Routines and Organizational Change: Inertia as a Hidden Source of Adaptation

Routines have been perceived as a source of inertia in the process of organizational change. In this study, we suggest an overlooked, but prevalent, mechanism by which the inertial nature of routines helps, rather than hinders, organizational adaptation. Routine-level inertia plays a hidden role of generating and retaining useful variations in the process of organization-level adaptation. We demonstrate this mechanism by using a simple theoretical model which formalizes an organization as a configuration of inertial, interdependent routines, and the managerial process by which this configuration adapts to cope with its task environment. In our nuanced perspective, inertia is not only a consequence of adaptation but also a source of adaptation. This logic is helpful to understand why reliable but apparently inertial organizations keep surviving and often exhibit outstanding performance. We conclude by discussing how this advanced understanding of the role of routines helps elaborate the theory of economic evolution.