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ВЕСТНИК БУРЯТСКОГО ГОСУДАРСТВЕННОГО УНИВЕРСИТЕТА
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УДК 33:005 © Б.Д. Сандитов, А.В. Мантатова
Экономические науки об имитационном поведении: имитационные стратегии в теории организаций
В статье рассмотрены теория и практика имитации и социального обучения в экономическом контексте. Рассмотрены классическая и современная литература в области экономики и управления наукой, которая объясняет происхождение имитации и ее влияние на коллективную экономическую динамику.
Ключевые слова: экономика, управление, имитационное поведение, теория организации, экономическая динамика.
B.D. Sanditov, A.V. Mantatova
Imitative behavior in economics and management: imitation strategy in the theory of organizations
In this paper the theory and practice of imitation and social learning have been considered in economic context. We survey classic and modern literature in the field of economics and management of science that explains origin of imitation and its effect on collective economic dynamics.
Б.Д. Сандитов, А.В. Мантатова. Экономические науки об имитационном поведении: имитационные стратегии в теории организаций
Keywords: economy, management, imitative behavior, organization theory, economic dynamics.
1. Introduction
There is a wide range of economic contexts where herding attributed to imitation of the behavior of the others, plays crucial role: in financial markets, herding contributes to both growth and consequent burst of the investment bubble; in industrial dynamics, firms' desire to imitate strategies of most successful competitors may lead to excessive crowding in certain segments of markets; in R&D, imitation alongside innovation is the driver of technical change and long-run economic growth, to mention only a few. Of course, imitation and social learning (learning from observing behavior of the others) are not confined to economic domain.
In the preface to his volume on "Extraordinary Popular Delusions and the Madness of Crowds" published in 1841 Charles MacKay wrote:
In reading history of nations, we find that, ... whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating then the first. ... Men, it has been said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly and one by one.
(MacKay 1995)
These words are as true today as they were 150 years ago. To say more, as in the course of the last centuries the world has become more connected, and frenzies, fads and fashions are getting global, perhaps these words are even more relevant today than ever before.
The major reason the history of the mankind is so abundant with the stories about "madness of crowds" so well documented by Mackay is rooted in the social character of our being. Social interactions shape our way of thinking, expectations, judgements and, ultimately, our behaviour. It is so natural that most of the time it goes unnoticed, but under certain conditions the social component reveals itself so openly that it cannot be ignored. Particular feature that allows frenzies to unfold is human readiness and ability to copy behaviour of others. Social nature and constitutional bias towards imitation govern crowds.
The importance of imitation, however, goes far beyond the phenomenon of fads and fashions; some might argue that the very survival of our species is due to our special gift for copying the behaviour of others. Because of its importance, imitation has been studied intensively. The literature on imitation is as vast as it is diverse - it spreads throughout different disciplines: biology, anthropology, psychology, sociology. Economics and management science are no exceptions.
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In this paper we survey the literature in economics and management theory on imitation and social learning. Because of the vast body of research carried out in the field we do not attempt to cover it all, but rather review a selection of papers close to our own research interests. The rest of the paper is structured as follows. In the next section we survey management literature on imitation.
2. Management and organization theory on imitation
From the perspective of evolutionary biology ability to imitate is an essential factor for species survival, as it provides an efficient channel through which experience can be transmitted from one individual to another. For many species imitation is a tool for adaptation to their environment and, ultimately, for survival in the course of natural selection. The pressure on natural selection guarantees that only beneficial behavioural traits essential for survival will dominate in the long run. Therefore to some degree our natural inclinations and abilities to imitate are 'hard-wired' in us, if not genetically then culturally.
Imitation occurs not only on the level of individuals; imitation is also an important element of group behavior, as selection process works not only on the level of individuals. Selection also operates on the level of groups of individuals, such as colonies, families, or, in an economic context, firms. This kind of perspective has been taken up by organization theory. In this section we focus on organization theory perspective of imitation, as at the moment the most systematic analysis of economic aspects of imitation has been done within this field.
Organization theory recounts that a firm is "an adaptively rational system rather than an omnisciently rational system" (Cyert and March 1963). It assumes that a firm's operations follow some standard operational procedures, in that a member of an economic organization (and, in fact, any organization) performs her functions according to "task performance rules" (Cyert and March 1963) or "routines" (Nelson and Winter 1982). These rules are "behavioural traits" of organizations and their role in the process of economic selection is similar to the role genes play in natural selection. The importance of imitation stems from its function in the mechanism of transmission and multiplication of routines within and between organizations.
2.1 Intra-organizational learning
Organization theory asserts that task-performing rules have an evolutionary origin; they arise in the process of boundedly rational search: through a process of trial-and-error members of an organization develop some heuristics to deal with particular kinds of problems they face in their position in that organization. However, would the process of organizational learning stop there, it would be rather unfortunate for at least two reasons.
First, since the rules are derived from experience rather than from "first principles" (e.g. profit maximization) without institutionalized transmission of rules within units of the organization, any rotation of personnel would result in partial or complete loss of organizational memory. It would imply that as
Б.Д. Сандитов, А.В. Мантатова. Экономические науки об имитационном поведении: имитационные стратегии в теории организаций
personnel changes, everyday routines would have to be reinvented over and over again. As Cyert and March (1963) put it:
Consider a new employee in an organization who is given the simple instruction, "Set price so as to maximize profit." If such an employee lasted long enough in the organization - and the organization lasted long enough -some ways for handling the pricing problem that were reasonably satisfactory would eventually be developed. But presumably prior employees have dealt with the same problem and developed some procedures. The organization's rules permit the transfer of past learning.
(Cyert and March 1963, p.104)
A new employee does not have to solve some formal optimization problem or go through the process of trial-and-error to figure out how to perform his functions, instead relevant rules can be learned from observing the work of her colleagues.
Second, a routine developed in a particular organizational unit as a response to a specific task might happen to have more general applicability than the task itself, and if shared with other units, it could potentially be beneficial to the organization as a whole. For example, this might be the case when an organization has to respond to systemic changes in the environment, and the same kind of changes has to be dealt with by different units. Efficient institutionalised transmission of ideas between units of an organization would ensure that some general procedure will be developed and shared; otherwise valuable resources will be wasted on duplicate efforts.
The importance of sharing of experience within organizations is well recognized in practice
Even if you have developed a high-caliber system of innovation, you will still not have institutional learning until you develop the ability to "flock". [...] Some managers see conventional training and development as merely an opportunity to acquire some new skills. However, ... training and development becomes a powerful vehicle for institutionalizing learning. [...] The flocking is intensive; course attendees nearly always tell you afterwards, "It is not so much what I learned in the official sessions, but what I picked up from my colleagues during the breaks that was important.
(Geus 1997)
Moreover, interaction between different units is important for learning to spread through the organization, otherwise
[w]e should therefore not be surprised, when these teams communicate antagonistically ..., at squabbling at the boundaries of their territories. The amount of institutional learning is limited ... the chances that the innovative ideas will become company policy are much reduced.
(Geus 1997)
Information exchange and learning in organization may take different forms. An employee may learn her functions and the way to carry them out via
ВЕСТНИК БУРЯТСКОГО ГОСУДАРСТВЕННОГО УНИВЕРСИТЕТА
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formal contacts such as sets of instructions, formal communications with her managers and so on, but as the quote above suggests the most important information comes via informal channels, from talking to and observing other employees. Social learning is particularly important in this mode of information transmission. According to the social learning approach to organizational behaviour, observational modelling plays an important role in transmitting task performance rules (as well as other formal and informal practices) among organization members:
... organizational participants learn how to behave from observing those around them. The dictum "Do as I say, not as I do" seems unlikely to be followed. Job description, rules, and policies are more likely to be interpreted from watching what others do than following written directives. The example by behavior that managers provide for their people may be more important than instructions they provide (Davis and Luthans 1980)
Thus social learning and imitation are important mechanisms through which organizations accumulate experience, and share and sustain task-performance rules.
2.2 Inter-organizational learning
Besides being an important mechanism for transmission of behaviour within an organization and therefore affecting the efficiency of organizational learning, social learning also plays essential role in the process of inter-organization learning. First, as in the case of intra-organizational learning, the ability to copy behaviour of the others helps by saving on the costly process of search. In addition, "standardization" of task performing rules on the level of population of organizations permits managers to "read" behaviour of other firms, and to avoid uncertainty:
[S]ome rules are more general than the individual firm and are identified as a more pervasive code called "industry standard practice", "standard business practice", "ethical business practice" or "good business practice." ... "goodpractice" - especially at managerial levels tends to be shared among firms. ... [general rules] serve the important function of providing an operational procedure for the manager to use in a situation of comparative ambiguity. Insofar as the external situation consists in other firms, it becomes predictable. Competitors' behavior can be predicted in the areas covered by standard practice. Insofar as potential failure is of concern to the decision maker, "standardization"provides defense. (Cyert and March 1963, p.104)
Adoption of a "good business practice", whether it is related to new production or management technology, is an instance of imitation.
Organization theorists distinguish between three fundamental modes of imitation: frequency-based imitation, trait-based imitation, and outcome-based imitation (Haunschild and Miner 1997). Frequency-based imitation occurs
Б.Д. Сандитов, А.В. Мантатова. Экономические науки об имитационном поведении: имитационные стратегии в теории организаций
when organizations try to implement practices widely adopted in the industry. Fligstein (1985) examined the spread of the multidivisional form (MDF) of organization among large firms and found that the probability of adoption is increasing with the share of other firms in the same industry that adopted MDF. Palmer et al (1993) focused on the adoption of MDF in a sample of late adopters (with a different set of other explanatory variables) and came to the same conclusions with respect to the effect of the prevalence of the MDF in the respective industry. Burns and Wholey (1993) analyzed adoption of matrix management by hospitals and found that the probability of adoption increases with the cumulative share of adopters among local hospitals. Rao et al. (2001) studied initiation of coverage of firms listed on the NASDAQ by investment analysts and found that the number of analysts initiating coverage of a certain stock in the previous year positively affects the probability of this stock to attract another analyst.
In contrast to frequency-based imitation, trait-based imitation is focused on practices in use only by a subset of other organizations having specific characteristics associated with high status. These characteristics usually include size, prestige, and success. Results of Burns and Wholey (1993) suggest that diffusion of matrix management proceeds from higher- to lower- prestige hospitals. Haveman (1993) studied the Californian industry of savings and loan and found positive relationship between the decision to enter into a new market and the presence of large and profitable firms in this market1. In another study Rao et al. (2001) showed that decision to start coverage of a stock depends on the number of high-status analysts started to cover this stock in the previous year. When making the choice of a model for imitation, an organization might take into account not only the traits associated with success, but also the degree of similarity between the model and the organization. Baum et al. (2000) studied acquisitions by chain nursery homes in Canada with respect to geographical location of acquisition targets. In the line with the other studies mentioned above they found that choices of larger chains are likely to be imitated immediately. In addition, they found that choices of similar-sized chain organizations are also likely to be imitated, but with some lag and conditional on the success ('wait-and-see' strategy).
With outcome-based imitation, organizations copy practices that brought favourable outcomes to organizations which use them, and avoid practices that led to bad outcomes. Most diffusion studies confirm that diffusion (imitation) rate depends on profitability (Griliches 1957; Mansfield 1961). Therefore if we assume that the knowledge about profitability of technology (practice) spills over to other firms, then this can be considered as a form of outcome-based
1 The relationship is positive if the share of high-status firms does not exceed a certain limit. Above this limit, the relationship turns negative due to the effects of competition.
ВЕСТНИК БУРЯТСКОГО ГОСУДАРСТВЕННОГО УНИВЕРСИТЕТА
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imitation. There are also empirical studies that indicate that salient positive outcomes are more likely to be imitated. For example, Conell and Cohn (1993) found that strikes in the coal mining sector in France did stimulate other strikes in the same department, and the impact was significantly higher if the initial strikes were victorious. Haunschild and Miner (1997) examined the factors that influence companies' choices of an investment bank as an adviser on an acquisition and found that highly salient outcomes sustain outcome-based imitation mode.
The literature suggests different theoretical rationales for different modes of imitation. DiMaggio and Powell (1983) argue that there are three main mechanisms of isomorphic change (process leading toward homogenization). First, there is coercive isomorphism, that results from formal and informal pressures exerted on an organization by other organizations on which the organization is dependent (e.g. government, financial institutions, suppliers). Adoption of "greener" technologies in order to comply with environmental standards enforced by the government is the case in point. Another mechanism is normative pressure that stems primarily from professionalization. For instance, Palmer et al. (1993) studied of adoption of MDF by large US corporations in 1960s and found that having a CEO with an MBA from an elite business school increased the probability of adoption of MDF. Last but not the least, there is mimetic isomorphism that arises as a response to uncertainty surrounding a novel practice/technology. In such an environment organizations may model themselves on other organizations. This mechanism of isomorphic change is directly related to trait-based imitation modes:
Organizations tend to model themselves after similar organizations in their field that they perceive to be more legitimate or successful. The ubiquity of certain kinds of arrangements can be credited to the universality of mimetic process than to any concrete evidence that the adopted models enhance efficiency."
(DiMaggio and Powell 1983, p.152)
Similarly, as the passage from Cyert and March (1963) quoted above suggests, the legitimacy of a "good business practice" may stem from its widespread use, and therefore an organization may choose to imitate the practice prevailing in the field, i.e. in this case we speak of the frequency-based imitation mode.
While frequency- and trait- based imitation modes are due to institutionalised pressure toward homogeneity, outcome-based imitation is related to the technical value of the practice/technology. Organization theorists have argued that just as individuals can learn from observing actions of others (social learning theory), organizations are also able to learn from the experience of other organizations and make decisions to imitate or to avoid practices depending on their perceived impact on earlier adopters (Davis and Luthans 1980). This view on imitation is in a way similar to the standard
Б.Д. Сандитов, А.В. Мантатова. Экономические науки об имитационном поведении: имитационные стратегии в теории организаций
treatment of adoption process in the economics literature, and it will be discussed in detail in the next section.
4. Summary
From more general perspective imitation is a mechanism of evolutionary selection relevant understanding behavior of individuals (be they animals or humans), groups of individuals (such as organizations), and aggregate collective dynamics. In this paper we reviewed literature on imitation and social learning in economics and organization theory.
Organization theory acknowledges that the task-performing rules by which organizations (and individuals within organizations) operate have evolutionary nature and arise in the process of boundedly rational search. In this respect imitation and learning from observing the others are the key mechanisms through which successful routines are transmitted within and between organizations. Research in this field mostly concerns with identifying instances, describing and classifying different types of imitation, and to less extent with the motivation of imitating agents and analysis of the effects on the collective dynamics.
In (mainstream) economics, which takes as a model of agents' behavior perfectly rational optimizing agents, the motivation for copying behaviour of others traditionally has been assigned to direct or indirect payoff externalities. In the past decade, economists turned their attention to boundedly rational behaviour and developed a number of models to analyse properties of an economic system where agents imitate behaviour of each other. Most of such models however have to rely on rather simple (and often ad hoc) assumptions about agents' behaviour to match the sophisticated organizational routines studied in organization theory. In this respect, convergence of the two field (economics and organization theory) remains the challenge for future research.
Литература
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Сандитов Булат Дамбаевич, PhD, Школа Бизнеса ТЕЛЕКОМ (Франция).
Мантатова Арюна Валериановна, кандидат географических наук, старший
преподаватель, Бурятский государственный университет. 670000, г. Улан-
Удэ, ул. Смолина, 24а.
Sanditov Bulat Dambaevich, PhD, TELECOM Ecole de Management, Institute
Mines-Telecom, France.
MantatovaAryunaValerianovna, candidate of geographical sciences, senior lecturer, Buryat State University, Russia, Ulan-Ude, Smolin str., 24а.
