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Simple Indicators of Adaptation versus Rigidity in History-Dependent Firm Activities and Decision Rules

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  • Helfat, Constance E

Abstract

Evolutionary theory suggests that firms' activities and decision rules are history-dependent: firms tend to do what they have done in the past. This paper proposes some simple indicators of adaptation versus rigidity in the amount of effort that a firm devotes to a history-dependent activity, as well as in a decision rule that specifies alterations in the amount of activity. Without requiring complex statistical procedures, runs tests in combination with some simple arithmetic measures of changes in firm behavior over time can help distinguish between rigidity and adaptation in firm behavior. As an illustration, the procedures are applied to data on oil industry R&D activities. Copyright 1998 by Oxford University Press.

Suggested Citation

  • Helfat, Constance E, 1998. "Simple Indicators of Adaptation versus Rigidity in History-Dependent Firm Activities and Decision Rules," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 7(1), pages 49-75, March.
    • Handle: RePEc:oup:indcch:v:7:y:1998:i:1:p:49-75
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    Cited by:

    1. Pettus, Michael L. & Kor, Yasemin Y. & Mahoney, Joseph T., 2007. "A Theory of Change in Turbulent Environments: The Sequencing of Dynamic Capabilities Following Industry Deregulation," Working Papers 07-0100, University of Illinois at Urbana-Champaign, College of Business.
    2. Rajshree Agarwal & Constance E. Helfat, 2009. "Strategic Renewal of Organizations," Organization Science, INFORMS, vol. 20(2), pages 281-293, April.
    3. Li, Shenxue & Easterby-Smith, Mark & Lyles, Marjorie A., 2008. "Overcoming corporate rigidities in the dynamic Chinese market," Business Horizons, Elsevier, vol. 51(6), pages 501-509.
    4. Matthew S. Kraatz & Edward J. Zajac, 2001. "How Organizational Resources Affect Strategic Change and Performance in Turbulent Environments: Theory and Evidence," Organization Science, INFORMS, vol. 12(5), pages 632-657, October.

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