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The Determinants of Organizational Change and Structural Inertia: Technological and Organizational Factors

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  • Massimo G. Colombo
  • Marco Delmastro

Abstract

There are a growing body of theoretical work, wide anecdotal evidence, and a few large-scale empirical studies supporting the view that business firms quite rarely change their organizational structure, a phenomenon usually referred to in the literature as structural inertia. The present paper aims to analyze empirically the determinants of structural inertia and organizational change. As far as we know, this work constitutes the first attempt to directly address such issues through econometric estimates based on a large, longitudinal dataset at plant level. For this purpose, we consider changes of the organizational structure within a sample composed of 438 Italian manufacturing plants observed from 1975 to 1996. More precisely, we specify and test a duration model of the likelihood of an individual plant changing the number of hierarchical tiers after a spell r, provided that no change has occurred up to T. We also analyze the direction of change, distinguishing increases from decreases of the number of managerial layers. We consider a set of plant- and industry-specific explanatory variables that are expected to induce or oppose organizational change. The findings show that the adoption of advanced manufacturing technologies and new human-resources management practices favors organizational change. On the contrary, the presence of sunk costs and the extent of influence activities figure prominently in explaining structural inertia of business organizations. Copyright (c) 2002 Massachusetts Institute of Technology.

Suggested Citation

  • Massimo G. Colombo & Marco Delmastro, 2002. "The Determinants of Organizational Change and Structural Inertia: Technological and Organizational Factors," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(4), pages 595-635, December.
  • Handle: RePEc:bla:jemstr:v:11:y:2002:i:4:p:595-635
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    Cited by:

    1. Thorsten Grohsjean & Tobias Kretschmer & Nils Stieglitz, 2011. "Performance Feedback, Firm Resources, and Strategic Change," DRUID Working Papers 11-02, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    2. Piva, Mariacristina & Santarelli, Enrico & Vivarelli, Marco, 2005. "The skill bias effect of technological and organisational change: Evidence and policy implications," Research Policy, Elsevier, vol. 34(2), pages 141-157, March.
    3. Asano, Akihito & Eto, Takaharu, 2007. "Organisational inertia in Japanese institutions," Journal of Asian Economics, Elsevier, vol. 18(6), pages 915-933, December.
    4. Kuhn, Dieter, 2011. "Delayering and Firm Performance: Evidence from Swiss firm-level Data," Working papers 2011/02, Faculty of Business and Economics - University of Basel.
    5. Babur Wasim Arif & Tetsushi Sonobe, 2012. "Virtual Incubation in Industrial Clusters: A Case Study in Pakistan," Journal of Development Studies, Taylor & Francis Journals, vol. 48(3), pages 377-392, March.
    6. repec:spr:opmare:v:10:y:2017:i:1:d:10.1007_s12063-016-0119-7 is not listed on IDEAS
    7. Colombo, Massimo G. & Grilli, Luca & Piva, Evila, 2006. "In search of complementary assets: The determinants of alliance formation of high-tech start-ups," Research Policy, Elsevier, vol. 35(8), pages 1166-1199, October.
    8. García-Quevedo, José & Pellegrino, Gabriele & Vivarelli, Marco, 2014. "R&D drivers and age: Are young firms different?," Research Policy, Elsevier, vol. 43(9), pages 1544-1556.
    9. Qingrui Xu & Jin Chen & Zhangshu Xie & Jingjiang Liu & Gang Zheng & Yong Wang, 2007. "Total Innovation Management: a novel paradigm of innovation management in the 21st century," The Journal of Technology Transfer, Springer, vol. 32(1), pages 9-25, April.
    10. repec:eee:ecmode:v:69:y:2018:i:c:p:1-12 is not listed on IDEAS
    11. Zand, Fardad & Van Beers, Cees & Van Leeuwen, George, 2011. "Information technology, organizational change and firm productivity: A panel study of complementarity effects and clustering patterns in Manufacturing and Services," MPRA Paper 46469, University Library of Munich, Germany.
    12. Mariacristina Piva & Enrico Santarelli & Marco Vivarelli, 2004. "Technological and Organizational Changes as Determinants of the Skill Bias: Evidence from a Panel of Italian Firms," Papers on Entrepreneurship, Growth and Public Policy 2004-03, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    13. Goel, Rajeev K. & Saunoris, James W., 2016. "Institutional path dependence and international research intensity," Economic Modelling, Elsevier, vol. 52(PB), pages 851-858.
    14. Mariacristina Piva & Enrico Santarelli & Marco Vivarelli, 2006. "Technological and organizational changes as determinants of the skill bias: evidence from the Italian machinery industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 63-73.
    15. Mariacristina Piva & Marco Vivarelli, 2007. "Is demand-pulled innovation equally important in different groups of firms?," Cambridge Journal of Economics, Oxford University Press, vol. 31(5), pages 691-710, September.
    16. Godfrey Mugurusi & Lydia Bals, 0. "A processual analysis of the purchasing and supply organization in transition: the impact of offshoring," Operations Management Research, Springer, vol. 0, pages 1-20.
    17. Andreeva, Tatiana E., 2006. "Organizational change in Russian companies: Findings from research project," Working Papers 784, Graduate School of Management, St. Petersburg State University.
    18. Beckmann, Michael & Armbruster, Kathrin, 2010. "Business environment, managerial strategies, and the allocation of decision-making authorities in Swiss Firms," Working papers 2010/06, Faculty of Business and Economics - University of Basel.

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