Teppo Felin

University of Oxford, Strategy and Organization Theory, Faculty Member

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Papers by Teppo Felin

What Problems Will You Solve with Blockchain

Open Innovation and the Theory of the Firm: (How) do Organizations and Boundaries (still) Matter?

Academy of Management Proceedings, 2012

The purpose of this symposium is to bring scholars together to discuss open innovation and its im... more

The Theory-Based View: Economic Actors as Theorists

Strategy Science, 2017

This paper outlines the theory-based view of strategy and markets. We argue that novel or "great"... more This paper outlines the theory-based view of strategy and markets. We argue that novel or "great" strategies come from theories. Entrepreneurs and managers originate theories and hypotheses about which activities they should engage in, which assets they might buy, and how they will create value. A firm's strategy, then, represents a set of contrarian beliefs and a theory-a unique, firm-specific point of view-about what problems to solve, and how to organize and govern the overall process of value creation. We outline the cognitive and perceptual, organizational, and economic foundations of the theorybased view of strategy. We also discuss the essential attributes needed for a firm-level theory of strategy. Throughout the paper we offer informal examples of our argument, by briefly discussing the strategies of companies like Apple, Uber, Disney, Wal-Mart, and Airbnb. The theory-based view of strategy and markets also offers important insights for how firms govern themselves (including ownership, boards, and organization design) and how firms interact with capital markets and external evaluators and stakeholders. We conclude with a discussion of the practical and managerial applications of the theory-based view.

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Mind, rationality, and cognition: An interdisciplinary debate

Psychonomic Bulletin & Review, 2017

This article features an interdisciplinary debate and dialogue about the nature of mind, percepti... more This article features an interdisciplinary debate and dialogue about the nature of mind, perception, and rationality. Scholars from a range of disciplines-cognitive science, applied and experimental psychology, behavioral economics, and biology-offer critiques and commentaries of a target article by Felin, Koenderink, and Krueger (2017): "Rationality, Perception, and the All-Seeing Eye," Psychonomic Bulletin & Review. The commentaries raise a number of criticisms and issues concerning rationality and the all-seeing-eye argument, including the nature of judgment and reasoning, biases versus heuristics, organism-environment relations, perception and situational construal, equilibrium analysis in economics, efficient markets, and the nature of empirical observation and the scientific method. The debated topics have far-reaching consequences for the rationality literature specifically, as well as for the cognitive, psychological, and economic sciences more broadly. The commentaries are followed by a response from the authors of the target article. Their response is organized around three central issues: (1) the problem of cues; (2) what is the question?; and (3) equilibria, $500 bills, and the axioms of rationality.

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The Organization Safari: What Can We Learn About the Universal Problems of Organizing from GitHub?

Academy of Management Proceedings, 2015

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What is New About 'Openness'? Implications for Value Creation and Value Capture

Academy of Management Proceedings, 2015

The goal of this panel symposium is to encourage a debate among a diverse group of organization s... more The goal of this panel symposium is to encourage a debate among a diverse group of organization scholars on how firms’ increasing levels of interactions with external stakeholders are balanced against maintaining sovereignty and control of firm inputs, processes and outcomes. We refer to this tension as the openness vs. sovereignty dilemma, and treat it as a starting point for promoting a discussion about the broader implications of openness for modifying existing frameworks, or generating new theories that explain and predict alternative pathways through which firms create and capture value.

The Microfoundations Movement in Strategy and Organization Theory

The Academy of Management Annals, 2015

ABSTRACT Microfoundations have received increased attention in strategy and organization theory o... more ABSTRACT Microfoundations have received increased attention in strategy and organization theory over the past decade. In this paper, we take stock of the microfoundations movement, its origins and history, and disparate forms. We briefly touch on similar micro movements in disciplines such as economics and sociology. However, our particular focus is on the unique features of the microfoundations movement in macro management. While the microfoundations movement in macro management does seek to link with more micro disciplines such as psychology and organizational behavior, it also features a unique set of questions, assumptions, theoretical mechanisms, and independent/dependent variables that complement the focus in the micro disciplines. We also discuss the disparate criticisms of the microfoundations literature and the challenges the movement faces, such as defining distinct theoretical and empirical programs for microfoundational research. The overall purpose of this manuscript is to clearly delineate the promise and uniqueness of microfoundations research in macro management, to discuss how the movement originated and where it is going, and to offer rich opportunities for future work.

Comparative organizational analysis: An introduction

Studying Differences between Organizations: Comparative Approaches to Organizational Research, 2009

Comparative organizational research means different things to different people and encompasses a ... more Comparative organizational research means different things to different people and encompasses a variety of research programs, some focused on specific methodologies and others exploring more substantive issues. ''Comparative'' is often used to describe research that is cross-national or cross-cultural, but more generally, comparative research explains contextual variation in social phenomena (Azumi & Hull, 1981; Ragin, 1987) including variation in organizational contexts. Comparative organizational analyses share an interest in revealing and explaining sources of enduring organizational heterogeneity (e.g., Clemens, 1997; Schneiberg, 2002). Variation in organizational forms, life-stages, and organizational cultures are examples of this kind of heterogeneity. Comparative analysis uncovers sources of persistent heterogeneity by focusing on contextual differences at varying levels of analysis, including across temporal and spatial dimensions (Aldrich, this volume). The need to explain difference is central to the comparative analysis of organizational bureaucracies prevalent in the 1950s and 1960s (Blau, 1955), the comparative approaches focusing on crosscultural differences (Hofstede, 1980; Hamilton & Biggart, 1988), and the comparative analysis of organizational forms (Williamson, 1991).

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The Micro Turn in Strategy: Variations and Connections

Academy of Management Proceedings, 2013

This symposium will address the recent trend in the strategy literature to take more micro perspe... more

Where Do Capabilities Come From?

Academy of Management Proceedings, 2014

The notion of dynamic or organizational capability has received much attention in the strategy, o... more

Open Innovation, Problem Solving, and the Theory of the (Innovative) Firm

SSRN Electronic Journal, 2012

Scholars have recently highlighted the promise of open innovation. In this paper, we treat open i... more Scholars have recently highlighted the promise of open innovation. In this paper, we treat open innovation-in it's different forms and manifestations-as well as internal or closed innovation, as unique governance forms with different benefits and costs. We discuss how each governance form, whether open or closed, is composed of a set of instruments that access (a) different types of communication channels for knowledge sharing, (b) different types of incentives, and (c) different types of property rights for appropriating value from innovation. We focus on the innovation "problem" as the central unit of analysis, arguing for a match between problem types and governance forms, which vary from open to closed and which support alternative forms of solution search. In all, the goal of this paper is to provide a comparative framework for managing innovation, where we delineate and discuss four categories of open innovation governance forms (markets, partnerships, contests and tournaments and user or community innovation) and compare them with each other and with two internal or closed forms of innovation governance (authority and consensus-based hierarchy).

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Experience and Repetition as Antecedents of Organizational Routines and Capabilities: A Critique of Behaviorist and Empiricist Approaches

SSRN Electronic Journal, 2009

We discuss the behaviorist and empiricist foundations of the organizational routines and capabili... more We discuss the behaviorist and empiricist foundations of the organizational routines and capabilities literature, specifically the extant emphasis placed on experience, repetition and observation as the key inputs and mechanisms of behavior, learning and change in organizations. Based on this discussion we highlight several concerns associated with specifying experience and repetition as antecedents of routines and capabilities, namely, (1) the problem of origins and causation, (2) the problem of extremes, (3) the problem of intentionality, (4) the problem of new knowledge, and ( ) the problem of the environment. We highlight the "poverty of stimulus" argument and more generally discuss how internalist or rationalist, choice-based approach might provide a more fruitful (though preliminary) foundation for extant research on organizational routines and capabilities.

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The Organizational Economics of Organizational Capability and Heterogeneity: A Research Agenda

SSRN Electronic Journal, 2012

For decades, the literatures on firm capabilities and organizational economics have been at odds ... more For decades, the literatures on firm capabilities and organizational economics have been at odds with each other, specifically relative to explaining organizational boundaries and heterogeneity. We briefly trace the history of the relationship between the capabilities literature and organizational economics and point to the dominance of a "capabilities first" logic in this relationship. We argue that capabilities considerations are inherently intertwined with questions about organizational boundaries and internal organization, and use this point to respond to the prevalent "capabilities first" logic. We offer an integrative research agenda that focuses, first, on the governance of capabilities and, second, on the capability of governance.

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Against Design

SSRN Electronic Journal, 2015

Institutions and the incentives they create can be designed or redesigned to produce desired outc... more Institutions and the incentives they create can be designed or redesigned to produce desired outcomes. But design does not work if social and economic dynamics are "creative." If it is impossible to know in advance how an institution will change behavior and incentives-and what interests it may serve or harm in the future-then it is impossible to "design" optimal institutions. Like organisms, institutions are adaptive functional wholes that change in unpredictable and unprestateable ways. We examine the history of interpretations of the United States Constitution to illustrate the unpredictable and unprestateable dynamics of institutional change. We highlight how innovative interpretations of the Commerce Clause crafted in the civil rights context of the 1960s provided legal support to the Controlled Substances Act of 1970, which has been used to disproportionately target African Americans in the "War on Drugs." Further, we explain how judicial expansion of procedural due process rights for criminal defendants created unintended consequences that ultimately undermined safeguards against overzealous prosecution. Our analysis suggests that two leading theories of constitutional interpretation, originalism and living constitutionalism, are both unsatisfactory. Originalists do not adequately recognize that the present differs from the past. Novel situations unimaginable to the framers make it possible to have multiple, inconsistent, but equally originalist interpretations of the Constitution. Living constitutionalists do not adequately recognize that the future will differ from the present. Present interpretations enable entirely new and unforeseen laws, which may produce outcomes opposite to those intended by the crafters of present interpretations. For this reason, both theories have morphed over time and become more similar, showing that theory itself defies design.

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An Exchange of Ideas About Knowledge Governance: Seeking First Principles and Microfoundations

Knowledge Governance, 2009

First, let me thank the Oxford University Press and the editors, Nicolai Au: Please note that the... more First, let me thank the Oxford University Press and the editors, Nicolai Au: Please note that the style for author's initial name is J. C. But in this chapter JC has been used as short form. Should JC be changed to J. C. as chapter author name? And should it be abbreviated as JC at the first occurrence in the text? Foss and Snejina Michailova, for allowing us to engage in this informal, unusual, and we hope, informative interaction and exchange of ideas. To get us going, let me propose a few points and positions that might be worth pursuing. These are informed by what Nicolai labels the 'knowledge governance approach' (KGA) (Foss 2007)-which I see as an attempt to focus on some fundamental issues in the area of knowledge management (KM); that is, issues which have heretofore received relatively little attention. So let me start with three 'first principles' that might anchor our discussion in KM more generally and the KGA in particular. These three points in essence represent areas of research that deserve more attention in knowledge-based arguments of the firm, and, the KGA may indeed provide a vehicle for addressing them. First, 'microfoundations' are needed for knowledge-related arguments pertaining to organizations. By microfoundations I mean there is a need to understand various individual-level factors in knowledge creation and production: abilities, decision-making, actions, beliefs, expectations, interests, imagination, preferences, and so forth. Thus, rather than assume individuals are simply heavily socialized toward perceiving their environments in a certain way, the KM literature would benefit from starting out from lower-level notions and systematically building theory upwards to

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Closed or open innovation? Problem solving and the governance choice

Research Policy, 2014

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What Are Microfoundations?

Academy of Management Perspectives, 2013

ABSTRACT In the extant organizational, management, and strategy literatures there are now frequen... more ABSTRACT In the extant organizational, management, and strategy literatures there are now frequent calls for microfoundations. However, there is little consensus on what microfoundations are and what they are not. In this paper we first (briefly) review the history of the microfoundations discussion and then discuss what microfoundations are and are not. We highlight four misconceptions or “half-truths” about microfoundations: 1) that microfoundations are psychology, human resources, or micro-organizational behavior, 2) that borrowed concepts constitute microfoundations, 3) that microfoundations lead to an infinite regress, and 4) that microfoundations deny the role of structure and institutions. We discuss both the partial truths and the misconceptions associated with the above understandings of microfoundations, and we argue that questions of social aggregation and emergence need to be center stage in any discussion of microfoundations. We link our arguments about microfoundations and aggregation with closely related calls for new areas of research, such as “behavioral strategy” and the domain of multilevel human capital research. We discuss various forms of social aggregation and also highlight associated opportunities for future research, specifically the origins of capabilities and competitive advantage.

Theories of the Firm–Market Boundary

The Academy of Management Annals, 2011

A central role of the entrepreneur-manager is assembling a strategic bundle of complementary asse... more A central role of the entrepreneur-manager is assembling a strategic bundle of complementary assets and activities, either existing or foreseen, which when combined create value for the firm. This process of creating value, however, requires managers to assess which activities should be handled by the market and which should be handled within hierarchy. Indeed, for more than 40 years, economists, sociologists and organizational scholars have extensively examined the theory of the firm's central question: what determines the boundaries of the firm? Many alternative theories have emerged and are frequently positioned as competing explanations, often with no shortage of critique for one another. In this paper, we review these theories and suggest that the core theories that have emerged to explain the boundary of the firm commonly address distinctly different directional forces on the firm boundary-forces that are tightly interrelated. We specifically address these divergent, directional forces-as they relate to

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Information aggregation, matching and radical market–hierarchy hybrids

Strategic Organization, 2011

More than 65 years ago Friedrich Hayek parenthetically remarked that while 'man has learned to us... more More than 65 years ago Friedrich Hayek parenthetically remarked that while 'man has learned to use [the market]. . he is still very far from having learned to make the best use of it' (1945: 528). The ensuing years have seen significant innovation in the structure and use of markets, including the infusion of market mechanisms into organizations (Zenger and Hesterly, 1997). However, the focus in extant scholarship has largely been on the market's high-powered incentives. But markets-as we argue in this essay-have additional features, such as information aggregation and matching. These novel features of markets have recently begun to receive managerial attention as organizations experiment with market-like practices such as crowdsourcing, information and prediction markets and open innovation. While we are descriptively learning much about these market-like practices and forms, nonetheless the theoretical foundations behind them, their implications for comparative governance (market vs hierarchy), their possible forms (markethierarchy hybrids) and implications for strategy and competitive advantage have yet to be fully vetted in the organizational literature. The purpose of this essay, then, is to step back and theoretically discuss the common threads that unite innovative practices such as prediction markets and crowdsourcing, and more importantly, to discuss their comparative implications for markets and organizations, as well as market-hierarchy hybrids. We specifically focus on two, relatively neglected features of markets as a governance form-features that give markets an advantage over firms and hierarchy: information aggregation and matching. We provide a contrast of the informational and matching-related assumptions associated with coordinating economic activity via the market's price mechanism vs hierarchy and organization, and highlight the potential gains from infusing the information aggregation and matching-related features of markets into organizations. While organizational scholars have certainly focused on the importance of information in organizations (Stinchcombe, 1990), and economists have highlighted the role that information So!apbox editorial essay

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Organizational Economics of Capability and Heterogeneity

Organization Science, 2012

Abstract For decades, the literatures on firm capabilities and organizational economics have been... more Abstract For decades, the literatures on firm capabilities and organizational economics have been at odds with each other, specifically relative to explaining organizational boundaries and heterogeneity. We briefly trace the history of the relationship between the capabilities literature and organizational economics, and we point to the dominance of a “capabilities first” logic in this relationship. We argue that capabilities considerations are inherently intertwined with questions about organizational boundaries and internal organization, and ...

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