Institutional Learning: Socio-spatial Distance of New Partner Selection

• In Event: 413 - Section on Organizations, Occupations and Work Refereed Roundtable Session. Table 01. Culture and Organizations
  In Refereed Roundtable 100min: Table 10. Institutions: Action and Practice

Abstract

Concepts of exploration and exploitation are widely used to interpret organizational behavior, typically classifying any new relationship as exploration and the continuation of an existing relationship as exploitation. This delineation from the organizational perspective, however, fails to differentiate between the relative socio-spatial distances of the two prospective partners. Arguably, these differences matter for the relative novelty of information that a new partner brings, not only to the organizational entities involved in the relationship, but to the institutional fields within which they are embedded. Conceptualizing novelty along a continuum of institutional distance across field boundaries, I develop a more robust theory of partner selection that distinguishes two types of organizational exploration: institutional exploitation, the initiation of a new relationship for the ego organization that involves the replication of past partner choices of others within the ego’s field, and institutional exploration, the formation of a relationship with a new organization that exists outside of the ego’s field. I test this theory using a novel, longitudinal dataset of U.S.-based foundations’ transnational grantee choices. I find that objective market- and firm-level uncertainty lead to institutional exploitation in new investment relationships. However, my analysis shows that exploitation is tempered by subjective perceptions of uncertainty rooted in the particular norms of an organization’s institutional environment. Larger professionalized foundations often see novelty as opportunity, while their less well-endowed peers view it as risk. These findings encourage the utility of including more nuanced degrees of exploration with explicit consideration of field boundaries in future studies of partner selection.

Authors

• Carrie Robson Oelberger

• Russell J. Funk, University of Minnesota