Adaptation and inertia in dynamic environments

Nils Stieglitz*, Thorbjørn Knudsen, Markus C. Becker

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Research summary: We address conflicting claims and mixed empirical findings about adaptation as a response to increased environmental dynamism. We disentangle distinct dimensions of environmental dynamism—the direction, magnitude, and frequency of change—and identify how selection shapes adaptive responses to these dimensions. Our results show how frequent directional changes undermine the value of exploration and decisively shift performance advantages to inert organizations that restrict exploration. In contrast, increased environmental variance rewards exploration. Our results also show that, in dynamic environments, the best-performing organizations are generally more inert than less successful organizations. Managerial summary: Our research helps managers to understand under what business conditions investments into exploration and strategic flexibility are more likely to pay off. Dynamic business environments characterized by persistent trends and by large, infrequently occurring structural shocks reward strategic pursuit of temporary advantage. Thus, exploration and strategic flexibility are preferred strategies. In contrast, the challenge in frequently changing environments with fleeting opportunities is to identify and to focus on strategic actions whose payoffs on average are high, independent of environmental volatility. Low levels of exploration and long-term strategic focus are preferred strategies in these circumstances.

Original languageEnglish
JournalStrategic Management Journal
Volume37
Issue number9
Pages (from-to)1854-1864
ISSN0143-2095
DOIs
Publication statusPublished - 2016

Fingerprint

Inertia
Dynamic environment
Reward
Strategic flexibility
Strategic action
Managers
Environmental dynamism
Business environment
Structural shocks

Keywords

  • dynamism
  • exploration
  • inertia
  • organizational adaptation
  • selection

Cite this

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title = "Adaptation and inertia in dynamic environments",
abstract = "Research summary: We address conflicting claims and mixed empirical findings about adaptation as a response to increased environmental dynamism. We disentangle distinct dimensions of environmental dynamism—the direction, magnitude, and frequency of change—and identify how selection shapes adaptive responses to these dimensions. Our results show how frequent directional changes undermine the value of exploration and decisively shift performance advantages to inert organizations that restrict exploration. In contrast, increased environmental variance rewards exploration. Our results also show that, in dynamic environments, the best-performing organizations are generally more inert than less successful organizations. Managerial summary: Our research helps managers to understand under what business conditions investments into exploration and strategic flexibility are more likely to pay off. Dynamic business environments characterized by persistent trends and by large, infrequently occurring structural shocks reward strategic pursuit of temporary advantage. Thus, exploration and strategic flexibility are preferred strategies. In contrast, the challenge in frequently changing environments with fleeting opportunities is to identify and to focus on strategic actions whose payoffs on average are high, independent of environmental volatility. Low levels of exploration and long-term strategic focus are preferred strategies in these circumstances.",
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}

Adaptation and inertia in dynamic environments. / Stieglitz, Nils; Knudsen, Thorbjørn; Becker, Markus C.

In: Strategic Management Journal, Vol. 37, No. 9, 2016, p. 1854-1864.

Research output: Contribution to journalJournal articleResearchpeer-review

TY - JOUR

T1 - Adaptation and inertia in dynamic environments

AU - Stieglitz, Nils

AU - Knudsen, Thorbjørn

AU - Becker, Markus C.

PY - 2016

Y1 - 2016

N2 - Research summary: We address conflicting claims and mixed empirical findings about adaptation as a response to increased environmental dynamism. We disentangle distinct dimensions of environmental dynamism—the direction, magnitude, and frequency of change—and identify how selection shapes adaptive responses to these dimensions. Our results show how frequent directional changes undermine the value of exploration and decisively shift performance advantages to inert organizations that restrict exploration. In contrast, increased environmental variance rewards exploration. Our results also show that, in dynamic environments, the best-performing organizations are generally more inert than less successful organizations. Managerial summary: Our research helps managers to understand under what business conditions investments into exploration and strategic flexibility are more likely to pay off. Dynamic business environments characterized by persistent trends and by large, infrequently occurring structural shocks reward strategic pursuit of temporary advantage. Thus, exploration and strategic flexibility are preferred strategies. In contrast, the challenge in frequently changing environments with fleeting opportunities is to identify and to focus on strategic actions whose payoffs on average are high, independent of environmental volatility. Low levels of exploration and long-term strategic focus are preferred strategies in these circumstances.

AB - Research summary: We address conflicting claims and mixed empirical findings about adaptation as a response to increased environmental dynamism. We disentangle distinct dimensions of environmental dynamism—the direction, magnitude, and frequency of change—and identify how selection shapes adaptive responses to these dimensions. Our results show how frequent directional changes undermine the value of exploration and decisively shift performance advantages to inert organizations that restrict exploration. In contrast, increased environmental variance rewards exploration. Our results also show that, in dynamic environments, the best-performing organizations are generally more inert than less successful organizations. Managerial summary: Our research helps managers to understand under what business conditions investments into exploration and strategic flexibility are more likely to pay off. Dynamic business environments characterized by persistent trends and by large, infrequently occurring structural shocks reward strategic pursuit of temporary advantage. Thus, exploration and strategic flexibility are preferred strategies. In contrast, the challenge in frequently changing environments with fleeting opportunities is to identify and to focus on strategic actions whose payoffs on average are high, independent of environmental volatility. Low levels of exploration and long-term strategic focus are preferred strategies in these circumstances.

KW - dynamism

KW - exploration

KW - inertia

KW - organizational adaptation

KW - selection

U2 - 10.1002/smj.2433

DO - 10.1002/smj.2433

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VL - 37

SP - 1854

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JO - Strategic Management Journal

JF - Strategic Management Journal

SN - 0143-2095

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ER -