Organizing for high reliability: Processes of collective mindfulness.

The article investigates how social embeddedness affects an organization's acquisition and cost of financial capital in middle-market banking-a lucrative but understudied financial sector Using existing theory and original fieldwork, Author develops a framework to explain how embeddedness can influence which firms get capital and at what cost I then statistically examine my claims using national data on small-business lending At the level of dyadic ties, author finds that firms that embed their commercial transactions with their lender in social attachments receive lower interest rates on loans At the network level, firms are more likely to get loans and to receive lower interest rates on loans if their network of bank ties has a mix of embedded ties and arm's-length ties These network effects arise because embedded ties motivate network partners to share private resources, while arm's-length ties facilitate access to public information on market prices and loan opportunities so that the benefits of different types of ties are optimized within one network Author concludes with a discussion of how the value produced by a network is at a premium when it creates a bridge that links the public information of markets with the private resources of relationships

/pdf/embeddedness-in-the-making-of-financial-capital-how-social-3kmfn3q16a.pdf

Embeddedness in the making of financial capital : How social relations and networks benefit firms seeking financing

This article explores the social processes that produce penalties for illegitimate role performance. It is proposed that such penalties are illuminated in markets that are significantly mediated by product critics. In particular, it is argued that failure to gain reviews by the critics who specialize in a product's intended category reflects confusion over the product's identity and that such illegitimacy should depress demand. The validity of this assertion is tested among public American firms in the stock market over the years 1985–94. It is shown that the stock price of an American firm was discounted to the extent that the firm was not covered by the securities analysts who specialized in its industries. This analysis holds implications for the study of role conformity in both market and nonmarket settings and adds sociological insight to the recent “behavioral” critique of the prevailing “efficient‐market” perspective on capital markets.

/pdf/the-categorical-imperative-securities-analysts-and-the-3k102birlq.pdf

The Categorical Imperative: Securities Analysts and the Illegitimacy Discount

The classic answer to what makes a decision good concerns outcomes. A good decision has high outcome benefits (it is worthwhile) and low outcome costs (it is worth it). I propose that, independent of outcomes or value from worth, people experience a regulatory fit when they use goal pursuit means that fit their regulatory orientation, and this regulatory fit increases the value of what they are doing. The following postulates of this value from fit proposal are examined: (a) People will be more inclined toward goal means that have higher regulatory fit, (b) people's motivation during goal pursuit will be stronger when regulatory fit is higher, (c) people's (prospective) feelings about a choice they might make will be more positive for a desirable choice and more negative for an undesirable choice when regulatory fit is higher, (d) people's (retrospective) evaluations of past decisions or goal pursuits will be more positive when regulatory fit was higher, and (e) people will assign higher value to an object that was chosen with higher regulatory fit. Studies testing each of these postulates support the value-from-fit proposal. How value from fit can enhance or diminish the value of goal pursuits and the quality of life itself is discussed.

Making a good decision: value from fit.

While strategy scholars primarily focus on internal firm capabilities and network scholars typically examine network structure, we posit that firms with superior network structures may be better able to exploit their internal capabilities and thus enhance their performance. We examine how innovative capabilities—both those of focal firms and those they access through their networks—influence the performance of Canadian mutual fund companies. We find that a firm's innovative capabilities and its network structure both enhance firm performance, while the innovativeness of its contacts does not do so directly. Innovative firms that also bridge structural holes get a further performance boost, suggesting that firms need to develop network-enabled capabilities—capabilities accruing to innovative firms that bridge structural holes. Copyright © 2005 John Wiley & Sons, Ltd.

https://www.jstor.org/stable/pdfplus/20142270.pdf

Benefiting from network position: firm capabilities, structural holes, and performance

Building on lecture notes from his course at Stanford University, James G. March provides an introduction to decision making, a central human activity, fundamental to individual, group, organizational, and societal life. March draws on research from all the disciplines of social and behavioural science to show decision making in its broadest context. By emphasizing how decisions are actually made - as opposed to how they should be made - he enables those involved in the process to understand it both as observers and as participants. In addition, March explains key concepts of vital importance to decision makers, such as limited rationality, history-dependent rules, and ambiguity, and weaves these ideas into a full depiction of decision making.

Chip Heath

Papers

A primer on decision making : how decisions happen