This article proposes that specific features of environmental dynamism and the notion of internal variety should be taken into consideration in response to caveats in prior research on choice or balance between exploration and exploitation and its implications for organizational performance. The study extends March's exploration—exploitation model by (1) conceptualizing and varying two dimensions — amplitude and frequency — of environmental dynamism and (2) articulating the notion of internal variety in an organization. Results from the simulation models show how a combination of organizational practices shapes internal variety, which in turn influences an organization's level of knowledge over time amid a changing environment.The study's findings suggest that the level of internal variety, along with the mechanisms by which each practice influences internal variety, affect adaptations of organizational knowledge. Managing internal variety through a combination of strong complementary practices, rather than anchoring on moderate levels of those practices, can achieve the balance between exploration and exploitation.

This study warns organizations against falling into an “early success trap.” The timing of initial success may lead organizations to divergent evolutionary paths as their experience at early ages has a greater consequence for their evolution than does their experience at later ages. In particular, we propose that early initial success can be more detrimental to an organization’s performance and survivability than later initial success because exploratory competence takes a long time to develop. To investigate the consequences of the timing of success, we developed a model of organizational learning and adaptation that examines what happens after success, when a success trap occurs, and whether and how the timing of initial success matters. The results from the simulation of our model indicate that the phenomenon of (early) success traps is a complex product of interactions among organizational learning of competences in exploitation and exploration and adaptations of historical and social aspiration levels. We discuss how organizations can avoid success traps and sustain their survival and prosperity over the long term.

This study investigates what determines social actors’ motivations and opportunities to risk changing their current courses of action and the extent to which they are likely to change, by integrating structural and behavioral perspectives on decision making. Behavioral perspectives argue that performance relative to aspirations determines the actors’ risk preference and motivation to change, while structural perspectives suggest that the actors’ choices and actions are enabled and constrained by the opportunities surrounding their structural positions to form exchange relations with the external audiences. We propose a theoretical model of how the actors’ status, distinctiveness, and relative performance interact to influence their motivations and opportunities to change, resulting in differential responsiveness to relative performance in terms of the degree of change. This model is empirically examined and supported in the context of the U.S. feature film industry between 1986 and 2006, where film directors decide the distances of change in the genre repertoires for their next film project. Overall, this study shows the importance of considering the interactions between the structural and behavioral antecedents to understand when and how social actors make decisions to change in an attempt to survive and prosper in dynamic environments.

This article reports a behavioural theory of reputation repair with a focus on the behavioural mechanisms underlying an organisation's response to a reputation-damaging event. The reputation repair model views reputation repair as a process of problem solving, consisting of three steps: problem recognition, search for solutions and implementation of solutions. Both an organisation's successful reputation repair and an ideal research program on reputation repair must cover both the issues of repairing or reviving the stakeholders' perceptions of the organisation by protecting these stakeholders from the harm of the reputation-damaging event, and determining the root causes and restructuring or reorganising the organisation's behaviour and position to prevent the recurrence of similar events. Managing the stakeholders' perceptions of the organisation can serve as a key supplement to the substantive reputation repair process and as a crucial part of an organisation's successful reputation repair.

The growing importance of corporate social responsibility (CSR) for firms’ sustainability has been spurring scholarly attempts at identifying the antecedents of CSR activities. This study examines how CEO ownership differentially affects firms’ CSR activities in response to their performance relative to aspirations. Building upon the agency theory and the performance feedback model, we argue that CEOs with greater ownership are relatively more likely to increase their firms’ CSR activities than those with smaller ownership as their firms’ performance further decreases below or increases above their aspiration levels, because they typically have more discretionary power and a greater pool of behavioral alternatives. Our fixed-effects analysis of the panel data from the U.S. crude petroleum and natural gas industry between 1995 and 2016 found that there is a systematic difference in how firms’ CSR activities are adjusted in response to negative performance feedback depending on the levels of CEO ownership, but no significant difference in the face of positive performance feedback. The overall results imply that the CEOs tend to care about CSR only when performance is near their target and not so much when performance is far below or above the target, especially if their stock ownership is low.

This study focuses on the joint effects of the firms’ access to structural holes within social networks and their status within social hierarchy on their innovation performance. The interactions between the firms’ positions in different dimensions of social structures have been rarely examined in prior research despite the fact that they jointly determine the firms’ opportunities and constraints for acquiring important resources, such as knowledge and information, for their innovation activities. In particular, we argue that the effects of structural holes and status contradict, rather than complement, each other because one tends to interfere with the other. We empirically test our theory and hypotheses by analysing the patterns of patent applications and strategic alliances in the US biotechnology industry between 1981 and 2006. While the results support the positive relationship between status and innovation, it is shown that access to structural holes does not significantly affect the biotech firms’ innovation performance on average. Our findings show that the positive effects of structural holes tend to be relatively stronger among lower-status firms, whereas the negative effects become stronger as the firms’ status increases. Finally, we discuss the implications and contributions of this study.