Why Do Firm Practices Differ? Examining the Selection and Implementation of Organizational Practices

Abstract

This dissertation is comprised of three studies investigating sources of variation in firm practices. Firm practices may differ both due to differences in the practices firms choose to implement – different types of firms may make different selections – and due to differences in implementation success of similar practices – variation in internal firm conditions may result in differences in otherwise similar practices. The first essay examines a difference in firm practice selection whereas the second and third essays examine differences in firm practice implementation. Essay one considers how ownership impacts the management practices implemented by firms, specifically considering the founder CEO firm’s adoption of management practices as compared to firms with other owner-manager types. Founder CEO firms adopt fewer management practices than firms under other ownership structures, both due to a lack of awareness about the lower quality of their practices and due to greater value placed on the nonpecuniary benefit provided by potentially less efficient but power-preserving practices. Essays two and three use data from a Fortune 100 retail chain that implemented a new restocking practice across a subset of its retail stores. Essay two examines how prior experience with the old restocking practice impacts a team’s ability to perform and learn the new restocking practice. Teams with greater exposure to the old practice perform worse at first – due to experiencing a competency trap – but then improve more rapidly – due to greater efficiency of communication and coordination. Essay three focuses on the impact of pilot use when rolling out the new practice, proposing that a main function of pilot implementations is to allow for vicarious learning opportunities for stores subsequently implementing the practice. The relative performance of the pilot stores as well as the contextual similarity of these stores to the stores learning from them matters a great deal. Nonpilot stores increasingly rely only on their own experiences rather than the pilots’ experiences in instances where the learning opportunities become less obvious.