Summary of Identity construction

Individuals create possible selves when encounter new environments. The possible self is the one that they would love to become, which is defined as the social identity. When possible self is established, individuals tend to act according to the possible self. Identity refers to the various meanings attached to a person by self and others (Gecas, 1992). There are two kinds of identities. One is based on people's social roles and group membership (social identity). The other is based on personal trait (personal identities)

Identities are constructed and negotiated in social interactions by sending signals about how people view themselves and how they want other people to view them. After getting feedback from others, they maintain or modify their identities (Swann, 1987). 

Identity can change through establishing possible selves. Possible selves have two impacts on individuals (Markus and Nurius, 1986). First, Possible self guides individuals' attentions and behaviors, so that individuals can select behaviors for trail and assess the behaviors. For example, in experimental learning, when people start to adopt the behaviors that are associated with the roles that they desire, they are creating possible self and the possible self further direct them to act as the roles that they admire. Second, possible self also serves as the benchmark for individuals to assess their own behaviors, which directs them to maintain or modify their behaviors.

From the interpersonal perspective, individuals tend to act for their own interest if they can pretend they are moral. The actions to engage in moral hypocrisy show individuals' awareness that they want be moral. The awareness of morality serves as on contextual cue for individuals to create a possible self. Therefore, in the next period, people tend to act according to the moral criteria if there is no chance to act in a self-interest way. 

Reference:

Gecas, V. (1992). Socialization. Encyclopedia of sociology, 4, 1863-1872.

Swann, W. B., Griffin, J. J., Predmore, S. C., & Gaines, B. (1987). The cognitive–affective crossfire: When self-consistency confronts self-enhancement. Journal of personality and social psychology, 52(5), 881.

Markus, H., & Nurius, P. (1986). Possible selves. American psychologist, 41(9), 954.

Research on alliance summary

Alliances are defined as "any voluntarily initiated cooperative agreements between firms" (Gulati, 1995). Most of the research of alliance focus on the formation of the alliances, alliance capability.

Formation of the alliance

There are mainly two factors that lead firms to form alliances. First, alliance help with knowledge transfer and innovation. Alliances help with knowledge exchange between partners via many mechanisms and one of the most important mechanisms is the rotations of employees of the firms, their partners and alliances. For technology firms, the partners have contracts to make technical staffs available to the joint ventures. Under this contract, the knowledge transfer is two-folded. First, as the technical staffs come from both firms, their knowledge will contribute to the joint ventures’ knowledge creation process. Second, the staffs in the joint venture will occasionally rotate back to the parent firms and take their experience and new knowledge with them. Knowledge-based view of the firms argues that knowledge is hard to transfer, especially for complex technology information (Kogut & Zander, 1992). In addition, the hierarchical structure of the joint venture makes knowledge transfer easier.Second, alliance is formed through prior interaction and is built on the trust between two firms (Gulati, 1995).


Alliance capability

Alliance capability is defined as the ability for firms to create and capture value through alliances.Alliance capability is discussed at two stages. One is value capture. Before the alliances have been formed, the capability refers to how organizations search and processing information, codify routines. Afer the alliance has been formed, the capability refers to whether the two organizations can coordinate and communicate with each other, how they solve conflicts and update their contract.
The other one is value capture. Before the alliances have been formed, the value capture process depends on contract design, governance and negotiation process. After the alliance has been formed, whether the firms can capture the value depends on the knowledge transfer, absorb capability and monitoring capabilities (Wang and Rajagopalan, 2015).


Alliance portfolio

Moving from discussing signal alliances, research in alliance portfolio is also flourishing. There are three parts of research that focus on alliance portfolio: the emergence of alliance portfolio, the configuration of alliance portfolios and the management of alliance portfolios (Wassmer, 2008).


References:
Gulati, R. (1995). Does Familiarity Breed Trust? the Implications of Repeated Ties for Contractual Choice in Alliances. Academy of Management Journal, 38(1), 85–112.

Wang, Y., & Rajagopalan, N. (2015). Alliance capabilities: Review and Research agenda. Journal of Management.

Wassmer, U. (2008). Alliance portfolios: A review and research agenda. Journal of Management.

Summary of Agency theory

The key research question for agency theory is: how to develop efficient contract to provide agents with enough incentives and at the same time maximizing the gain of the principles.

Classic agency theory:

The classic Agency theory
The procedure of classic agency theory:
1. the principle and agency sign a compensation contract
2. The agent chooses an action, but the principle cannot observe the choice
3. Events beyond the agent's control occur
4. The agenct's outcome is influenced by action and noice term
5. The agents receive the compensation from the principle

The assumption is that agency is risk averse. Therefore, the principles cannot give sell the company to the agents, because the agents will feel unsecure and do nothing with the company. On the other hand, the principles cannot only provide fixed income to the agents, because the agents will not have any incentives to work hard.

The solution to design a lineary contract, where the fixed part provide insurance and the flexible part depends on the performance of the agents. The linear solution is critisized because Mirrlees (1974) shows that nonlinear contract, such as step-function contract can be superior to linear contract. Holmstrom and Milgrom (1999) show that the contract should be viewed across different periods. Each period, the wage should depend on the outcome at the end of that period.Therefore, step-function is just one form of linear function of contract.

The basic assumptions are opportunism, and information asymmetry.

Empirical example: The unrestricted nature of the common stock residual claims of open corporations leads to an important agency problem (Jensen and Fama, 1983). The decision process is in the hands of professional managers whose interests are not identical to those of residual claimants. This problem of separation of "ownership" and "control"--more precisely, the separation of residual risk bearing from decision functions. Therefore, agency costs include the costs of structuring, monitoring, and bonding a set of contracts among agents with conflicting interests, plus the residual loss incurred because the cost of full enforcement of contracts exceeds the benefits.

New foundations for the theory of incentive contracts
In 1975, Steven Kerr found that traditional incentive contract cannot solve the problem that some companies met. For example, In 1992, Sears abolished the commission plan in its auto-repair shops, which paid mechanics based on the profit gained from the consumers. The California officials prepared to close Sears' auto repair business statewide, as a lot of consumers complain that mechanics misled them to pay more than they needed.

The problem is caused by the idea that principles need to take other things into account rather than just profits. Therefore, now the agents try to maximize contributions, but principles try to maximize profits. The contract should be designed in a way that do not let agents focus more on the parts that are not related to profits.

Object performance measure
One way is to use linear function based on contribution - multitask model. However, problem is that agents will distort the incentives and focusing on the part that does not related to profits. The distortion depends on the ratio between contribution and profits and how much contribution and profits align with each other (Holmstrom and Milgrom, 1999).

Relational contract (subject performance measure)
Another way is to make contract that is based on repeated games. The principle make promise to the agents that they will pay on the basis of their certain performance, however, the effectiveness of the contract is influenced by the credibility of the principle (Baker et al. , 1994).

New direction in Incentive theory

Previous literature assumes that incentives comes only from monetary rewards, which is not true in reality. People also care about their career and capabilities.

Career concerns: incentives without contracts
Managers typically work too hard in early years to show their capability and not hard enough in the late years.The career concerns is an incentive for efforts.

Investing in capabilities: paying for future performance

The capability concern is an incentive to invest. The promise to promoting is different from previous contract in that it depends on principles' decisions not on agents' outcomes. Therefore, it provides agents with the incentive to invest in their human capital.

New Applications to Supply transactions
 
This part links TCE with agency theory. Scholars derive two optimal incentive contract with integration and without integration. By comparing the social welfare of these two contracts, the decision of integration can be made.
By investigating the contract between and within firms, scholars find that besides incentive design, other decisions of the firms, such as product design, asset investment and job design, etc. all need to be considered in the integration decisions.
Relational contract between firms are threatened by asset ownership. Those firms that own the assets have temptation to renege on the relational contract.



Critics:
1) by stewardship theory: Stewardship theory rejects the agency theory assumptions and presupposes context in which managers perceive that satisfying shareholders goals is also in their personal interest. Separation of ownership and corporate control does not automatically lead to the conflict of goals and interests between owners and managers. 

2) Undersocialized. Donaldson (1997) criticized the agency theory dominance in terms of methodology individualism, narrow-defined motivation model, regressive simplification, disregarding other research, ideological framework, organizational economics and corporate governance's defensiveness.

References:

Mirrlees, J. (1974). Notes on welfare economics, information and uncertainty. Essays on economic behavior under uncertainty, 243-261.

Holmstrom, B., & Milgrom, P. (1991). Multitask principal-agent analyses: Incentive contracts, asset ownership, and job design. Journal of Law, Economics, & Organization, 24-52.

Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of law and economics, 301-325.

Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management journal, 18(4), 769-783.

Baker, G., Gibbons, R., & Murphy, K. J. (1993). Subjective performance measures in optimal incentive contracts (No. w4480). National Bureau of Economic Research.

Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management review, 22(1), 20-47.
 

Summary of Behavioral Decision Theory

Behavioral decision theory starts from March and Simon's (1958) intention to understand the process of how organizations make their decisions. They make two groups of assumptions. One group of assumptions is about individuals and the other group of assumptions is about organizations. 

1)    Model of man: There are two different models of man : 
a) man will compute and make rational decision when goals are set. The goals are influenced by the group characteristics
b) Individuals’ desire, want and value are assumed away and their behavior can be deliberately controlled, therefore, the behavior of the organization is the behavior of the individuals.
When individuals make decision, they first give definition of the situation and retrospect their past experience. After coming up with several possible solutions, they will make a satisfying decision.

2)    Model of organizations:
a)    When individuals have bounded rationality in making their decisions, different individuals will have different solution regarding the same problem, which usually conflict with other people’s way of solving problems. Aggregating these decisions together leads to extremely uncertain decision environment and organized anarchy, which is termed as "garbage can model" (Cohen, 1972)

b)    Organizations can make rational decision by controlling the routines actors use to make decision and define situations for them. Therefore, the model for the firms should be the leaders set up the goal and break the goal into subgoals.

c)    Control: Barnard’s control of organizations reside in rules and regulations, but March and Simon tend to illustrate another kind of control: the latent control form expectations, professional trained routines and informal group pressures.

However, March and Simon's (1958) theory has two main limitations. First,  They fail to theorize conflict in organizations because 1) they assume there is one goal for the organizations. 2) They assume resources are always abundant, which is not. 
Second, technology is not tackled because there are organizational characteristics that are independent of goals and structures: raw material and techniques used to transform the raw materials.

Behavioral decision theory was later clarified by Cyert and March (1963), where they develop a whole model describing how decisions are made in a firm. 


Organizational learning (Argote and Miron-Spektor, 2011)
As an important branch developed from behavioral decision theory, organizational learning has been looked at how organizations deal with current situation through what they have experienced before (Levitt and March, 1988). 

The core definition of organizational learning is that the knowledge of the organization change with the organizations' experience and the knowledge further changes the behaviors and cognition of members in the group. Knowledge can be stored in individuals, routines, transactive memory systems. 

The basic idea is that organizations' knowledge change by interacting with the environment. Members, tools and tasks, networks, structures of the organizations are the mechanisms through which the knowledge of the organizations is changed. 

There are mainly four themes in organizational learning:

Organization experience
Organizations can learn through their own experience or others' experience (knowledge transfer).  Experience can come from individuals or tasks; or before/during/ after tasks; rarity. 

Context
The main idea is that cognition can only be understood in the context. The context moderate the relationship between experience and outcomes. Development in this direction focus on how to figure out the characteristics of the context that will influence learning.

Organizational learning process
It contains knowledge creation, knowledge transfer and knowledge retention. There are four dimensions of learning process: mindfulness/ mindlessness (Levinthal and Rerup, 2006); extent to which learning processes are distributed among members; bottom-up or top-down; exploration or exploitation (March, 1991). 

Analyzing knowledge creation, retention, and transfer
Knowledge creation and innovation; knowledge stock and flow; factors that facilitate or inhibit knowledge transfer.

Warren Bennis had tried to argue that organizations will finally become decentralized because of three reasons.
1)    Increasing professionalization of managers demand more responsibility
2)    Environment changes fast
3)    Technology increase importance, which gives more power to engineers and scientists, which requires decentralized decision making. (Matrix form)
However, the argument is rebutted by the idea that even though the finishing the tasks only needs part of the expertise of the staffs, they still need to be kept when the tasks are finished. Therefore, simply from organizational learning perspectives, we cannot fully understand why organizations become decentralized. 

References:

Argote, L., & Miron-Spektor, E. (2011). Organizational learning: From experience to knowledge. Organization Science, 22(5), 1123-1137.

 Cohen, M. D., March, J. G., & Olsen, J. P. (1972). A garbage can model of organizational choice. Administrative science quarterly, 1-25.

March, J. G., & Simon, H. A. (1958). Organizations.

Levinthal, D. A., & March, J. G. (1993). The myopia of learning. Strategic management journal, 14(S2), 95-112.

Dyer, J. H., & Singh, H. (1998). The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of management review, 23(4), 660-679.

Summary of classsical management theory

Evolvement of management ideology

From about 1880 to 1910, the economy in the United States enjoyed great expansion. The expansion has ignored the workers and the idea of organization is social Darwinism. That is only the fittest organizations to the functions can survive (Spenser,1870). Later, the new thought movement had advanced the idea by arguing that the organizations that are most efficient can survive. The fitness ideology for sheer initiative and fighting spirit is replaced by Taylor’s scientific management theory in 1911.

Taylor’s Scientific Management

Key research question is how to design organizations in the most efficient way?
Taylor’s main idea is that cooperation between capital and labor brings the success to the organizations. He focuses not purely on how to divide the profit pie created by the organizations, but on how to create a larger pie for both employees and employers. In this sense, employees and employers have aligned interest. High profit for firm means high wages for employees. The function for managers is to train workers to gain maximum productivity. Therefore, the role of manager is important in set up formal organizations because informal organizations are inefficient, featured with soldering.
The managers can achieve the efficient management by designing the tasks in a way that workers’ ability can be fully utilized. The theory had been applied by Henry Ford, who successfully changed the organizational process of Ford company and improved the productivity of Ford company.
Contribution:
1) Taylorism opens the way to understand management in a scientific way and is the starting point for research in management area.
2) Reveal the paradox : on the one hand, formal structures subject to calculable manipulation (rational system); on the other hand, social structures imbedded in an institutional matrix (natural system). How to understand the informal structures of organizations has led to institutional school.

Critics:

1) Dehumanization: It totally ignores the role of workers and treated them as robots.
2) Undersocialized: workers are not just motivated by financial gains. An empirical example is Hwarthon experiment, where workers are motivated by the attentions they are given. This later develop the human relation school.

Manipulation and Natural cooperation

Refusing Taylor’s idea that workers are robots and workers tend to pursue their own goal without control from the managers, Dale Carnegie (1926) and Elton Mayo (1930) emphasize that people have the desire to stand well with their fellows and have instinctive incentives to collaborate with other people, as long as they share the same goals. Therefore, the function of the managers turned to persuade and propaganda workers with common goals and values.

Starting point of management theory:Bernard’s view of organizations

Bernard started a relatively formal organization theory by developing on Mayo’s (1930) idea that organizations are cooperative systems. He focused on the Bell System, which was the first to emphasize the cooperative nature of the organizations and treat workers decently. However, during the Depression, workers and investors were treated quite differently, as AT&T managed to keep dividend but laid out a great many workers. He examined several aspects of the organizations.

Assumptions: 1) Actors have incentive to cooperate. 2) Organizations exists with three key elements – communication, willingness to serve and common purpose.
Propositions:
1) Organizations are production and adaptive social systems.
2) Formal and informal structures are interdependent and primary function of
3) the executives are to devise and promulgate moral visions of the organizations’ missions to achieve the commitment of the participants not to design the efficient organizations.
4) Bernard assumes that organization is able to satisfy the motives of individuals. If an organization satisfies the motives of its members, while attaining its explicit goals, cooperation among its members will last.

Contribution:
1)    The executives making decisions with conflict. This leads to decision making school

Critics:
1)    Ignore the conflict part
2)    Ignore the human relationship part, which leads to the development of human relation school

Human relationship school

This school starts from Hawthorne study, where workers’ productivities were improved when managers gave them attention and separate them from other group members. The main argument is that good leadership is the core for good management. Good leadership leads to high morale, low turnover and absenteeism. Researchers in the Ohio State university tended to find the trait for leadership (1945) and they believed leaders could be trained.  Another group of researchers focus on changing the general environment of the organization. Likert’s Theory X (managers believe the workers hate their jobs and use heavy negative sanctions) and Theory Y (managers assume employees will be responsible and achieve common goals to gain individual goals and managers should arrange things for people to achieve common and individual goals) demonstrate two possible group relation model. 

References:

Perrow, Charles, Albert John Reiss, and Harold L. Wilensky. Complex organizations: A critical essay. Vol. 3. New York: McGraw-Hill, 1986.

Summary of Social network

Social networks form the skeleton of the field and they are sources of distinctions among different categories of individuals and groups. There are two main branches of social network research.

Embeddedness

Embeddedness contracts with arm-length relationships. Arm-length market relationships are characterized by (Dyer and Singh,1988): 1) Nonspecific asset investments 2) Minimal information exchange 3) Separable technological and functional systems within each firm that are characterized by low levels of interdependence 4) Low transaction costs and minimal investment in governance mechanisms (Williamson, 1985)
There are four kinds of embeddedness: structural, cognitive, political, and cultural.
Network analysis focuses on modeling organizational field. Networks serve as source of information (Davis, Dickmann and Tinsley, 1994), resources (Burt, 1980), trust (Uzzi, 1996), or collusion (Baker and Faulkner, 1990).

Antecedents of embeddedness: The weaker the ability of prices to distill information, the more organizations will form embedded ties. The greater the level of embeddedness in an organization’s network, the greater the its economies of time. The greater the competitive advantage of achieving real-time change to environmental shifts or fashion-sensitive markets, the more network form organizations will dominate and producing efficiency than other organizational forms

Critics: What is important about the relationship is under theorized. First, we know network matters in collective action, but we do not know the underlying mechanisms.

Social tags

With the fast development of social network, one emerging area is social tagging. Online users try to assign different tags on the website where they can interact with each other. How the tagging behavior influence the formation of social category and how they motivate the innovation of new products receives relatively scant attentions.

Summary of Population Ecology

Organizational ecologists wonder “Why are there so many kinds of organizations?” and seek to understand the distribution of organizations across different environment (Hannan and Freeman, 1977). To this end, ecologists have adapted and applied theories and formal models to explain population biology and human demography to explain the evolution of organizational systems – rate of founding, failure, growth, performance, and change.

The core logic is population thinking (Hannan and Freeman, 1989). Populations are aggregates of organizations that share a common dependence on material and cultural environments

There are mainly four domains of research:

Density dependence:

The main argument is that organizations’ vital rate depends on the population density. At low density, increasing density increases legitimacy and taken-for-grantedness of the organizations. At high density, increasing density increases vie for resources. Freeman’s (1987) studies of labor unions in United States show that unions’ founding and failure rates followed the predicted non-monotonic patterns. This line of research has developed to assess the effect of density in subpopulations. The whole population can be divided in two ways. First, along the key dimensions of organizational forms, such as goals, sizes, technology and location. Second, along different digree (similarity by their domain overlap). High overlap increases high failure rates with increasing density.

Along degree dimension

Generalists (organizations that serve a wide range of clients with a diverse array of products) and specialists (organizations that serve a more limited clientele, offering them a narrower set of products) receive great attention. The basic argument is that when there are economies of scale and a resource distribution with a single rich center and poor peripheral regions, the resource “space” (the combination of inputs and demand for output) becomes partitioned, with generalist occupying the center and specialists occupy the peripheral ( Carroll, Dobrev and  Swaminathan, 2003). This has been tested along newspapers (Carroll, 1985); breweries (Carroll and  Swaminathan, 2000)

Inertia

the core assumptions is that the core features of organizations change slowly, because of inertial pressures (Hannan and Freeman, 1984), because of four internal constrains (investment in plants, equipment, and specialized personnel; limits on the internal information received by decision-makers; vested interests; organizational history)  and four external constrains (legal and economic barriers to entry and exit; constraints on the external information gathered by decision-makers; legitimacy considerations; the problem of collective rationality and the general equilibrium). These pressures favor organizations that are reliable and reproductable. There are mainly two reasons:

a. it is usually harmful for organizations to change, because it requires reorganizing the resources, or may not fit the environment. But it can be beneficial if it fit the environment (Barnett and Carroll, 1995) or the organizations’ constituencies support the content of change and are willing to supply resources to effect change (Minkoff, 1999) or ties with state or communities, supplying resources and legitimacy (Baum and Oliver, 1991).
b. Organizations do change a lot. Changes depends on prior history and well or poorly-performed organizations (Greve, 1999)

Criticism: the age and size of the organizations have confounded influence on organizational survival. For example, research on New York credit unions: age has negative effects on failure, but when adding size, the age effect becomes positive. Size decreased failure. The age effect may be nonlinear: increasing in the first few years after founding, as fledgling organizations use up their initial stores of  resources, then decreasing, as organizations learn how to operate efficiently and develop solid reputations.

Identity -> organizational form:

they analyze organizational forms as identities or social codes –“recognizable patterns that take on rule-like standing and get enforced by social agents” (Polos, Hannan and Carroll, 2002). Identity: rules of conduct and signals to internal and external observers.

Rules of conduct: provide guidelines for members of a population by delimiting what they should and should not be and do. Signals generate a cognitive understanding about the population because they define what observers understand the members of organizational population are and what they do.

It benefit three other streams: 1) resource-partition, it is difficult for organizations with established identities to present themselves as totally different kinds of organizations, even the identity is based on intangible authenticity. 2) density and fatal rates: disk-array producers do not legitimate the disk-array-producer form, but only legitimize disk-arrage producers, because they have different origins and derive their identities from other fields (McKendrick and Carroll, 2001). Therefore, increase in density of focused identities will lead to organizational form

Strength of ecologists: 1) high level of paradigmatic consensus . They agree on what outcomes to study (founding, failure, growth, performance, and change), what explanatory variables to consider (density, size, age, location, technology, networks and identities), and what analytical strategies to employ (survival analysis). Even though the empirical results are not consistent, the theory can be refined on the basis of the paradigmatic development.

Weakness: organizational ecology is so paradigmatic that it has subtle influence outside of its own field.

References:
Hannan, M., & Freeman, J. (1977). The population ecology of organizations. American Journal of Sociology, 82(5), 929–964.
Hannan, M. T., & Freeman, J. (1987). The ecology of organizational founding: American labor unions, 1836-1985. American Journal of Sociology, 910-943.

Carroll, G. R., & Swaminathan, A. (1992). The organizational ecology of strategic groups in the American brewing industry from 1975 to 1990. Industrial and Corporate Change, 1(1), 65-97.

Carroll, G. R., Dobrev, S. D., & Swaminathan, A. (2002). Organizational processes of resource partitioning. Research in organizational behavior, 24, 1-40.

Carroll, G. R., Dobrev, S. D., & Swaminathan, A. (2002). Organizational processes of resource partitioning. Research in organizational behavior, 24, 1-40.

Barnett, W. P., & Carroll, G. R. (1995). Modeling internal organizational change. Annual review of sociology, 217-236.

Minkoff, D. C. (1999). Bending with the Wind: Strategic Change and Adaptation by Women's and Racial Minority Organizations 1. American Journal of Sociology, 104(6), 1666-1703.

Baum, J. A., & Oliver, C. (1991). Institutional linkages and organizational mortality. Administrative science quarterly, 187-218.

Greve, H. R. (1999). The effect of core change on performance: Inertia and regression toward the mean. Administrative Science Quarterly, 44(3), 590-614.
McKendrick, D. G., Jaffee, J., Carroll, G. R., & Khessina, O. M. (2003). In the bud? Disk array producers as a (possibly) emergent organizational form. Administrative Science Quarterly, 48(1), 60-93.

Pólos, L., Hannan, M. T., & Carroll, G. R. (2002). Foundations of a theory of social forms. Industrial and Corporate Change, 11(1), 85-115.

Hsu, G., & Hannan, M. T. (2005). Identities, Genres, and Organizational Forms. Organization Science, 16(5), 474–490.