When to adopt a new process management standard? An organizational learning perspective

Abstract

Strategy literature has paid attention to whether and how the timing of action leads to competitive advantage. However, the answer to when firms should adopt a new process management standard is inconclusive. This study examines the dynamic benefits and costs of learning as two latent mechanisms from an organizational learning perspective to propose a curvilinear relationship between the standard adoption time and firm performance. Further, we investigated how different slack resources moderate this relationship. The study uses longitudinal data from listed manufacturing firms in China. We show that the timing of a firm's adoption of a new process management standard (relative to its rivals) has an inverted U-shaped relationship with its financial performance. The optimal adoption time of a new process management standard is slightly earlier than the industry average. Further, the inverted U-shaped curve is flatter for firms with more unabsorbed slack (i.e. liquid resources). On the other hand, it is steeper for those with more absorbed slack (i.e. non-liquid resources), indicating that firms with fewer resources that can be reemployed can benefit more from deciding the optimal time to implement a new process management standard.