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What Makes Agility Fragile? A Dynamic Theory of Organizational Rigidity

Author

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  • Jin Li

    (Faculty of Business and Economics, The University of Hong Kong, Pok Fu Lam, Hong Kong)

  • Arijit Mukherjee

    (Department of Economics, Michigan State University, East Lansing, Michigan 48823)

  • Luis Vasconcelos

    (UTS Business School, University of Technology Sydney, Ultimo, New South Wales 2007, Australia; Nova School of Business and Economics, Universidade Nova de Lisboa, 2775-405 Carcavelos, Portugal)

Abstract

We present a novel explanation of why organizations tend to lose their agility over time despite their efforts to foster worker initiative in adapting to local information. Worker initiative ensures efficiency but requires strong incentives. When incentives are relational and the firm faces shocks to its credibility, it may adopt standardized work processes that ignore local information but yield satisfactory (though suboptimal) performance. The adoption of such standardized processes helps the firm survive the current shock but inflicts inefficiencies in the future. Although the firm may recover, it becomes more vulnerable to future shocks, and consequently, more reliant on the standardized work procedures.

Suggested Citation

  • Jin Li & Arijit Mukherjee & Luis Vasconcelos, 2023. "What Makes Agility Fragile? A Dynamic Theory of Organizational Rigidity," Management Science, INFORMS, vol. 69(6), pages 3578-3601, June.
    • Handle: RePEc:inm:ormnsc:v:69:y:2023:i:6:p:3578-3601
    DOI: 10.1287/mnsc.2022.4512
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