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Pacing and path dependence: how strategic consistency in capital reallocation shapes firm performance

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  • Hayata, Tomoki

Abstract

While capital reallocation is essential for maintaining competitiveness, it presents a dilemma: large-scale changes disrupt existing routines and harm performance. Prior research has focused on the level of reallocation, overlooking how its effects are conditioned by a firm’s historical context. To shed light on this dilemma, We examine how the performance impact of capital reallocation depends not only on its pace (discontinuous vs. incremental) but also on a path-dependent mechanism: consistency with past strategies. Analyzing Japanese panel data, we find that discontinuous (large-scale) reallocation harms performance more than incremental (small-scale) reallocation. Critically, this relationship is strongly contingent on a firm’s past patterns: the negative impact is mitigated for firms with a history of discontinuous change, whereas performance suffers most when organizations accustomed to incremental change reallocate discontinuously. Our study introduces strategic consistency as a new channel in reallocation research and empirically suggests that dynamic capabilities are cultivated within organizational history and inertia.

Suggested Citation

  • Hayata, Tomoki, 2026. "Pacing and path dependence: how strategic consistency in capital reallocation shapes firm performance," Journal of Business Research, Elsevier, vol. 205(C).
    • Handle: RePEc:eee:jbrese:v:205:y:2026:i:c:s0148296325007179
    DOI: 10.1016/j.jbusres.2025.115894
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