John Eklund

New technologies often emerge that can impact incumbent firms. Due to uncertainty regarding whether a new technology will displace an existing technology, firms can choose to facilitate or hinder customer adoption of the new technology. On the one hand, the technology diffusion literature has emphasized how customer and technology attributes shape adoption, largely neglecting the role of firms. On the other hand, industry disruption research has stressed the role of firms’ capabilities in shaping their responses but overlooked customer adoption. Our paper bridges these two research streams to explain how and why incumbent firms differ in their responses to technological change. Using theories of adjustment costs and managerial attention, we argue that there is significant heterogeneity in firms’ facilitation of customer adoption of new technologies. We move away from assumptions that incumbents act as single units operating within single markets solely on the older technology and consider incumbents organized into multiple units varying in size, operating across multiple markets, and dealing with old and new technologies simultaneously. At the business-unit level, increased market competition and fewer assets tied to the existing technology are associated with lower adjustment costs which enable units to facilitate customer adoption of the new technology. At the corporate level, if managerial attention is scattered across multiple markets, business units will be less likely to facilitate adoption. However, if the business unit is large or the firm has high slack, this relationship is weakened. Our arguments are supported in the context of the US electric utility industry.

Large firms generally undertake their research and development (R&D) activities through networks of laboratories located in multiple countries. Scholars have sought to understand how knowledge flows between these R&D centers through examining firms’ use of information technology, shared common routines, and long-term immigration of human capital. Less is known about whether short-term migration of scientists between R&D centers located in different countries can impact firms’ intra-organizational knowledge flows and resultant invention outcomes. However, firms often leverage short-term migration of employees, thus understanding how it can impact firms’ invention outcomes is important. We theoretically argue that short-term migration of employees to R&D centers in other countries can help to lower the communication costs associated with transferring tacit knowledge between different R&D centers. In turn, this will translate into firms creating a greater quantity of inventions that draw on a broader scope of knowledge. Further, we suggest that these benefits of reduced communication costs on firms’ invention outcomes will be magnified if the two R&D centers have an intermediate level of knowledge overlap and if their primary spoken languages differ. To empirically test these arguments, we take advantage of the creation of the visa-waiver program for up to 42 countries which increased their citizens’ ease of visiting the USA. We broadly find support for our theoretical arguments in the context of the pharmaceutical industry. Further, we find that both R&D centers (host and visitor) gain from short term migration with the magnitude being greater for centers with access to more resources.

A fundamental characteristic of organizations is that they aggregate the preferences of their members to make organization-level decisions. When examining how preferences are aggregated, prior work has tended to underplay the role of individual preference heterogeneity. We develop a novel approach to derive an organization's utility function from the heterogeneous utility functions of its members and the aggregation structure used. Our key insight to derive the organizational utility function is translating utility functions into choice probabilities and vice versa. We demonstrate that an organizational utility function is not just the sum of individual utility functions but a nuanced amalgamation of the preferences of its members. Our work contributes to better understanding the effect of organizational conflict and suggests ways of managing organizational decision-making.

Markets have a fundamental information asymmetry problem in evaluating public organizations, as market actors lack detailed firsthand knowledge about organizational capabilities and strategies. Top executive communication helps to address this asymmetry by providing information about firm strategies that signal firm quality and intentions. In this study we use signaling theory to examine how top executive communications about different parts of their firm’s strategy provide signals to securities analysts that shape their evaluations of the company. We hypothesize that analysts, working on behalf of shareholders who are interested in stock growth, positively evaluate communication related to externally-oriented strategies that signal alignment with analyst goals for growth, and negatively evaluate communication that focuses on internally-oriented maintenance strategies that signal concerns about firm capabilities and market positioning. We then explore the potential moderating influence of factors that reduce signal efficacy through lower signal intensity or weaker signal consistency. We find support for our arguments using a novel text analysis tool in a random sample of S&P500 companies. In supplemental analysis we find that several contextual factors can also magnify or suppress signal impact, assess which specific strategies have the biggest impact, and identify different patterns for high and low performing firms.

Although the prior literature on industry change has tended to focus on incumbent firms in isolation, firms often operate in complex ecosystems with a variety of other entities. We examine how entrants can impact such ecosystems by altering incumbents’ supplier partnership models. Drawing on theories of value-based strategy and organizational routines, we argue that those incumbents that alter their supplier model following the new entrant’s entry will perform more effectively than incumbent firms that maintain their previous model. However, firms with deep relationships with their suppliers will gain less from altering their supplier model due to the associated difficulty in changing established incumbent-supplier routines. We find support for these arguments in the United States television programming industry following the entry of Netflix in 2013.