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In a highly uncertain world, it is imperative to efficiently govern innovative buyer-supplier exchanges, which are often characterized by high asset specificity, the key indicator of governance choice in transaction economics (TCE). While TCE traditionally assumes asset specificity is easily observed and measured, recent research suggests managers' perceptions of specificity typically drive these decisions instead. Additionally, since managers are boundedly rational, these perceptions are likely to be biased. We contribute by exploring the direction and potential of asset specificity perception biases, and how they may lead to inefficient governance. We first argue that false uniqueness and confirmation biases influence buyer and supplier asset specificity perceptions in opposite directions. We then propose that perceptions of human asset specificity are more likely to be biased than other types and that bias is more likely when the exchange features radical as opposed to incremental innovation. Finally, we examine the impact of these unconscious biases, arguing that buyer bias is more likely to be dominate in discrete exchanges, resulting in costly over-governance compared to that predicted from standard TCE theory. This paper expands our understanding of biased specificity perceptions and their impact on efficient governance and value capture for innovation partnerships. [ABSTRACT FROM AUTHOR]

Psychology research on decision-making highlights the challenge of repairing the "hardwired errors of individual cognition" (Powell et al., 2011:1378) and suggests structural interventions to improve the decision environment. This panel symposium brings together two eminent streams of organizational research that explore the psychological design of organizations: organizational design research and transaction cost economics (TCE) research. Among others, we explore how hierarchy can create, exacerbate, and solve cognitive biases. While the symposium offers a brief review of the related body of work from different perspectives, it will focus on providing a perspective on promising future research directions. [ABSTRACT FROM AUTHOR]

Building on Transaction Cost Economics (TCE) research, which has largely focused on contractual safeguards for increasing highly specific investments, our study explores the nuanced effects of contract framing on investment decisions in strategic alliances, particularly considering varying degrees of asset specificity ambiguity. Through three experiments, we demonstrate that prevention contracts, framed to mitigate negative events, boost initial investment in exchanges characterized by both explicit high asset specificity and ambiguous specificity levels. In contrast, promotion contracts, framed to promote positive events, are more effective in supporting ambiguous specific investment, following violations of informal exchange expectations. Together, this study underscores the dynamic nature of contract framing in strategic alliances, contributing to a deeper understanding of how psychological factors intersect with traditional TCE considerations to shape investment behavior. [ABSTRACT FROM AUTHOR]

Prior studies suggest economically equivalent but differently framed contracts have a psychologically distinct impact on exchanges and partner relationships. One significant difference is the divergent expectations of partner motivations they set, which can be confirmed or violated in the exchange. Yet, these studies do not consider that the partner likely has multiple simultaneous exchanges, allowing the focal firm to make comparisons of contract terms, which may also meet or violate partner expectations. Drawing upon social comparison theory and expectancy violation theory, we examine how expectations set by prevention and promotion contract frames are confirmed or violated by this comparison. Further, we predict these confirmations and violations lead to distinct focal firm managers' emotions, as well as systematic impacts on focal firm investment in the exchange, and trust towards the new partner. [ABSTRACT FROM AUTHOR]

Not all political conflict in the workplace is the same. Increasing disclosure of political identities and political discussions in the workplace have led to unprecedented political conflict in organizations, leading to toxic work cultures and costly employee turnover. As such, addressing this conflict ex ante has become a strategic issue grappled with by the C-suite, rather than a reactive intervention by HR. Yet, executives have little guidance on crafting governance mechanisms to prevent workplace political conflict. We suggest rather than one-size-fits-all policies (e.g., banning sensitive political discussions), it is necessary to understand how differences between liberals and conservatives, and the organization's political composition, affect the type of political conflict that emerges. Drawing on regulatory focus theory, we predict the likely type of political disclosure and resulting conflict for conservatives and liberals in organizations with different political compositions. We then predict the most effective governance mechanism for preventing political conflict in the organization. [ABSTRACT FROM AUTHOR]

This symposium aims to showcase novel insights of the growing body of research that examines corporate purpose through a microfoundational, stakeholder-driven lens. We selected papers that explore the role of a shared corporate purpose that goes beyond short-term profit generation on stakeholder resource provision. The first paper outlines the theoretical foundations of the relationship between a corporate purpose, stakeholder outcomes and firm performance, and the rest of the papers provide empirical examinations of how employee resource provision is impacted by what employees know about the purpose of their organization. The Value of Organizational Purpose Author: Witold Jerzy Henisz; U. of Pennsylvania Corporate Social Responsiveness and Employee Outcomes: The "All-Or-Nothing" Conundrum Author: Anna Szerb; INSEAD Social Responsibility Orientation and Employer Advantages Across the Employee Lifecycle Author: J. Daniel Kim; The Wharton School, U. of Pennsylvania Author: Matthew Lee; Harvard Kennedy School Theory and Experimental Evidence of Stakeholder Responses to CEO Political Activism Author: Tommaso Bondi; Cornell SC Johnson College of Business Author: Vanessa Burbano; Columbia Business School Author: Fabrizio Dell'Acqua; Harvard Business School [ABSTRACT FROM AUTHOR]

The article presents research on the cognitive learning mechanisms from negative interorganizational exchange events. The study discusses the impact of cognitive learning on on-going exchange relationship, contract template and future governance. It demonstrates the potential of cognitive factors in undermining the contracting capability development. It suggests the inability of firm employees to learn the correct cause-effect pathway in previous exchanges. It points out that employees may learn the association of the effect with cause due to attributional processes.

The article argues that opportunism does not play a dominant role in transaction cost economics (TCE) when bounded rationality assumption is augmented with cognitive biases and framing. It mentions that bounded rationality may cause opportunism by making a reference to a case where an employee may get engaged to opportunism by intentionally claiming an excessive share of the joint efforts. It further mentions that bounded rationality was kept in backseat due to incapability of its psychology research to be factored in TCE theorizing.

Although behavioral strategy research has long been a central subject in organizations and strategy, it has not been sufficiently microfoundational. The goal of this panel symposium is to highlight this gap and propose future directions to advance our understanding for the human element in an organizational phenomenon. Our distinguished group of panelists will introduce their own research program and discuss how behavioral mechanisms (e.g., cognitive biases, communication, conflicts, decision-making structures, and resource allocation) occurring at the lower-level in an organizational hierarchy shape a variety of macro-level organizational outcomes. [ABSTRACT FROM AUTHOR]

Does creativity change in the absence of markets? Does forming entrepreneurial opportunities necessitate the existence of markets? What is the role of creativity in recognizing, discovering, and/or creating entrepreneurial opportunities? In this panel symposium we will debate whether the role of creativity is the same in discovery versus creation of entrepreneurial opportunities. The panelists are in three camps: the discovery camp, the creation camp, and the third -- it does not really matter camp. [ABSTRACT FROM AUTHOR]