The evolution of organizational routines among large Western and Japanese firms

Abstract

Students of innovation and evolutionary economists have long recognized the significance of organizational adaptation, as a consequence of changes in production technology and adoption of technological innovations and in understanding transformation of firms in competitive environments. But changes in organizational structure and procedures of firms remain largely unexplored. The paper explores the adoption and adaptation of new structural and procedural organizational routines and emerging dominant managerial practices, and their relations with technological innovation activities. Drawing on a large-scale survey of organizational characteristics in large European, Japanese and US firms between 1992 and 1996, we map the emergence, diffusion and adaptation of new organizational routines. The analysis identifies firms that show high adoption of organizational routines and firms that leapfrog the leading edge companies. We find a high movement of Western firms toward the frontier previously defined by Japanese managerial practices. We also find a strong association of high R&D intensity with the adoption of new routines in European and American firms, but not in Japan. Overall the analysis supports a dynamic view of adoption of emerging organizational routines and finds an evolutionary pattern of imitation and selection of such routines.