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Coping with Unsatisfactory Activity Performance : The learning and governance dynamics of an activity

Author

Listed:
  • Xavier Castañer

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • A. Cuerzo-Cazurra

Abstract

Building on the behavioral theory and the competence-based views of the firm, we theorize about how firms cope with unsatisfactory performance of an activity they currently perform. We argue that firms adopt a gradual approach that simultaneously tries to economize on bounded rationality as well as to preserve control over the activity. In particular, we claim that managers follow a sequence of actions in trying to regain satisfactory performance –internal investments, imitation, competence purchase, and cooperation– which constitute different choices of learning modes. The outcomes of these lead to different governance decisions: retaining the activity within the organization, jointly producing it with a partner, outsourcing, or abandoning it.

Suggested Citation

  • Xavier Castañer & A. Cuerzo-Cazurra, 2006. "Coping with Unsatisfactory Activity Performance : The learning and governance dynamics of an activity," Post-Print halshs-00125667, HAL.
    • Handle: RePEc:hal:journl:halshs-00125667
    as

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