, they “are characterized by the elaboration of rules and requirements to which individual organizations must conform in order to receive legitimacy and support” (Scott, 1995). Legitimacy allows organizations to gain acceptance in their institutional environments and survive.

Institutional research, then, has been focused on learning about conformity pressures and legitimacy building as mechanisms that lead to organizations to be uniform, and how this impacts their survival (DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Powell, 1991; Tolbert & Zucker, 1983; Zucker, 1977). A criticism of the emphasis on legitimacy emerged when Friedland and Alford (1991) claimed that the current explanations did not address the success and failure of institutionalization.

Key papers include:

• Meyer & Rowan 1977
• Fligstein 1985
• DiMaggio & Powell 1983
• Kraatz & Zajac 1996
• Tolbert & Zucker 1996

Related topics include:

• Institutional Entrepreneurship (Greenwood & Suddaby 2006)
• Institutional Logics (Thornton)

(Adapted from course notes and my research paper)

(Flashcards and other resources here)

Organizational Ecology

Organizational ecology theory has its roots in the natural selection work in biology. It is primarily concerned with the founding and death of organizations and organizational survival (Hannan & Freeman, 1977).

In addition, this theory focuses on organizational populations as the main unit of analysis. Therefore, research using an ecological perspective tends to look at sets of organizations over long periods of time.

The main components of this theory include inertia, age, and niche focus:

• Inertia refers to the idea that organizations formed under similar circumstances have similar features, which are retained over their lifespan (Hannan & Freeman, 1977). 
• Age concepts refer to the different pressures organizations face as they age. For instance, new organizations with new forms are more likely to fail (Stinchcombe, 1965). 
• And the niche focus concept explores how either a specialist or a generalist focus impacts organizational survival (Carroll, 1985).

The key concepts in this theory include:

• Variation, selection, retention, competition model (Darwinian vs. Lamarckian) 
• Liability of newness (Stinchcombe 1965) 
• Structural inertia (internal and external) (Meyer & Rowan 1977) 
• Generalist vs. specialist (Meyer & Rowan 1977) 
• Variability (degree of change) and grain (speed of change) 
• Resource partitioning 
• Niche overlap
• Localized competition Isomorphism to the context

(Adapted from course notes)

(Flashcards and other resources here)

Resource Dependence

Resource Dependency Theory (RDT) acknowledges that every organization needs resources to function. These resources can be found both within and outside an organization. When the resources are outside the focal organization, it leads to interdependence and therefore uncertainty.

Thus the central ideas of RDT deal with power over resources, the strategies organizations employ to gain access and maintain power over those resources, and the social context where these decision take place (Scott & Davis, 2007). In order to reduce interdependence and uncertainty, organizations seek power over their key resources. In order to gain that power, they may employ many strategies including forming alliances, associations, an co-optation (Scott & Davis, 2007).

Organizations must exchange with other organizations for resources to survive, but the interdependence leads to power differences. Managers act to reduce such dependence while increasing its own power in relation to others (Pfeffer and Salancik 1978).

RDT rests on the following assumptions:

• Organizations are comprised of internal and external alliances/coalitions created to influence or control.
• The environment has scarce and valuable resources essential for the organization.
• Organizations work to minimize dependence on other organizations and maximize other organization's dependence on them.

This theory can be applied at the organizational level by looking at power relationships among different organizations. It can also be applied at the unit level within an organization. Hillman, Withers and Collins (2009) have a useful review of how this theory has been used in management. They note that RDT has been tested in several corporate activities including mergers, vertical integration, joint ventures. They also note how this theory has applications in the study of inter-organizational relationships, board of directors, political action, and executive succession.

(Adapted from course notes)

(Flashcards and other resources here)

Contingency Theory

Contingency theory is primarily concerned with the idea that the organization should fit their internal organization to the environment.  This theory is focused on the individual organization and the choices made by the designers of the organization. In particular when it comes to the structure and scope that will yield the best outcomes. The concept of structure is defined as the level of formalization and centralization as well as the subunits created within the organization. The goal of the organization is to find the best fit between their chosen form and the environment. Ultimately, contingency theory does not prescribe one organizational form. Instead it argues that the best form is determined by the goodness of fit.

The logic of this theory is:

1. Assume that everything depends on their environment (Woodward 1958, Lawrence & Lorsch 1967). 
2. Given that there is no best way to organize and that any way of organizing is not equally effective (Galbraith 1973),
3. Organizations whose structures were best adapted to the environment are expected to perform best (Pfeffer 1982).

This theory, then, has three concepts of interest. First, is the environment. This leads designers of the organizations to select a particular structure. This in turn leads to certain performance.

Diagram of the theory:

(Adapted from course notes)

(Flashcards and other resources here)

Sociological Foundations of Strategic Management

Strategic management is, at its core, about how managers can transform environmental factors along with internal organizational resources to make decisions. These decisions should be based on goals and plans of action for reaching them.  The overarching goal is to guide the organization into the future in a dominant competitive position.

Given the importance of the environment in decision-making, sociology was a natural field for strategic management to draw on. The study of sociology centers around human social actions and social structure.

In 2004, W. Richard Scott published an article reviewing 50 years of organizational sociology. It this article, he detailed how the field has changed over time:

• During the early 20th century, the study of organizational sociology came from the engineering orientation (Taylor 1911, Fayol 1919/1949).  
• During the 1920s, the focus was on the historical view (Weber 1924/1968). 
• By the 1930s, social scientists focused on unofficial, informal patterns of cooperation, shared norms and conflicts .
• Then in the 1940s there was a shift in unit of analysis to organization (Barnard 1938, Selznick 1948). Researchers also looked at the paradox of manipulation and embeddedness. 
• The 1950s brought the Carnegie-Mellon School of thought typified by bounded rationality (Simon), and the Columbia School, which focused on unintended consequences of purposive action (Merton).
• The 1970s, researchers focused on perfect rationality vs. irrationality.
• And the 1980s brought a higher level of anlaysis (organizational population, organizational fields, and networks).

Since strategic management requires the understanding of the environment, many theories used place a strong focus on it. Some of the most relevant are:

• Contingency Theory: Galbraith 1973, Pfeffer 1982 
• Resource Dependence Theory: Pfeffer & Salancik 1978 
• Organizational Ecology: Stinchcombe 1965, Hannan & Freeman 1977 
• Neo-institutional Theory: Meyer & Rowan 1977, DiMaggio & Powell 1983 
• Networks: Granovetter 1985 
• Social Movements: David, Morrill, Rao and Soule 2008 (Review) 
• Organizational Identity: Dutton, Dukerich & Harguail 1994 
• Categories and Classification: Zuckerman 1999, Hsu 2005