BUS 374 – Organization Theory Session 5 Consequences of acting differently

Jack of all trades and master of none – the case of generalist  Generalists vs Specialists  Niche width broader for generalists  Broader the niche more the audience  But appeal is lower for broader niche occupants  So there is a trade-off  How to resolve this?  Audience assessment is the key

Audience expectations and legitimacy  Audience set expectations  They evaluate organizations based on level of fitness to their expectations – greater fitness, greater legitimacy  i.e., conforming to audience expectations provides legitimacy

A study of Hollywood movie makers’ appeal to gatekeepers and audience  Producers have limited resources  Producers can choose to focus on limited or broad audience  i.e., producers could use the same amount of resources to either cater to one genre or multiple genres  All producers aim to cater to a wider audience  But is it acceptable behavior?

The role of the film critics  Critics influence audience interest in a film  How do critics evaluate?  Step 1: Decides if he/she will evaluate a movie  Asks if film is within any of the genres he evaluates  Step 2: Evaluates the movie  Asks how the film fares in comparison to other films in its genre  So a film producers should  First, gain the attention of the critics  Second, increase their appeal

No engagement, no audience  A film caters to a genre only if it engages with the audiences in that genre through different types of promos  Critics will consider a movie for evaluation only if they have been engaged by the film producer  If a film doesn’t engage audience of a genre, it doesn't cater to that audience  So if a genre can be seen as a niche, a film occupies a niche only if it engages with the audience in that genre  Film producers want to engage a wide range of audience  But engagement is a costly affair.

More engagement, more appeal  Given limited resources, film producer have to allocate their engagement with audience carefully  The more genres they engage with, the less they can engage with each.  The less genres they engage with, the more they can engage with each.  i.e., more engagement with a limited audience increases their appeal and less engagement with a wide audience limits their appeal

Some predictions about number of audience and appeal  The more the niches occupied, the larger the audience  The more the niches occupied, the lesser the appeal

Role of consensus  All critics should agree that a movie belongs to a certain genre  But more genres the film producer engages with, the less the consensus among critics  Greater the consensus among critics, the more the number of audience  The greater the consensus among critics, the greater the appeal to focal audience

The model Niche Width ConsensusAppeal

Limits of new institutionalism – Kraatz and Zajac, 1996  So is spanning genres always harmful?  A new institutional answer would be, yes!

New institutional expectations  In highly institutionalized organizational fields  Organizations do not deviate from institutional expectations  Organizations do not pay attention to technical environment  If there is any deviation at all, it reinforces homogeneity  Organizations tend to copy high status players  Diversity in local environment does not predict change  Illegitimate change (deviance) is punished  Technical considerations only predict early adopters, late adopters are merely copying the high status early adopters.

Non-profit liberal arts colleges and change in curriculum  They operate under highly structured environments  They are very similar to one another in practices  But… technical requirements are changing in the environment  Shift in student life goals – from meaningful life to wealth  Emphasis on specialized skills  Decline in college-age students  But adapting to such technical changes will be viewed as deviant

Did they deviate?  Yes, they did…  Towards a more vocational curriculum  More in tune with changing student life expectations  But less homogeneity due to this change  Greater variation in types of vocational programs offered  Increasing divide between identity of low and high status liberal arts colleges  Low status became more professionalized  Organizational change did result from diversity in environmental demand  Greater reliance on fee based income than endowments adapted most to new student expectations  Deviance did not significantly decrease survival rate  Motivation for early and late adopters of change was not significantly different

So does deviance hurt?  Audience is the key!  Audience provide vital resources for survival  Appealing to audience is crucial  More so, when an organization is more reliant on its audience  If audience want predictability, deviance hurts  If audience demand change, deviance pays, or at least doesn't hurt

That’s it for today  For next session: How do organizations evolve?