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Should organizations move to flatter designs—or rather: when, why, and how should they do so? In light of a burgeoning literature, I review the well-structured, timely, and applicable contribution that Markus Reitzig’s new book Better at Flatter: A guide to shaping and leading organizations with less hierarchy makes in particular for executives struggling with these questions. At the same time, I highlight how the core arguments on which Reitzig builds his insights and recommendations easily transcend to current academic discussions, and may help inspire further research on the future of organizing more broadly.

Research Summary: Theories of crowdsourced search suggest that firms should limit the search space from which solutions to the problem may be drawn by constraining the problem definition. In turn, problems that are not or cannot be constrained should be tackled through other means of innovation. We propose that unconstrained problems can be crowdsourced, but firms need to govern the crowds differently. Specifically, we hypothesize that firms should govern crowds for solving unconstrained problems by instructing them not just to solve the problem but also to help (re)define the problem by offering their problem frames and integrating others' frames. We find evidence for this interaction hypothesis in a field study of over a thousand participants in 20 different crowdsourcing events with interventions for the different governance approaches. Managerial Summary: Unconstrained innovation problems, which require finding a new product and a new market at the same time, are thought to be difficult to solve via crowdsourcing. We propose and test a governance approach for problem-finding, that is, (re)defining the firm's original problem statement by instructing crowds to make their problem frames explicit (by posting them) and to integrate others’ problem frames into their solution ideas. In doing so, we provide guidance for firms hoping to use crowdsourcing for both unconstrained and constrained problems. For constrained problems, as widely known, firms should govern for problem-solving only; for unconstrained problems, they should govern for problem-finding and problem-solving. Both forms of governance are “light-touch,” requiring only minimal intervention in the form of instructions for the crowd at the beginning of the crowdsourcing event.

How organization designs evolve between adaptation to changing conditions and the pressures toward persistence of the designs adopted at founding remains an understudied phenomenon. To fill this lacuna, we conducted a longitudinal, multicase study of eight young ventures. We find that, in these ventures, specific organization design solutions changed frequently, triggered by various internal and external developments, although the changes were typically incremental and myopic. However, the more abstract principles of design, captured in the founders’ logics of organizing, were less amenable to change. This explains why observations of imprinting effects in logics of organizing may be consistent with observations of dynamic change to organization designs.

Looking at business models as systems of interdependent elements, we study how the breadth of an incumbent firm’s business model reconfiguration influences its performance. Drawing on the metaphor of firms searching on a performance landscape, we argue that the relationship between business model reconfiguration breadth and performance should form an inverted U-shape. While firms can gain from increasing business model reconfiguration breadth, these benefits need to be traded-off against the increasing complexity of its associated changes. We further predict that this inverted U-shape will flip for highly performing firms while being amplified for firms heavily active in innovation. Using data from an original survey of knowledge-intensive business services firms, we find that, on average, business model reconfiguration has little effect on performance. However, U-shaped effects clearly emerge when accounting for the effects of past performance and innovative activity. Our findings contribute to a better understanding of the conditional nature of the advantages stemming from business model reconfiguration.

Grasping the true value of ideas is essential for corporate innovation success. When it comes to forecasting the value of one’s own innovation ideas, however, people may err systematically. In this...

The crucial contingencies surrounding organization design for innovation are experiencing drastic shifts. First, environmental uncertainty is rising with the increasingly connected nature of innova...

We study how OSS project owners can manage their repositories so as to motivate particularly high-skilled coders to exert continuous effort after joining a project. Drawing on literature from personnel economics, we lay out how coders’ skill level affects their selection for a focal project in the first place. In turn, we theorize how project-specific norms and quality aspirations that developers learn about after joining an OSS project represent treatments that varyingly entice developers to contribute more code conditional on their skill level. Based on a custom-tailored dataset merging GitHub and Stack Overflow data for almost 50,000 contributor-project-month observations, we find that repository owners are able to motivate their most talented volunteer contributors when they (1) show no visible commercial orientation while managing their projects, (2) show generosity in accepting external contributions, and (3) provide fast feedback. We discuss implications for research and practice in the fields of community-based organizations like OSS as well as personnel economics.

Although open innovation has become increasingly established in the management literature, comprehensive theoretical explanations of what drives firms to be open are sparse. Taking the perspective of the behavioral theory of the firm, we conceive of open innovation as a form of nonlocal search, arguing that firms will turn to open innovation when substantially under- or over-performing relative to their aspirations. We further enquire how this relationship is moderated by firm-specific innovation-related resources: human capital, research and development investment, and patents. Employing a representative survey of UK firms, we find some evidence of moderation, allowing us to present explanations of search through open innovation and contribute to the behavioral theory of the firm itself.

International audience; Innovation ecosystems are increasingly regarded as important vehicles to create and capture value from complex value propositions. While current literature assumes these value propositions can be known ex-ante and an appropriate ecosystem design derived from them, we focus instead on generative technological innovations that enable an unbounded range of potential value propositions, hence offering no clear guidance to firms. To illustrate our arguments, we inductively study two organizations, each attempting to create two novel ecosystems around new technological enablers deep in their industry architecture. We highlight how ecosystem creation in such conditions is a systemic process driven by coupled feedback loops, which organizations must try to control dynamically: firms first make the switch to creating the ecosystem following an external pull to narrow down the range of potential applications; then need to learn to keep up with ecosystem dynamics by roadmapping and preempting, while simultaneously enacting resonance. Dynamic control further entails counteracting the drifting away of the nascent ecosystem from the firm's idea of future value creation and the sliding of its intended control points for value capture. Our findings shed new light on strategy and control in emerging ecosystems, and provide guidance to managers on playing the ecosystem game.

Research Summary Strategic openness—firms voluntary forfeiting of control over resources—seemingly challenges the premise of the resource-based view (RBV), which posits that firms should control valuable, rare, and inimitable (VRI) resources. We reconcile this apparent paradox by formalizing whether and when firms—consisting of resource bundles and deriving competitive advantage from exploiting selected VRI resources—may maximize profitability by opening parts of their resource base. As such, our paper refines RBV-related thinking while supporting the theory's core tenets. Notably, we illustrate how a common-pool resource can become a source of competitive advantage and how firms may use openness to shape inter-firm competition. Managerial Summary Conventional wisdom holds that firms must control scarce and valuable resources to obtain competitive advantage. That being said, over the past decade many firms – amongst them Computer Associates, IBM, and Nokia – embarked on open strategies and made parts of their valuable resources available for free. These decisions pose an obvious conundrum, which we solve in our paper. We use a mathematical model, grounded in principles of the resource-based view, to show why and under what conditions open strategies will succeed. Firms significantly improve their performance when (1) opening resources reduces their cost base while (2) strongly increasing demand for their still-proprietary resource(s). We also explain how openness can reshape markets by weakening competitors, particularly in highly rivalrous environments.

Open innovation is often facilitated by strong intellectual property rights (IPRs), but it may also function, and even be boosted, when firms deliberately waive some of their IPRs. Extant literature has pointed out the potential benefits of such behavior, but falls short of explaining what triggers firms to practice it in the first place and to maintain or extend it. Since the waiving of IPRs runs counter to common views on strategy and competition and to engrained practices, this is a non-trivial question. To address it, we conduct an empirical study in a segment of the computer component industry which traditionally has taken a rather proprietary stance. With the advent of the open source operating system Linux, firms increasingly waived their IPRs on software drivers. We trace and analyze this process using both qualitative and quantitative methods. Our results indicate that component makers went through a learning process, which led some to realize how selectively waiving IPRs may be beneficial for their business. We uncover customer demand pull as the initial trigger and observe how a positive feedback loop sets in subsequently, leading to a further increase in the use of selective revealing. Overall, we find that openness develops into a new dimension of competition. We discuss the implication of our findings for research on open innovation and highlight how they impact managers in practice.

In order to assess whether new theories are necessary to explain new forms of organizing or existing theories suffice, we must first specify exactly what makes a form of organizing “new.” We propose clear criteria for making such an assessment and show how they are useful in assessing if and when new theories of organizing may truly be needed. We illustrate our arguments by contrasting forms of organizing often considered novel, such as Linux, Wikipedia, and Oticon, against their traditional counterparts. We conclude that even when there may be little that existing theory cannot explain about individual elements in these new forms of organizing, opportunities for new theorizing lie in understanding the bundles of co-occurring elements that seem to underlie them and why the same bundles occur in widely disparate organizations.

Firms strategically disclose information about innovative progress for a number of reasons – to deter competitors, attract complementors, secure financing at favorable rates, enhance reputation, an...

When trying to attain the benefits of open source software (OSS), proprietary closed source software (PCSS) firms are struggling to adopt this radically different practice of software development. We approach these adoption challenges as a problem of gaining support for organizational innovation. Through a mixed-method research design consisting of qualitative interviews and a survey of employees of a large telecommunications firm, we find that the organizational innovation to commercially engage in OSS has different impacts on technical and administrative dimensions of different job roles. Accordingly, individuals enacting different job roles are—on average—more or less well aligned with the OSS practice and OSS processes per se. We find that individual-level attributes can counterbalance the job role changes that weaken support for adopting OSS, while perceived organizational commitment has no effect. Suggestions for PCSS firms are presented and implications for innovation literature are discussed.

We extend theory on private–collective innovation by studying the role of exclusion rights for technology in the competition between private–collective and other innovators. We argue that private–collective innovators both pledge their own and invest in orphan exclusion rights for technology as a subtle coordination mechanism to compete against firms proposing alternative proprietary solutions. We discuss implications of our findings for theories of innovation, particularly appropriation strategy, ownership and control, and coordination and industry self-regulation.

Current theories of how organizations harness knowledge for innovative activity cannot convincingly explain emergent practices whereby firms selectively reveal knowledge to their advantage. We conceive of selective revealing as a strategic mechanism to reshape the collaborative behavior of other actors in a firm's innovation ecosystem. We propose that selective revealing may provide an effective alternative to known collaboration mechanisms, particularly under conditions of high partner uncertainty, high coordination costs, and unwilling potential collaborators. We specify conditions when firms are more likely to reveal knowledge and highlight some boundary conditions for competitor reciprocity. We elaborate on strategies that allow firms to exhibit managerial agency in selective revealing and discuss selective revealing's implications for theories of organization and open innovation and for management practice.

Many established organizations rely on unsponsored R&D projects to sustain and support corporate renewal. These ideas that emerge from dark corners of the organization are often the result of inventors’ proactive creative efforts. Yet, little is known about the origins of these creative efforts, and what drives individuals to decide for or against engagement in such behavior. Building on the notion of middle-status conformity, we argue for the existence of a curvilinear (U-shaped) relationship between inventors’ status and their participation in autonomous inventive efforts. We argue that this effect is further moderated by factors influencing the salience of existing status-granting institutions, specifically the novelty of the technological domain of the invention, the competitive position of the wider organization, and the inventors’ geographic location. Using a unique dataset of invention disclosures from a global technology-based firm, we find general support for our hypotheses. We propose implications for theories of innovation, networks, and status that add to our understanding of proactive forms of creative effort.

The organizational literature is increasingly interested in the origins and consequences of category emergence. We examine the effects of being affiliated with categories initially considered illegitimate (�divergence�), and of organizational attempts to blur the boundaries between categories (�straddling�), on capital market reactions to firm announcements. We develop arguments for how these effects likely vary with increasing legitimation (�currency�) of the category. We apply event study methodology to the complete population of firms' announcements of open source activities, an open innovation model for software development that is novel and defies the extant dominant logic of software production and valorization. Over a ten-year period, we find negative effects of divergence, positive effects of straddling, and that the magnitude of both these effects diminishes with increasing category currency. The implications for theories of organization and open innovation in the context of category emergence are discussed.

Entry into international markets is a challenging process that fundamentally tests existing capabilities. During this entry process, capability gaps arise that need to be bridged to exploit the commercial opportunity and grow the business. Using a global retailer, Tesco plc, as a case study and employing grounded theory development techniques, we find that in order to achieve growth, two organizational attributes become critical—structural coherence of the firm’s capabilities and organizational identity. We identify three processes of capability development during market entry—transference, splicing, and enhanced imitation. Further, actions and processes that maintain or adapt organizational identity serve as a moderator of the relationship between these processes, capability deployment, and internalization necessary for entry into international markets. We discuss the study’s implications for theories of capability development, organizational identity, and foreign market entry.

How does the social capital of venture capitalists (VCs) affect the funding of start-ups? By building on the rich social capital literature, we hypothesize a positive effect of VCs¿ social capital, derived from past syndication, on the amount of money that start-ups receive. Specifically, we argue that both structural and relational aspects of VCs¿ social networks provide VCs with superior access to information about current investment objects and opportunities to leverage them in the future, increasing their willingness to invest in these firms. Our empirical results, derived from a novel dataset containing more than 1,500 first funding rounds in the Internet and IT sector, strongly confirm our hypotheses. We discuss the implications of our findings for theories of venture capital and entrepreneurship, showing that the role and effect of VCs¿ social capital on start-up firms may be more complex than previously argued in the literature.

How can firms engaged in distributed innovation attract external volunteers and direct their efforts efficiently and effectively? Extant research proposes financial rewards as suitable management practice, maintaining that extrinsic financial rewards and intrinsic motivation have a unidimensionally positive effect on volunteers' motivation. In contrast, using the same theory underlying these studies, we argue that the effect of payment is far more complex. To do so, we introduce the concept of payment norms as a moderator of the effect of payment on motivation. Conducting a scenario experiment with open source software developers, we find that intrinsic motivation decreases for individuals with norms against payment, and that self-determination mediates this effect. Furthermore, payment has a direct positive effect on total motivation, but not for individuals with strong norms for payment. Our findings help explain conflicting earlier results on motivation crowding and contribute to the debate on how to manage external volunteers in distributed innovation settings.

In this article, we explore how new capabilities emerge and solidify in new ventures that are faced with fundamental uncertainty from their environment. To do so, we draw from the organizational and entrepreneurial literature on cognition and capabilities. Using initial qualitative evidence from a multifirm study in the context of new venture internationalization, we develop a cognition–based model of capability emergence in new ventures. Our findings extend the capability development and learning implications of internationalization to the fundamental character of organizing processes in start–ups. Moreover, we derive avenues for future entrepreneurship research on the origins and evolution of capabilities in new ventures.

Using the example of open source software, this study examines the effect of opening up the innovation process on the market value of firms. In a sample of 30 software companies in the time span fr...

The authors discusses the use of open source software (OSS) as opposed to proprietary closed source software in companies. Some of the questions proposed wonder who within an organization advocates the use of OSS and the reasons behind their beliefs. The authors acknowledge three levels of engagement with OSS, use of OSS, modifying OSS projects, and initiating OSS programs. Defined with technologys' technolgy support groups are five levels of employees defined as software architects, developers, testers, project managers, and general managers. Their study which used detailed interviews was conducted with input from the telecommunications department of a multinational electronics company.

How do the adoption of selective revealing strategies and the consequential diffusion of knowledge affect an industry’s innovativeness? Under what circumstances is the adoption of this strategy profitable? One could suggest that large-scale diffusion of selective revealing leads to homogenization and conformity. We hypothesize instead that open innovation of this kind can increase the speed of innovation to a degree that it outweighs the equalizing effect of the knowledge sharing that often is associated to open innovation strategies. More precisely, the net effect of open innovation on industry innovativeness depends on the exact circumstances. We find that there are scenarios in which the ability of imitators to correctly retrieve knowledge and anticipate the results of adopting the revealers’ knowledge have surprisingly little influence. On the other hand, the contribution of the crowd reciprocating with its creative power to the esteemed revealers is a decisive factor.

A large gap has opened up between expectations about the value of business model reconfiguration (BMR) and the evidence to support these views. To help close this gap, this paper examines the relationship between BMR and the performance of incumbent firms. We investigate this relation using regression analysis and unique survey data from a sample of 198 publicly-traded UK and US knowledge-intensive business service firms. We find that BMR, on average, has no effect on firm performance. However, we estimate an inverted U-shaped relation between the scope of BMR and performance for firms which are also engaged in technological innovation. We also show that, unlike firms in general, high performing firms tend to experience increasing returns to BMR. These findings contribute to the innovation and the emerging business model literatures by highlighting both the costs and the benefits associated with BMR, by developing a new measurement scale for BMR, and by elucidating the contingent nature of the BMR-perform...

Existing academic and popular literature suggests that unsolicited ideas, the non-contractual and voluntary submission of innovation-related information from external sources to the firm, offer the promise of a bountiful and low-cost tool to sustain and extend firms' R&D efforts. Yet, in practice, many organizations find it difficult to deal with unsolicited ideas because of high quantity, low quality, and the need to transfer IP ownership. This article identifies a range of practices that allow organizations to meet these challenges and therefore realize some of the potential of unsolicited ideas for R&D.

We examine the impact of firms’ open and distributed innovation (ODI) business models on their market value. Using a legitimacy lens, we argue that engaging in ODI business models implies non-conformance to existing socio-cognitive categories, thereby making it difficult for investors to evaluate its impact on firm value. We examine the effect of media communication as a countervailing strategy, and the implications for creating new categories to evaluate the firm’s innovation activities. We apply event study methodology to the complete population of firms’ announcements of open source activities, a specific form of ODI, over a ten-year period. Consistent with a legitimacy perspective, both category non-conformance and media communication, initially, have negative effects on market value. However, with the emergence of a category over time, both effects disappear. Provided that the capital market’s legitimacy requirements are met, we find that engaging in open and distributed innovation increases the market value of the firm. We discuss the implications of our findings for theories of open and distributed innovation, business models, and media communication strategies.

We extend theory on private-collective innovation by studying the role of exclusion rights for technology in the competition between private-collective and other innovators. We argue that private-collective innovators both pledge their own and invest in orphan exclusion rights for technology as a subtle coordination mechanism to compete against firms proposing alternative proprietary solutions. We discuss implications of our findings for theories of innovation, particularly appropriation strategy, ownership and control, and coordination and industry self-regulation.

Unsolicited ideas, the non-contractual and voluntary submission of innovation-related information from external sources to the firm, hold the promise of becoming an almost costless and limitless font for firms’ innovative efforts. In contrast, in this paper, we analyze the difficulties associated with unsolicited ideas processes to understand the problems that firms intending to engage in this form of open and distributed innovation are facing. In particular, we look at the costs that arise from the managerial attention unsolicited ideas require, and the legal setting the process is embedded in. We do so using a series of exploratory interviews, an in-depth case study, and a web-based analysis of the current management practices used by the world’s 150 largest firms. Highlighting quality, quantity, and Intellectual Property issues as the key concerns, we uncover that firms use distinct strategies, which we label signaling, structuring, and selecting, to increase the efficiency and efficacy of the unsolicited ideas process. We discuss the implication of our findings for theories of open and distributed innovation and for management practice.NOTE: Please note that the published version has been substantially extended beyond this draft. Please see Alexy, O., Criscuolo, P., & Ammon, S. 2012. Managing unsolicited ideas for R&D. California Management Review, 54(3): 116-139.

In order to assess if new theories are necessary to explain new forms of organizing, or whether existing theories suffice, we must first specify exactly what makes a form of organizing “new.” We propose clear criteria for making such an assessment, and show how they are useful in assessing if and when new theories of organizing may truly be needed. We illustrate our arguments by contrasting forms of organizing often considered novel, such as Linux, Wikipedia, and Oticon against their traditional counterparts. We conclude that while there may be little that existing theory cannot explain about individual elements in these new forms of organizing, opportunities for new theorizing may lie in understanding the bundles of co-occurring elements that seem to underlie them, and why the same bundles occur in widely disparate organizations.

Programming is riddled with issues of ethical nature. However, while extant literature explains why individuals in IT would act unethically in many situations, we know surprisingly little about what causes them to do so during the creative act of programming. To address this issue, we look at the reuse of Internet-accessible code: software source code legally available for gratis download from the Internet. Specifically, we scrutinize the reasons why individuals would unethically reuse such code by not checking or purposefully violating its accompanying license obligations, thus risking harm for their employer. By integrating teleological and deontological ethical judgments into a theory of planned behavior model — using elements of expected utility, deterrence, and ethical work climate theory — we construct an original theoretical framework to capture individuals’ decision making process leading to the unethical reuse of Internet-accessible code. We test this framework with a unique survey of 869 professional software developers. Our findings advance the theoretical and practical understanding of ethical behavior in information systems. We show that programmers use consequentialist ethical judgments when carrying out creative tasks and that ethical work climates influence programmers indirectly through their peers’ judgment of what is appropriate behavior. For practice, where code reuse promises substantial efficiency and quality gains, our results highlight that firms can prevent unethical code reuse by informing developers of its negative consequences, building a work climate that fosters compliance with laws and professional codes, and making sure that excessive time pressure is avoided.

When trying to attain the benefits of open source software (OSS), proprietary closed source software (PCSS) firms are struggling to adopt this radically different practice of software development. We approach these adoption challenges as a problem of gaining support for organizational innovation. Through a mixed-method research design consisting of qualitative interviews and a survey of employees of a large telecommunications firm, we find that the organizational innovation to commercially engage in OSS has different impacts on technical and administrative dimensions of different job roles. Accordingly, individuals enacting different job roles are — on average — more or less well aligned with the OSS practice and OSS processes per se. We find that individual-level attributes can counterbalance the job role changes that weaken support for adopting OSS, while perceived organizational commitment has no effect. Suggestions for PCSS firms are presented and implications for innovation literature are discussed.

Current theories of how organizations harness knowledge for innovative activity cannot convincingly explain emergent practices whereby firms selectively reveal knowledge to their advantage. We conceive selective revealing as a strategic mechanism to re-shape the collaborative behavior of other actors in the innovation ecosystem. We propose that selective revealing may provide a more effective alternative to known collaboration mechanisms in particular under conditions of high partner uncertainty, high coordination costs, and unwilling potential collaborators. We specify conditions when firms are more likely to reveal knowledge and highlight some boundary conditions for competitor reciprocity. We elaborate upon strategies that allow firms to exhibit managerial agency in selective revealing, and discuss its implications for theories of innovation and management practice.

The authors apologize for a minor error in Table 6 of the orignal manuscript. In this table, the labels for the two different ependent variables were swapped; i.e., models 6A–6D really refer o the reliance on Linux (and not to OSS, as stated in the origial paper), whereas models 6E–6H refer to the reliance on OSS falsely labelled as Linux in the manuscript). Also, the number of those models that use reliance on Linux as the dependent variable. These findings are in line with in line with Fosfuri et al.’s (2008) argument suggesting that complementarities between introducing open-source-based products, and specifically Linux-based products, and privately retained software patent rights in adjacent domains may exist.”

Existing literature on open source software (OSS) maintains that intrinsic motivation and extrinsic financial rewards have a unidimensionally positive effect on the motivation of individual developers. Based on self-determination theory, which underlies most of these studies, we challenge this assumption. We argue that the effect of payment on both intrinsic motivation and total motivation of OSS developers is far more complex. To illustrate our point, we introduce the concept of individuals’ norms about payment to the field of OSS. In doing so, we are able to show that payment norms moderate the effect of payment on intrinsic motivation and total motivation. Conducting a scenario experiment, we find that intrinsic motivation decreases for individuals with norms against payment. This effect becomes even stronger when analyzing for mediation effects. Total motivation is impacted positively by payment, but the effect turns insignificant for individuals with norms for payment. Our findings help explain the results of previous studies in which OSS developers did not seem to be affected by motivation crowding. They further contribute to the more general debate on how to manage individuals in the absence of formal contracts. From a practical perspective, we show that financial rewards may create a management dilemma for OSS project leaders.

2006 had been a very interesting, not to say turbulent, year for Juergen Bauer, head of product strategy for small and medium-sized enterprises for Siemens Enterprise Communications (SEN), and all of what had previously been Siemens Communications. With the foundation of the new SEN subsidiary that originated from the Enterprise Networks segment of Siemens Communications, SEN could now focus on what lay ahead, hoping to leave its troubled past behind for good. Sitting in his Munich office in late December, Bauer was starting to prepare a presentation he was supposed to give at the first Board meeting in January 2007, in which the current strategy of SEN was to be reviewed. Bauer had chosen to take a closer look at some of the current drivers of the industry – especially Voice over IP (VoIP) – and how they were currently being addressed by SEN.

Until now, time has been mainly used as a variable in IT-related event studies to explain the delayed impact of strategic IT decisions on firm value and productivity. Yet, the timing of the decision itself, due to investor sentiment, may have an effect on its valuation by the capital market. Using the example of product source code releases as open source, I find that market valuation takes a curvilinear shape over time due to investor sentiment caused by the rise and fall of the dot.com bubble. Future IT-related event studies will need to take this potentially interfering effect into account.

How organizational designs arise and change as an organization grows, remains an understudied though critical phenomenon for organizational scientists. To fill this lacuna, we set up a mixed- metho...