Behavioral Microfoundations of New Practice Adoption: the Effects of Rewards, Training and Population Dynamics

Management Science

49 Pages Posted: 4 Aug 2020 Last revised: 7 Sep 2023

See all articles by Antoine Feylessoufi

Antoine Feylessoufi

University of Cambridge - Judge Business School; University College London; University College London - School of Management

Stelios Kavadias

Cambridge Judge Business School

Daniel Ralph

University of Cambridge - Judge Business School

Date Written: September 5, 2023

Abstract

Organizations face challenges when trying to effectively introduce new operational practices that substitute for existing ones. We study how the dynamics due to social comparisons between employees give rise to individual strategic considerations, and eventually shape the organizational adoption outcome. We develop an evolutionary game theory model that accounts for these micro-level individual adoption decisions and their impact on macro-level population adoption equilibria. Social comparisons invoke dynamics that expand the possible outcomes beyond the traditional non-adoption versus full-adoption dichotomy. Specifically, ahead-seeking social comparisons drive the long-term coexistence of practices, because employees seek to differentiate their choices from those of others. Meanwhile, behind-averse comparisons create a bandwagon effect that determines adoption depending on the initial fraction of adopters, i.e., employees who are trained upfront. These dynamics are robust to various settings: different conceptualizations of social comparisons;
each employee responding to more than one kind of social comparison; and non-homogeneous social comparisons across employees. Moreover, they are material to organizations that seek to maximize their profit when introducing a new practice, by setting the levels of upfront training and adoption rewards. Our results call for senior managers to account for such behavioral traits when managing the introduction of new practices. Profitable adoption critically relies upon matching rewards and training to the type of social comparison.

Keywords: Organizational adoption processes, Social comparisons culture, Population equilibria, Evolutionary game theory, Bounded rationality

Suggested Citation

Feylessoufi, Antoine and Kavadias, Stylianos and Ralph, Daniel, Behavioral Microfoundations of New Practice Adoption: the Effects of Rewards, Training and Population Dynamics (September 5, 2023). Management Science, Available at SSRN: https://ssrn.com/abstract=3644499 or http://dx.doi.org/10.2139/ssrn.3644499

Antoine Feylessoufi (Contact Author)

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

University College London - School of Management ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Stylianos Kavadias

Cambridge Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

Daniel Ralph

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

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