Opportunity/Threat Perception and Inertia in Response to Discontinuous Change: Replicating and Extending Gilbert (2005)

Abstract

We use extensive longitudinal data from companies in the book retailing and telecommunication industries to replicate and extend Gilbert’s qualitative study on the influence of opportunity/threat perceptions on resource rigidity and routine rigidity in incumbents’ responses to discontinuous change. After discovering important anomalies in an empirical generalization study, we engage in a generalization and extension study to unbundle opportunity/threat perception into the dimensions of gain/loss framing and perceived control and induce a revised theory of the effect of such appraisals on incumbent inertia. Specifically, we induce that (a) imminent loss framing relaxes resource rigidity only when decision makers perceive a moderate level of control; (b) resource rigidity also relaxes in response to gain framing, at least when decision makers perceive the discontinuity as a particularly relevant strategic issue and strongly sense that they can control it; (c) loss framing and low perceived control can amplify routine rigidity by exacerbating resource rigidity; and (d) structural separation creates perceptions of gain and control by fostering the emergence of a local organizational identity in the unit implementing the discontinuous change. We resolve long-debated contradictions in studies on managerial and organizational cognition and discontinuous change, particularly between studies invoking threat rigidity theory and studies invoking prospect theory. We also demonstrate the usefulness of replicating qualitative research that is based on multiple case comparison.

Dynamic capabilities in the tourist companies of the Colombian Caribbean coast: Case of Cartagena de Indias

“…Therefore, adaptation lies on the idea of seizing opportunities coming from the dynamic market, making organizations to activate their strategies and competencies to reconfigure their resources and processes in the interest of ensuring survival in the environment and maximizing their economic profits (Teece et al, 1997;Wang & Ahmed, 2007;Teece, 2007;Garzón, 2015, Polo García, De-Pablos-Heredero & Blanco Jiménez, 2020. If companies have an optimal adaptation dynamic capability, this automatically contributes to the development of other dynamic capabilities and helps assimilation and appropriation of new knowledge by organizations in dynamic environments to become a source of sustainable competitive advantages (Teece et al, 1997;Teece, 2000) and a useful mechanism for the adaptation of companies to the new conditions imposed by the environment (Eichholz, 2014;König, Graf-Vlachy & Schöberl, 2021;Koronis & Ponis, 2018;Mendoza & Monsalve, 2021).…”

The impacts of ambidextrous innovation on organizational obsolescence in turbulent environments

“…From internal perspective, obsolescence defines a condition that prevents firms to perform correctly their vital functions without full consciousness (Cumenal, 2015). The internal obsolescence is often characterized by inferior vitality, declining capability, and rigid resource and routine (Konig et al , 2021; Le Mens et al , 2015; Sorensen and Stuart, 2000). From an external perspective, obsolescence represents a status that an organization cannot keep pace with the rapid environmental changes in market and industrial technology (Hamilton, 2011; Le Mens et al , 2015) and the booming development of rivals (Tushman and Anderson, 1986).…”

“…However, they are different concepts with heterogeneous logic in nature. It is a fact that obsolescence would be caused by internal factors such as resource rigidity, routine rigidity (Konig et al , 2021) and structural inertia (Boin et al , 2017) which are often strengthened as organizations age (Jain, 2016), but it may also be resulted from external factors such as rival's progress (Lampel and Jha, 2017), technological change (Christensen, 1997) and shifting customer preferences (Le Mens et al , 2015). Furthermore, the effects of rigidity, inertia and routine do not necessarily lead to obsolescence.…”

Strategic leadership and technological innovation: A comprehensive review and research agenda

“…However, scholars could fruitfully draw from a wider variety of alternative theoretical perspectives that have thus far only been sparsely applied. As technological innovation requires shifts in organizational routines and cognitive schemas (König, Graf‐Vlachy, & Schöberl, 2020; Tripsas & Gavetti, 2000), it creates potential for conflict within the group of strategic leaders (Kammerlander, König, & Richards, 2018). Therefore, scholars could build on the theory of cooperation and competition (Deutsch, 1973) to study the role of conflicts and conflict management among TMT and board members in the context of technological innovation (Chen, Liu, & Tjosvold, 2005).…”