Vinit M. Desai
International Journal of Management Reviews, Jun. 2010, Vol. 12 Issue 2, pp. 184-200
Whether they are formally prescribed or informally agreed upon, rules delineate the types of behavior deemed acceptable or appropriate within organizations. Studies often find that negative outcomes such as decreased group cohesion and higher turnover result when rules are broken. However, research rarely examines the potential positive effects of rule violations. Rules describe expectations about behavior within routines, or patterns of activity in organizations. When rules are violated by individuals, it could be an indication that the associated patterns of activity are no longer appropriate and that changes to the routines are needed. Organizations may learn from these violations if the violations trigger a search for new ways to organize activities, but this connection between violations and the search for new routines is affected by several factors. Drawing from a review and discussion of rules, routines, and research on organizational search and learning, this paper develops propositions regarding how rule violations motivate the search for new routines. This perspective integrates the literatures on rule-breaking and organizational search, and also suggests that managers who attend to patterns of rule-breaking within their organizations may detect drift from their environments and take corrective action earlier than suggested by other organizational learning research.
Industrial and Corporate Change, Volume 19, Issue 3, Pp. 713-739
Failures contain valuable information. However, organizations vary at learning from them. I ask whether failures prompt organizations to make technological investments, and whether these investments help boost performance beyond improvements gained through direct organizational learning. I test hypotheses on natural gas distributors to determine whether they enhance their performance by learning directly, by recognizing failures as prompts to invest in safer technologies, or through a combination. Results suggest that distributors learn directly, though firms, which also invest in related technologies, are able to gain some additional benefits.
Vinit M. Desai
ORGANIZATION SCIENCE Vol. 19: p. 594-608
Poor performance indicates that an organization’s routines are not well suited for its environment and prompts decision makers to search for solutions. However, results conflict regarding how this search process influences risk taking in organizations. Managers in some organizations facing actual or expected performance shortfalls tend to take risks, while managers in other poorly performing organizations avoid risky changes. This conflict is interesting because some level of risk taking appears necessary for organizations to remain competitive, adapt to their environment, and improve performance. This study examines several mechanisms that moderate risk taking following performance shortfalls. First, I draw from organizational learning theories to argue that organizations with limited operating experience are less buffered from failure, and hence that poor performance constrains risk taking at these organizations. Second, I argue that organizations with poor legitimacy are also less buffered, and hence that performance shortfalls also lead to risk aversion at these organizations. Third, I draw from structural inertia theory to suggest that older organizations are less able to support risk taking following performance shortfalls. A test of these hypotheses on the capacity expansion behavior of U.S. railroad companies generally supports these hypotheses, although the effect of age is weaker. The findings contribute to theories of organizational learning and to several perspectives in organization theory more broadly.