1. Old Wine in Big Bottles: The New Behavioral Theory of the Firm Henrich R. Greve Professor of Strategy Norwegian School of Management BI

2. © Henrich R. Greve

3. Old Wine Behavioral theory of the firm (Cyert and March, 1963) is the oldest of the major theoretical perspectives in organizational theory Often taught among “classics” rather than as theoretical perspectives in OT doctoral education Extremely high citation count with many gratuitous citations Review papers of organizational learning often cite many papers not conceived as learning theoretical or have titles like “Ugly duckling no more”

4. © Henrich R. Greve Big Bottles Older learning traditions revitalized with new methods and ideas Learning theory used by other theoretical perspectives Learning theory reinterpreting findings from other perspectives Learning theory appropriating new research questions

5. © Henrich R. Greve Revitalization: The quantitative turn BTF started with qualitative studies and simulation studies Qualitative studies: Base for building theory Simulation studies: Implications of theory Missing: Evidence for theory Many propositions were about change, but methodological apparatus for studying change was missing. Theories making static predictions were easier to test. Initial studies were taken as a model for how to study theory Recently provided by: Panel and event history studies of change Learning-curve variations incorporating BTF propositions Surveys/field studies designed to capture BTF processes

6. © Henrich R. Greve Panel/event history study of change Performance feedback research Tests propositions on problemistic search and slack search leading to change, and develops integration with prospect theory ideas on risk taking Event: Various strategic changes caused by performance feedback (Greve, 1998 ASQ, 2001 OS, 2003 AMJ) Panel: Growth in assets caused by performance feedback (Greve, 2003 ICC) Related approaches: Cross-sectional survey work on innovations (Singh, 1986 AMJ) Cross-sectional and panel work on R&D intensity (Antonelli, 1989 JEBO) Cross-sectional and before-after designs on risk taking (Bromiley, 1991 AMJ; McNamara and Bromiley, 1999 AMJ; Miller and Chen, 2004 AMJ) Panel data on aspiration levels (Lant, 1992 MS; Mezias et al. 2002 MS)

7. © Henrich R. Greve Performance Feedback and the Innovation Process

8. © Henrich R. Greve Learning-curve and BTF Various experience variables interacted with context to test myopia idea: experience always used, but only helpful when relevant Panel studies of performance, event history studies of survival (Barnett et al., 1994 SMJ; Ingram and Baum, 1997 SMJ; Baum and Ingram 1998 MS; Greve 1999 AiSM; Ingram and Baum, 2001 AiSM) Red Queen competition, all improve absolutely but not relatively Event history history studies of survival (Barnett and Hansen, 1996 SMJ; Barnett and Sorenson, 2002 ICC)

9. © Henrich R. Greve Surveys of BTF Intraorganizational search and knowledge transfer Role of internal networks and attention mechanisms Szulanski 1996 SMJ, Hansen 1999 ASQ, Schulz 2001 AMJ, Reagans 2003 ASQ Interorganizational search and knowledge transfer Absorptive capacity: created by prior knowledge, social similarity, social networks Cohen and Levinthal 1990 ASQ, Lane and Lubatkin 1998 SMJ, Lane et al. 2001 SMJ

10. © Henrich R. Greve Learning theory used by other perspectives Population ecology No theory of action, often filled in with BTF propositions when needed for predictions Inertia prediction that major organizational change is harmful in the short term elaborated and tested using BTF (Amburgey et al. 1993 ASQ; Greve, 1999 ASQ; Barnett and Freeman, 2001 OS; Dobrev et al. 2003 OS) Momentum prediction that recent organizational changes are prone to be repeated because of myopic decision making drawn from BTF (Amburgey and Miner, 1992 SMJ; Amburgey et al. 1993 ASQ; Greve, 2000 AMJ; Guillen, 2002 AMJ; Washington and Ventresca, 2004 OS)

11. © Henrich R. Greve Learning theory reinterpreting findings Diffusion—does it prove learning, institutionalization, or both? Strike 1: Diffusion is not limited to institutional practices with low consequences, consistent with learning through observation of others (Greve, 1995 ASQ, 1996 ASQ; Kraatz and Zajac, 1996 ASR; Haunschild and Miner 1997 ASQ, Kraatz, 1998 ASQ) Strike 2: Adoption decisions are reversed in ways consistent with learning processes (Rao, Greve, Davis, 2001 ASQ) Strike 3: Adoption decisions are result of problemistic and slack search in the external environment (no evidence yet) Implication is more caution in when one can say that diffusion proves institutionalization

12. © Henrich R. Greve Learning theory finding new research questions What changes as a result of learning? Organizational rules change (Zhou, 1993 AJS; Schulz, 1998 ASQ; Haunschild and Sullivan, 2002; Schulz 2003 ICC) Job descriptions change (Miner, 1990 OS; Miner, 1991 ASR) Niche boundaries change (Greve, 1998 ASQ; Korn and Baum, 1999 AMJ; Miller and Shamsie, 2001 SMJ) Geographical boundaries change (Baum, Li, Usher, 2000 ASQ; Greve, 2000 AMJ; Guillen, 2002 AMJ; Bastos and Greve, 2003 AiSM) Organizational populations change (Miner et al. 1999 AiSM; McKendrick, 2001 SMJ)

13. © Henrich R. Greve New directions for learning theory Elaboration and testing of theories that are not yet completely developed Performance feedback, absorptive capacity, history dependence (especially momentum) Stronger push into strategic management Especially because performance implications of many learning theories are untested New dependent variables Expect much more work on routines as learning theory and evolutionary theory work together New theory integration Already seen some “learning in networks” theory, and likely to see more