This paper develops a dynamic rational expectations model of the credit rating process, incorporating three critical elements of this industry: (1) the rating agencies' ability to misreport the issuer's credit quality, (2) their ability to issue unsolicited ratings, and (3) their reputational concerns. We analyze the incentives of credit rating agencies to issue unsolicited credit ratings and t…
Time constraints, managerial power, and reputational concerns can impede board communication. This paper develops a model where board decisions depend on directors' effort in communicating their information to others. I show that directors communicate more effectively when pressure for conformity is stronger—that is, when directors are more reluctant to disagree with each other. Hence, open b…
Why do security analysts issue overly positive recommendations? We propose a novel approach to distinguish strategic motives (e.g., generating small-investor purchases and pleasing management) from nonstrategic motives (genuine overoptimism). We argue that nonstrategic distorters tend to issue both positive recommendations and optimistic forecasts, while strategic distorters "speak in two tongu…
In spite of recent interest in its microfoundations, institutional theory’s account of what, why, and when ideas diffuse remains limited and oversocialized. As such, it is unclear how firms decide what to adopt and how these decisions evolve across a population as innovations spread and become taken for granted. We review recent work in institutional theory on this issue and draw from learnin…
This study examines the contingent effect of the degree of exploration characterizing strategic initiatives on the relationship between group-level organizational learning activities (i.e., searching, processing, codifying, and practicing) and the performance of strategic initiatives. Results from a sample of 96 strategic initiatives conducted by three large European insurance corporations prov…
Research on organizational learning from performance feedback has produced findings on how organizational change is influenced by performance relative to aspiration levels, but has focused on short-term goal variables. In this article, we examine how short- and long-term goals are related to short- and long-term actions, respectively. We do so by predicting changes in absorptive capacity from p…
The aim of this study is to examine how learning emerges in terms of structure and function to transform from an individual to a collective (team) phenomenon. Drawing on learning theory and multilevel thinking, the authors developed and validated measures for the basic team learning processes (i.e., intuition, interpretation, integration, and codification) in three independent field studies of …
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Research on organizational decision making seeks to understand how external events shape how organizational decision makers attend to particular issues and allocate scarce resources across the organization’s activities. The author investigates whether supplemental information available to decision makers about their own and other organizations impacts this process. He finds that media coverag…
Includes indexes
Includes index
Where there is uncertainty, there is bound to be failure. It is not surprising, therefore, that many new ventures fail. What happens to entrepreneurs when their business fails? People hear of highly successful entrepreneurs extolling the virtues of failure as a valuable teacher. Yet the aftermath of failure is often fraught with psychological, social, and financial turmoil. The purpose of this …
An extensive amount of research has been conducted regarding the various advantages and disadvantages posed by engaging in market pioneering behavior at the product level. However, relatively little research examines factors that facilitate the relationship between a firm’s overall pioneering orientation and firm growth. This article investigates pioneering as an orientation that a firm adopt…
As people develop competence in a new domain of expertise, they move along an S Curve: Growth is slow and effortful at the outset, or launch point.It then progresses rapidly as people acquire new skills in a stretch known as the sweet spot. At the peak is mastery, when work becomes easier but the curve flattens. Understanding where your employees are on this S Curve of Learning will help you co…
In order to realize AI’s giant potential, CMOs need to have a good grasp of the various kinds of applications available and how they may evolve. This article guides marketing executives through the current state of AI and presents a framework that will help them classify their existing projects and plan the effective rollout of future ones. It categorizes AI along two dimensions: intelligence…
More and more companies are relying on pricing algorithms to maximize profits. The use of artificial intelligence and machine learning enables real-time price adjustments based on supply and demand, competitors’ activities, delivery schedules, and so forth. But constant price shifts have a downside: They may trigger unfavorable perceptions of a firm’s offerings and its brand. It’s vital, …
In today’s fast-changing business environment, employees’ continual development is essential. That’s leading to a new and more powerful role for chief learning officers: They’re not just trainers anymore; they’re transformers who are reshaping organizational capabilities and culture. The authors interviewed CLOs at 19 large companies and found that transformers are revamping their org…