DELAYING CHANGE: EXAMINING HOW INDUSTRY AND MANAGERIAL TURBULENCE IMPACT STRUCTURAL REALIGNMENT

This paper examines when firms pursue structural realignment through business unit reconfiguration, specifically by recombining business units. Our results refine and extend contingency theory and studies of organization design by drawing on theories of decision avoidance and delay to describe envir...

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Bibliographic Details
Published in:Academy of Management journal 2016-06, Vol.59 (3), p.791-817
Main Authors: KARIM, SAMINA, CARROLL, TIMOTHY N., LONG, CHRIS P.
Format: Article
Language:English
Subjects:
Business units
Companies
Contingency theory
Corporate reorganization
Decision makers
Decision making
Environmental conditions
Group dynamics
Medical device industry
Pharmaceutical industry
Realignment
Studies
Teams
Theory
Top management
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Summary:This paper examines when firms pursue structural realignment through business unit reconfiguration, specifically by recombining business units. Our results refine and extend contingency theory and studies of organization design by drawing on theories of decision avoidance and delay to describe environmental conditions when firms pursue or postpone structural realignment. Our empirical analysis of 46 firms from 1978 to 1997, operating within the U.S. medical device and pharmaceutical sectors, demonstrates that while decision makers initiate structural recombination during periods of industry growth (i.e., munificence), they reduce their recombination efforts during periods of industry turbulence (i.e., dynamism), and managerial turbulence (i.e., growth in top management team size). We also find evidence that firms delay realignment and bide their time for better environmental conditions of declining turbulence and industry growth before pursuing more structural realignment. Together, these findings suggest that decision makers often delay initiating structural recombination until they can effectively process information and assess how structural changes will help them realign the organization to the environment.
ISSN:0001-4273
1948-0989
DOI:10.5465/amj.2012.0409