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Assessing organizational fitness on a dynamic landscape: an empirical test of the relative inertia thesis

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  • Martin Ruef

Abstract

This paper proposes an empirical framework for evaluating the relative structural inertia hypothesis, a central assumption of organizational ecology theories. In stark contrast to the tenets of strategic management, the relative inertia thesis claims that organizations are typically unable to match structural changes to their competitive environments in a timely fashion. The hypothesis is tested for the hospital industry in California during the 1980–90 time frame. Strategic movements in a competition ‘landscape’ are tracked using a variant of the Jaccard similarity coefficient, which has been applied in numerous studies of biological competition. Findings indicate that few hospitals are able to overcome inertial forces in adapting their service portfolios; furthermore, the ability of hospitals to strategically reposition themselves decreases markedly with provider density. Analyses also investigate the relation between organizational attributes (e.g., age, size, mission, and portfolio scope) and adaptability. Implications for both ecological and strategic theory are pursued. © 1997 John Wiley & Sons, Ltd.

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  • Martin Ruef, 1997. "Assessing organizational fitness on a dynamic landscape: an empirical test of the relative inertia thesis," Strategic Management Journal, Wiley Blackwell, vol. 18(11), pages 837-853, December.
  • Handle: RePEc:bla:stratm:v:18:y:1997:i:11:p:837-853
    DOI: 10.1002/(SICI)1097-0266(199712)18:113.0.CO;2-B
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    Cited by:

    1. Josse Delfgaauw & Otto H. Swank, 2016. "Task‐Specific Human Capital and Organizational Inertia," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(3), pages 608-626, September.
    2. Vinit M. Desai, 2008. "Constrained Growth: How Experience, Legitimacy, and Age Influence Risk Taking in Organizations," Organization Science, INFORMS, vol. 19(4), pages 594-608, August.
    3. Abraham Carmeli & Zachary Sheaffer, 2009. "How Leadership Characteristics Affect Organizational Decline and Downsizing," Journal of Business Ethics, Springer, vol. 86(3), pages 363-378, May.
    4. Strandholm, Karen & Kumar, Kamalesh & Subramanian, Ram, 2004. "Examining the interrelationships among perceived environmental change, strategic response, managerial characteristics, and organizational performance," Journal of Business Research, Elsevier, vol. 57(1), pages 58-68, January.
    5. David Hirshleifer & Ivo Welch, 2002. "An Economic Approach to the Psychology of Change: Amnesia, Inertia, and Impulsiveness," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 379-421, September.
    6. Lindawati Gani & Johnny Jermias, 2012. "The Effects of Strategy–Management Control System Misfits on Firm Performance," Accounting Perspectives, John Wiley & Sons, vol. 11(3), pages 165-196, September.
    7. de Leeuw, Tim & Gilsing, Victor & Duysters, Geert, 2019. "Greater adaptivity or greater control? Adaptation of IOR portfolios in response to technological change," Research Policy, Elsevier, vol. 48(6), pages 1586-1600.
    8. Tobias Kollmann & Andreas Kuckertz & Christoph Stöckmann, 2009. "Continuous Innovation In Entrepreneurial Growth Companies: Exploring The Ambidextrous Strategy," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 17(03), pages 297-322.
    9. April L. Wright & Gemma Irving & Asma Zafar & Trish Reay, 2023. "The Role of Space and Place in Organizational and Institutional Change: A Systematic Review of the Literature," Journal of Management Studies, Wiley Blackwell, vol. 60(4), pages 991-1026, June.
    10. 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.
    11. Zuniga-Vicente, Jose Angel & de la Fuente-Sabate, Juan Manuel & Suarez Gonzalez, Isabel, 2004. "Dynamics of the strategic group membership-performance linkage in rapidly changing environments," Journal of Business Research, Elsevier, vol. 57(12), pages 1378-1390, December.
    12. Euisin Kim & Mooweon Rhee, 2021. "Learning from Alliance Membership: An Empirical Study of Learning from the Failure of Their Alliance Members, Liability and Environmentally Sustainable Airline," Sustainability, MDPI, vol. 13(21), pages 1-12, October.
    13. Kim, Euisin & Rhee, Mooweon, 2017. "How airlines learn from airline accidents: An empirical study of how attributed errors and performance feedback affect learning from failure," Journal of Air Transport Management, Elsevier, vol. 58(C), pages 135-143.
    14. Carpano, Claudio & Rahman, Manzur & Roth, Kendall & Michel, John G., 2006. "International competition in mature, localized industries: Evidence from the U.S. furniture industry," Journal of Business Research, Elsevier, vol. 59(5), pages 630-637, May.
    15. Helmut M. Dietl & Markus Lang & Eric Lucas & Dirk Martignoni, 2012. "Learning Through Inaccurate Replication," Working Papers 312, University of Zurich, Department of Business Administration (IBW).
    16. Nils Stieglitz & Thorbjørn Knudsen & Markus C. Becker, 2016. "Adaptation and inertia in dynamic environments," Strategic Management Journal, Wiley Blackwell, vol. 37(9), pages 1854-1864, September.
    17. Demirbag, Mehmet & Tatoglu, Ekrem & Glaister, Keith W. & Zaim, Selim, 2010. "Measuring strategic decision making efficiency in different country contexts: A comparison of British and Turkish firms," Omega, Elsevier, vol. 38(1-2), pages 95-104, February.

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