Environmental jolts and industry revolutions: Organizational responses to discontinuous change
Publication Year: 1990
Journal: Strategic Management Journal
The organizational change literature contains diverse characterizations of change processes with contradictory implications for strategic mianagers. Many inconsistencies are resolved by classifying models of organizational change according to the primary mode of change (continuous or discontinuous) and the primary level at which change occurs (organization or industry) to yield four basic types of change: adaptation, metamorphosis, evolution, and revolution. These types influence organizations' adaptive responses, shape industries' competitive structures, and constrain researchers' methods of inquiry. This paper identifies a gap in the literature:theory and researchfocusing on discontinuous changes occurring at the industry level of analysis. A perspective on this type of change is developed, and applied in a historical analysis of the hospital induistry. Data from a longitudinal field study are used to illustrate various organizational responses to discontinuities.
Proposition 1: Over time, an industry's evolutionary changes tend to increase the homogeneity of firms within the industry. Proposition 2: Over time, adaptive changes undertaken by individual firms increase the collective diversity of firms within an industry. Proposition 3: Revolutionary changes within an industry trigger adaptive and metamorphic changes within firms. Proposition 4: Engaging in temporary meta- morphic change is a viable strategyfor adapting to transitory environmental jolts. Proposition 5: Environmental jolts provoke crises that facilitate organizational metamorphoses. Proposition 6: Weak forces can trigger revo- lutionary change by releasing the accumulated pressure of prior technological, social, and political changes. Proposition 7: Revolutionary change within an industry stimulates the formation of interor- ganizational relationships. Proposition 8: Revolutionary change within an industrypromotes experimentation with new organizational forms. Proposition 9: Revolutionary change within an industry precipitates affiliations spanning industry boundaries. Proposition 10: Interorganizational networks absorb uncertainty arising from revolutionary change. This article is the result of a longitudinal study that had to deal with changes in the environment of the firms studied. The authors state that environments are generally held to be changing more slowly than firms’ capacities for adaptation. When these assumptions are valid, cross-sectional research designs can yield meaningful results. But when they are violated, the results of cross sectional designs become uninterpretable and findings become non-cumulative. The false assumptions made by the researchers are identified by the authors the hard way. They started with more or less the same assumption and then found out that there is also the possible scenario of discontinuous change. They adjusted their research to it and tried to fill a part of the gap that was present in the research and literature. They are talking about the type of change that Toon Abcouwer and Bas Parson refer to as crisis. This study and the propositions that flow from it can be of added value to the theory of the adaptive cycle.