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Inertia and transformation

Author: Rumelt, Richard P. INSEAD Area: Strategy In: Resource-based and evolutionary theories of the firm:towards a synthesis - Montgomery, Cynthia A. - 1995 - Book Language: EnglishDescription: p. 101-132.Type of document: INSEAD ChapterNote: Please ask us for this itemAbstract: In this article the author argues that strategy scholars have incorrectly borrowed from economists the assumption of organizational plasticity. Particularly in large firms, inertia, rather than plasticity is the norm. Unfortunately, there can be no simple theory of inertia as its causes are multiple and varied. After sketching out the shapes of the most important sources of inertia, the author turns to the problem of overcoming inertia - the question of organizational capabilities as existing on two levels (unit-based and rooted in co-ordination among units). He draws some preliminary conclusions about the shape of organizational transformation. In particular, the author focuses on the interplay between incentive intensity and co-ordinative capacity and argues that most transformations move through a sequence of phases in which co-ordinative capacity is first dramatically reduced and then rebuilt along new lines
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In this article the author argues that strategy scholars have incorrectly borrowed from economists the assumption of organizational plasticity. Particularly in large firms, inertia, rather than plasticity is the norm. Unfortunately, there can be no simple theory of inertia as its causes are multiple and varied. After sketching out the shapes of the most important sources of inertia, the author turns to the problem of overcoming inertia - the question of organizational capabilities as existing on two levels (unit-based and rooted in co-ordination among units). He draws some preliminary conclusions about the shape of organizational transformation. In particular, the author focuses on the interplay between incentive intensity and co-ordinative capacity and argues that most transformations move through a sequence of phases in which co-ordinative capacity is first dramatically reduced and then rebuilt along new lines

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