Malaptation - The Unintended Outcomes When Organizations Can Shape Their Environment

Abstract

Exogenous environmental turbulence produces a misfit between the organization and its environment. This can harm organizational performance. In contrast, shaping induces an endogenous form of environmental turbulence, leading to a better fit of the organization and its environment. This generally benefits organizations. We, however, look beyond this taken-for-granted belief about the benefits of shaping and highlight its dark side: The organization’s own beliefs render the alternatives perceived as less attractive and induce the organization to stick to slightly improving, yet inferior, alternatives. This leads to hazardous performance outcomes. We call this effect malaptation. Further, we show how this endogenous environmental turbulence operates through a different mechanism than exogenous environmental turbulence. With a modified n-armed bandit model we systematically examine the effects of shaping on organizational knowledge and performance. For this purpose, we introduce two dimensions of shaping: shaping depth and shaping scope.