A classification of structural inertia: Variations in structural response

Structurally inert firms suffer elevated failure risks in the face of environmental change because inertia makes it difficult to keep pace with the speed of such change. Traditionally, this ecology theory based outlook focuses on the risks of mortality, treating the make-up of an organization’s architecture as uniform and thus relatively inconsequential for understanding this hazard. Renewing recent debates on inertia and on structure, in this paper we examine the specifics of the make-up of structural inertia in the context of failure hazards—the measurable survival risks associated with failure. Developing a classification of structural inertia, we test a sample of 755 firms listed on the Taiwanese Security Exchange across 52 industries to develop a convention on organizational structure, ratifying that structural inertia differs by type in incorporating failure hazards. Findings differentiate between and elaborate the validating environmental and resource conditions for these different categories, detailing the extent to which failure hazards are related to the specifics of each type. This variation is helpful in explaining better why, despite conditions leading to failure, inert organizations continue to thrive over time. Discussing this logic addresses the narrow representation of structural inertia and limitations to its theoretical development over several decades. It also shows that traditional organizational ecology measures can be legitimately underplayed in organizations dealing with increased failure hazards in favor of the characteristics of different structural inertia types.