Understanding complementarities as organizational configurations : using set theoretical methods

The growing literature on complementarities has drawn attention to how the effects of different organizational structures, practices, and institutions are interdependent. Rather than one best way of organizing, complementarities suggest that the effectiveness of one organizational element may be dependent on the presence or absence of another particular element. Consequently, organizational arrangements often display "multiple equilibria" or what is known as equifinality, whereby multiple pathways may lead to the same or similar outcomes. While being a source of theoretical innovation, the configurational nature of complementarities has posed a number of challenges. This chapter reviews the emerging literature on complementarities to identify a series of conceptual challenges related to understanding complementarities as organizational configurations, and examines the methodological challenges in studying how such elements combine to produce joint effects on performance. The chapter argues that new set-theoretic methods using Qualitative Comparative Analysis (QCA) may present a very useful methodological alternative to studying complementarities. The chapter illustrates this potential by re-analyzing past work by Aoki, Jackson, and Miyajima (2007) on relationships between ownership structure, board structure, and employment practices of listed firms in Japan to show evidence of complementarities associated with hybrid configurations that combine market and relational forms of organization.