Organizational Inertia Research Articles

Analogical reasoning, cognition, and the response to technological change: Lessons from mobile communication

We examine how analogical reasoning affects cognition and investment decisions in the face of technological change. Our research design is an in-depth, longitudinal case study of Nokia and its response to mobile Internet between the late 1990s and the mid-2010s. We show that Nokia diligently analyzed the competitive dynamics of other industries, such as the personal computer industry, that had already been affected by the same technological discontinuities and used the lessons from these industries to anticipate future competition outcomes in the mobile phone business. We also show that analogical reasoning helped Nokia's managers change the beliefs developed through their prior experiences. However, Nokia's managers became overconfident in their new beliefs, and this overconfidence constrained their cognitive processes of attention and interpretation, thereby increasing organizational inertia. This constraint was particularly evident in the new belief that the software operating system was the essential source of product differentiation. This belief directed key investment decisions for over a decade and contributed to the eventual decline of Nokia by leading the company to embrace Microsoft's Windows Phone rather than Google's Android.

Converting Inventions into Innovations in Large Firms: How Inventors at Xerox Navigated the Innovation Process to Commercialize Their Ideas

The challenges of commercializing breakthrough inventions in large firms have been studied extensively through a lens of managerial decision-making and resource allocation. This perspective has characterized the innovation process in large firms as one in which inventors confine themselves to idea generation, leaving idea commercialization to other actors, subject to organizational inertia. We develop a complementary perspective of the innovation process in which inventors may navigate organizational inertia by going beyond idea generation to attracting resources towards commercializing their breakthrough inventions. Using historical case studies of three breakthrough inventions at Xerox office workstations, personal computers, and laser printers we illustrate this resource-attraction process and how it affected the conversion of these inventions into innovations. Inventors navigated multiple evaluation criteria used by Xerox managers to allocate resources towards inventions. These criteria stemmed from Xerox’s first successful breakthrough invention, the 914 copier and the specific objectives of the different organizational units. We highlight two approaches deployed by Xerox inventors—searching across the different organizational units for more favorable evaluation criteria and shaping the evaluation criteria to help attract resources. While searching leveraged the heterogeneity of evaluation criteria across the different organizational units, shaping required the presence of evaluative uncertainty with respect to the appropriate criteria for evaluating a breakthrough invention. By offering a novel account of how inventors at Xerox navigated multiple evaluation criteria to commercialize their inventions, the study sheds light on an important yet overlooked aspect of the innovation process in large firms that can facilitate the commercialization of breakthrough inventions.

Analysis on the influential factors of transformation resistance of small and medium enterprise managers

The majority of small and medium-sized enterprises (SMEs) in Taiwan are original equipment manufacturers (OEMs) or original design manufacturers (ODMs). Given the growing intensity of global competition, transformation from OEM or ODM to a branded enterprise is a key concern for SMEs. SMEs’ branding processes are subject to numerous problems and among them, resistance by organization members is considered the most critical. Previous studies have largely focused on factors contributing to branding success or resistance by an organization’s employees, and few have addressed the implications of SMEs managers’ resistance to branding. To address the research gap, this study constructs a cognitive model for managers’ resistant behavior while drawing on the theory of planned behavior. Then, applying structural equation modeling, this study confirms that four exogenous variables, perceived belief, changes in job characteristics, organizational inertia, and social factors, directly influence two endogenous variables, managers’ attitude toward resistant behavior and the subjective norms of resistant behavior. Using demographic variables as independent variables, this study conducts a logistic regression analysis to predict companies resistant to branding on the basis of their background characteristics. The results highlight that the three factors with the highest predictive powers are organizational inertia, job position, and capitalization.

Value Constraining or Value Enabling? The Impact of Business Group Affiliation on Post-Acquisition Performance by Emerging Market Firms

ABSTRACTLiterature has advanced two contrasting theoretical perspectives related to the governance structure of business groups: the ‘value-constraining’ perspective, which focuses on principal–principal agency conflict and organizational inertia theory, and the ‘value-enabling’ perspective, which emphasizes the role of business groups in mitigation of institutional voids. Building on these two competing lenses, we develop hypotheses to examine post-acquisition performance of affiliate firms relative to stand-alone firms. As our empirical context, we study 440 majority-stake, domestic and cross-border merger and acquisition deals closed by Indian firms during the period 2002–2013. The results imply that in emerging markets, despite concerns of organizational inertia and principal–principal agency issues, the value-enabling impact of group affiliation persists. We also examine the contextual impact of intergroup heterogeneity owing to group diversification on post-acquisition performance and find that greater group diversification leads to better performance for affiliate acquirers.

The Effects of Headquarters’ Levels of Control and Subsidiaries’ Local Experiences on Competency in Foreign Subsidiaries: A Quadratic Model Investigation of Korean Multinational Corporations

Purpose – This study aims to overcome the limitations of existing studies, which linearly determine the precedence factors of competency in overseas subsidiaries. The research objectives are as follows. First, what kind of nonlinear effects does the level of control held by Korean headquarters over foreign subsidiaries have in terms of competency in the subsidiaries? Second, what kind of nonlinear effects do the local experiences of overseas subsidiaries have on their competency Design/methodology – With data on Korean multinational corporations (MNCs), this paper analyzes the effects of control levels of headquarters (HQs) and host-country experiences of foreign subsidiaries regarding competency in overseas subsidiaries. In particular, this study focuses on nonlinear models, differentiating it from previous studies. In order to examine research hypotheses, this study conducted a survey of overseas subsidiaries of Korean corporations. Surveys were conducted through various methods including e-mail, online questionnaires, fax, and telephone calls. Copies of the questionnaire were distributed to a total of 2,246 overseas subsidiaries, and 409 completed responses were collected. Excluding 15 copies that were insufficiently answered, responses from a total of 394 copies were used for analysis. Findings – This study presents the following results. First, there is a U-shaped relationship between levels of HQ control and competency in foreign subsidiaries. This means that higher levels of HQ control negatively impact the competency levels of subsidiaries because strict control undermines autonomy in subsidiaries. However, if the level of HQ control exceeds a certain point, then the transfer of knowledge between HQs and subsidiaries is facilitated. Knowledge transferred from HQs can be used as prior knowledge by foreign subsidiaries to the benefit of all parties. Accordingly, knowledge transfer negates the negative effects of excessive HQ control and positively affects competency in subsidiaries. Second, there is an inverted U-shaped relationship between the local (host-country) experiences of subsidiaries and competency in foreign subsidiaries. This means that foreign subsidiaries can overcome the liabilities of foreignness and contribute to capability building by accumulating unique knowledge about their host countries. However, if local experiences accumulate excessively beyond a certain point, then the host country-specific experiences of foreign subsidiaries will offset the benefits discussed above. Excessive local experiences not only increase organizational inertia, but also create a problem of goal incongruence due to information asymmetry between HQs and subsidiaries. Therefore, excessive local experiences have negative effects on competency in foreign subsidiaries. Originality/value – This study suggests the following implications. First, unlike existing studies based mainly on linear models, this study presents important theoretical implications in its focus on nonlinear models and its analysis of the effects of HQ control and local experiences on competency in foreign subsidiaries from perspectives of organizational learning theory and agency theory. Second, in terms of practical implications, the results of this study suggest that optimally raising levels of HQ control and managing the local experiences of subsidiaries without increasing organizational inertia is important for enhancing competency in foreign subsidiaries.

Exploring the Elements of Organizational Inertia and Impactson Organization

Exploring the Elements of Organizational Inertia and Impactson Organization

Exploring the Elements of Organizational Inertia and Impacts on Organization

Exploring the Elements of Organizational Inertia and Impacts on Organization

Exploring the barriers to SMEs’ open innovation adoption in Ghana

PurposeOpen innovation (OI) is now recognized as one essential innovation paradigm to help small and medium enterprises (SMEs) quell their liability of newness and smallness. However, little is known about SMEs’ OI barriers, particularly in emerging economies. Drawing on both network and transaction cost theory, this study aims to explore the barriers to SMEs’ OI adoption in Ghana.Design/methodology/approachThe study adopted an exploratory sequential research design that involved both qualitative and quantitative study methodologies. A total of 644 responses (21 survey interviews and 623 usable questionnaires) across SMEs in Ghana were collected and analyzed in the study. A qualitative analysis involving quotations extracted from the respondent’s statement was used to present the qualitative findings, whereas SEM-partial least square, co-variance approach, was used to analyze the formulated hypotheses.FindingsResults show that significant barriers to SMEs OI adoption are collaboration barriers – difficulty in finding the right partners and problems of cooperation and coordination of operational functions; organizational barriers – lack of flexible internal procedures and structures and organizational inertia; and strategic barriers – opportunistic behavior of partners and lack of strategic and resource fit. Contrary to existing findings, financial and knowledge barriers were disclosed as driving factors, rather than barriers, to SMEs’ OI adoption; these findings challenge conventional thinking about SMEs’ major OI barriers.Research limitations/implicationsThis study focuses on only SMEs in one emerging economy, namely, Ghana, which may limit the generalization of the findings.Practical implicationsThe findings of this study, while limited to Ghana, offer useful insights to SMEs managers, development practitioners and policymakers respecting the overall importance of the OI model, its associated impediments, as well as the strategic measures to quell those barriers.Originality/valueThis study provides a pioneering empirical investigation into the main barriers to SMEs’ OI adoption in a less-explored emerging market context through a mixed research approach.

Filling in the gaps in higher education quality

Purpose It is not easy to grasp the concept of “value” in the higher education context. In fact, different stakeholders generally hold diverging perspectives about the value generated by Higher Education Institutions (HEIs). The purpose of this paper is to disentangle the value expectations and perceptions of current and former students (i.e. the main stakeholders) of a medium-sized university established in Northern Italy. Design/methodology/approach A mixed, qualitative–quantitative case study was undertaken. A semi-structured survey was delivered through a computer-assisted web interview technique to a sample of 2,572 people. Inter alia, the interviewees were asked to express their value perceptions and value expectations toward the case institution and to rate their own assessment of educational services’ quality. Findings The respondents felt that the university was effective in delivering functional, extrinsic and intrinsic value; conversely, they perceived several gaps in the case institution’s ability to accomplish emotional and relational value. Moreover, the interviewees argued that the institution was unsuccessful in establishing a bridge between higher education and the labor market, focussing on conceptual issues, rather than on experiential learning and soft skills. Practical implications The gap between the students’ value expectations and perceptions hampers the perceived quality of educational services. The lack of awareness of this gap is thought to trigger organizational inertia, which contributes to the impoverishment of educational services’ quality. Originality/value The paper sheds light on different value perceptions and expectations held by students of a medium-sized HEI; also, it provides some insights into the organizational and management implications of diverging value perceptions and expectations of students.

Investigating the effect of intellectual and social alignment on organisational agility by mediating organisational inertia and emergent coordination

In this study, the impact of business-IT alignment on organisational agility was investigated. The research data were collected from 139 employees of Qazvin Telecommunication Company from Iranian telecommunication areas and analysed by structural equation modelling (SEM) and path analysis using AMOS software. Results obtained from the analysis of the research data show that intellectual alignment in the organisation can increase agility by influencing inertia as a mediator factor, and does not confirm the positive effect of intellectual alignment on organisational agility. Moreover social alignment with emergent coordination mediation has a positive effect on organisational agility, whereas intellectual alignment with organisational inertia mediation has no significant effect on organisational agility.

Quality, Costs, and Policy: Factors Influencing Choice of Anesthesia Staffing Models.

Certified registered nurse anesthetists (CRNAs) can practice independently or with varying degrees of supervision by physicians or anesthesiologists. Before 2001, the Centers for Medicare & Medicaid Services (CMS) conditions of participation required CRNAs to be supervised by a physician. Starting in November 2001, CMS implemented an opt-out policy to give states greater autonomy in determining how anesthesia services are delivered. The policy also provided a mechanism to increase access to anesthesia services.We sought to understand and describe surgical facility leaders' perceptions of CRNA quality, safety, and cost-effectiveness; the motivation and rationale for using different anesthesia staffing models; and facilitators and barriers to using CRNAs. We applied a mixed-methods approach to understand surgical facility leadership decision-making for staffing arrangements.The use of anesthesia staffing models differed by location and surgical facility type. For example, the predominantly CRNA model was used in only 10% of large urban hospitals but in 61% of rural ambulatory surgical centers. Interviews with surgical facility leaders revealed that geographic location, surgeon preference, and organizational inertia were powerful contributors to a facility's choice of staffing model. Other factors included the Medicare opt-out provision, facility experience, and cost considerations. Differences in quality and safety between models were not contributing factors for most facilities.

THE ESTABLISHMENT AND ANALYSES OF THE SOCIAL NETWORK OF PARTICIPANTS IN CHILD-FRIENDLY COMMUNITY BUILDING — A CASE OF THE KIDS’ GARDENS IN YUCAI NO. 3 PRIMARY SCHOOL IN CHANGSHA, HUNAN PROVINCE

Introducing the case of the Kids’ Gardens in Yucai No. 3 Primary School in Changsha City, Hunan Province, this study established sociograms upon the contact-frequency-based network with UCINET to systematically analyze the characteristics of different participants in the process of the childfriendly community building and the varying pattern of all social relations, aiming at addressing problems emerging in public participation and multi-stakeholder collaboration in Chinese mainland. It was found that by bonding stakeholders including citizens, the government and party organizations, universities, and public institutions and enterprises, this practice encouraged the school — as a community — to leverage its internal resources. The school finally overcame the organizational inertia and achieved independent operation and growth during the process of community building. The study also demonstrated that the social network of participants was developed and defined with both independent and dependent modes from an overall perspective, of which the former characterized for its dominant internal ties and a dense tree-like hierarchical management structure might be more efficient. From a participant perspective, the brokerage roles in key nodes were critical to the community building. Finally, spatial design strategies, including enhancing the spatial affordance to serve diverse activities, space zoning and allocation, offering “half-done” spaces, and phased development, were provided for similar community building practice.

The dynamics of entry mode choice in challenging business environments: an exploratory study of medium sized exporters' entry into Africa

This article studies the entry modes adopted by medium-sized enterprises (MEs) seeking market access to challenging business environments in Africa. Based on a review of the extant literature on entry mode choice and organisational learning in internationalisation, we develop a dynamic model for analysing entry mode choice of exporting MEs. Via a longitudinal study of 14 Danish MEs' attempted entry into the Kenyan market, we found that gaining better knowledge of own resources in relation to the Kenyan business environment did not make the MEs adjust their entry mode. The only behavioural adjustments in lieu of better knowledge were that several MEs, rather than changing their preferred entry mode, decided to abandon entry altogether. We ascribe this lack of adaptation of entry mode strategy to organisational inertia. In conclusion, we argue that our findings have important implications for the theory of organisational learning in internationalisation.

Big Data, Big Data Analytics Capability, and Sustainable Innovation Performance

Literature suggests that big data is a new competitive advantage and that it enhance organizational performance. Yet, previous empirical research has provided conflicting results. Building on the resource-based view and the organizational inertia theory, we develop a model to investigate how big data and big data analytics capability affect innovation success. We show that there is a trade-off between big data and big data analytics capability and that optimal balance of big data depends upon levels of big data analytics capability. We conduct a four-year empirical research project to secure empirical data on 1109 data-driven innovation projects from the United States and China. This research is the first time reporting the empirical results. The study findings reveal several surprising results that challenge traditional views of the importance of big data in innovation. For U.S. innovation projects, big data has an inverted U-shaped relationship with sales growth. Big data analytics capability exerts a positive moderating effect, that is, the stronger this capability is, the greater the impact of big data on sales growth and gross margin. For Chinese innovation projects, when big data resource is low, promoting big data analytics capability increases sales growth and gross margin up to a certain point; developing big data analytics capability beyond that point may actually inhibit innovation performance. Our findings provide guidance to firms on making strategic decisions regarding resource allocations for big data and big data analytics capability.

Enablers and inhibitors of cloud computing assimilation: an empirical study

PurposeThe purpose of this paper is to understand what inhibit or facilitate cloud computing (CC) assimilation.Design/methodology/approachThe authors investigate the effects of two enablers, top management support (TMS) and government support (GS), and two inhibitors, organization inertia (OI) and data security risk (DSR) on CC assimilation. The authors posit that enablers and inhibitors influence CC assimilation separately and interactively. The research model is empirically tested by using the field survey data from 376 Chinese firms.FindingsBoth TMS and GS positively and DSR negatively influence CC assimilation. OI negatively moderates the TMS–assimilation link, and DSR negatively moderates the GS–assimilation link.Research limitations/implicationsThe results indicate that enablers and inhibitors influence CC assimilation in both separate and joint manners, suggesting that CC assimilation is a much more complex process and demands new knowledge to be learned.Practical implicationsFor these firms with a high level of OI, only TMS is not enough, and top managers should find other effective way to successfully implement structural and behavioral change in the process of CC assimilation. For policy makers, they should actively play their supportive roles in CC assimilation.Originality/valueA new framework is developed to identify key drivers of CC assimilation along two bipolar dimensions including enabling vs inhibiting and internal vs external.

Knowledge vacuum: An organizational learning dynamic of how e-government innovations fail

In spite of attempting to implement e-government innovations to enhance efficiency in public organizations for several decades, e-government innovation has often not met the expectations of citizens, legislatures, or the organizations. Although a wide range of causes from poor planning to improper implementation have been suggested for explanation of failures, it is still challenging to theoretically construct an explanation of what the overarching dynamic is behind those causes. To further develop the understanding of the conditions of unrealized benefits of e-government innovation, we propose a conceptual framework of a knowledge vacuum, which is an organizational condition in which excessive exploration and organizational inertia interact to create a vicious cycle of low performance. We first review the history of e-government and factors that affect the success and failure of e-government innovation. Next, we develop the conceptual framework, and apply the concept to review an e-government innovation failure case for an illustrative purpose. We conclude by discussing theoretical and practical implications of the conceptual framework and its limitations in understanding the current state of e-government innovations.

The impact of corporate governance on the cost of equity

PurposeIn view of organizational inertia, with the occurrence of a major event, though resource rigidity minimizes, however simultaneously, it increases process rigidity, which creates difficulties in motivating managers and dealing with the agency problem. Therefore, keeping in mind the high demand created by the China–Pakistan Economic Corridor and Naya Pakistan Housing Scheme in the cement sector of Pakistan, the purpose of this paper is to investigate the impact of corporate governance (CG) on the cost of equity (COE) in the cement sector, to deal with the problems surging during and after the completion of these projects and highlight further opportunities for the cement sector of Pakistan.Design/methodology/approachCG is a qualitative concept therefore, eight proxies have been used to measure it along with the two control variables. This study uses balance panel data of six years from 2012 to 2017, collected from 18 companies of the cement sector of Pakistan. Descriptive statistics have been used to describe the data, correlation matrix to see the nature of the relationship, and Pooled OLS as the estimation technique, while to analyze the data a statistical package 13 has been used. To measure the COE, the Capital Asset Pricing Model (CAPM) has been used.FindingsRegression results suggest that block ownership, insider ownership and the board size are insignificant, while CEO tenure is negatively and significantly associated with the COE. Non-executive directors, independence and CEO duality are insignificant; however, diversity is positively and significantly associated with the COE. Moreover, the mean value of the COE is 8.22 percent for the cement sector, while the coefficient of determination of the model under study is 74 percent.Research limitations/implicationsThis paper is based on the data from the cement sector of Pakistan only. Therefore, this is the reason that these results cannot be generalized on the whole economy of Pakistan.Practical implicationsThis study helps in finding out the COE value specific to the cement sector, which will help this sector to evaluate the capital budgeting decision more precisely and accurately than before. Moreover, the association of diversity as positive, while independence as negative with the COE highlights a room for improvement in the implementation of CG codes by SECP. This study also helps to mitigate the impact of inertia, the after-effects of high demand, and managing the agency problem in the cement sector.Originality/valueThis is the first study using CG data collected just after the revised promulgation of CG codes in 2012, along with a wide range of eight proxies measuring CG and its impact on the COE in the cement sector.

Explicit and tacit synergies between alliance firms and radical innovation: the moderating roles of interfirm technological diversity and environmental technological dynamism

This study draws on theories of organizational inertia and relational view to examine how the pursuit of partnership synergy influences radical innovation in different technological contexts. We differentiate between two types of synergy: explicit synergy, defined as the potential to exchange interfirm operational elements to renew processes or capabilities, and tacit synergy, conceptualized as the potential to synthesize cross‐boundary resources to develop new perspectives or thinking modes. We find that both explicit and tacit synergies have positive impacts on radical innovation, and such impacts are contingent on interfirm technological diversity and environmental technological dynamism in opposing ways. Specifically, environmental technological dynamism positively moderates the relationship between explicit synergy and radical innovation but not the relationship between tacit synergy and radical innovation. In contrast, interfirm technological diversity positively moderates the relationship between tacit synergy and radical innovation but not the relationship between explicit synergy and radical innovation. Our study sheds new light on the generation of radical innovation in alliances. It also provides practitioners with useful guidelines for crafting synergy strategies that will facilitate the pursuit of radical innovation.

Shaking Things Up: Unintended Consequences of Firm Acquisitions on Inequality and Diversity

This paper develops a theory of how disruptive events could reduce racial and gender inequality in organizations. Despite pressure from regulators and advocates, racial and gender inequality in the workplace remains high. I theorize that because such inequality is often reinforced by organizational inertia, disruptive changes that shake up old hierarchies, break down routines, and shift culture could offer an opportunity for racial minority and women workers to advance. I test this theory by examining 37,343 mergers and acquisitions in the United States from 1971 to 2015. Using a difference-in-differences design, I find that although acquisitions lead to occupational reconfigurations that favor higher-skilled workers, they also improve the managerial representation of racial minorities and women and reduce racial and gender segregation in the acquired workplace. These findings suggest that certain radical organizational changes could significantly reduce racial and gender inequality.

Mitigating manifest supply chain disruptions

PurposeThe purpose of this paper is to understand if organizations can leverage recovery/continuous improvement (RCI) capabilities and two competencies to mitigate manifest supply chain (SC) disruptions. Specifically, the authors examine how learning from previous experience and SC disruption-orientation affects organizations’ capability to recover/continuously improve once a SC disruption has manifested. In addition, knowing that organizational inertia likely exists during disruptions, the authors examine the mediating effects of routine rigidity on proposed relationships.Design/methodology/approachTo determine how these antecedents impact an organization’s RCI capabilities, the authors collected survey data from 219 procurement managers and analyzed these records using structural equation modeling.FindingsThe results indicate that by fostering SC disruption-orientation and developing competencies to learn from previous experience, firms can enhance their RCI capabilities, which in turn improves operational performance. Furthermore, the authors demonstrate how routine rigidity mediates the positive effects these antecedents have on the RCI capabilities construct.Originality/valueBy developing these risk management (RM) tactics and managing routine rigidity, organizations broaden their continuous improvement capability, which enables practitioners to respond to and recover from manifest disruptions. When used in conjunction with other RM tactics, such as inventory and/or redundant capacity, organizations can address an array of disruption scenarios.