Strategic inertia and renewal: Contrasting responses to market changes

Abstract

The academic, consulting, and practitioner-oriented literatures present many examples of companies that have failed to adapt their strategy in the face of a changing competitive arena, even when their top managers and executives acknowledged the need for change—and had a reasonable idea of what ought to be done. By means of an in-depth study of two polar cases of large companies from the fast-moving consumer goods sector, this study sheds light on the complex intertwined causes that lead some companies into strategic inertia, while others engage in strategic renewal. Our theoretical framing of possible causes of inertia encompasses cognitive schema, power and politics, emotions, and communication. Our findings provide credible evidence that strategic inertia (or renewal) is the outcome of conjunctural causation, so that a similar initial cause may result in different outcomes depending on the processual interaction with other contributing factors at the organizational, group, and individual levels. The conjunction of various causes can lead a company's managers to adhere rigidly to their sources of past success or, alternatively, embrace novel pathways despite short-term uncertainty and anxiety.