Tight or Loose – An Integrative Perspective on Organizational Structures of Renewal

Abstract

Extant literature distinguishes between two perspectives that make different assumptions about the effect of structure on firm performance: One emphasizes the value of tight interdependencies, the other advocates for loose interdependencies. We find that these literatures build on a common assumption that structure hinders organizational adaptation. Based on an in-depth case study of a software company with 30 years of successful history, we show how a combination of tight and loose coupling – a tightly coupled activity system aligned around loose discretion-inducing elements – can facilitate strategic renewal. We propose an integrative perspective that provides a more complete picture on how organizational structures affect adaptation. This perspective recognizes that organizational structures can enable individual and interpersonal behaviors that aggregate into a firm-level capacity for continuous renewal.