Geoffrey M Kistruck

There has been a growing interest among management scholars in conducting research on grand challenges. Despite recognizing that studying such highly complex and uncertain phenomena likely requires more unconventional approaches, there has been very little methodological guidance provided to interested scholars. Drawing upon our own grand challenge projects undertaken over the past decade, we put forward a methodological approach we term ‘abductive experimentation’. Such an approach is an action-oriented process of inquiry that cycles between generating ‘doubt’ and generating ‘belief’. More specifically, abductive experimentation iterates between induction, abduction, and deduction to both generate and reconcile ‘surprising’ findings and causal mechanisms. While we submit abductive experimentation as a methodological approach particularly well suited to the study of grand challenges, we believe that the process depicted also provides a general roadmap for scholars seeking to dismantle the artificial dualism between theory and practice.

Top-tier management journals are advocating for greater relevance from management research to Grand Challenges such as poverty alleviation. However, many scholars struggle to identify linkages between the practical undertaking of poverty alleviation and theory development opportunities in the management literature. Responding to this call, we develop and outline a framework for theorizing from an increasingly common business-based poverty alleviation approach known as ‘market orchestration.’ Core to this framework are a set of contextual difference that contrast with the Western environment in which most management theorizing has taken place. These contextual differences—at the micro, meso, and macro levels—challenge the implicit assumptions underpinning much of the management literature. As a result, a substantial opportunity exists to identify new predictors, contingencies, explanations, and outcomes that can significantly inform theory. Equally important, by focusing on the contextual differences and the challenges they create, management scholars can provide practical guidance to organizations engaged in market orchestration efforts.

As an organizational form, cooperatives are increasingly being used throughout the world across different industries and sectors. While it has been suggested that various benefits can be derived from shared ownership, cooperatives are often characterized by conflict among members that, in turn, can lead to eventual failure of the cooperatives. Existing theory has suggested that the choice of formal control structure can play an important role in mitigating conflict, but a longstanding debate exists as to whether flat versus hierarchical control structures are more effective. To add further insight into this theoretical discussion, we conducted a field experiment involving 40 newly formed cooperatives in rural Ghana, which were randomly assigned to either a flat or hierarchical control structure. The quantitative results of our field experiment and subsequent qualitative data suggest that formal hierarchical control structures lead to lower levels of collective psychological ownership, which in turn result in higher levels of conflict compared to flat control structures within cooperatives. However, our results also suggest that the extent to which the choice of formal control structures influences conflict among cooperative members can be highly dependent on the absence or presence of an informal hierarchy.

Informal markets encompass economic activity that occurs outside of formal regulations and is rather guided by informal norms, values, and understandings. A growing stream of research explores the transition of entrepreneurs from informal to formal markets. Past research appears to portray the transition to formality as a strategic choice made by entrepreneurs and to center on regulatory concerns, such as acquiring licenses, registering the business, and paying taxes. Such an approach to studying formalization, however, may not adequately account for the influence of informal institutions on such a transition, and ignores the facilitating role often played by institutional intermediaries, a type of institutional entrepreneur. Thus, the purpose of this study is to explore a more comprehensive view of formalization in which an institutional intermediary seeks to help small producers transition from selling their goods in informal markets (where formal regulations and infrastructures do not exist or are severely underdeveloped) to formal markets (where developed formal regulations and infrastructures have engendered stronger competition and heightened quality and efficiency standards). More specifically, we examined the process by which an NGO attempted to transition approximately 1,800 dairy farmers in rural Nicaragua from informal to formal markets. Our results suggest that the success of formalization efforts by institutional intermediaries hinges on a series of inter-related tactics aimed at providing “institutional scaffolding” to encourage and facilitate informal entrepreneurs’ participation in formal markets.

While the past decade has produced a number of insights into the process of institutional change, scholars still lack a comprehensive understanding of the germinal stages of institutional entrepreneurship. More specifically, further knowledge is needed into what factors cause certain individuals to initiate norm-breaking behaviour while others continue to adhere to societal expectations. Prior work seeking to inform this question has focused either on individual-level or environmental-level explanations. Comparatively, we employ a social network perspective as a ‘meso-level’ lens into the space where actors and their environment intersect. Based upon our qualitative findings, we propose that social ties can serve as an important factor in enabling (heterophilic ties) as well as constraining (homophilic ties) institutional change. However, our data also suggest that these network forces are highly dynamic and contingent upon tie frequency, the sequencing of tie contact, and the prevailing social norms in which tie contact takes place.

There is a growing consensus that cooperative goal structures are more effective at motivating groups than competitive goal structures. However, such results are based largely on studies conducted in highly-controlled settings where participants were provided with the necessary resources to accomplish their assigned task. In an attempt to extend the boundary conditions of current theoretical predictions, we undertook a field experiment within a base-of-the-pyramid setting where resource scarcity is extremely high. Specifically, we collected data on 44 communities within rural Sri Lanka who were tasked with contributing a portion of their resources to the construction of a school building; 24 were assigned to a competition condition and 20 to a cooperation condition. The results of our field experiment, and subsequent follow-up interviews and focus groups, collectively suggest that competitive goal structures generally lead to higher levels of motivation within a resource scarce environment. However, our results also suggest that cooperative goal structures can be highly motivating when groups are unfamiliar with one another, as cooperating with unfamiliar groups can provide access to valuable and rare knowledge within such settings.

Scholars have begun to merge the transaction cost economics and capabilities perspectives to examine outsourcing decisions. Further integrating these perspectives with intermediation theory, we assert that a firm’s decision to use an intermediary when entering a foreign market is largely a function of the intermediary’s relative capabilities and relative transaction costs (i.e., relative advantage). We hypothesize that the intermediary’s relative advantage is influenced by three significantly intertwined exchange conditions: client heterogeneity, intermediary risk, and firm learning. Using a sample of 929 new foreign market initiatives by a global consulting firm, our results support our theory.

As compared to developed countries, a much higher proportion of entrepreneurs within base-of-the-pyramid (BOP) markets operate unregistered businesses. Prior research has suggested that the primary cause of such informal activity in these settings is the general failure of ‘weak’ institutions to provide sufficient resources to warrant formalization. We attempt to extend such thinking by deconstructing the discrete and inter-related effects of formal business registration on the level of resources obtained by entrepreneurs from financial, labor, and legal institutions within BOP markets. Using a multi-method approach involving 299 entrepreneurs within Guatemala City, our results suggest that being seen as a ‘legitimate’, registered business can actually lead to both increased resource provision and resource appropriation. More specifically, adhering to the norms and rules prescribed by regulatory institutions within weak legal environments can convey positive signals of stability and profitability that both attract the desired attention from formal institutional actors, as well as unwanted attention from criminals.

Base‐of‐the‐Pyramid (BoP) enterprises seek to serve impoverished customers in informal markets. While BoP enterprises have grown in prominence, comparatively little multidimensional theoretical work has explored why these customers ultimately elect to purchase their products. Using a sample of 555 potential customers in rural India, our results indicate that the influence of different dimensions of poverty on likelihood of purchase is largely a function of the strength of the formal institutional environment. Specifically, stronger formal institutional environments can act as both a complement to, and a substitute for, the influence of individual‐ and network‐level norms on purchasing decisions in informal markets. Copyright © 2014 Strategic Management Society.

While templates may facilitate knowledge sharing within the base‐of‐the‐pyramid, it is often necessary for entrepreneurs to adapt the template for reasons of resource scarcity. We explore the role of social interaction in determining whether these adaptations are beneficial or detrimental. Our results suggest that interactions between the entrepreneur and technical experts who understand the ‘why’ behind each practice can result in improved performance while interactions with entrepreneurial peers can produce more varied results. Thus, the type of knowledge generated through social interaction plays a significant role in the degree to which adaptations to templates are principled versus presumptive in nature. Copyright © 2014 Strategic Management Society.

Our study explores the structuring decisions made by intermediaries seeking to alleviate poverty by connecting base‐of‐the‐pyramid markets with more developed markets. Using intermediation theory to ground our study, we collected qualitative data on 29 social intermediation projects located within Latin America, Africa, and Asia. Our findings suggest that ‘socializing’ intermediation theory to more accurately explain and predict structural outcomes across more diverse contexts requires three key modifications: (1) the attenuation of opportunism, which creates an internalizing social force; (2) the accommodation of non‐monetary objectives, which creates an externalizing social force; and (3) the perception of transaction capabilities as tractable, which serves as a guidepost for reconciling these two opposing social forces.

The potential for profitably distributing products to previously underserved “base-of-the-pyramid” (BOP) markets as a means of poverty alleviation has received growing interest within the management field. However, such business models often struggle with the agency costs that arise between the firm and local sales agents as the institutions and infrastructure in BOP markets make traditional contractual and monitoring mechanisms difficult and expensive to employ. We present the results of two complementary studies which were both conducted with salespeople in rural Guatemala. The first study employed a quasi-experimental field-study combined with in-depth interviews, while the second study was a laboratory experiment. The results of the studies suggest that identity-based mechanisms can potentially mitigate agency costs through a positive identity spillover effect in multiproduct settings.

While prior research has discussed how entrepreneurs deal with formal institutional voids and informal institutional environments, little is known about how entrepreneurs respond to institutional arrangements involving illegitimate actors. We define such arrangements as semi-formal illegitimate institutions. Using an exploratory study, we examine one such arrangement in Guatemala City, where organized crime dominates the institutional landscape in which entrepreneurs operate. We examine the strategic responses of these entrepreneurs, and find that they vary in the extent to which they resist semi-formal illegitimate institutions; some entrepreneurs engage in defiance, others avoid the illegitimate pressures, while others simply acquiesce. Upon further investigation, we find that the differences in entrepreneurs’ network strength and network proximity, combined with their individual perception of threat and resource mobility, help to predict the different strategic responses.