Özgecan Koçak

Decoding Culture: Tools for Behavioral Strategists

Özgecan Koçak, Phanish Puranam

2023-07-03

It is uncontroversial for strategy scholars that culture matters for both strategy formulation and execution. Yet, the diversity of approaches and concepts for thinking about culture can prove daunting for operationalizing this insight. We introduce the concept of a “code”—a fuzzy mapping between two distinct sets of cognitive constructs—as a fundamental construct to study culture. The concept of a code, and the distinction between using a code versus expectations about the code others use, can be applied to study many different elements of culture both in terms of theorizing about them with precision and for empirical applications. Furthermore, we argue that a code-based perspective on culture is particularly useful from the normative, design-oriented stance that is characteristic of strategy. Using an example of creating stakeholder alignment around the problem of sustainability, a first-order challenge for business and society today, we show that the perspectives of culture as shared values and culture as a toolkit point to different interventions that are each likely to work under different conditions.

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Decoding cultural conflicts

Özgecan Koçak, Phanish Puranam, Afşar Yegin

2023-09-13

As pioneers of the Carnegie Perspective recognized, conflicts in organizations can exist even when incentives of all parties are aligned. These can often be traced to differences in cognitions such as beliefs and values, which are foundational components of any given culture. This paper refines the operationalization of cultural clashes by identifying differences in beliefs about causality (“which actions cause which outcomes”) and morality (in the broad sense of “what is evaluated as desirable”) as two fundamental sources of conflict. In our first study, we demonstrate empirically that participants recognize and distinguish between these two sources of conflict. In our second study, we test the hypotheses that while misalignments in either causal or moral codes increase observers' perceptions of relationship conflict, negative affect, likelihood of avoidance, and lower perceived likelihood of conflict resolution, the effects are stronger for misalignments in moral codes than misalignments in causal codes and strongest when both causal and moral codes are misaligned. We test these arguments using vignette-based experimental studies. Our findings support our hypotheses. This research has significant implications for the understanding of conflict dynamics within and beyond organizational contexts. By recognizing the pivotal role of cultural differences in shaping conflicts, organizations and decision-makers can better anticipate, manage, and potentially preempt such conflicts.

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Shared Identity Schemas Shape Incumbent Responses to New Entrants

Özgecan Koçak, Başak Topaler

2023-01-01

An outstanding question in research on competitive strategy is what determines the strength and type of strategic response that incumbents deploy against new entrants. We argue that strategists’ assessment of threat from new entrants and their choice of strategic reactions depend on the shared identity schema in their field. Position of new entrants across identity categories indicate whether they pose a competitive threat within the same identity-based niche or outside it and whether they threaten to erode the incumbent’s category’s social value relative to other categories. Potential reactions to these threats can also be classified according to whether they protect or enhance the value that incumbents create and capture through their membership in their identity category. Matching identity-relevant strategic actions to the type of threat that new entries pose, we argue that incumbents (1) employ identity-deepening tactics in response to competition in their identity-based niche; (2) use identity-extending tactics in response to competition outside their niche; (3) respond to categorical identity threats by affirming their identities; and (4) are less likely to respond to either competitive or identity threats that originate from new entrants that do not clearly fit in the shared identity schema. We find support for our predictions in analyses using data on the population of Turkish universities over a 30-year period. We discuss theoretical implications for ecological and socio-cognitive studies of markets and practical implications for predicting patterns of strategic interaction and disruptive potential of new entrants.

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The Dual Challenge of Search and Coordination for Organizational Adaptation: How Structures of Influence Matter

Özgecan Koçak, Daniel A. Levinthal, Phanish Puranam

2022-08-02

Organizations increasingly need to adapt to challenges in which search and coordination cannot be decoupled. In response, many have experimented with “agile” and “flat” designs that dismantle traditional forms of hierarchy to harness the distributed knowledge of specialized individuals. Despite the popularity of such practices, there is considerable variation in their implementation as well as conceptual ambiguity about the underlying premise. Does effective rapid experimentation necessarily imply the repudiation of hierarchical structures of influence? We use computational models of multiagent reinforcement learning to study the effectiveness of coordinated search in groups that vary in how they influence each other’s beliefs. We compare the behavior of flat and hierarchical teams with a baseline structure without any influence on beliefs (a “crowd”) when all three are placed in the same task environments. We find that influence on beliefs—whether it is hierarchical or not—makes it less likely that agents stabilize prematurely around their own experiences. However, flat teams can engage in excessive exploration, finding it difficult to converge on good alternatives, whereas hierarchical influence on beliefs reduces simultaneous uncoordinated exploration, introducing a degree of rapid exploitation. As a result, teams that need to achieve agility (i.e., rapid satisfactory results) in environments that require coordinated search may benefit from a hierarchical structure of influence—even when the apex actor has no superior knowledge, foresight, or capacity to control subordinates’ actions.

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Separated by a Common Language: How the Nature of Code Differences Shapes Communication Success and Code Convergence

Özgecan Koçak, Phanish Puranam

2022-01-07

Coordinated action within and between organizations is easier when individuals share communication codes—mappings between stimuli and labels. Because codes are specific to the groups within which they arise as conventions, collaboration across organizational units that have developed their own distinctive codes is often difficult. However, not all code differences are equal in their implications for communication difficulty and the capacity of individuals starting out with different codes to develop a shared code. Using computational models, we develop a theory about the nature of differences in initial communication codes and how they impact convergence on a common code. Our results show that the difficulty of code convergence lies not as much in learning new codes as in unlearning existing ones. The most severe challenges to communication stem from “code clashes” where codes contain different mappings between the same labels and stimuli. Furthermore, clashes that arise when agents have developed their individual codes in different task environments but draw on a common set of labels are likely to be the hardest to recover from, reflecting the perils of being “separated by a common language.”

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Ambiguity can compensate for semantic differences in human-AI communication

Özgecan Koçak, Sanghyun Park, Phanish Puranam

2022-05-01

Ambiguity and semantic differences are each known to be independent sources of communication difficulty. However, we show using computational models that ambiguity can compensate for semantic differences across communicators. Given the heterogeneity of humans with which artificial systems interact, semantic differences will be the norm. Therefore each time a machine starts to communicate with a new user, our results suggest it will do well to start with a moderately ambiguous code in order to more effectively bridge semantic differences. We dub this the “adaptive ambiguity” hypothesis.

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Positioning new identities for appeal: Configurations of optimal distinctiveness amid ancestral identities

Başak Topaler, Özgecan Koçak, Behlül Üsdiken

2021-03-08

The theory of strategic balance argues that organizations that are neither too similar to nor too distinct from their rivals will be best positioned to meet competing demands for legitimacy and competition. This is because a similar identity to other organizations signals conformity, thus generating legitimacy, while adopting a distinctive identity through differentiation provides competitive advantage. Recent studies have noted that various combinations of conformity and differentiation tactics can achieve “optimal distinctiveness,” which, depending on the particular competitive landscape, may be low, moderate, or high. This study disentangles the effect of distinctiveness in a landscape from the effects of conformity to and differentiation from ancestral identities that serve as templates for new identities. Taking a configurational approach, we explore whether distinctiveness, proximity to an ancestral identity, hybridization of multiple ancestral identities, and vertical or horizontal differentiation are necessary or sufficient, alone or in combination, to generate appeal for new identities.

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When three’s a crowd: how relational structure and social history shape organizational codes in triads

2020-08-28

When members of an organization share communication codes, coordination across subunits is easier. But if groups interact separately, they will each develop a specialized code. This paper asks: Can organizations shape how people interact in order to create shared communication codes? What kinds of design interventions in communication structures and systems are useful? In laboratory experiments on triads composed of dyads that solve distributed coordination problems, we examine the effect of three factors: transparency of communication (versus privacy), role differentiation, and the subjects’ social history. We find that these factors impact the harmonization of dyadic codes into triadic codes, shaping the likelihood that groups develop group-level codes, converge on a single group-level code, and compress the group-level code into a single word. Groups with transparent communication develop more effective codes, while acyclic triads composed of strangers are more likely to use multiple dyadic codes, which are less efficient than group-level codes. Groups of strangers put into acyclic configurations appear to have more difficulty establishing “ground rules”—that is, the “behavioral common ground” necessary to navigate acyclic structures. These coordination problems are transient—groups of different structures end up with the same average communication performance if given sufficient time. However, lasting differences in the code that is generated remain.

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Experientially diverse customers and organizational adaptation in changing demand landscapes: A study of US cannabis markets, 2014–2016

Greta Hsu, Balázs Kovács, Özgecan Koçak

2019-08-15

In this study, we contribute to strategy and organizational theories of organizational adaptation by developing theory about the kinds of customers that facilitate an organization's ability to adapt to changing demand-side conditions. We propose that customers who have previously interacted with diverse types of organizations in the market convey informationally rich feedback that better enables organizations to understand and adapt to change—particularly in more rapidly changing con- texts. We further expect that organizations that position themselves congruently with market preferences will be stronger market competitors. We test and find support for our arguments using a unique dataset of over 8,000 canna- bis dispensaries operating in seven states that were listed on Weedmaps.com between July 2014 and June 2016.

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Co-opt or coexist? A study of medical cannabis dispensaries’ identity-based responses to recreational-use legalization in Colorado and Washington

Greta Hsu, Özgecan Koçak, Balázs Kovács

2018-01-30

When recreational cannabis dispensaries first entered the U.S. market in 2014, how did incumbent medical cannabis dispensaries react? Did they emphasize their distinct identity as medical providers, distancing themselves from recreational dispensaries and those consumers who consume cannabis recreationally? Or did they downplay their medical orientation to compete directly for potential resources? In this study, we propose that how incumbent organizations position their identities in response to increasing competition from an emerging rival form depends on key audiences’ acceptance of the new form. Using data on the evolving cannabis markets in the states of Colorado and Washington during the year following the initial emergence of the recreational category, we find a sharpening of identity among medical dispensaries in communities with low voter support for recreational-use legalization. Medical dispensaries accentuated the medical orientation of their identities as recreational dispensaries increasingly set up operations and as buyers inclined more toward recreational use. In contrast, we find a blurring of medical/recreational identity in communities where voters demonstrated support for recreational-use legalization in the state-level ballot. Overall, the theoretical framework we advance integrates cultural and strategic approaches by explicitly considering conflict in different audiences’ beliefs about the legitimacy of products and its implications for market producers seeking to connect with and appeal to current/potential consumers.

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Designing a Culture of Collaboration: When Changing Beliefs Is (Not) Enough.

Özgecan Koçak, Phanish Puranam

2018-10-28

Organizational cultures that facilitate collaboration are valuable, but little is known about how to create them. The authors investigate the micro-foundations of this problem using computational models of dyadic coupled learning. The authors find that merely altering initial beliefs about the consequence of actions (without altering the consequences themselves) can under some conditions create cultures that promote collaboration. The results of this study show why the right initial “framing” of a situation established for instance through persuasive rhetoric, an inspiring vision, or careful recruitment choices
may under the right conditions be self-reinforcing, instead of becoming empty symbolism.

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