Monday, December 12, 2011

Analogical reasoning

Analogies represent an important yet confusing domain of reasoning. There is no intuitive simple way to understand information processing related to analogies. Mathematics and computer programming do not deal with analogy. It is extremely difficult to program computers to recognize and process analogies. This also means that it is very difficult to theorize the processes.

Yet, we know that managers need to constantly engage in analogical reasoning. Entrepreneurs use analogies to evalute, examine, and sell novel ideas (e.g. Cornelissen & Clarke, 2010 in AMR). The whole Harvard case method popular in almost all business schools is based on the assumed ability of analogies to prepare students to manage firms and to solve problems.

There is a very interesting forthcoming laboratory study on analogical reasoning to be published in Strategic Management Journal by Lovallo, Clarke & Camerer.

The lab experiment on analogical reasoning

To examine the processes of analogical reasoning in managerial judgments, the authors asked experts to judge the expected returns for a sample of new ventures. They inially instructed the participants to take an "insider view" without analogical comparisons to other similar cases:
Please describe the path along which you see the Project proceeding. Start from where the Project is now and construct the most probable future scenario for the Project. Please create a timeline that describes the key steps, milestones, and actions that need to be taken to reach the Project’s goal, using as much space as you need (This should take about 15–20 minutes). After you have finished, please answer the questions on the following pages.
 They then asked the participants to use analogies to re-examine their estimates:
What two categories of investments or potential investments are most similar to the Project (e.g., founder-seller, early-stage, technical-risk, public company)? You can define/create whatever categories you think are the most relevant to the Project.
The authors found that the use of analogies led 82% of participants to lower their estimates (initial estimates were far greater than industry averages).This, I thought, was not particularly interesting as it can be simply an example of anchoring bias (in this case, a useful one). The interesting observation is this:
One finding from the study is that people do not seem naturally inclined to form a broad reference class of projects even when encouraged to do so. [...] the vast majority of reference projects were described as successes.These results are disturbing, as they suggest that reference class forecasting is itself open to bias in the recollection of reference projects (Kahneman and Tversky, 1979).
Analogical reasoning should not be limited to successes

It is clearly alarming if managers mostly base their analogical reasoning on success cases. People justifiedly complain about From Good to Great for its lack of attention to failed firms.If we compare situations we encounter to success cases, we will become overly optimistic about the characteristics of our situation that match successes while at the same time ignoring characteristics that would match failure cases. People love to read and hear good stories. Also, those who succeed are more willing to share their stories than those that fail. Journalists know this and tend to write about successful innovators and turn-arounds. Business professors know this and tend to write and teach case studies of the heroic success stories.

To counter these tendencies, we might need to instruct managers to engage in systematic analogical reasoning. When thinking about an investment or other decisions, managers should see that their discussions and private reflections consider analogies not only to similar success cases but also to an equal number of failure cases. Lovallo et al. forthcoming paper leads to a similar conclusion, although they propose a much more systematic methodology.

Two possible theories of analogical reasoning

I have yet to read a definite paper on the philosophy of analogical reasoning. Personally, I think there are two ways to go about it. First, we can assume analogies to be very complex and follow some form of parallel processing where numerous attributes are matched and conclusions are drawn from a complex body of tacit knowledge. The parallel processing can be assumed to be so complex that it is practically untheorizable on micro-level. The best we may be able to do is to see broad tendencies of  past experience or working memory recall to influence outcomes.

Second, we can assume analogical reasoning to follow working theories that are commonly tacit but can be made explicit. That is, analogical reasoning may repreresent a systematic comparison of characteristics and the application of knowledge concerning the relationship of matching characterics on outcomes of interest. We may have never heard of a "snow lion" (an imaginary animal), but through analogy we can figure out the likely characteristics: it would be analogous to snow leopard in being white and furry. It would likely eat other relatively large mammals such as goat, analogously to normal lions. These would be predicted by the knowledge-based theory of categorization -- traits that we know to have either functionality in snow-related environment or likely to be inherited across sub-species.The analogical reasoning is not pattern-matching, but the application of causal knowledge to estimate likely similarities.

The first option mystifies analogical reasoning as something that arises from the complexities of the human brain. The second option suggests that analogical reasoning is really just the application of existing knowledge to match premises to likely outcomes - not qualitatively different from more formal reasoning tasks, except that the initial premises attended to arise from specification of one or more analogous exemplars. The second option is the only account of analogical reasoning that allows discursive consideration of analogies. Classroom discussions of case studies is not about matching patterns, but about illustrating and memorizing knowledge concerning causal relationships.

Conclusion

Analogy and metaphor are difficult topics that can easily become mystified. They are linked to powerful and complicated processes of reasoning that we need to understand better. The forthcoming paper by Lovallo et al. is a nice example of work trying to make analogical reasoning more explicit with simplicity and clarity.

I'll conclude with my favorite passage of James Joyce, an application of analogy (metaphor) to motivate selective reasoning about the properties of women.
What special affinities appeared to him to exist between the moon and woman?

Her antiquity in preceeding and surviving successive tellurian generations: her nocturnal predominance: her satellitic dependence: her luminary reflection: her constancy under all her phases, rising and setting by her appointed times, waxing and waning: the forced invariability of her aspect: her indeterminate response to inaffirmative interrogation: her potency over effluent and refluent waters: her power to enamour, to mortify, to invest with beauty, to render insane, to incite to and aid delinquency: the tranquil inscrutability of her visage: the terribility of her isolated dominant implacable resplendent propinquity: her omens of tempest and calm: the stimulation of her light, her motion, and her presence: the admonition of her craters, her arid seas, her silence: her splendour, when visible: her attraction, when invisible.

James Joyce, Ulysses Vol. 2, p. 110

Saturday, October 22, 2011

Selection problem in reasoning

Employees who have chosen to join a labour union seem to make less money than their coworkers who have abstained from union membership. So why would anyone join a labour union to begin with?

J.J. Heckman
The above example illustrates sample selection bias, a typical fault in scientific reasoning that was first explicated in detail by D.B. Rubin (I am not 100% sure) and later addressed by J.J. Heckman (worthy of Nobel prize in 2000). The above reasoning is faulty because people who are likely to benefit from union membership join a union, while those unlikely to benefit decide not to join. It happens to be that in general those who earn more are less likely to benefit from the union membership.

Selection bias in academic research
The selection bias (a specific case of the broader problem of 'endogeneity') is discussed in detail in every good PhD program. Much of the advanced statistics (stuff covered after basic and time-series regression models) relates to the problem of endogeneity. Yet, selection bias remains an endemic weakness in strategic management, and probably plenty of social sciences studies.Some academics have joked that if the reviewer does not like an article and would like it to be rejected, (s)he can always complain about selection bias and endogeneity.

I recently read an article in Academy of Management Journal that I really liked, finding in effect that the actively involvement of managers and their tendency to draw in external stakeholders to discuss problems increased both the quality of resulting agreements and the resulting actions.It is a strong and enticing article. Yet, the author neglects to discuss the possibility that managers are unlikely to engage with problems or call in external stakeholders when they are thorny: managers select which problems to attend to based on their likely ability to resolve the issues. Thus, the seemingly self-evident prescription that the more managers and stakeholders engage with issues the better may be false. Indeed, it is easy to see that when problems cannot ultimately be solved, managerial engagement and the involvement of stakeholders can have high cost for the managers themselves - if not the organization.

Why are academics unable to reason correctly and to attend to the selection bias? I think there are three issues. First, it is very difficult to robustly correct for selection bias. We would have far less research done and published if we insisted on controlling for all potential selection problems. Second, the PhD education, while attending to selection problems, also creates a lot of trust into basic methodologies, both quatitative and qualitative. Researchers will always be overjoyed with any novel findings they make, It is not very enticing for us to go and try to decimate our results. Management being such a shitty practically oriented discipline that it is nearly impossible to publish studies that identify relationships and then prove them to be spurious. Finally, researchers often have a good qualitative understanding of their research subjects. When you know the managers and know how they think, you immediately know that the selection bias is not an issue. If you know it is not an issue, you may not think it is worth doing a lot of extra work to prove it conclusively.

Selection bias of managers?
To my best knowledge (not saying much), nobody has really examined selection bias in managerial reasoning. The phenomenon lies under a broader umbrella of 'superficial learning', the idea that managers learn wrong lessons from their experiences. In reality, we do not know the extent to which managers assume causality from mere correlation.The bias would seem likely: managers supposedly imitate the behaviors of their successful competitors, even though the only reason why less successful companies do not behave in the same way lies in the inability of less competitive companies to benefit from the practices.

The question is pretty significant for two reasons. First, selection bias leads to false causal attributions and thereby wrong decsisions. Second, problems resulting from selection bias can be influenced. By drawing attention to problematic causal attributions, managers can either correct their mistakes or at least approach their causal attributions and knowledge with the required scepticism.

How to study the selection bias in real life? I suppose we would require very intelligently deviced large-scale surveys. The next step would be to design laboratory experiments to investigate potential ways to mitigate biases. While neither form of research really appeals to me, I hope someone would investigate this.  

Selection bias and network centrality
When doing my PhD I had some data from a big telecoms firm to examine interpersonal networks within a big R&D unit. I found, along with the prior research, that engineers who had worked with other central engineers created inventions with greater impact within the firm. However, once I looked at the technological domains these people worked with, there was no longer any causal relationship: engineers were well connected if they worked on technologies that were crucial to the firm and the inventions of these engineers had big impact only because of the technological area they operated in. It turned out that the social ties were selected based on the work task, which also explained the apparent 'productivity'.

The data was not rich enough to "disprove" the importance of centrality in explaining 'innovative productivity', and I lost my interest in the whole domain area over time. Yet, my own observations provide a nagging feeling that many effects reported in research are significantly weaker than expected, but our social sciences are terrible in self-correcting themselves.

Wednesday, October 5, 2011

Reflexivity and irony

Philosophers are a reflexive bunch. Not that they are very shiny (in my experience the contarary), rather they tend to think a lot about their thoughts. In management theory and education, reflexivity comes heavily recommended (see e.g. an article on reflexivity in reseach by my friend Nelson and his co-authors). Reflexivity is commonly associated with wisdom, something most of us would consider desirable.

In this blog post, I raise the question whether reflexivity and irony -- key philosophical virtues -- are also potential problems for managers wo must lead actual organizations.

Reflexivity and irony

To reflect is to ask why, to engage in reasoning where existing beliefs are used to justify or reject an action, a choice, a norm, a belief or an assumption. Philosophy has been and largely still is about reflecting on basic issue - why we consider something to be good, why we accept something to be true, and so forth. An intelligent individual reflects, an ignorant one accept the status quo without considering further reasons.

Richard Rorty, my favourite philosopher, has taken reflexivity to a point where most philosophers become uncomfortable. Namely, he convincingly argues that there can be no reason for a philosophical system that we can outright accept. There is no escaping language, in the sense that nothing but experience outside claims can underwrite our premises. With whatever philosophical standpoint we take, we ought to consider it with irony. This is a sense of irony that Rorty associates foremost with Nietzsche, the detached amusement towards the beliefs one accepts himself or herself. We may accept a certain outlook to life, but we must accept that there is no final unquestionable reason to do so (philosophy is in this sense no different from religion, it relies on belief).

Now, the view has not made Rorty very liked among many philosophers. Such is the burden of irony socially. Ironic approach to management studies is likewise warranted - does what we do make any difference? Are our papers really insightful? Has everything mostly not been said (and forgotten)? Are most approaches not only dogmatic continuations from commonsensical observations mystified by charismatic old men? Whatever the answers, these are worthy considerations. But don't expect them to be crowd pleasers on the cocktail event at a major conference.

Should managers be ironic?

Some authors, including Karl Weick, have called for more reflection and "mindfulness" on the behalf of managers. I am not sure it is always a good thing. Management and leadership benefit from confidence. Social action requires unity and permanence. How can hundreds of employees in an organization coordinate their work efforts if there is no uniform and stable understanding of means and ends, of premises and values? In Blink, Gladwell argues that Gettysburg, one of the most famous battles in military history, was lost because of reflection and indecision. Psychologically, individuals need their life to be predictable. Living with a partner who constantly questions and adjusts key life choices would probably be quite horrible.

A truly strong individual might be ironic privately, yet project utmost confidence externally. The self-control of an actor? The benefit of irony is the lack of fear. One who accomplishes to not take ones own position seriously will not be fooled to respect authority when it is not warranted. But without authority, even the authority of one's own knowledge, what is the basis for continued motivation and effort?

Entrepreneurship is particularly an area where scholars have identified passion and persistence to be advantageous. Irony and reflexivity, taken to an extreme, seem antithetical to passion. Indeed, the stereotypical philosopher is a miserable being mired in the fundamentsl doubt, best exempfilied in Sartre's existentialist novels (and perhaps even better by Camus). The entrepreneur is, in Lampel's words, "an optimistic martyr", an individual who chooses not to reflect on potential problems with the knowledge that the battle is more important than the victory. Because of the complexity of our existing beliefs, reasoning will seldom lead to any closure. A manager knows that analysis leads to paralysis because there are infinite facts and choices to reflect on.

Conclusions? I'll reflect on that...

Ironic reflection is the reasonable conclusion of 20th century philosophy, a conclusion that dethrones philosophy from its position as the meta-science, casting what used to be philosophy into history of philosophy, a humanistic curiosity and a source of inspiration devoid of authority. To reflect is to reason more, to be wiser. But managers might need a sort of meta-wisdom that tells them when not to reflect. We all need that actually, not to become the antiheroes of Camus and Sartre. Maybe someone should do a study on thhe downsides of wisdom and reflexivity in management? I'm not holding my breath to see that published and taught in the MBA programs...

Monday, September 12, 2011

Identity mystique

Organization theory seems to be undergoing some type of identity reneissance. Identity work is very popular, and plenty of cultural explanations use the concept of identity as part of the explanation. In popular management thinking, the concept of 'organzational identity' is now used in parallel with 'organizational culture'. This blog post, however, is of interest only to academics.

Identity in Jaco Lok's (2010) paper in AMJ

It is hardly controversial to think that actors have identities (self-understandings), a set of beliefs concerning themselves (identity beliefs). However, there is often a temptation to treat identities as roles, singular templates that somehow define what actors are. In such talk, a priest is bound to have the identity of a priest and a professor has the identity of a professor.
[I]dentity is thought to form an important link between institutional logics and the behavior of individuals and organizations
The construction of resonant identities in their legitimating accounts has been shown to be an important mechanism by which institutional entrepreneurs are able to effect particular logics
Identity is seen as central to entrepreneurial attempts to theorize need for change, as it is through subsequent identification by individual and/or collective actors that new logics can become institutionalized ['identification' here remains unclear to me]
This study deepens understanding of the relations between identity construction and institutional logic reproduction and translation by demonstrating how identity can be contested and reconstructed, or “worked.”
The above quotes are from Lok's introduction. As is typical among institutional theorists, identity is offered as a some sort of explanation for behavior. Priests behave in a certain way because they have priest identity. This is a very neat sociological explanation, but for one thing. It explains nothing.

I am not going to go into the details of Lok's article. It is a nice qualitative study and it is perhaps unfair to take it here as a representative of the broader malaise. The problem I have is with his framing, and the article is chosen simply because its new and published in the highest impact factor management journal.

The identity-based non-explanation can be summarized as follows:
Can a better explanation be devised? Would it have anything to do with reasoning? YOU BET.

Now again, but without holistic identities

A much clearer story can be told if we accept the rather mundane argument that in reality actors never assume a single stereotypical identity and that all identities actually consist of multiple identity beliefs, beliefs concerning the self.

It then happens that beliefs actors have about themselves are quite likely to be connected to beliefs one has more broadly. If one believes that animals have souls and it is quite cruel to eat them, then it may also happen that the individual has a self-belief that by abstaining from eating meat he/she is an ethical and good human being. Does the vegeterian identity here explain the behavior (not eating meat)? Or might we device a more elegant explanation by saying that eating meat just does not seem like a very rational thing to do given the beliefs of the individual?

We might have an explanation like this:
Let's reconsider:
The construction of resonant identities in their legitimating accounts has been shown to be an important mechanism by which institutional entrepreneurs are able to effect particular logics
One can say that plausible identity beliefs (e.g. vegetarianism is a good thing) do influence how people think more broadly (farming meat is unethical). But it seems more apt to state that identity beliefs are only plausible once they conform to broader beliefs accepted by actors.
Identity is seen as central to entrepreneurial attempts to theorize need for change, as it is through subsequent identification by individual and/or collective actors that new logics can become institutionalized ['identification' here remains unclear to me]

This may also get it the wrong way around: if actors build their identity beliefs based on broader beliefs, then the broader beliefs become accepted? It does seem that if actors are reasonable and they accept the broader cultural beliefs, then their identity beliefs will also change over time.


Durability of identities matters

Even if the explanations in instutional theory amount to unnecessary 'identity mystique' and/or the explanations have gotten causality the wrong way around, there is at least one clear way in which identity beliefs matter. Intuitively, identity beliefs seem to be stable. It seems that actors are much less likely to reject beliefs that strongly relate to our understanding of ourselves than other beliefs (there must be research on this as well, but I am too lazy busy to look atm). The claims concerning the centrality of identity are therefore probably correct, but the role identity has in the initial changes in industries is likely to be exagerated by accounts that treat identities as holistic entities. 

Me against mystification

I am thinking about writing a paper concerning the aggregation mystification that results from theorization on the level of aggregate concepts (identities) rather than their constitutive parts (identity beliefs). Aggregate concepts are seldom suspect to reasoning-based explanations whereas the effects of constitutive parts can be largely explained by simply positing actors to be reasonable. Aggregation mystification represents exotic theoretical arguments that result from intrepreting data on an unwieldy level of analysis.

Monday, August 29, 2011

Reasoning about ourselves and our organizations

In this blog post: The tendency for individuals to reason about themselves has arguably increased. Is the same true for organizations ? Top managers are told to ask themselves 'what is this firm about', to become 'paranoid' about what their firm is and could be. Has such anxiety increased? Was there a time when firms had a fixed organizational identity that has now come to pass? 

The modern question: Who am I?
Anthony Giddens has suggested that 'the late modern age' we live in is distinct from the prior times in terms of how we think of ourselves. While previously our identities (who we consider ourselves to be) were defined by our family and our role in the society. Now, we constantly 'try on' different identities, burdened by the knowledge that whatever we are is just one choice out of many possible ones. Identity is a key topic we reason about: We consider whether our observations and 'facts' justify the self-conception we have, and we attend to reasonable implications 'justified' by the self-conception we have chosen. We use our identity to reason about what to do. 
A person may take refuge in a traditional or pre-established style of life as a means of cutting back on anxieties that might otherwise beset her. But, for reasons already given, the security such a strategy offers is likely to be limited, because the individual connot but be conscious that any such option is only one among plural possibilities. (Giddens, 1991: 182).
In late modernity, there is no choice but to reason about who we are, a source of burned and anxiety (and freedom, one may say). Does this apply to organizations? 

Reasoning about Organizational Identity
Just as our conception of ourselves is our identity, the conception an organization has of itself is its organizational identity. Organizational identity is pretty close to what many would understand to be strategy, but I'll use the former concept in order to keep with the argument by Giddens discussed above.Even though Giddens has no interest in organizaitons, we could make analogous argument: in early modernity, organizations were not too concerned to reason about themselves, in late modernity organizations are anxious to consider and reconsider what they are about.

In terms of reasoning, this thesis would mean that the range of beliefs subject to reasoning is broadening. In earlier 'simple times', managerial reasoning incorporated simple premises: how can we do whatever we are about in a way that creates growth or profits? Changes in identity emerged from 'diversification', which added new elements but did not raise thorny questions about the legacy. In late 'complex times', the complexity of reasoning is increased exponentially because the very premises of these prior questions are also subject to reasoning: Should we be this or that? Is there an identity we could assume that we are not aware of? Such complexity can make anyone nervous. Only companies with large irreversible investments are safe from questions concerning the optimality of their current business. 

In conclusion
This blog is just a thought experiment, leading to a rather dull-sounding proposition that 'things have gotten more complex'. But this line of thought may also suggest that managers are becoming increasingly anxious and paranoid. More generally, this implies that the range of topics managers reason about are defined by the broader societal context.  

P.S.
My colleague Saku told a story behind the book. Giddens got remarried, and his new wife read self-help books. When spending time on the toilet seat, Anthony started browsing these books. They got him thinking about the constant quest to conceive and reconceive the understanding of self, which he associated with late modernity.

Reference
Giddens, Anthony. 1991. Modernity & Self-Identity: Self and Society in the Late Modern Age. Polity Press.

Sunday, August 21, 2011

Homes for Africans: How reasonability helps understand social institutions

I'm going to tell a story about David, a smart university graduate who volunteered to help build homes in Africa (and now a CEO of his own firm). This story helps elaborate my own stuff on the role of 'discursive institutional work' in creating, maintaining, and disrupting the prevailing social order.

Warning: This post marks the first instance of explicit promotion of my own work on this blog! 

Selling Houses in Africa
While working at Imperial College London, I met an entrepreneur running an IT company, whom I had to give a guest lecture. While we were chatting, he told me had gone to Africa immediately after he had graduated (from Cambridge) to work as a volunteer. He got involved in a big charity building proper houses for the poor in developing countries, using money and volunteer workers from the West. In really poor countries, 40% of energy is consumed by households, a lot of it goes into heating during winter nights because insulation is terrible. The guy was pretty smart, and he soon figured out that the scale of their activities was non-existing. If he could delegate the house-building to entrepreneurial Africans who would do it for profit, they could leverage the donated money and accomplish a substantive improvement. Moreover, selling subsidized houses would allocate the resources effectively for those families most willing to invest (with safeguards in place to make sure the new tenants were not wealthy). Because continued flow of the Western money was not guaranteed, a for-profit-philanthropy hybrid would lead to a more sustained impact. Great idea, so lets do it?

Not so fast. In the 90s most philantrophists were not overly excited about turning volunteer activities into a franchised business. They hated the idea. The reasoning was pretty straight-forward: entrepreneurs making money out of the poor Africans was wrong. Moreover, because nobody else was doing it, it had to be a bad idea (this is a common element in practical reasoning and probably a very good rule of thumb usually). Today, of course the salient reasoning would be quite different: creating entrepreneurship in an African country is a great way to boost its economy and the well-being of the people. The idea of subsidizing entrepreneurship as a form of philanthropy had not yet been institutionalized, the business plan was "rationally speaking" as good in the 90s as it is today, but the plan did not correspond to an existing social institution. Anyhow, during his 3-year stay in Malawi, the charity became the country's largest home builder.

After Africa and some other charity work, David was dead-set on becoming an entrepreneur. He went to do the MBA at Imperial and got involved into a venture while there. He is now the CEO of his IT firm, a portfolio company of the Imperial Innovations.

Social Institutions
Organization theory is hugely occupied with social institutions -- basically, a term usable for any durable, widespread, observable regularities in behavior. Institutions can be anything: the ubiquitous quality management systems, the tenure system in universities, sales commissions, whatever. Why such preoccupation? Because a lot of behaviors and other stuff taking place in companies (and more broadly in industries and countries) does not seem to result solely from rational decision making or technical concerns. If we can explain rational/purposeful decisions in organizations and the social institutions around those decisions then we have a pretty good understanding of what is going on.

Reasonability and Institutions
The notion of 'institutional work' captures the work done by actors, such as David, to create, maintain, or disrupt social institutions. This theory approach is founded on the notion that practices, entities, or social arrangements do not 'sell themselves' to customers, potential employees, government regulators, or the media. For example, when someone seeks to shape the attitudes or regulations concerning immigration or social welfare they are engaging in 'institutional work'. Institutional work is distinct from 'selling' because acceptability ('legitimacy') gained through institutional work tends to help everyone equally. There tends to be a freeriding problem.

This is a topic of a work (see below) I did with Saku Mantere and Eero Vaara. Our commentary suggests that the theory on institutional work -- by focusing what is done or said rather than the cultural context in which things are said -- has tended to ignore the discursively articulated reasoning around the social institutions in question. Thus:
We argue that reasonability plays at least three crucial roles in institutional work: It provides the main contextual constraint of institutional work, its major outcome as well as the key trigger for actors to engage in it.
These are very basic observations, but they are things we should at least control for when explaining why some actors manage to promote novel social order while others fail. These observations also help explain why discourse matters a lot when firms try to shape their industries or when managers try to change the ways things are done inside their own firm. Institutional work involves the creation and circulation of credible justifications to social institutions. On a meta level, the broader background assumptions (propagated by the Media) define how things can be justified in the first place -- for example, what arguments can be used to defend or attack immigration (an unfortunately hot topic in our increasingly xenophobic Finland).
1. Reasoning as a constraint: Any claims put forth by actors need to be justifiable with acceptable reasons, must have some implications that recipients comprehend, and need to avoid clearly acceptable reasons for their refutation.
For David, the salient beliefs donors and volunteers used to reason about philanthropy mattered a lot. The evaluation criteria and beliefs African regulators used to reason of foreign organizations would also define the conclusions these regulators would draw should the organization experiment with alternative approaches. What matters is how premises (the organization is now doing X) leads to conclusions (the organization is "not philanthropic") in reasoning, not just whether the actual or expected measurable outcomes from X are desirable.
2. Reasoning as an outcome: When actors engage in discursive work, they define and refine the generally accepted conditions for beliefs—the reasons why actors ought to believe one thing or another.

If David would engage in successful institutional work and shape how philanthropists perceive the franchising organization, it would likely lead to a broader change in how they reason -- what type of conclusions they draw from any philanthropic 'business model' that involves local entrepreneurship. Institutional work would make employment and economic growth more salient topics  to reason about.

3. Reasoning as a trigger: When new events and outcomes contradict the existing, accepted linkages between premises and conclusions (the established way of reasoning), institutions can only remain reasonable and legitimate if 'maintenance work' again makes them reasonable. We gave the example of the financial crisis in 2007, which questioned the very reasonability of the existing financial order and the premises on which it had been considered legitimate. As always, various experts were ready to provide reasoning to support the system.

The current story is the Euro crisis. Although the common currency has had many reasonable justifications going for it, the near-default of Greece and the continued crisis with Ireland, Portugal, Spain, and now even Italy and France, is suggesting that the reasoning behind Euro may have been flawed. To retain its legitimacy, the proponents of Euro must engage in what we call 'discursive maintenance work' that diminishes criticism and fears raised by recent events and provides solid line of reasoning to support Euro, set of reasons that must be immune to the recent evidence against the viability of Euro. 
We also pose some research questions in the rest of our brief paper that relate to the role of various actors (such as professions) in creating and maintaining reasonability of practices and arrangements. 

Reasonability
To say some some behavior has reasonability means two different things, which I here call weak and strong reasonability (terms I conveniently invented tonight). Weak reasonability means we are able to provide reasons for that behavior; we can comprehend and evaluate the behavior because there are some reasons for it. A merger lacks reasonability if we cannot understand what the purpose of it is, or how it will change things (to the better or the worse). Strong reasonability means that the justifications are broadly acceptable and aligned with the broader beliefs and interests of the actors involved. A merger may be weakly reasonabile if those who decided on it had clear goals, but still lack strong reasonability (or be 'unreasonable') if reasons exist to discredit the justifications. For example, if the costs of the merger exceed the benefits provided by its goals or if there reasons exist to assume that the goals of the merger cannot be accomplished.

In our paper we say that reasonability is "the existence of acceptable justifying reasons for beliefs and practices". It is not clear that we (or at least I) had in mind the first, weak, sense of reasonability. Social institutions may be sustained to the extent they are weakly reasonable, they can be justified in some comprehensive manner by someone. That does not mean that they are strongly reasonable, that there wouldn't be a plausible way to discredit the social institution. After all, the U.S. has a law about debt ceiling that is justified by some pretty good arguments. However, in a broader sense the law is really bad and even the justifications do not really stand to closer scrutiny. The debt ceiling is a weakly reasonable arrangement (social institution, if you will), but it does not really seem to be strongly reasonable.

The story of our paper
The piece we got published on reasonability and institutional work is not really an article. It is an invited commentary in a special issue. Journal of Management Inquiry was publishing a special issue on Institutional Work -- a new research program that seeks to understand how actors create, maintain, and disrupt social institutions (mainly, how they shape the acceptability of things such as the franchising model for philanthropic construction company). The special issue had a big 'agenda setting' paper by Lawrence, Suddaby & Leca, and some invited pieces by various academics. Because the comments were mainly from Americans, the editor thought we could do a more European type of thing with Saku & Eero.

I knew immediately I wanted to write on reasoning. Luckily Saku was keen on this as well, bringing in the notion of linguistic division of labor (Saku is more knowledgeable on Hilary Putnam, whom I've just read a bit recently). While Eero had his own brilliant ideas as well, we needed to retain some focus so he concentrated on just making our initial ideas much better.We didn't have too much time to fine-tune the commentary but I am pretty pleased about how it turned out. Now I just need to finish writing the proper article on reasoning & social institutions.

The most imporant thing: Reference
Schildt, H.A., Mantere, S., Vaara, E. 2011. Reasonability and the Linguistic Division of Labor in Institutional Work. Journal of Management Inquiry. March 2011, Vol. 20: 82-86.
doi:10.1177/1056492610387226

Monday, August 15, 2011

What is management knowledge and how do B-schools create that?

This blog post discusses how reasoning can shed light to what 'management knowledge' is in order to clarify what makes management research and management education relevant to managers. My interest in philosophy and psychology of reasoning inevitably got me to consider  how managers think about the issues they face. Despite plenty of reflection by management scholars on their practical relevance, the lack of any attention to the ability of managers to think is striking. When a manager is faced with a lot of information (e.g. market share is dropping, a competitor has introduced new products, and key sales people have resigned), managers will try to conceive reasons for these observations, and to come up with with different actions justified by seemingly good reasons.

Reasoning about an investment
Let's think of a manager who must decide whether to invest into an expensive IT project to improve customer satisfaction. Now, one may approach this decision using a simple financial model: if the NPV of increased profits is greater than the NPV of project costs, that is a pretty good reason to make the investment. One of course will then need a way to reason about the costs and benefits. Alternatively,  a manager who has taken a strategic management course might think in terms of capabilities. Can my competitors imitate or substitute the resource I am seeking to develop for a lower cost than I am investing? The IT system may not be a necessary resource, the first mover advantage may be insignificant, and the cost for competitors to copy the system may actually be lower than the initial cost of developing it through trial and error. If these three considerations are all true then there are  pretty good reasons not to invest.

Finance and strategy provide competing ways to reason about the decision. Both of them include some rather explicit inferences (e.g. formula to calculate NPV; the rule "if 2nd mover advantage is greater than 1st mover advantage then do not be the first mover"). These "ways of reasoning"  also require a lot of tacit knowledge (e.g. how to come up with an estimate of costs associated with an IT project; how to figure out the imitability of a potential new capability).

My hypothesis is that wise and stupid (is there a reason why the concept 'stupid' is absent from all theory?) managers are mostly distinguished by substantive (practical) quality of the reasons they conceive for their actions and choices rather than the logical validity of their thinking. Although cognitive psychologists have found clear and stable individual-level differences in the ability for critical reasoning, the lack of attention to imitability or NPV calculations is more likely to distinguish good and bad managers than the number of logical mistakes they make. Philosophy of mind would have us believe that reasoning has in general relatively  little to do with formal logic and a lot to do with the meanings we hold (I believe this view is advocated by Davidson and also John Searle in Rationality in Action - a book that is all about reasoning and very little about typical rationality).

Management education
The above example suggests that management education should enable students to reason about situations they will encounter at work. Managers ought to have the ability to utilize explicit knowledge in their reasoning (e.g. finance formulas, the VRIN criteria of the RBV -- if you believe in it). However, they should also have tacit skills to reason well -- to know what kind of things make resources imitable or substitutable. Is it not a bit strange that probably more than 95% of basic business strategy courses on this planet teach students that  inimitability is a necessary reason to assume a resource to be a sustainable source of value, yet less than 5% of the courses probably address at all how the imitability of a resource might be inferred!

It may seem quite uncontroversial to say that management education should teach people how to think about business problems and business decisions. Yet, there has been a substantial movement towards evidence-based management. This perspective suggests that management is no different from medicine and the key goal of management education should be to provide the right answers (I should mention that evidence-based medicine has been criticized quite a bit too, so medicine may not be about the correct answers either). The idea is that good management research figures out the right answers to problems faced my managers and that management education communicates these answers to people. While this approach may work in many areas, it seems to me that a lot of problems faced by managers are idiosyncratic and require non-trivial amount of reasoning to figure out. Once some management scholar has evidence on whether firms in industry X should  implement the  IT system Y, the window of opportunity has surely already closed.

If reasoning about problems and solutions is what managers do, then  management education needs to provide managers with theoretical concepts (such as imitability, first mover advantage, net present value) and teach the managers how to competently utilize those concepts.

Relevance of management research
I am working on a paper concerning the practical relevance of management research with my colleagues at Hanken: Saku Mantere and Eero Vaara. The paper is based on the conception of management knowledge as explicit and tacit ability to reason using a certain set of concepts. I am slightly concerned about giving out our argument in this blog because there are no clear rules -- at least in principle the journals want to only publish arguments that haven't been published before. In practice, it would probably make little difference if I published the conclusions of our main arguments in this obscure blog.

One conclusion we'll reach that I am particularly fond of concerns the practical relevance of individual articles. Since evidence-based management has limited applicability (basically answering only questions common to all companies and being very limited in its ability to help in thinking about idiosyncratic problems), we should not consider articles with clear prescriptions as more "practically relevant" than studies without prescriptions. In our mind, an article has practical relevance if it provides explicit or tacit examples of how to use theoretical concepts to think about real-life problems in a productive manner. For example, research on organizational identity has provided us a very useful concept that helps understand and solve problems in organizations even though the research provides almost no  prescriptions (it would be silly to expect evidence-based rules such as "companies in industry X should develop an organizational identity with characteristics Y&Z to improve profits").

Monday, August 8, 2011

Can a hedge fund eliminate human biases in reasoning?

One would imagine that organizations that make money through superior reasoning would develop practices and processes that reduce suspectibility to biases. And it turns to be so! The example is provided in recent New Yorker article on Bridgewater, the richest and strangest hedge fund on the planet. The owner of the fund, Ray Dalio, takes biases very seriously. The attempts of the organization to keep human tendencies at bay make the organization seem like a cult. Reporting by John Cassidy, quoted from New Yorker (within fair use):

Dalio asked for another opinion. From the back of the room, a young man dressed in a black sweatshirt started saying that a Chinese slowdown could have a big effect on global supply and demand. Dalio cut him off: “Are you going to answer me knowledgeably or are you going to give me a guess?” The young man, whom I will call Jack, said he would hazard an educated guess. “Don’t do that,” Dalio said. He went on, “You have a tendency to do this. . . . We’ve talked about this before.” After an awkward silence, Jack tried to defend himself, saying that he thought he had been asked to give his views. Dalio didn’t let up. Eventually, the young employee said that he would go away and do some careful calculations.
[...]

One day, I drove to Westport and sat in on a management-committee meeting, which had been set up for the purpose of “getting in synch” with a recent recruit, whom I’ll call Peter and who had come from a big financial firm. All nine members of Bridgewater’s management committee were sitting at a long wooden conference table. Peter, a lean man with fair hair, sat stiffly near the front: he looked like somebody anticipating a root canal. Jensen and McCormick were nominally in charge, but Dalio took over, telling Peter that, during a previous management meeting, he had answered emotionally in response to questioning from Jensen. “This is a common thing when somebody’s getting probed,” Dalio said. “Because the amygdala gets stimulated and you have that emotional reaction.” Peter agreed that he had become upset, especially when he sensed he was being accused of misleading his colleagues. “I felt in some sense my integrity was being attacked,” he said. “That’s when things spiralled out of control.” 

Dalio walked to the front of the room, where he wrote on a whiteboard, “FELT,” “INTEGRITY,” and “MISLED.” “?‘Felt’ is the key word here . . . and it’s a challenge for people,” he said. After a bit more discussion, he went on, “What we’re trying to have is a place where there are no ego barriers, no emotional reactions to mistakes. . . . If we could eliminate all those reactions, we’d learn so much faster.” (my emphasis)

Do social processes set up in organizations trump psychology? Or is Dalio's attempt to make humans non-human a futile undertaking? I believe we have good evidence that social contexts do matter, and the social conventions and patterns of conversation to some extent override psychological tendencies when people reason discursively. But there are limits to everything and Bridgewater seems a bit freaky (you can check their 'Principiles' out; they might be handy if you teach org. culture). But they are by some acocunts the most successful organization in their field, and one cannot rule out the possibility that it is because they have engineered a solution that might be accounted for through sociology of reasoning.

Many organizational processes might help actors overcome individual-level 'deficits' in reasoning, such as those identified by behavioral economists. For example, by simply requiring managers to provide explicit justifications (verbal or numeric) for choices they make can reduce the use of biased heuristics associated with non-reflective reasoning. On the other hand, interaction situations tend to lead to all kinds of other unproductive patterns in reasoning (e.g. social desirability bias). There are nice lists of individual-level biases (e.g. by Stancovich, ref at the end), but I am not aware of a good summarizing review on organizational or group-level effects on reasoning.

The passage quoted above is a pretty dystopic vision of future workplace, is it not?

Ref:
Stanovich, K. E. 2009. 'Distinguishing the reflective, algorithmic, and autonomous minds: Is it time for a tri-process theory?' in In Two Minds: Dual Processes and Beyond. (eds), 55-88. Oxford, UK: Oxford University Press

PS. Thanks to a visually giften friend of mine, I got some tips on making the blog more readable.
PPS. I accidentally called Bridgewater 'Blackwater'. Bridgewater is the hedge fund run by Dalio. Blackwater is the American mercenary group (now known as XE) where employee recreation allegedly involves murdering civilians.

Thursday, August 4, 2011

Self-deception & reasonability

Work on reasoning has traditionally been very rationalistic. Researchers who focus on ways through which actors link beliefs or observations as justifications for further beliefs and actions would like to assume that the consistency that tends to characterize reasoning is universal for human beings. Yet, the real reasoning processes and outcomes are somewhat 'irrational' from the "objective" perspective of the logician.

Davidson on Self-Deception
Irrationality is particularly interesting for analytical philosophers who begin to explain mind and language from assumed logical coherence. I've been recently reading Davidson's essay collection (actually, in four volumes). Donald Davidson is absolutely brilliant and worth reading just for the elegant style of his argumentation (I suppose dummies are mostly not elected presidents of the American philosophical association). His late essay "Who is Fooled?" addresses the question of self-deceit -- how is it that people hold beliefs they know to be contradictory?

The essay begins with the story of Ronald Reagan and George Bush claiming they did not know that the U.S. was offering Iran arms in exchange for hostages. The former Secretary of State Schultz claimed that while G.B. consciously lied to the public, R.R. did not because he had "lied to himself", deceived himself to believe that he did not actually know of the deal (although he had been present in the meetings). What does it mean for R.R. to deceive himself to the effect he was "not aware" of the deal even though he knew the facts? Davidson also brings the example of Columbus claiming he was the first to spot land when reaching America, although he clearly was not (it was the lookout) and most likely knew it. This behavior "has been variously interpreted by some as naked, mean greed, by others as honorable self-deception, born of the arrogance and lust for flame" (D.D. cites F. Fernandez in The London Review of Books). Whatever the initial reason, we know intuitively that some people genuinely begin to believe in propositions they should reasonably reject (ps. D.D. recognizes cognitive dissonance literature as well, something I will not go into here right now).

How to define what is rational and what is irrational?
Davidson takes a humble approach and draws a conclusion on our ability to theorize reasoning (p. 218 in "Problems of Rationality"):
At this point someone is sure to ask who is to be the judge of rationality and consistency. The annoying answer is that this is a bad question, a question without an answer. There is no eternal, absolute standard. At the same time, we are not thrown back on your standards or mine; relativism is not the only alternative to standards independent of all though and judgment. It is clear that in evading the question when a set of attitudes can be recognized as inconsistent, we are quickly driven back to basic logic; there comes a point in which intelligibility is so diminshed by perceived inconsistency that an accusation of inconsistency loses application for lack of identifiable contents about which to be inconsistent.
This insight echos Davidson's truly ingenious resolution of Descarte's problem of scepticism (his essay "Coherence theory of truth"): We are pretty inconsistent in terms of absolute rationality, but we must be quite rational in order for anyone to be able to even point out a logical inconsistency. The fact that we can say someone to be deceiving themselves is only possible if most people most of the time do not deceive themselves: if we stick to conclusions that are warranted in some intersubjectively valid manner by beliefs we endorse as true. WHOAH! Such a logically consistent and clear point, but one that inevitably only gets made by a proper philosopher with a remarkable mind.


The Self-Deception of Madame Bowary
The essay ends in a show of remarkable intellectual breadth, where Davidson elaborates on Flaubert's Madame Bowary.  The protagonist of the story engages in ever-deepening self-deception, going through great deal of effort in order to retain a distinction between the true conditions of her life and the romantic dream image of hers she maintains to motivate herself. Davidson suggests that the key to self-deception is the effortful avoidance of considering the contradictory beliefs at the same time.

I may offer a trivial reading based on modern cognitive psychology. Some research (oh the refs escape me) suggest that all reflective reasoning involves the retrieval of beliefs and memories into working memory (the bit of the mind we are conscious of). Working memory has very limited capacity (you know the popular claim we can only hold "seven things" in our minds at the time), and unless we retrieve our dream-beliefs and the facts that contradict them into our working memory at the same time, we may just be able to deceive ourselves. On the other hand, real self deception might require us to do away with the most basic norms of rationality we have been socialized into. But wouldn't that appear as outright insanity?

And What about Managers?
As you can see, I've been clearly inspired by Davidson. Since this blog is about reasoning in organizations, I might pose the following question: Do managers regularly engage in self-deceit? Do organizations encourage them to do so, or are there perhaps mechanisms in organizations that help prevent or rectify self-deceit?

PS. Fun fact: before turning full-time philosophy superstar, Davidson went to Harvard Business School. His account: "I've always been glad I went to business school because it gave me an insight into how a lot of people think that I would have never known otherwise. And I liked the feelign that I could have done it. But I wouldn't have liked the people. After the war they said come back for a month and you could get the degree. I didn't go back."

Wednesday, July 27, 2011

Styles and tastes of reasoning

The choice of reasons we offer and accept for our beliefs and actions is without a doubt also a question of convention. Conventions concerning 'valid' or 'interesting' arguments and ways of justifying beliefs are at least partially dependent upon styles or tastes.What we consider to constitute acceptable justifications depend upon conventions.

For example, how do we reason about the 'quality' or legitimacy of academics? Previously, the judgments would have been based on the reading of key works, scholar affiliation, and various other sources of reputation. Today, increasingly the reasoning concerning academics is driven by numeric indices -- citation counts, numbers of A-publications, etc. The taste for quantified reasoning has spread and penetrated most areas of life now.

Unfortunately, humans seem to have a natural taste for the unconditional. This is what I mean. If possible, the private inferences and public arguments are grounded on beliefs and values that are absolute and unconditional. Such behavior is most emphasized in moral reasoning, where (quite naturally) we want to base our behavior on unconditional principles (e.g. the golden rule). Reasoning based on unconditional principles constitutes essentially fundamentalism. Beyond moral fundamentalism (which is not always disasterous) the love for the unconditional is evident in substantive areas, including 'market fundamentalism'. Holding the principles of free markets as unconditional guidelines for reasoning about choices and actions is enticing but inevitably leads to 'unreasonable' prescriptions.

The phrase 'taste for the unconditional' comes from Nietzsche (in Beyond Good and Evil), where it is mentioned in passing. For Nietzsche the tendency (of youth, in his mind) to rely on unconditional premises in reasoning about one's opinions and beliefs is not merely a bad taste, but 'the worst of all tastes'. Are managers victims of this bad taste? Or might such bad taste is in fact beneficial in politics and business? It certainly seems that many management gurus embrace and catalyze such bad taste by emphasizing the need of managers to 'focus on core competencies' (Hamel & Prahalad) or orient the decision making in their corporations around simple 'rules of thumb' (Eisenhardt & Martin).

Finally, some styles of reasoning are specifically related to social settings. In addition to monologies we have dialectical and dialogical ways of reasoning. The Blogger statistics suggest that there are dozens of page hits, but there are yet no comments on any of the blog texts. My reasoning would obviously be greatly enhanced by the introduction of more dialogue.

Sunday, July 24, 2011

Reasoning about threats and opportunities

When I started to write this blog, I pondered what are would count as the most common approaches to reasoning within organization theory and strategy. While institutional theory probably wins with a number of key arguments relating to how people think, strategic issue framing is certainly centrally connected to how managers and organizations reason. In 1987 Dutton & Jackson suggested that the way managers perceive events or changes influences how they respond to them. That is, if something counts as a threat then it tends to trigger reasoning that leads to altogether different actions than if that something counts as an opportunity.

This viewpoint draws on Staw's amazingly good 1981 paper on Threat Rigidity Effects. Staw argues that when an individual, a group, or an organization faces a considerable threat (a radical change) their premises to reason rationally are influenced. On individual level, stress and anxiety reduce ability to process information and reason about alternatives. On collective levels, managers faced with threat seek to restrict information and centralize control in order to effectively control the threatened organization (moreover, threats increase group pressures to cohesion and organizational pressures for efficiency). Naturally, the centralization of control towards the top managers is rather detrimental when an organization needs to improvize a novel and creative response to cope with a radical external change.

From the perspective of reasoning, threats to the organizations and individuals seem to change the individual and collective ability to link beliefs and observations as reasonable justifications for proper actions. Threats (when associated with stress) prevent individuals from exploring initially uncertain courses of action that might otherwise provide solutions. Threats also prevent the management in the organization from engaging in typical open discourse about the available alternatives.

This is all good and well, but do framings (opportunity/threat) matter in real life? This is very very difficult to study because the framings are dependent on the content of the events. In scientific jargon, the framing is endogenously determined (by the content of the event). The initial natural solution would be to device a research setting examining the responses of numerous organizations to a single event that is equal to all actors. Yet, the same event is not the same event for every actor. Effects that events have are always relational, and thus the framing of a common event (e.g. Lehman Brothers) by different corporations as threats or opportunities depends in part in how the organization is influenced by it. Heat wave is objectively a single event, but it is much more of a threat to pensioners than teenagers. Teenagers will inevitably frame a heat wave as an opportunity (to go to the beach, perhaps) and pensioners will inevitably frame it as a threat. Not surprisingly, empirical research will find that those with threat framing have more conservative responses and fare worse.

Whether an event is a threat or an opportunity to us or our organizations influences how we reason about it. However, the initial classification itself is based on our reasoning concerning the event.

Tuesday, July 19, 2011

Some disciplinary approaches to reasoning

Reasoning is a stunningly complex topic -- how humans think. How can such a question ever be answered? Well, the approaches have been wildly different.

In cognitive psychology, researchers have focused on anthropological regularities, ways in which human reasoning is biased and deviates from the 'objectively correct'. Pioneered and popularized by Nobel-prize winning Kahneman as behavioral economics, the psychological work on reasoning seeks to explain how people reason answers to problems. The key point here is to focus on reasoning tasks that have an objectively correct answer, commonly probabiliities and set theoretical puzzles (famously, people judging that Linda is more likely to be a feminist bank clerk than to be merely a bank clerk).

In rhetoric, scholars (e.g. Toulmin's 1979 book, An Introduction to Reasoning) have looked at ways people reason in arguments, through discourse. In contrast to the kind of positivist studies of cognitive psychologists, this endeavor is largely descriptive. D.N. Walton has done enormous job in describing "argumentation schemes" -- ways through which people explicate their reasoning to one and other. Of course the study of rhetoric is also normative in a sense that some forms of arguments are fallacious and some are acceptable. Yet, a gray area exist: for example, slipperly slope arguments are commonly fallacious (unfair), but in some cases valid (whether they have a point seems to be genuinely an empirical rather than a philosophical question).

Both psychological and rhetoric work assume that proper reasoning is schematically correct and somehow independent of the content. This is a key assumption in producing generalizable scientific knowledge about how we think. Alternatively, we might conclude that this is simply not possible. This is what work on moral reasoning tends to do (Toulmin's 2001 book 'Return to reason' takes this approach). If reasoning is about fitting premises to valid conclusions, it might just be that the content of the beliefs we hold form premises that cannot be linked mechanistically to any predetermined set of conclusions. Moral principles can lead to a range of conclusions -- often because they spawn contradictions that escape unique resolutions. Religion can justify war and peace, and no form of 'moral calculus' will tell an artificial intelligence system what the 'correct' answer is.

This is a very disappointing view from the perspective of generalizable science. If our thinking is driven by rather idiosyncratic beliefs that can be used in a variety of ways not easily explained from a universalistic normative or descriptive viewpoint, there is only so much we can do with reasoning. I believe this is largely the case in areas well beyond ethics and morality. Managers and organizations more broadly are reasonable and rational, but there is no generic way to explain the uniquely most rational conclusion to be had from the commonly held/shared beliefs. Premises are connected to conclusions in ways that are neither arbitrary nor fully predictable based on some universal principles. Reasoning is messy, but not messy enough to be ignored.

These are my premises. There is a place and need for psychological study of 'biases' in human reasoning, but such biases are not the whole deal about reasoning. There is a need for a deeper understanding of generic rhetorical forms of reasoning and argumentation but these do not capture all that is relevant either. Reasoning is, to use some terrible jargon, more semantic than syntagmatic. This is the approach Foucault took in his genealogical work on rationalities and 'episteme'. I do not think his ambitious attemps that genelizable insight were very believable, but that is a topic for another posting...

Sunday, June 19, 2011

Reasoning in Organizations? What? Why?

So here it begins, my private blog. A wise friend once said that only vanity drives people to write personal blogs. You decide. I've had an interest for some time in reasoning -- the mental and discursive processes of linking of facts, observations, normative beliefs, etc. as reasons for other observations, beliefs, actions, etc. Humans are inherently sentient creatures and what we believe matters to us. We manipulate our beliefs and observations to come up with novel observations through a creative process. Reasoning is, arguably, the very basis of acting intentionally. Yet, generic attention to reasoning by that name is almost invisible in current organization theory and even sociology more broadly (but see an esoteric article by Vaisey 2009 in AJS). As Toulmin (2001, book "Return to reason") notes, theory on rationality has long been dominated by rational choice theorists (RCT), while the older and richer tradition that conceives rationality as reasoning has been ignored by proponents and opponents of RCT. A lot of organizational research is actually about reasoning, even though the term is very seldom used.

My own interest mainly concerns the role of culture in reasoning. I have a firm conviction that culture (e.g. what we organization theorists call 'institutional logics') influences social life largely by shaping how people reason (more of this later). That is, by shaping not only what beliefs we hold to be true but more importantly defining what kind of conclusions we see those premises as underwriting. I believe reasoning provides an elegant process to understand the theoretical morass of sensemaking (more of this later). Even categories, the not-so-new favorite topic in sociology of markets, are essentially significant because they are the nodes that reasoning operates around. Arguably, it is only their role in reasoning that makes categories hold any significance whatsoever (more of this later).I claim that the ubiquitous mystery-term of 'cultural meanings' is sensible only in relationship to reasoning (you guessed it -- more of this later).

There is an agenda for this blog. I think we need to have a proper sociology of reasoning. If 'behavioral economics' is about looking how psychological constants influence economic reasoning, we could have 'cultural economics' examining how cultural structures influence economic reasoning. That is, whereas cognitive psychology focuses on identifying generic patterns of automated reasoning (Kahneman), we ought to complement this by studying how substantive content of reasoning is shaped by social (organizationizational & industry) contexts. Since 'cultural economics' sounds pretty dull, I'd suggest a focus on 'organizational reasoning' in the dual meaning that patterns of socially conditioned ways of reasoning shape organizations and the social contexts of organizations shape how actors and groups reason. While much research on these processes has been done (some of which I hope to cover), we might benefit from recognizing the commonalities and attending to reasoning in a more explicit and systematic manner. 

Why a blog? Who says doing social science should be just about publishing stuff in journals? Only everyone. The blog will serve as a way for me air some thoughts and comments related to ideas and studies I find to be particularly interesting or useful. Hopefully my observations will be of interest to at least someone. And crucially, the blog allows me to air my ideas while my papers dwell in the depths of the peer-review process.

Oh well, this is too much already. For those who made it here -- thank you for reading. All comments very welcome!

-- Henri

PS. Here are some potential topics you might read about if you subscribe:
- How do organizations shape individual reasoning? Can we have a research agenda for studying organizational reasoning?
- Conceiving legitimacy as an outcome of reasoning
- Institutional logics/beliefs systems as networks of interrelated norms of reasoning
- Categories as tools of reasoning
- Sensemaking process as reasoning (and how to conceptualize 'meanings')
- Goffman's frame analysis essay as being really just about context-specific norms of reasoning
- Interesting recent philosophical work on reasoning
- Interesting recent cognitive psychology work on reasoning, dual processing theory
- Making sense of cultural structures (e.g. organic food) through reasoning