HOW DO ORGANIZATIONS RESPOND TO FAILURES? THE ROLE OF ATTRIBUTION BIAS IN THE ALLOCATION OF ATTENTION TO EXPLORATION

• Grant number: 21/10518-3
• Support Opportunities: Scholarships in Brazil - Post-Doctoral
• Start date: August 01, 2022
• End date: May 31, 2025
• Field of knowledge: Applied Social Sciences - Administration - Business Administration
• Principal Investigator: Jorge Manoel Teixeira Carneiro
• Grantee: Marlon Fernandes Rodrigues Alves
• Host Institution: Escola de Administração de Empresas de São Paulo (EAESP). Fundação Getúlio Vargas (FGV). São Paulo , SP, Brazil

Abstract

This project is situated in the behavioral literature within strategic management, and we are particularly interested in how organizations respond to failures. More specifically, we want to examine how different sources of failure (specifically, one's own failures vs. failures by third parties) affect the way organizations explore new knowledge. Learning from past failures is central to organizational adaptation and change. Whereas prior studies have investigated the effects of failure on performance, the effects on how organizations adjust their behavior, that is, degree of exploration, have received limited attention. Indeed, organizations might take advantage of experiential and vicarious learning mechanisms through which they make sense of direct and indirect failure experiences, respectively. However, managers differ in the way they attribute value to each source of failure experience. As a result, we contend that, due to systematic attribution bias, failures from others tend to be associated with greater levels of exploration than a firm's own failures. For our empirical analyses, we will conduct two studies to test the hypotheses. The first study will be correlational and the second, causal. Study 1 is a field study to observe product recalls and technology development in the medical device industry. Study 2 uses an experimental design to orthogonally manipulate the failure source and provide clear evidence to support or not the attribution bias mechanism underlying the theory development. In doing so, this project has potential and relevant implications for corporations, as well as for research on technology development, project management, and public interventions. Overall, our study has the potential to advance the understanding of behavioral dynamics in organizational responses to failure.