Current Projects

Listed below are the titles and brief descriptions of a number of my current research projects. These papers are either under review or in the process of being revised. If you are interested in knowing more about any of these papers, please feel free to email me at akaul@umn.edu

Managing social impact: An integrated approach and research agenda

(with Jiao Luo, University of Minnesota, & Jasjit Singh, INSEAD)

Strategy and management research has increasingly focused on understanding the role organizations play in society, offering valuable guidance for measuring social impact. In this article, we build upon multiple streams of this literature to propose an integrated approach for managing social impact. Starting with a general definition of ‘impact’ as the difference between the states of the world with and without a given initiative, we propose a two-step approach for managing its social impact. The first is an analysis step, where the consequences of the initiative are evaluated descriptively in terms of: (a) goal realization, i.e., the extent to which it achieves its stated goals for contributing to society; (b) other outcomes, i.e., the extent to which it affects other financial or social outcomes; and (c) opportunity cost, i.e., its effectiveness relative to alternative means of organizing to achieve the same goals. The second is an assessment step, where the initiative’s full set of benefits and costs from the first step are normatively assessed using (and potentially triangulating across) one or more of three methods: (a) using Pareto improvement as the basis for comparison; (b) calculating net impact using a single metric for aggregation; and (c) confronting the nature of the trade-offs involved (relative magnitude, equity, certainty, and agency). In addition to integrating relevant streams of existing work into a systematic approach for managing social impact, we offer an agenda for further research applying concepts and insights from management research to questions related to social impact. 

A current version of this paper can be found at: http://dx.doi.org/10.2139/ssrn.3575027

Strategic search: Adaptation of internal fit and market positioning under competition

(with Gianluigi Giustiziero, Frankfurt School and Dirk Martignoni, USI)

Firms seeking competitive advantage need both internal fit and a distinctive market position, yet strategy research says little about how the search for the two is related. We develop a model of strategic search that integrates an NK landscape with differentiated Cournot competition, allowing a firm’s position to shape both its internal fit and distinctiveness. We show that, under low complexity, competition constrains search, locking firms into resource configurations and creating a trade-off between internal fit and distinctiveness. Conversely, under high complexity competition drives distant search, so that internal fit and distinctiveness go hand in hand. We further show that competitive lock-in constrains search by early leaders, while distant search drives the emergence of new leaders, thus offering a search-based theory of market disruption.

Comparative spillovers of hybrid organizations in addressing grand challenges: Evidence from Internet cooperatives

(with Hyoju Jeong, Syracuse University, and Jiao Luo, University of Minnesota)

We explore the spillover effects of private efforts to address grand challenges, i.e., their effect on the actions of other organizations in the market. Taking a question-based abductive approach, we develop a framework for studying spillover effects that we apply to internet provision in the United States, showing that entry by high quality cooperatives leads incumbents to upgrade their quality of provision, especially for larger incumbents in less competitive markets, consistent with cooperatives having a pro-competitive effect. This effect is stronger for cooperative entrants than for investor-owned or municipal entrants, in rural and low-income areas, and in markets where institutional barriers limit threat of entry. We thus highlight how hybrid organizations such as cooperatives may address societal grand challenges through market-based mechanisms.

Spawning or seeding? Employee spinouts as external experimentation

(with Liyue Yan, Boston University and Brian Wu, University of Michigan)

We study the ongoing relationship between employee spinouts and incumbent firms through an abductive study of the electronic design automation (EDA) software industry. We find that a majority of spinouts in the industry were eventually acquired by established incumbents, though not necessarily by their parents, that these acquisitions occurred after the market segments the spinouts entered had peaked, and that this pattern was stronger for spinouts than for other entrants. Our best explanation for these findings is that spinouts represent a form of collective external experimentation, with incumbent firms allowing employees to leave to pursue innovations independently and then buying back the winners of that technological competition, wherever they may have originated—a pattern we call “seeding.” We formalize this argument into a simple formal model that lays out the conditions under which such a seeding pattern may occur. Our study thus offers a new perspective on employee spinouts, suggesting that under some circumstances they may be a comparatively effective way of pursuing modular innovations. 

Cooperativeness, heterogeneity, and the structure of collective action

(with Farzam Boroomand, University of Minnesota)

We examine how successful collective action among heterogeneous actors may be achieved. Using a simulation-based approach, we explore the effect of three parameters—cooperativeness, heterogeneity of benefits, and heterogeneity of capabilities—on the extent to which actors in a population contribute towards a collective good in the long run. Our results show that cooperativeness is neither necessary nor sufficient for collective action; where actors are heterogeneous, collective action may fail even with full cooperativeness. We then offer two solutions to this problem: a meritocratic solution that relies on motivating high capability rational egoists to contribute more to the common good by aligning their benefits with their capabilities; and a locally transparent solution that relies on motivating high capability conditional cooperators to contribute more to the common good by making them aware of others’ constraints. We show that together these approaches can help sustain moderate to high levels of collective action even in highly heterogeneous populations.   

Inclusion as the mother of invention: Serving marginal stakeholders as exploration

(with Xiangting Wu, University of Minnesota)

We extend the business case for inclusive innovation, i.e., innovation in the service of marginal stakeholders, by highlighting the positive spillovers from such innovation on firms’ mainstream innovation efforts. We argue that that the pursuit of inclusive innovation will expose firms to novel problem contexts and underexplored solution domains, and the new knowledge thus gained will make them more effective at developing innovative products for mainstream markets. We test this prediction in the biopharmaceutical context, showing that the successful development of orphan drugs by a firm is positively associated with the success of its subsequent mainstream drug development efforts in the same indication area, and that this relation is robust to the use of the passage of the European Orphan Drug Regulation as an instrument. We further show that orphan drugs are associated with exposure to more novel demographic, socio-economic, and biomedical knowledge, and that this novelty of knowledge associated with orphan drug experience fully mediates the relationship between it and subsequent mainstream innovation success, consistent with our theory. Our study thus suggests a virtuous cycle of private innovation in public interest, with firms’ inclusive innovation efforts serving as a form of knowledge exploration that helps to boost their subsequent innovativeness in mainstream markets.

Rational satisficing: When exploration erodes or enables competitive advantage

(with Yingjia Du, University of Minnesota)

Strategy scholars have long argued that firms should seek to balance exploration and exploitation, trying out new alternatives in order to overcome inertia and stay competitive even as they take advantage of their existing strengths. In this study we argue that this may be questionable advice when faced with competition. Using a simulation model, we show that exploration may prove costly under competition, potentially shifting the optimal balance towards a focus on exploitation. This is because competition creates asymmetric turbulence, changing the payoffs to good alternatives while leaving the returns to bad alternatives unaffected. Once a firm has arrived at a reasonably good alternative, any further improvements it discovers are likely to be fleeting, while good alternatives, once abandoned, may be hard to return to, making it rational for firms to satisfice and stick with good enough alternatives. However, if firms not only compete but can also learn substantially from each other’s experiences, then exploration may be the dominant strategy because any advantages from learning are swiftly competed away and superior performance requires constant new discoveries. Our model also shows that where balance is required under competition is in how fast firms learn, with moderate learning rates outperforming both fast learning (which leads to overreaction) and slow learning (which leads to excessive caution).  

The problem of leftovers in M&A: Redundancy costs and sub-additivity in combining resource portfolios

(with Jay Anand, Ohio State University, and Sungho Kim, Southern Illinois University)

Resource-based accounts of acquisitions suggest that they create value by replacing an inferior resource with a superior one, especially if the latter is fungible and scale-free. This argument often overlooks that such acquisitions also make the replaced resources redundant, and to the extent that these ‘leftover’ resources cannot be traded on the market, the loss of their value represents an opportunity cost to the firm. Such redundancy costs mean that even acquisitions that successfully deploy or access new resources may prove sub-additive, i.e., may have a net negative effect on value creation. Using a simple formal model, we show that the likelihood of such sub-additivity in acquisitions decreases with the tradability of the replaced resource, but may increase with the fungibility and superiority of the deployed resource.

The revolving door as boundary-spanning: Value creation and capture through public-private mobility in the commercial space sector

(with Jeffrey Martin, University of Alabama, and Samina Karim, Northeastern University)

The movement of people between private and government roles—the so-called ‘revolving door’—has generally been seen as a means for firms to evade or manipulate regulation to their advantage, raising ethical concerns about this form of cross-sector mobility. In this study, we expand this perspective, suggesting that cross-sector mobility may also be a source of value creation, enabling public and private actors to collaborate more effectively to their mutual advantage. We abductively explore this possibility in the context of the emerging commercial space industry (commonly referred to as NewSpace). Building on two illustrative cases, we depict how individuals who move across sectors can serve as boundary spanners, using their superior information, access, and influence to enable successful innovation at the intersection of public and private interests. We also highlight a distinction between public-to-private mobility and private-to-public mobility, suggesting that while the former may drive competitive advantage for individual firms, the latter may result in better public policy, reshaping the institutional environment to make it more effective.

Gotta serve somebody: The elitist nature of U.S. corporate philanthropy

(with Jiao Luo, University of Minnesota, and Haram Seo, Arizona State University)

Is corporate philanthropy responsive to the needs of society? In this abductive study, we use detailed grant-level data on corporate giving by the foundations of 2,958 firms from 2005 to 2018 in the United States to examine where corporate donations go. We develop a framework of four potential roles for corporate giving in society—progressive, exclusive, altruistic, and elitist—based on whether or not corporate giving is responsive to socio-economic needs across and within communities. We find that corporate philanthropy is primarily elitist: it goes disproportionately to prosperous urban communities (even after accounting for the underlying distribution of potential recipients) and seems largely unresponsive to changing needs within communities. We further explore whether this result varies across firms, showing that it holds across firms of different performance level, ownership, and philanthropic focus. We do, however, find that firms that prioritize a cause area are responsive to changing community needs related to that cause. We also find that the responsiveness of such firms comes from unique and non-repeat donations, suggesting that attention to a cause helps firms move past institutional pressures and inertia in their philanthropic efforts.

Limits to stakeholder management

(with Kate Odziemkowska, University of Toronto & Jiao Luo, University of Minnesota)

Stakeholder theorists contend that firms can boost their value creation by enfranchising key stakeholders, implicitly assuming that stakeholders have agency, i.e., they can recognize and reciprocate the value being shared with them. In this paper, we interrogate that assumption, arguing that stakeholders are often heedless, powerless, or absent, and laying out the conditions under which firms’ attempts to enfranchise stakeholders may go unrewarded—conditions we collectively define as missing agent problems. Profit-maximizing firms will avoid enfranchising stakeholders who lack agency, and firms that do enfranchise such stakeholders are likely to see their profits decline. Our study thus highlights an important but largely unexamined boundary condition of stakeholder theory, while offering a fresh perspective on the social impact of stakeholder management.

Neither too close nor too far: Cross-regional intra-firm collaborations as drivers of radical innovation

(with Sohyun Park and Aks Zaheer, University of Minnesota)

In this study, we examine the relationship between two distinct forms of boundary-spanning knowledge recombination: across geographies and across knowledge domains. We contend that cross-regional collaborations between inventors within firms enable the successful spanning of technological boundaries to produce new-to-the-world recombinations. They do so, moreover, both by connecting geographically separated bodies of within-industry knowledge to eliminate inventions that are too incremental, and by screening out recombinations of knowledge across industries that might prove too radical. Results from a study of 27,833 medical device patents in the U.S. from 1981 to 2005 show support for these arguments, even after accounting for the endogeneity of cross-regional collaboration. Supplementary analyses show that cross-regional collaborations enhance the impact of firm patents, and that effects are stronger for close vs. distant collaborations. Our study offers a nuanced examination of the ways in which firms benefit from internal collaborations across locations, while also contributing to research on knowledge agglomeration and organizational innovation.