tag:blogger.com,1999:blog-1930103235934641180.post4020293132457767846..comments2024-03-18T09:18:01.006+00:00Comments on FREEKY BUSINESS: How bad practice prevailsUnknownnoreply@blogger.comBlogger3125tag:blogger.com,1999:blog-1930103235934641180.post-39897471232241860102008-06-26T12:46:00.000+01:002008-06-26T12:46:00.000+01:00Easy. Most people find it preferable to fail in co...Easy. Most people find it preferable to fail in company rather than succeed alone.<BR/>It's a purely social construct I believe. Unless a figure of authority steps in, or the new way becomes not-easily assailable (i.e. one will not get blamed for using it, regardless whether the failure was or was not a result of abandoning the old way and using a new way), changing your ways takes:<BR/>a) personal courage; or<BR/>b) an outsider who's not easily influenced by the inmates (sorry, incumbents).<BR/>Both of them are rare.<BR/>It's (to an extent) similar to smoking - you know it's bad for you, but even so won't necessarily quit if you're in a group of smokers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1930103235934641180.post-5071154474336952832008-06-20T19:21:00.000+01:002008-06-20T19:21:00.000+01:00Emre: You're of course very right. Sometimes pract...Emre: You're of course very right. Sometimes practices are inefficient but still benefit the firm because they provide them with legitimacy in the eyes of their customers, suppliers, etc. (e.g. ISO9000 in certain industries). However, those are not the ones I am talking about - in my vocabulaire, I would not even call them "bad practices - since they do bring benefits for the firm and increase its "chance of survival".<BR/><BR/>I'm convinced that there are practices out there that don't even do that (i.e. provide legitimacy); they're bad, lower your survival chances and you'd be better off without them. How come such practices survive, is the topic of my entry.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1930103235934641180.post-32318431805381633112008-06-17T14:48:00.000+01:002008-06-17T14:48:00.000+01:00An insightful point. Yet, I think the underlying a...An insightful point. Yet, I think the underlying assumption you have here is that each and every practice adopted should ideally contribute to the efficiency of a firm. When viewed in isolation, a particular practice may not make any sense at all to that end. However, when considered along with others, the practice could play a key role in the overall business model of a firm. <BR/><BR/>From another point of view, managers may also well aware of the fact that prevalent use of a practice does not necessarily render this practice as the decisive factor in the Darwinian selection process. However, they still may adopt bad/inefficient practices since it could be seen as a way of gaining legitimacy by participating the crowd. Thus, alternative to seeing it as a peril of vicarious learning, we can see the persistence of a bad practice as an outcome of the trade-off between legitimacy and efficiency. I believe one can find cases in which cost of deviation from institutional norms may outweigh benefits of streamlining the set of organizational practices.<BR/><BR/>Emre<BR/>Stockholm School of EconomicsAnonymousnoreply@blogger.com