Regulatory Change/Business-Government Relations
Description
“Sources of Learning Heterogeneity: Discontinuous Regulatory Shock and its Impact on Organizational Search Behaviors”
Co-authoring with Jerry Kim, in this study I look at how discontinuous regulatory shock shapes organizational learning behaviors and what moderates the heterogeneous response of firms. Most literature on organizational learning argues that exploration is a better learning strategy when there is an exogenous shock because the value of existing knowledge would be deteriorated after the shock. However, sudden and discontinuous shock, such as deregulation that increases competition, could drive firms to exploit more in order to survive. Thus, we use the 1984 U.S. Drug Price Competition and Patent Term Restoration Act, widely known as the Hatch-Waxman Act, as an empirical setting to examine this question. The results indicate that pharmaceutical firms reacted to the shock differently depending on their previous learning experiences and capabilities. This is because how they perceived the shock—whether as threatening or munificent—was driven by changes in the relative value of prior learning experiences and capabilities after the shock. Therefore, heterogeneous capabilities make firms either explorative or exploitative, and this becomes the source of firms’ different learning paths and strategies. This study is complete and will be submitted for publication.
“Influencing the Administrative State: Exploring the Bi-Directionality of Agency Embeddedness in U.S. Government Contracting”
In this paper with Shon Hiatt, we tease apart bi-directionality of agency embeddedness and how U.S. defense contractors benefit from agency embeddedness. Prior literature on agency embeddedness suggests that an administrative state benefits from agency embeddedness by acquiring information and trust and through relationship building. However, in this paper, we argue that firms also use agency embeddedness to maximize their strategic outcomes by influencing regulatory agencies. Using U.S. Department of Defense contract data, we show that agency embeddedness, measured as geographic proximity, increases the amount of defense contracts. Moreover, this effect is moderated by the degree of administrative discretion of lower-level contracting offices, which is a clear indication that agency embeddedness works as a mechanism benefiting firms with higher degree of agency embeddedness. This study is complete and will be submitted for publication.