Unbundling the structure of inertia: Resource versus routine rigidity
Inertia is an important concept in much of the literature on industry dynamics and innovation (e.g., Henderson and Clark, 1990) and in population ecology (e.g., Hannan and Freedom, 1977). Gilbert suggests that academic work and managerial experience has found the concept of inertia hard to understand because the literature has failed to untangle two distinct types of inertia:
- Resource rigidity which he suggests is discussed by Christensen and Bowery (1996) and which describes the failure to in invest in new resources necessary in a changing environment.
- Routine rigidity which he suggests is more connected to Nelson and Winter (1982) and others and which is failure to change organizational processes.
Gilbert is also interested in the effect of threat perception on inertia. He formulates two research questions:
- How does threat perception affect incumbent inertia in the face of discontinuous change?
- Is the effect of threat perception different for resource rigidity and routine rigidity?
Gilbert characterizes his study as "theory evaluation" and evaluates these two questions in the context of the newspaper industry at a time when they were facing the threat of increased digital news media. He presents studies of eight newspapers in a multiple case study design through interviews, archival documents, and direct observations.
The basic story he saw repeated in his examples were that the new organizations reacted to the threat by bringing in increasing resources in order to handle the threat. However, a the same time, they took actions that caused routines within the organization to contract and become more rigid.
Based on his observations, he inductively creates a series of propositions (each quoted verbatim):
- Proposition 1a. The perception of an imminent threat in the face of discontinuous change enables managers to overcome sources of resource rigidity that stem from resource dependence.
- Proposition 1b. The perception of an imminent threat in the face of discontinuous change enables managers to overcome sources of resource rigidity that stem from incumbent position reinvestment incentives.
- Proposition 2a. Perception of an imminent threat leads to a contraction of authority that amplifies routine rigidity.
- Proposition 2b. Perception of an imminent threat leads to a reduced level of experimentation that amplifies routine rigidity.
- Proposition 2c. Perception of an imminent threat leads to a focus on existing resources that amplifies routine rigidity.
In his sample, there was one exception the firm essentially contracted with an external organization and created a structurally different organization to handle it's online foray. This firm was also the only firm that successfully responded.
From this example, he created a set of propositions as well (also quoted verbatim):
- Proposition 3. Involving outside influence when deciding how to respond to discontinuous change will increase the likelihood that managers will structurally differentiate a new venture from its parent organization.
- Proposition 4. Structural differentiation can help decouple threat perception in a parent from an opportunity perception in a new venture.
- Proposition 5. Outside influence, structural differentiation, and opportunity framing combine to relax routine rigidity in a new venture.
Gilbert also describes and depicts a model that he suggest can help integration his propositions.
Theoretical and practical relevance:
Gilbert's article has been cited more than 130 times since it's publication 5 years ago.