Extant studies on the impact of mental representation on firms’ adaptation tend to emphasize either sensing or responding role of mental representation. The difference in the perspectives on mental representation gives rise to the puzzling effects of pursuing a representation that recognizes a wide range of factors and their interactions on the firm’s adaptiveness. This study addresses the puzzle by demonstrating the joint development of sensing and responding representations and articulating its adaptive implications. I employ a neural network model of a firm’s mental representation that consists of the sensing layer that reduces a given situation to decision factors and the responding layer that formulates the firm’s response to the decision factors. The results suggest a temporal trade-off of cultivating a complex sensing layer. Firms pursuing multiple objectives cultivate a complex sensing layer, which promotes their adaptation in the short run. However, in the long run, the complex sensing layer impedes the firms from formulating a proper rule to respond to the observed situation. This study extends our understanding of the role of mental representation in firms’ adaptation. Also, this study sheds light on the interdependence among firm objectives, which emerges and resides in firms’ cognition.
Practitioners and scholars have often warned against the negative social consequences of homophily. We consider the implications of homophily for the efficacy of organizational learning. In doing so, we highlight conditions under which homophily may enhance, rather than undermine, a firm’s ability to recombine and exploit individuals’ diverse knowledge. Employing a computational model, we identify two distinct pathways via which homophily influences the interactions between individuals in the organization, which we call the segregating and integrating effects of homophily. While homophily segregates individuals into homophilous social clusters, it also integrates individuals across a firm’s structural units (e.g., teams, divisions, departments). These two competing effects of homophily adjust the firm’s formal structure to drive effective recombination and diffusion of knowledge within the firm. We discuss why this positive role of homophily is more likely to exist in firms than in other social contexts.
In the organizational learning and search literature, conventional wisdom holds that a moderate degree of noise helps organizations improve their performance by introducing more variation. We note, however, that portrayals of most organizational structures in this line of inquiry are overly simplified. We contribute to this literature by suggesting that the beneficial role of moderate noise is dependent on its relational presence in a mutual selection and learning system. By extending March’s (1991) mutual learning model, we examine the role of noise in an organization as an adaptive system where both the organizational code and individuals can select and learn from others. We demonstrate that, while a small amount of noise on the learning stage is beneficial, noise on the selection stage monotonically decreases performance. Our results indicate a need for re-examination of the role of noise in various organizational settings and structures.
The organizational learning scholars have asserted that organizations and individuals learn from others' success and failure. However, they have left unsolved questions on the effect of their target selection between successful and failed targets on learning outcomes. It begets the shortage of managerial implications. To expand our understanding of the role of target selection, we developed a computational model that features agents learning from either successful or failed targets. The results indicated that bitargeting in which organizations and individuals learn from both others' success and failure is the best strategy for adaptation for most cases. The strategy of bitargeting helps them to balance exploitation and exploration, and it is more effective than passive slow learning. The implications and the limitations are discussed.
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