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Hart Posen

Dr. Posen is an expert on business strategy. He received his Ph.D. at The Wharton School, University of Pennsylvania, was previously on faculty at the University of Michigan and has held affiliate appointments at Seoul National University (S. Korea), the Technion (Israel), and the University of Zurich (Switzerland). Before his Ph.D., he spent over a decade as an entrepreneur in the technology and retail sectors.

Dr. Posen studies strategy, innovation, and entrepreneurship from a behavioral perspective. He examines how firms use knowledge, capabilities, and innovation to gain a competitive advantage over rivals and why some firms fail to do so. He is particularly interested in industries that are subject to substantial uncertainty and technological change. To address these topics, Dr. Posen uses computational social science methods to develop models of how collective intelligence emerges and evolves in organizations via learning processes. He is currently applying artificial intelligence (deep learning in neural networks) to model how competition impacts firms’ decision-making, organizational structures, and collective intelligence.

Currently an Associate Editor at the Strategic Management Journal (2021-), Dr. Posen is on the editorial boards of Administrative Science Quarterly, Organization Science and Strategy Science, and was previously an Associate Editor at Management Science (2014-18). His research is regularly published in leading strategy journals (Academy of Management Review, Administrative Science Quarterly, Organization Science, and the Strategic Management Journal), and he is ranked among the “Top 10% of Authors” by the Social Science Research Network (SSRN).

Dr. Posen is frequently invited to lecture to audiences in North America, Europe, and Asia. His commentary on economic issues has appeared in various media outlets, including The Wall Street Journal, USA Today, New York Times, NPR National News, Marketplace, CNBC, and the BBC.

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Papers by Hart Posen

Academy of Management Review

Organization Science

Organizational decision making that leverages the collective wisdom and knowledge of multiple ind... more Organizational decision making that leverages the collective wisdom and knowledge of multiple individuals is ubiquitous in management practice, occurring in settings such as top management teams, corporate boards, and the teams and groups that pervade modern organizations. Decision-making structures employed by organizations shape the effectiveness of knowledge aggregation. We argue that decision-making structures play a second crucial role in that they shape the learning of individuals that participate in organizational decision making. In organizational decision making, individuals do not engage in learning by doing but, rather, in what we call learning by participating, which is distinct in that individuals learn by receiving feedback not on their own choices but, rather, on the choice made by the organization. We examine how learning by participating influences the efficacy of aggregation and learning across alternative decision-making structures and group sizes. Our central ins...

Social Science Research Network, May 15, 2006

Academy of Management Proceedings, 2017

This symposium focuses on a central question of corporate strategy research: how to allocate corp... more This symposium focuses on a central question of corporate strategy research: how to allocate corporate resources in multi-business firms? Spurred by early qualitative theory, a surge of empirical r...

Academy of Management Proceedings, 2021

Practitioners and scholars have often warned against the negative social consequences of homophil... more 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 s...

This paper develops a realistic real option theory of resource allocation decisions in strategic ... more This paper develops a realistic real option theory of resource allocation decisions in strategic factor markets. We build on extant financial and managerial theories, real option theories of decisi...

Academy of Management Review, 2021

The existence of a learning curve in which a firm’s costs decline with cumulative experience sugg... more The existence of a learning curve in which a firm’s costs decline with cumulative experience suggests that early entry provides learning opportunities that create advantage by reducing future costs...

Academy of Management Proceedings, 2018

A central tenet of work in the Carnegie School tradition is the notion of “learning-by-doing”– or... more A central tenet of work in the Carnegie School tradition is the notion of “learning-by-doing”– organizations learn over time through feedback. In this paper we argue that the learning-by-doing account overlooks the fact that an organization’s decision-making structure is often participatory–i.e., organizational decisions often involve multiple individuals aggregating opinions through a process such as voting. In such contexts, individuals in the organization do not themselves learn-by-doing. Rather, when participating in the decision, they may vote for an alternative that is different from the one eventually selected by the organization. A key consequence of this is that these individual participants do not always receive feedback on their own choices; rather, they receive feedback on the choice made by the organization. We call this “learning-by-participating,” and we seek to understand the implications of this form of learning by comparing it to learning-by-doing, where an individual in the organization...

SSRN Electronic Journal, 2020

Recent advances in entrepreneurial practice associated with the Lean Startup has brought a sea-ch... more Recent advances in entrepreneurial practice associated with the Lean Startup has brought a sea-change in conventional wisdom to the practice of entrepreneurship – rather than commit and persevere, the advice is now to pivot your way to success. Yet this normative prescription is not as yet accompanied by a well developed theoretical logic. We seek to develop such a logic that informs our understanding of the factors that determine whether, when, and how often a new venture should pivot. The logic we propose, and examine via a computational model, is built on the relation between two key elements of an entrepreneur’s pivot strategy: the number of experiments she will undertake and her pivot threshold for evaluating the results. In our model, ventures that experiment and pivot outperform those that do not. At the same time, we identify an experimentation-pivot trade-off that dictates pairing extensive experimentation with conservative pivot thresholds to avoid pivoting too often and too early. The intensity of this trade-off depends critically on entrepreneurs’ bias. We find that pivoting may serve as a remedy for bias, and overconfident entrepreneurs perform better when following a more aggressive pivoting strategy than their unbiased counterparts.

Academy of Management Review, 2020

How should decision-making be organized in entrepreneurial teams when founders exhibit confidence... more How should decision-making be organized in entrepreneurial teams when founders exhibit confidence biases? New ventures are commonly founded by teams of entrepreneurs, who must employ a decision-making structure that implicitly or explicitly defines how individual beliefs are aggregated into team decisions. We consider this issue through the lens of organizational economics that focuses on decision-making governance. Using a computational model, we consider three archetypal decision-making structures: partnership voting, a boss with employees, and a buyout option (partnership convertible to boss structure). We highlight the conditions under which partnership voting is an effective means of governing market entry and exit decisions when teams' decision-making is informed by efforts to learn about the merits of uncertain opportunities. The promise of partnership voting is realized when entrepreneurs are either unbiased or optimistic about their likelihood of success. Partnership voting is problematic when entrepreneurs differ in their biases or respond too rapidly to new information, in which case a buyout option is better. From a policy perspective, we show that confidence biases may be managed by selectively matching the decision-making structure to entrepreneurs' biases, and that doing so may substantially improve the performance of new ventures.

Strategic Management Journal, 2019

Imitation is ubiquitous, yet the comparative efficacy of imitation strategies is poorly understoo... more Imitation is ubiquitous, yet the comparative efficacy of imitation strategies is poorly understood. A popular imitation strategy, sometimes called benchmarking, "mixes-and-matches" the practices common to leading firms. Using computational models, we compare benchmarking to the "copy-the-best" imitation strategy of copying a subset of the best-performing firm's practices. We find benchmarking is more effective in heterogeneous environments, where practices that are good for firms in one group (e.g., geographic submarket) may be bad for firms in another. Firms using mix-and-match tend to imitate practices of rivals within their group, less likely copying inappropriate practices from other groups. In homogeneous environments, however, the "copy-the-best" strategy is superior because firms are more likely to go beyond their group and copy novel good practices from rivals in other groups.

SSRN Electronic Journal, 2019

Decision-making that leverages the collective knowledge of multiple individuals is ubiquitous in ... more Decision-making that leverages the collective knowledge of multiple individuals is ubiquitous in organizations, occurring in settings such as groups, committees, top management teams, and boards. Research has examined how decision-making structures (e.g., plurality voting) aggregate individuals’ beliefs into a single organizational choice. We argue that decision-making structures play another role beyond just aggregating individuals' beliefs — they also shape the learning of the individuals who participate in decision making. Learning-by-participating is distinct from learning-by-doing (i.e., experiential learning) in that individuals receive feedback not on their own choices, but rather on the choice made by the organization. We develop a theoretically grounded conceptual framework to characterize different decision-making structures, together with a computational model of organizational decision-making, to examine the impact of learning-by-participating across different such structures. We find that decision-making structures vary across two critical outcomes — their efficacy in aggregating information and their efficacy in shaping individual learning, and that these outcomes may be inversely related. Adjudicating among these two outcomes is the way in which organizations utilize the knowledge of organizational contrarians, individuals who favor choices that differ from that of the organization. A key implication is that the choice of a decision-making structure requires taking the learning context into account. Structures that are effective in settings where the potential for learning is limited may be less effective when individual learning is important. We discuss further implications for research on organizational decision making, learning, top management teams, and the wisdom of organizational crowds.

Academy of Management Proceedings, 2019

Startups are commonly founded by teams rather than single individuals. We develop a computational... more Startups are commonly founded by teams rather than single individuals. We develop a computational model of learning and decision-making when teams consider an opportunity of unknown quality, learn from noisy information about the opportunity's quality before and after entry, and are potentially subject to confidence biases. We examine the implications of alternative team governance arrangements-decision-making structures that define how individuals' beliefs are aggregated into team decisions. Our approach contrasts with prior work that has focused on conflict, goal setting, demographic diversity, prior experience, and affect. We consider three archetypal decision-making structures in which two entrepreneurs can be arranged: partnership (team members must agree), boss (boss and employee), and buyout option (partnership with option to convert to boss structure). We highlight conditions under which a partnership structure is not the most effective means of governing a founding team. We find that (a) the optimal decision structure for an entrepreneurial team depends on the biases of team members, length of pre-entry learning, and distribution of opportunity costs; (b) under some decision-structures, team performance may be better when entrepreneurs are biased; (c) under some conditions, buyout option underperforms both partnership and boss due to a "winner's curse" of entry. *Equal co-authors in alphabetical order

Organization Science, 2003

The resource-based view holds that firms can earn supranormal returns if and only if they have su... more The resource-based view holds that firms can earn supranormal returns if and only if they have superior resources and those resources are protected by some form of isolating mechanism preventing their diffusion throughout industry. One isolating mechanism that has been proposed for intangible assets is their accumulation process. The hypothesis is that intangible assets are inherently inimitable because would-be imitators need to replicate the entire accumulation path to achieve the same resource position. Thus, entrants can never catch up to incumbents. An interesting challenge to this hypothesis is counterfactual evidence that entrants sometimes outperform incumbents. Such counterfactual evidence should not exist if the theory is strictly correct. This paper attempts to reconcile resource accumulation theory with the counterfactual evidence. We do so by building an intermediate good-production function for a firm's intangible asset stocks. We test the contribution of the intan...

Organization Science, 2009

One of the key mechanisms of firms' strategic renewal is R&D, and a key driver of the intensi... more One of the key mechanisms of firms' strategic renewal is R&D, and a key driver of the intensity of R&D is industry context. A number of theories develop propositions linking industry factors to firm R&D behavior, but these theories lack consensus. To date, empirical tests have been unable to resolve the competing predictions because of lack of time-varying measures of technology. We create new measures for technology and then conduct a test of the competing theories. Our results indicate that the data best match a model of innovative behavior in which firms invest in R&D principally to regain eroded advantage rather than to pursue the new frontier.

Management Science, 2009

Although spillovers are a crucial factor in determining the optimal environment for innovation, t... more Although spillovers are a crucial factor in determining the optimal environment for innovation, there is no consensus regarding their impact on firm behavior. One reason for this may be that models differ in their assumptions for the functional form of the spillover pool. In industrial organization and economic geography, for example, the predominant convention is that all innovation within an industry/region contributes to a spillover pool that has a common value for all firms. An alternative convention prevalent in endogenous growth and evolutionary economics is that spillovers have directionality—the size of the relevant pool differs across firms. Knowing the correct functional form may facilitate theoretical consensus, either analytically (by modifying models' assumptions) or empirically (by supporting a critical test of competing theories). We characterize and test the functional form of spillover pools for efficiency-enhancing innovation across 50 markets in the banking in...

Management Science, 2012

A common justification for organizational change is that the circumstances in which the organizat... more A common justification for organizational change is that the circumstances in which the organization finds itself have changed, thereby eroding the value of utilizing existing knowledge. On the surface, the claim that organizations should adapt by generating new knowledge seems obvious and compelling. However, this standard wisdom overlooks the possibility that the reward to generating new knowledge may itself be eroded if change is an ongoing property of the environment. This observation in turn suggests that environmental change is not a self-evident call for strategies of greater exploration. Indeed, under some conditions the appropriate response to environmental change is a renewed focus on exploiting existing knowledge and opportunities. We develop a computational model based on the canonical multiarmed bandit formulation of exploration and exploitation. We endeavor to understand the mechanisms by which environmental change acts to make purposeful efforts at organizational adap...

Administrative Science Quarterly, 2007

This paper develops and tests a model of the effectiveness of selection processes in eliminating ... more This paper develops and tests a model of the effectiveness of selection processes in eliminating less fit organizations from a population when organizations are undergoing adaptive change. Stable organizational traits, such as a search strategy or routine, do not imply that an organization's performance will remain stable over time or that cross-sectional differences in performance will persist. These properties create the possibility that population-level selection processes will be inefficient in that organizations with potentially superior long-run performance will be selected out. We theorize that organizational-level adaptation often results in fluctuations in current performance across time. These fluctuations may attenuate the degree to which current performance differences among organizations are indicative of future performance. As a consequence, search strategies that generate systematically different performance trajectories, even if they share a common long-run outco...

Knowledge is a central construct in the modern strategy literature because it contributes to perf... more Knowledge is a central construct in the modern strategy literature because it contributes to performance differences across firms. In the Carnegie School tradition, knowledge is the outcome of a process of search and learning by which firms discover better solutions to the challenges they face. Knowledge can be interpreted as more accurate beliefs about the merits of alternative policy choices which we term first-order knowledge. Such knowledge may be employed to allocate resources across alternative investment opportunities, for example, new plants, new drug molecules, or venture capital investments. Yet knowledge has a second dimension related to a firm's confidence in its beliefs. Intuition suggests that accuracy has limited value without confidence, and confidence has limited value without accuracy. We term accuracy-confidence matches second-order knowledge. We identify conditions under which low second-order knowledge (a confidence mismatch high confidence in inaccurate bel...