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How Organizational Resources Affect Strategic Change and Performance in Turbulent Environments: Theory and Evidence

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  • Matthew S. Kraatz

    (College of Commerce and Business Administration, University of Illinois, Champaign, Illinois 61820)

  • Edward J. Zajac

    (J.L. Kellogg Graduate School of Management, Northwestern University, Evanston, Illinois 60208)

Abstract

This study examines how historical resource endowments and competencies affect strategic change and its outcomes amid environmental turbulence. Drawing from both behavioral and economics-based literatures, we develop four distinct perspectives regarding the likely effect of resources on strategic change. These four perspectives offer alternative predictions about how and why resource endowments should affect the likelihood or magnitude of strategic change, and how and why they should moderate the relation between strategic change and performance. We examine the predictive power of these four alternative arguments using extensive longitudinal data from a single industry context characterized both by substantial resource heterogeneity and environmental turbulence. Results indicate that organizations possessing greater stocks of historically valuable resources were much less likely to engage in adaptive strategic change, but also that this resource-driven disinclination towards change tended to have a benign or even beneficial effect on performance. We discuss the implications of our theory and findings for the strategic change literature and also for the literature on the resource-based view of the firm.

Suggested Citation

  • Matthew S. Kraatz & Edward J. Zajac, 2001. "How Organizational Resources Affect Strategic Change and Performance in Turbulent Environments: Theory and Evidence," Organization Science, INFORMS, vol. 12(5), pages 632-657, October.
    • Handle: RePEc:inm:ororsc:v:12:y:2001:i:5:p:632-657
    DOI: 10.1287/orsc.12.5.632.10088
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    References listed on IDEAS

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