Overcoming Path Dependence in an Established Firm: The role of senior leadership

Abstract

Strategy literature has extensively highlighted the benefits and the constraining effects of self-reinforcing mechanisms leading firms onto path dependence. Surprisingly, literature has been scarce in unveiling how established firms deploy path breaking interventions in practice, and especially how a basic constituent of formal organizations – hierarchical power – can be an important antecedent to path breaking. In this paper, we investigate how senior leaders shape path breaking processes over time in an established firm. We investigate the case of Kiabi, a multinational whose leaders decided to proactively overcome path dependence by inviting the firm’s total workforce to shape a series of path breaking interventions. We discover how senior leaders rely on (1) ad hoc problem solving, (2) new strategic intentions and (3) new capabilities to break from path dependence over time. Our contributions with this paper are fourfold. First, we show the relevance of hierarchical power to study path breaking dynamics. We provide an agentic view of path breaking and show how senior leader create intentional processes to maintain the firm’s path breaking capacities over time. Second, we make a methodological contribution and show how ad hoc problem solving, strategic intentions and dynamic capabilities enable path breaking in practice. Third, we bring an endogenous view of path breaking by showing how senior leaders shape from within the conditions to overcome the threat of emerging self-reinforcing mechanisms. We demonstrate how endogenous path breaking processes – less studied in current path dependence literature – cohabitate with exogenous path breaking processes. Fourth, we discuss the temporal dynamics of breaking paths from a theoretical and practical perspective.