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Complete summary Adaptive Organization
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This is an extensive summary of the Adaptive Organization, including the knowledge clips (lecture notes) and articles of each week.
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Summary The Adaptive OrganisationWeek 1: foundations of adaptation ........................................................................................................ 2
Recap from ToS (Stoelhorst & Bridoux, 2015)..................................................................................... 2
Article 1: Images of organization (Morgan, 2006) ............................................................................. 2
Article 2: Research in organizational evolution: what comes next? (Abatecola, 2014) ................... 3
Article 3: Reconceptualizing organizational routines as a source of flexibility and change
(Feldman & Pentland, 2003)............................................................................................................... 4
Article 4: Intraorganizational ecology of strategy making and organizational adaptation
(Burgelman, 1991) .............................................................................................................................. 6
Week 2: drivers of adaptation ................................................................................................................. 7
Article 5: Learning curves in manufacturing (Argote & Epple, 1990)................................................ 7
Article 6: The myopia of learning (Levinthal & March, 1993) ........................................................... 8
Article 7: Core capabilities and core rigidities: a paradox in managing new product development
(Leonard-Barton, 1992) ...................................................................................................................... 9
Week 3: capabilities for adaptation ...................................................................................................... 10
Article 8: Strategic renewal of organizations (Agarwal & Helfat, 2009) ......................................... 10
Article 9: Dynamic capabilities: what are they? (Eisenhardt & martin, 2000) ............................... 11
Article 10: Absorptive capacity: a review, reconceptualization and extension (Zahra & George,
2002).................................................................................................................................................. 12
Article 11: Dynamic capabilities and organizational agility (Teece et al., 2016) ............................ 14
Week 4: organizing adaptation ............................................................................................................. 15
Article 12: Structural differentiation and ambidexterity: the mediating role of integration
mechanisms (Jansen et al., 2009)..................................................................................................... 15
Article 13: Building ambidexterity into an organization (Birkinshaw & Gibson, 2004) ................. 17
Article 14: How do firms adapt to discontinuous change? (Birkinshaw et al., 2016) .................... 18
Week 5: managing adaptation .............................................................................................................. 19
Article 15: Explorative and exploitative learning from external corporate ventures (Schildt et al.,
2005).................................................................................................................................................. 19
Article 16: The four models of corporate entrepreneurship (Wolcott & Lippitz, 2007) ................ 20
Article 17: Creating value through business model innovation (Amit & Zott, 2012) ..................... 22
Week 6: managing adaptation .............................................................................................................. 23
Article 19: What leaders really do (Kotter, 2001) ............................................................................ 23
Article 20: Transformational leadership’s role in promoting corporate entrepreneurship:
Examining the CEO-TMT interface (Ling et al., 2008) ...................................................................... 24
Article 21: Middle managers’ strategic role in the corporate entrepreneurial process: attention-
based effects (Ren & Guo, 2011) ...................................................................................................... 24
1
,Week 1: foundations of adaptation
Recap from ToS (Stoelhorst & Bridoux, 2015)
There are 2 theories in RBV that explain competitive advantage:
- Ricardian (static): competitive advantage is dependent on economic profit grounded by the
equilibrium logic of price theory.
o Positional competitive advantage: CA relies on the difference between economic value and
costs, hence the operational efficiency that depends on productive knowledge. This theory is
equilibrium-based and assumes a closed system in which there is a given set of external
conditions. When there are exogenous shocks, these conditions change and firms need to
reposition in order to get a new equilibrium.
- Evolutionary (dynamic): competitive advantage is dependent on growth grounded by the knowledge-
based & dynamic capability theories.
o Dynamic competitive advantage: CA relies on differences in growth and the ability to
maintain/increase economic value in an open system, hence the adaptive efficiency that
depends on learning to gain productive knowledge. As a result, learning asymmetries are the
main sources of CA in which knowledge is endogenous, since it is not given but based on
disequilibria.
The fundamental difference between the theories is rather that an equilibrium-based theory needs to
assume a closed system that adjusts to conditions that are externally determined, while an evolutionary
theory applies to open systems that change themselves from within. This makes an equilibrium-based
theory uniquely suited to explain economic profit but unfit to explain growth, and vice versa.
Article 1: Images of organization (Morgan, 2006)
Theory of strategy has shifted from mechanistic (static) views towards an organic (dynamic) view.
- Mechanistic view (old perspective): firms are closed systems in which the firm itself controls
what is being changed, independent of the environment (stakeholders). Such firms are stable in
non-changing environments, but have low adaptability/survival rate in changing environments.
- Organic view (new perspective): firms are interdependent on
its environment. For example, the product lifecycle goes on, so
firms need to adapt their strategy based on in which lifecycle
their products are (otherwise they will be outcompeted). Firms
should be seen as open systems in which the firm adapts to the
environment by inputs that flow into the system. As competitive
pressures increase and market leadership is more volatile
(market power is not a stable position), firms need to adapt to
changing customers’ needs in order to survive.
Evolutionary theory: organizations need to change to meet the
requirement of their environment, just like the evolution of organisms to nature.
- Continuous cycle: input → internal transformation → output → feedback → input….
- Homeostatis: self-regulation and ability to maintain steady state (bijv. zenuwstelsel reageert op
inputs van receptoren in het lichaam en past zich aan om gezond te blijven).
- Negative entropy (ontaarding van systeem): unlike closed systems, open systems sustain
themselves by using energy to offset possible deterioration caused by entropy.
- Structure, function, differentiation, integration: all these aspects are closely intertwined.
- Requisite variety: internal regulatory system needs to be as diverse as the environment.
- Equifinality: there are different ways leading to Rome (flexible patterns/ processes).
2
, - System evolution: a firm’s system consists of the processes: variation (generating multiple ideas/
strategic intent) → selection (choosing one idea based on competencies & capabilities) → retention
(implement idea/ adapt).
The interest of corporate strategy is the realization
that organizations must be sensitive to what is
occurring in the world beyond. Firms can be seen as
an organization with interrelated subsystems
(individuals, groups, departments, etc.) that all have
their own subsystems (characteristics, personal
traits, expertise, etc.). These subsystems should be
aligned by identifying and eliminating dysfunctions
→ need for continuous learning and improving
integration.
Contingency theory: organizations are systems that
need careful management to balance and satisfy
internal needs and to adapt to the environment
(adaptive efficiency).
Management is concerned with aligning environment and organizational characteristics:
Environment
Certain/ stable Uncertain/ unpredictable
Strategy Defensive operational goal setting Proactive creation of learning system
Technology Routine, low discretion roles Complex, high discretion roles
Culture Economic orientation to work Self-actualizing orientation to work
Structure Mechanistic/ bureaucratic Organic/ entrepreneurial
Management Authoritarian Democratic
→ Not every organization can adapt due to inertia, unwillingness, managerial inability, etc.
→ Not every adaptation is successful.
Population ecology perspective: the environment is a critical factor in determining which firms succeed
and which fail → survival of the fittest. Based on this, firms are concerned with cyclical configurations of
variation, selection, retention and modification. “New species” (renewed firms) are often more “fit” than
“older species” (firms that don’t change). Focus is on selecting for resource scarcity and firm-specific
knowledge to outperform competitors. Yet, this view undermines the power of alliances, self-renewing
resources and value creation by creating niches (instead of adapting to existing markets).
Article 2: Research in organizational evolution: what comes next? (Abatecola, 2014)
The primary goal of organizational ecology has been that of understanding ‘‘mutual interactions within and
among the populations and communities comprising organizational ecosystems and the mechanisms and
processes underlying their growth, regulation and decline’’.
The evolutionary theory focuses on macro-economic level dynamics and changes and rely on both
Darwinian (variation, selection, retention) as well as Schumpeterian approaches (creative destruction).
The Darwinian approach is concerned with gradual change (incremental) whereas the Schumpeterian
approach involves punctuated equilibria by short radical changes.
The process of adaptation can be viewed from two perspectives:
- Externally pulled (determinism): change determined by competitive environment (market) and
macro-economic pressures.
o Passive/reactive – because you have to (Darwinian).
o Domain navigation – organizational behavior guided by environment.
o External selection environment - capabilities require change to gain CA.
o Causation theory – many-to-one; achieve effect with multiple means.
- Internally pushed (voluntarism): change shaped by organizations themselves (strategic choice)
to meet new demand.
o Proactive/responsive – because you want to (Schumpeterian).
o Domain definition – organizational performance sets environmental enactment.
3
, o Internal selection environment – competences and capabilities are changed from within to
make sense for the environment (link internal innovations to customers’ needs).
o Effectuation theory – one-to-many; achieve multiple effects with one mean.
-
Strategic choice and environmental determinism are interactive and interdependent and both needed to
satisfy adaptation. Both provide trusts for change and both are causes and consequences (mutual
causation). → Strategic choices shape environment and vice versa.
Co-evolution: achieving “environmental fitness” by combining both internal and external selection to adapt
correctly and sustain survival as well as success.
Article 3: Reconceptualizing organizational routines as a source of flexibility and change
(Feldman & Pentland, 2003)
Routines: repetitive, recognizable, interdependent action patterns embedded in organizations that
involves multiple actors and determine how a firm reacts to certain situations. Organizational routines exist
of structure (underlying idea) and performance (by people). Routines are the product of nature in which
organizational context makes some actions easier and more likely and other actions harder and less likely
(avoid difficulties, create security).
Traditional view: routines are persistent over time and help with integrating and retaining information (i.e.
learning of tacit knowledge). To maximize (cognitive) efficiency and legitimacy and minimize or suppress
conflict, organizations use routines to achieve their work processes. The resulting organizational routines
are like habits or programs that are executed without conscious thought. Like DNA, routines are the genetic
material from which organizations are reproduced. Because of their nature as fixed structures, routines
result in inertia, inflexibility, and mindlessness.
Limitations of traditional views:
- Lack of agency: focus is on the structure of routines to act on past events. However, routines
involve agency as people execute the routines. In traditional views, agency is only considered to
play a role in forming the routines (vooraf) and excludes the role of agency in executing the
routines. Decisions were made in the past that characterize routines.
- Contradictory data: research shows that routines vary and change.
New view: routines are exercised by humans and (even though it’s complex) humans can change their
behaviors and actions. Thus, meta-routines for changing routines can be a source of flexibility and change,
which refers to having a dynamic capability. Routine dynamics depend on:
- Ostensive: ideal form of routine shaped by perceptions (generalized idea). It can involve a
standard operating procedure which is formed by tacit knowledge and agreed upon by multiple
participants (so more objective). The ostensive functions as guidance, but cannot consider the
actual performance of the routines, because multiple behaviors cannot be implicitly guided.
- Performative: specific actions taken by individuals at specific times that result in an overall
performance. Practices are always carried out against a background of rules and expectations but
the actual actions chosen are always to some extent novel → improvisational.
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