21616: Nobody Knows Anything: Imitation of Resource Allocation Decisions Under Uncertainty (session 25423)

Designated as a “Best Paper” by STR
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This paper explores how environmental uncertainty influences the interorganizational imitation of resource allocation decisions. Existing literature proposes contrasting findings: one highlighting reduced imitation under high uncertainty due to limitations in observational learning, and the other emphasizing the use of imitation to mitigate the risk of falling behind competitors in such environments. We attempt to reconcile the different views by proposing that imitation depends on the interplay between the type of environmental uncertainty (demand and competitive), the focal organization’s performance rank (first vs. last), and the organizational leader’s inexperience. We test our hypotheses using data on the allocation of new investments across different movie genres made by major Hollywood film studios (1986-2004). The results reveal that imitation under uncertainty depends on the interplay between competitive and social considerations shaping incentives to focus on managing reputational risk versus creating opportunities to catch up.

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