Abstract

Whereas prior research has focused on why organizations cannot break their strategic path with new strategic options after environmental changes, it remains unclear what kind of new strategic options can/cannot form a new strategic path, and why. By classifying self- reinforcing effects into external positive feedback and internal positive feedback, this comparative case study of two IT outsourcing companies reveal that dominant strategic options that generate the same external positive feedbacks as original ones may lead to strategic path dependence by bringing similar external resources and reactivating original strategic patterns that constrain deliberate actions and enable emergent actions, while dominant strategic options that generate distinct external positive feedbacks from original ones may realize strategic path transformation by bringing new external resources and shaping deliberate actions. This research contributes to the literature by offering new explanations of strategic path dependence and transformation from the perspective of external positive feedback.

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