Is dominant logic a value or a liability? On the explorative turn in the German power utility industry

Abstract

Purpose: This study seeks to specify the role of ‘dominant logic’ in an organization. So doing, the ambiguous character of the dominant logic emerges, as on the one hand, a dominant logic can make sense of a change, provide useful guidelines and keep the company focused. However, on the other hand, a dominant logic may provide reasons why preventing change could be ‘logical’ or work as a blinder when it comes to interpreting up-and-coming developments. Therefore, a dominant logic can be a value and a liability in times of change. Methodology: This study sets out to contribute to prior research by raising two questions. First, how can we re-conceptualize the construct of dominant logic to address both the driving and the hampering role in the case of explorative turns? And, second, which factors restrain and which allow explorative turns? With special regard to the German energy transition in the 2010s, this research grounds on explorative qualitative empirical research and employs a single case-study design for a traditional German power utility company, which – as an incumbent – has to deal with the high complexity in the German power industry. Data sources are in-depth and problem-centered interviews with both internal and external experts as well as field observations. An inductive procedure allows the development of research propositions from data, framed by prior research. Findings: As a result, this study delivers a six-factor framework to shine a light on the micro-foundations of dominant logic. Whether a dominant logic is of value or is a liability in organizational change and allows an explorative turn, depends on the identified abilities to unlearn, to explore, to change and to manage. Data suggests that an explorative turn, driven by dominant logic, works better in the case of combined learning and unlearning capacities, an ambidextrous balance of exploration and exploitation, co-existing logics, continuous adaptations of dominant logic and lower levels of leadership power and formal structures. Implications for theory and practice: This study specifies the roles of dominant logic that may hamper explorative turns in times of severe disruptions. Originality and value: It contributes to the research of managerial cognition by refining and applying the concept of dominant logic. It provides empirical evidence on how this phenomenon creates inertia, drives change, and discusses the needs for and the barriers to an explorative turn. From a managerial viewpoint, dominant logic serves as a filter to identify required changes and to tune the speed of change. This, however, depends on managerial reflection on the appropriateness of dominant logic in the run of events.