RADICAL STRATEGIC AND STRUCTURAL CHANGE: OCCURRENCE, ANTECEDENTS, AND CONSEQUENCES.

Abstract

Over time, firms tend to develop relatively stable strategies and organisational arrangements. Radical departure from such patterns is infrequent, yet sometimes necessary for organisational effectiveness and survival. In this study, we examine key factors that facilitate radical strategic and structural change and the performance consequences associated with each type of change. Our analysis of a sample of bank holding companies in the USA over 20 years suggests that radical structural change occurs more frequently than radical strategic change and that radical strategic change positively influences the likelihood that radical structural change will follow, but not the reverse. Results also show that sustained low performance and top executive change facilitate the occurrence of radical strategic but not structural change and that neither type of change exhibits a significant effect on firm profitability and survival. We discuss the implications of these findings for research on organisational change.