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15. Strategic Renewal Flashcards

1
Q

Define path dependence.

A

Constraints of past organisational development on future decisions and actions.

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2
Q

What do firms become highly dependent on? What type of firm struggles more with path dependence?

A

1) Resource allocations
2) Relations with stakeholders

Older firms are more path dependent.

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3
Q

What are two conflicting forces that arise from path dependence?

A

1) Exploitation

2) Exploration

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4
Q

What does exploitation entail?

A

Efficient and stable structures for optimal exploitation of existing knowledge.

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5
Q

What does exploration entail?

A

Environmental changes force firms to increase flexibility and explore new sources of wealth through new research combinations.

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6
Q

Define strategic renewal.

A

Adaptive choices and actions a firm takes to alter its path dependency and maintain a dynamic strategic fit with changing environments.

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7
Q

What is a dynamic strategic fit?

A

Firm’s specific fit over time between environmental factors and organisational contingencies (uncertainty).

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8
Q

What are the four perspectives for viewing the interaction between firms and their environments?

A

1) Population Ecology Theory
2) Evolutionary Theory
3) Resource Based Theory
4) Institutional Theory

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9
Q

What is population ecology theory?

A

Environmental factors favour reliable and specialised organisations (firms match the environmental niche).

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10
Q

What do firms build up if they match population ecology theory?

A

Structural inertia (persistance to changes in organisational structures).

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11
Q

Define fitness.

A

Capacity to learn and change organisation structures to fit new circumstances.

Opposite of inertia.

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12
Q

Define relative inertia.

A

Firms that respond slowly to threats/opportunities. They will eventually adapt.

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13
Q

What creates hyper competition (Red Queen effect)?

A

Dynamic interactions between increasing firm adaptation and increasing competition cancel each other out.

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14
Q

Define hyper competition.

A

Environment of rapidly escalating competition.

  • high uncertainty
  • heterogeneous (diverse) players
  • constant disequilibrium and change
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15
Q

What are similarities evolutionary theory shares with population ecology theory?

A

1) Limited organisational adaptability.
2) Population analysis
3) Important environmental selection.

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16
Q

What differs evolutionary theory?

A

Routines.

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17
Q

Define routines and its role in evolutionary theory.

A

Regular and predicted behaviour patterns of firms.

Daily operations helps firm develop unique skills that create opportunity for distinct competitive advantages.

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18
Q

What are limitations of routines?

A

Search for new ideas align with current ones –> Limited innovative capability.

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19
Q

What is resource based theory?

A

Firms viewed as tangible and intangible resources; tactics must be developed for superior performance.

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20
Q

Regarding resource based theory, what is a struggle of firms?

A

Unique bundle of resources (capabilities) take time to develop and are complexly intertwined with firms, therefore they are sticky (difficult to change).

Overly relying –> competence trap.

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21
Q

What is institutional theory?

A

Isomorphism of organisations in a population.

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22
Q

Define isomorphism.

A

Similarity in strategies and behaviours between firms.

Isomorphic forces may cause firms to homogenise (make uniform) their strategies.

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23
Q

What are the three kinds of isomorphism and what do they entail?

A

1) Coercive isomorphism: political and legitimacy constraints (formal rules/regulations)
2) Normative isomorphism: professionalisation and industry values/norms (unwritten rules/ etiquette)
3) Mimetic isomorphism: bandwagon effect; tendencies of companies to follow beliefs/behaviours of others

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24
Q

What is an adaption perspective on strategic renewal? What are the four types of adaption perspectives?

A

Voluntary approach to strategic renewal.

1) Strategic choice perspective
2) Dynamic capabilities theory
3) Organisational learning theory
4) Behavioural theory

25
What is strategic choice perspective?
Firms with the power to drive strategic renewal and reshape their environment. Decision makers are intermediaries between firms and environments.
26
What is dynamic capabilities theory? What are dynamic capabilities?
Dynamics of resource deployment. Firms should constantly renew themselves by looking for opportunities. Dynamic capabilities is where firms integrate and release resources to match or create market change.
27
What is organisational learning theory? What is absorptive capacity?
How organisation members notice and use knowledge to reconsider firms fit in environments using absorptive capacity. Absorptive capacity: firms ability to value, assimilate and utilise new external knowledge.
28
What is behavioural theory? What is a problem firms encounter?
Organisations are a coalition of individuals with needs that are satisfied through effective resource allocation. Results to firms looking for exploitive rather than adaptive solutions (short-term approach).
29
What are the dimensions of strategic renewal and what do they entail?
Content: core attributes of the strategy (exploitative or explorative) that need to be changed Context: learning the strategic renewal internally (experimental learning) or externally (acquisitive learning) Process: how/when effective strategies are shaped and implemented efficiently in firms
30
What is the difference between incremental and discontinuous transformations?
Incremental: adaption through small interactions b/w path dependent choices and environmental feedback over time Discontinuous: adaption through drastic revitalisation of firms operations (business scope, competitive approach)
31
What are the two types of learning?
Explorative and exploitative learning.
32
What is explorative learning and what does it entail?
Adds new attributes to organisations current portfolios and competences. - highly variable gains, distant in time - overexploitation: over relying on core competences and specialised resources --> competence trap and core rigidity
33
What is exploitative learning and what does it entail?
Learning existing/similar knowledge to organisations current competencies. - gains are predictable and proximate (immediate) - renewal trap: over-exploration of resources and excessive searching --> destroyed value (too focused on future)
34
What are the two main tasks associated to strategic flexibility?
1) Managerial tasks | 2) Organisational design tasks
35
What are the two components of managerial tasks and what do they entail?
1) Variety of capabilities: ability to respond to all disturbances (in form of quantity or quality of capabilities) 2) Speed
36
What are four types of flexibility?
1) Steady state flexibility 2) Operational flexibility 3) Structural flexibility 4) Strategic flexibility
37
Define steady state flexibility.
Static procedures for optimal performance (during stable times).
38
Define operational flexibility.
Routine capabilities (for responding to environments) based on present structure and goals of organisation.
39
Define structural flexibility.
Managerial capabilities for adaption in response to complex changes in environments.
40
Define strategic flexibility.
Dynamic capabilities for adapting the goals of the organisation.
41
What are organisational design tasks for?
To gain flexibility.
42
Define organisational technology.
Hardware and software that transforms inputs into outputs.
43
Define organisational structure.
Distribution of responsibility and authority among personnel, control systems, and the coordination process. Restructuring helps improve responsiveness.
44
Define organisational culture. What can it change to? What are the constrains?
Beliefs and assumptions held by all members. - can change from conservative to innovative - may constrain managerial capabilities because of shared rules for reactions to unexpected contingencies (events).
45
What are the four organisation forms for coping with competitive environments? (To be more flexible)
1) Rigid form (strategic programming) 2) Planning form (strategic planning) 3) Flexible form (adaptive strategies) 4) Chaotic form (spontaneous strategy)
46
What is rigid form and what does it entail?
Strategic programs based on extrapolation (extend) of existing trends. - little innovation/change - static/narrow minded perspective - established firms in predictable environments
47
What is planning form and what does it entail?
Firms coping with moderate competition. - flexibility constrained to specific rules - strategic drift where incremental (additional internal) changes don't keep up with radical environmental changes
48
What is flexible form and what does it entail?
Dominated by strategic and structural flexibility; in hyper-competition. - innovate and implement quickly - balance between exploration/exploitation - intelligence gathering and information gathering for receptiveness to new feedback for increasing learning capacity of management
49
What is chaotic form and what does it entail?
Very extensive flexibility dominated by strategic flexibility (however uncontrollable). - unlimited variations - no distinctive technology or stable administrative structure (shared values) - strategic neglect (managers don't pay attention)
50
Are the (strategic) organisation forms permanent? What should firms do, then?
Not permanent; needs renewal.
51
What are the two trajectories for renewal?
1) Natural trajectory of routinisation: decreasing competition 2) Reversed trajectory of revitalisation: escalating competition
52
What does natural trajectory of routinisation entail?
New entrepreneurial firms must go from chaotic to flexible, and rigid to survive. Requires strategic focus. Increase knowledge processing capacities through routines.
53
What does reversed trajectory of routinisation entail?
Transition from flexible to chaotic to cope with increasing competition (hypercompetition).
54
Define ambidexterity (using both).
Abilities to develop high levels of exploration and exploitation.
55
Corporate transformations consist of dual renewal trajectories. What are the four types of ambidexterity that exist?
1) Contextual ambidexterity 2) Structural ambidexterity 3) Cyclical ambidexterity 4) Reciprocal ambidexterity
56
What is contextual ambidexterity?
Simultaneous exploration and exploitation by organisational context that cause individuals to do both.
57
What is structural ambidexterity?
Simultaneous exploration and exploitation across organisation units that specialise in either exploration or exploitation.
58
What is cyclical ambidexterity?
Sequential pursuit of exploration and exploitation in an organisation unit across time.
59
What is reciprocal ambidexterity?
Subsequent (following) pursuit of exploration and exploitation across domains, functions and hierarchical levels.

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