SMEAL C OLLEGE OF B USINESS T HEORY D EVELOPMENT AS O BSERVATIONAL PUZZLE - SOLVING Donald C....

transcript

SMEAL COLLEGE OF BUSINESS

THEORY DEVELOPMENT AS OBSERVATIONAL PUZZLE-SOLVING

Donald C. Hambrick

SMEAL College of Business 2

OUTLINE

1. De-Mystifying Theory• Q and A

OUTLINE

2. Theory Development as Observational Puzzle-Solving: Some Personal Experiences

• Q and A

OUTLINE

• Q and A

3. Theory Development From Rich Qualitative Data

• Q and A

OUTLINE

• Q and A

3. Theory Development From Rich Qualitative Data

• Q and A

4. Open Discussion

DE-MYSTIFYING THEORY

What is “theory”?

• The scientist’s job: to search for and explain patterns

• Let’s adopt Dubin’s classic perspective

X YWhy?

theory!

• Or, as Kaplan said, “Theory explains why empirical patterns were observed or are expected to be observed.

X YWhy

theory!

A couple examples:

Equity Theory

A couple examples:

Equity Theory

Increased (or Decreased)

Effort

One’s Perception

of Being Overpaid

(or Underpaid)

Relative to One’s

Contribution

A couple examples:

Equity Theory

Effort

One’s Perception

of Being Overpaid

(or Underpaid)

Relative to One’s

Contribution

Why?• Sense of “debt”

A couple examples:

Equity Theory

Agency Theory (as applied to corporate governance)

Effort

One’s Perception

of Being Overpaid

(or Underpaid)

Relative to One’s

Contribution

A couple examples:

Equity Theory

Badoutcomes

for theowners

When owners hire

others to manage

their firms…

Effort

One’s Perception

of Being Overpaid

(or Underpaid)

Relative to One’s

Contribution

A couple examples:

Equity Theory

Badoutcomes

for theowners

When owners hire

others to manage

their firms…

Why?• Hired managers… • shirk • steal • pursue their own objectives

Effort

One’s Perception

of Being Overpaid

(or Underpaid)

Relative to One’s

Contribution

SMEAL College of Business

So, what does it mean to make a “theoretical contribution”?

Badoutcomes

for theowner

When owners hire

others to manage

their firms…

Agency Theory

• develop a brand-new theory

Badoutcomes

for theowner

When owners hire

others to manage

their firms…

Agency Theory

• develop a brand-new theory • add to an existing theory

• clarify the operative mechanisms (mediators)• introduce moderators• add new concepts

Badoutcomes

for theowner

When owners hire

others to manage

their firms…

Agency Theory

• identify or elaborate on the implications of the theory

Badoutcomes

for theowner

When owners hire

others to manage

their firms…

Agency Theory

• identify or elaborate on the implications of the theory• “subtract from” the theory

• identify important boundary conditions• logically argue or demonstrate that the theory

is weak/wrong

Badoutcomes

for theowner

When owners hire

others to manage

their firms…

Agency Theory

How do we assess the “quality” of a theoretical contribution?

How do we assess the “quality” of a theoretical contribution?• generality

• including the scope of its implications• a very encompassing theory

qualifies as a paradigm

qualifies as a paradigm• simplicity

qualifies as a paradigm• simplicity• accuracy

qualifies as a paradigm• simplicity• accuracy• surprise

When Sutton and Staw refer to “strong theory,” what do they mean?

When Sutton and Staw refer to “strong theory,” what do they mean?• clarity of argumentation• logical consistency

Questions?

THEORY DEVELOPMENT: SOME PERSONAL EXPERIENCES

Where do theoretical ideas not come from?

Where do theoretical ideas not come from?• reading in isolation

Where do theoretical ideas not come from?• reading in isolation• thinking in isolation

Where do theoretical ideas not come from?• reading in isolation• thinking in isolation• intentions to theorize

Instead, theoretical ideas “emerge” from observational puzzle-solving: “Why is it…?”“Have you ever noticed…?”

Namely, to develop theory, you need data!• aggregate, large-N data• fine, rich, small-N data• accumulation of data – via experience

Let me illustrate with three of my successes in theory/concept development:

• Upper echelons theory

• Managerial discretion

• Behavioral integration (within top management teams, or TMTs)

Upper echelons theory:

StrategicChoice

ExecutiveCharacteristi

(more accurately a “framework”)

StrategicChoice

Originally (in 1975) a term paper for a PhD seminar

StrategicChoice

The data that puzzled me: Why does Fortune magazine devote space to reporting the detailed demographic backgrounds of 500 CEOs every year?

StrategicChoice

Later, (in 1983), a discussion with my PhD student Phyllis Mason

The data that puzzled me: I wonder if I’m having any effect on my MBA students?

StrategicChoice

Later, (in 1983), a discussion with my PhD student Phyllis Mason

The data that puzzled me: I wonder if I’m having any effect on my MBA students?

I wonder if executives who have MBAs are any different from those without MBAs?

StrategicChoice

Hambrick & Mason (AMR, 1984) was a happy confluence of three things

a fun discussion with Phyllis Mason in 1983

recollection of the 1975 paperinsights from my 1979

dissertation on environmental scanning

THEORY DEVELOPMENT: SOME PERSONAL EXPERIENCESThe eventual Upper Echelons model:

Managerial Discretion(a concept, not a theory)

• initially presented by Hambrick and Finkelstein, ROB, 1987

• definition: latitude of managerial action(Or, how much choice does a manager

have?)

• definition: latitude of managerial action(Or, how much choice does a manager

have?)

• introduced as a way to bridge, or reconcile, opposing views about how much influence executives have over organizational outcomes.

Of course, managerial discretion has major implications for upper echelons theory:

StrategicChoice

ManagerialDiscretion

So, where did we get the idea of managerial discretion?

The data that puzzled us: Why does CEO pay differ so greatly between different industries?

But also, from years before, my puzzlement about the CEO of the Penn State University Credit Union…

CEO glass

cubicle

Tellers/clerks

FrontDoor

Behavioral Integration(a concept, not a theory)

• initially presented by Hambrick, ROB, 1994

• definition: the degree to which members of a TMT engage in mutual and collective interaction

• of course, behavioral integration has major implications for upper echelons theory, particularly if the TMT is the unit of analysis

StrategicChoice

BehavioralIntegration

TMTCharacteristi

So, where did the concept of behavioral integration come from?

The data that puzzled me:

• In field interviews, some CEOs needed a lot of clarification when I started asking about their “top management teams.”

• Then, when I started talking to TMT members, and watching them in action, it became clear that some senior groups have very few “team” properties.

“Team? How do you define “team”? When I think of a team, I think of interaction, give-and-take, and shared purpose. Here, we’re a collection of strong players but hardly a “team.” We rarely meet as a team – rarely see each other, in fact. We don’t particularly share the same views. I wouldn’t say we actually work at cross-purposes, but a lot of self-centered behavior occurs. Where’s the “team” in all this?”

Of course, I cannot begin to describe the many wonderful theoretical ideas I have not had.

All I know is what’s worked for me:

Theory development as observational puzzle-solving

Questions?

THEORY DEVELOPMENT FROM RICH QUALITATIVE DATA

“It is the intimate connection with empirical reality that permits the development of a testable, relevant, and valid theory.”

Glaser and Strauss

Want to come up with theoretical ideas?Get inside organizations. Talk to managers and workers.Think about what you hear and see.

Glaser and Strauss

Want to come up with theoretical ideas?Get inside organizations. Talk to managers and workers.Think about what you hear and see.

Want to come up with really good theoretical ideas?Get inside organizations. Talk to managers and workers.Think about what you hear and see.

In-depth qualitative research can be useful in several ways:

It can lead directly to a theory.

It can lead directly to a theory. (e.g., Eisenhardt, Burgelman, Gioia)

It can help you understand your phenomena of interest.

(Li, Xin, Tsui and Hambrick – IJV leadership teams)

It can help you understand your phenomena of interest. (Li, Xin, Tsui and Hambrick – IJV leadership teams)

It can help guide the design of a quantitative study.

It can help you make sense of, or interpret, quantitative results.

“We uncover all kinds of relationships in our hard data, but it is only through the use of soft data that we are able to explain them.”

Mintzberg

Some suggestions:

When going into the field, you face a delicate balance…

Some suggestions:

Open-mindedness, no pre-conceived ideas:

Some suggestions:

“…case research is begun as close as possible to the ideal of no theory under consideration and no hypotheses to test.”

Eisenhardt

Some suggestions:

Eisenhardt

Absorptive capacity, a readiness to comprehend

Some suggestions:

Eisenhardt

Absorptive capacity, a readiness to comprehend

∙ study relevant literatures∙ study press accounts, public information

Some suggestions:

In your field research, look for big themes, but also be alert to small cues.

• Who is most willing to talk to you? • How energetic and spontaneous do they seem to be?

• How informed/knowledgeable do they seem to be?• Do all your interviewees describe things the same

Some suggestions:

A couple examples:

Li, Xin, Tsui, Hambrickinterviews of IJV team

leaders

Li and Hambrick’sconcept of factional

groups

Some suggestions:

A couple examples:

Li, Xin, Tsui, Hambrickinterviews of IJV team

leaders

Li and Hambrick’sconcept of factional

groups

Interviews of CEOsabout their TMTs

Research onchief operating officers

(COOs)

Division Division Division CFO General VP, VP, VP GM GM GM Counsel HR R&D Corporate Development

Without a COO:

Division Division Division CFO General VP, VP, VP GM GM GM Counsel HR R&D Corporate Development

CFO General COO VP, VP, Counsel HR Corporate Development

Division Division Division VP, GM GM GM R&D

Without a COO:

With a COO:

Some suggestions:

Be very alert to the performance conditions, or recent track record, of the organization(s) you are studying.

• Are you being told about what works, what doesn’t work, or what? • The performance context can greatly color your interviewees’ remarks.

Some suggestions:

Be very alert to the performance conditions, or recent track record, of the organization(s) you are studying.

• Are you being told about what works, what doesn’t work, or what? • The performance context can greatly color your interviewees’ remarks.

Also, while far less feasible, try to comprehend the lenses, or biases, of your individual interviewees.

Eisenhardt’s Table 1:Process of Building Theory from Case Study Research

Getting Started

Selecting Cases

Crafting Instrumentsand Protocols

Entering the Field

Analyzing Data

Shaping Hypotheses

Enfolding Literature

Reaching Closure

Questions?

SOME CONCLUDING THOUGHTS

When it comes to theory development, don’t be paralyzed by holding yourself to too high a standard.

We need “big theories” and “small theories.”

“Some social scientists yearn for a Theory That Sweeps Away All Others. We think it is bad to reserve the word theory to mean only Good Theory or Grand Theory or Unassailable Theory. We would like writers to feel free to use theory whenever they are theorizing.”

Runkel and Runkel

We need thoroughly developed and “half-baked” theories.

Runkel and Runkel

We need thoroughly developed and “half-baked” theories.

“Products of the theorizing process seldom emerge as full-blown theories.”

Questions?

About anything!!

SMEAL C OLLEGE OF B USINESS T HEORY D EVELOPMENT AS O BSERVATIONAL PUZZLE - SOLVING Donald C....

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