In search of excellence: Fads, success stories, and adaptive emulation

The faddishness of the business community is often noted and lamented but n ot well understood by standard models of innovation and diffusion. We combi ne arguments about organizational cognition and institutional mimicry to de velop a model of adaptive emulation, where firms respond to perceived failu re by imitating their most successful peers. Computational experiments show that this process generates empirically plausible cascades of adoption, ev en if innovations are entirely worthless. Faddish cycles are most robust ac ross alternative treatments of managerial decision making where innovations have modest positive effects on outcomes. These results have broad implica tions for the faddishness of a business community increasingly marked by me dia-driven accounts of success, and for the properties of organizational pr actices that are hot one day and cold the next.