External Forces of Inertia
Strategic inertia is argued to be present if there is a large imbalance between the rate at which the environment change and the rate of the organizational change (Hopkins et al. 2013). Previous research has focused on external forces of strategic inertia (Schoemaker & Laurentious Marais, 1996; Hopkins et al., 2013). Legal, fiscal and national barriers, such as price controls and new laws and regulations, are given as examples of external forces that inhibit a firm’s ability to adapt freely to changes (Schoemaker & Laurentious Marais, 1996). Although these barriers can be considered problematic, many firms are still able to successfully adapt without major problems. A potential reason as to why certain firms perform better than others can be the attitude of the manager, since there is a critical connection between the manager’s ability to understand environmental conditions and firm strategy (Barr et al., 1992).
The Cognitive Perspective
Studying strategic renewal and the influence of strategic inertial forces from a cognitive perspective is appropriate because the perspective is likely to provide an in-depth understanding of why similar changes in the environment are addressed differently among firms (Rajagopalan & Spreitzer, 1997). In other words, a cognitive approach may help to address the issue of identifying some circumstances that leads to a successful renewal process and some that are likely to strengthen the inertial forces. A key assumption within the cognitive perspective is that the external environment is too complex to objectify (Rajagopalan & Spreitzer, 1997). Therefore, managers, and arguably all individuals (Walsh, 1995), instead portray the environment based on certain perceptions and understandings (i.e. cognition) that are unique to each and everyone (Porac & Thomas, 1990; Rajagopalan & Spreitzer, 1997). Moreover, since managers act based on their own view of the environment, studying various responses to changes should focus on manager’s perceptions and understandings (Porac & Thomas, 1990). It is further argued that a changing environment requires an adaptable cognitive structure (Mallette & Hopkins, 2013), thus emphasizing the importance
of the managers’ way of thinking during periods of renewal. To review the concept of cognition within the business nature is challenging. In an extensive review of the previous literature within the field, Walsh (1995) could conclude that a common theoretical language was non-existent. The absence of clear definitions within the research field has lead to a diverse group of concepts explaining similar notions. Walsh (1995) described cognition as a mixture of an individual’s cause maps, schemas, core beliefs and knowledge structures. In short, cognition is the underlying assumptions that guide a person’s thoughts, choices and behavior.
Mallette and Hopkins (2013) add on to this but used the term cognitive frame to explain how an individual’s frame influences the way she collect, analyze and share information. Rajagopalan and Spreitzer (1997) shared the notion of the cognitive frame and also brought the concept a step further by confirming that one’s frame is shaped by the organizational context. In other words, the company shapes an individual’s way of thinking and comprehending information. Since all individuals and organizations are different and the interaction between the two will affect one another, it can serve as an explanation to why changes in the environment are approached differently.
Barr and colleagues (1992) described an individual’s interpretation of the external environment by the use of mental models. They described it as a filter that simplifies and limit the external environment, with the purpose to determine what information that should be given ttention. The connection between mental models and renewal is clear. In order to respond to changes in the external environment, it is suggested that strategic renewal must be accompanied by a change in managers’ mental models (Barr et al., 1992). If this process is delayed, it is likely to also delay the renewal process and result in performance decline (Barr et al., 1992), thus become an inertial force. A static external environment is argued to result in fixed a cognitive frame whereas a changing environment must be accompanied with a flexible cognitive frame (Mallette & Hopkins, 2013).
The Innovative Firm
As the aim of this thesis is to explore strategic renewal and strategic inertia in an innovative firm, it is important to give an overview of the term innovation as to explain what an innovative firm is. The wide concept of innovation is a process of learning that enables the implementation of new ideas, products and processes (Thomson, 1965). Baregheh, Rowley and Sambrook (2009) defines innovation as “…the multi-stage process whereby organizations transform ideas into new/improved products, services or processes, in order to advance, compete and differentiate themselves successfully in their marketplace” (Baregheh, Rowley & Sambrook, 2009, p.1334).
1.3 Purpose .
1.4 Research Questions
2 Frame of Reference
2.2 Strategic Renewa
2.3 Strategic Inertia
2.4 The Cognitive Perspective
2.5 The Innovative Firm
3 Methodology and Dat
3.2 Research Strategy
4 Empirical Findings
4.1 The History of Fagerhult
4.2 Influences from an open-minded work climate
4.3 Identifying the need for renewal
4.4 Initiation and implementation
4.5 Preserving the present
4.6 Execution barriers
5.1 Presenting the model
5.2 Explaining the model
List of References
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The Co-Existence of Strategic Renewal and Strategic Inertia