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Overcoming the inertia of organizational competence: Olivetti’s transition from mechanical to electronic technology

Author

Listed:
  • Erwin Danneels
  • Gianmario Verona
  • Bernardino Provera

Abstract

This historical case study of Olivetti, the Italian office products firm, argues that technological competence becomes socially embedded in a firm over time as it is legitimized, backed by powerful agents, and supported by resource allocation. Paradoxically, these three building blocks of a competence—legitimacy, power, and resources—both promote inertia and enable change. Inertia can be overcome when firms employ three levers of transition: organizationally separating an emerging technology to protect it, co-opting legitimacy by using the new technology to serve the incumbent technology, and diverting resources for the emerging technology’s development. Over time, the emerging technology achieves enough legitimacy, power, and resources in the firm to overtake, and ultimately displace, the incumbent competence. We develop an integrative model of technology transition that contributes to literature on resources, dynamic capabilities, competence-destroying change, and ambidexterity.

Suggested Citation

  • Erwin Danneels & Gianmario Verona & Bernardino Provera, 2018. "Overcoming the inertia of organizational competence: Olivetti’s transition from mechanical to electronic technology," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(3), pages 595-618.
    • Handle: RePEc:oup:indcch:v:27:y:2018:i:3:p:595-618.
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    File URL: http://hdl.handle.net/10.1093/icc/dtx049
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    Citations

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    Cited by:

    1. Krzywdzinski, Martin & Butollo, Florian, 2022. "Combining Experiential Knowledge and Artificial Intelligence. The Digital Transformation of a Traditional Machine-Building Company," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 33(2), pages 161-184.
    2. Vittori, Davide & Natalicchio, Angelo & Panniello, Umberto & Messeni Petruzzelli, Antonio & Albino, Vito & Cupertino, Francesco, 2024. "Failure is an option: How failure can lead to disruptive innovations," Technovation, Elsevier, vol. 129(C).
    3. Gwendolyn Lee & Janarthanan Nythruva, 2022. "A Mendelian perspective on strategic management: path-dependence and artificial selection in a search for sustainable energy," Journal of Organization Design, Springer;Organizational Design Community, vol. 11(3), pages 95-105, September.
    4. Krzywdzinski, Martin & Butollo, Florian, 2022. "Combining Experiential Knowledge and Artificial Intelligence. The Digital Transformation of a Traditional Machine-Building Company," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 33(2), pages 161-184.
    5. Saeed Khanagha & Shahzad (Shaz) Ansari & Sotirios Paroutis & Luciano Oviedo, 2022. "Mutualism and the dynamics of new platform creation: A study of Cisco and fog computing," Strategic Management Journal, Wiley Blackwell, vol. 43(3), pages 476-506, March.
    6. Choi, Hyundo, 2024. "Investing in hardware vs. software of digital systems for innovation outcomes: A contingency view," Technological Forecasting and Social Change, Elsevier, vol. 202(C).

    More about this item

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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