Testing the Time‐Variancy of Explanatory Factors of Strategic Change1
| Date | 01 June 2006 |
| Published date | 01 June 2006 |
| DOI | http://doi.org/10.1111/j.1467-8551.2005.00483.x |
| Author | José David Vicente‐Lorente,JoséÁngel Zúñiga‐Vicente |
Testing the Time-Variancy of Explanatory
Factors of Strategic Change
1
Jose
´David Vicente-Lorente and Jose
´A
´ngel Zu´ n
˜iga-Vicente
*
Universidad de Salamanca, Facultad de Economı
´a y Empresa, Departamento de Administracio
´n y Economı
´a
de la Empresa, Campus ‘Miguel de Unamuno’, 37007 Salamanca and
*
Departamento de Economı
´adela
Empresa (Adm., Dir., y Org.), Facultad de Ciencias Jurı
´dicas y Sociales, Universidad Rey Juan Carlos, Campus
de Vica
´lvaro, Paseo de Artilleros s/n, 28032 Madrid, Spain
Corresponding author email: josvic@usal.es
The article proposes an empirical framework able to: (1) assess the relative validity of
both adaptive and inertial views of strategic change and (2) verify the potential time- or
context-dependency by testing the structural stability of the empirical model, in Spanish
banks, 1983–1997. Results offer inconclusive findings regarding (1) but strong evidence
to answer (2). The assumption of structural stability is rejected and the effect of many
explanatory factors considered in the empirical model varies over time as some factors
show different effects and/or significance levels depending on the period considered.
These findings suggest that explanatory models of strategic change should be viewed as
‘time-’ or ‘context-dependent’. The article provides a conceptual model in which
alternative explanations operate in a sequential way. The results highlight, first, that
inconclusive past findings about adaptive versus inertial views should be reviewed under
this new evidence, and future empirical research must assure that its methods and
interpretations are robust to potential structural breakdowns; and second, the
limitations raised by the static approach offered by the available theories/models when
approaching the dynamic and complex nature of strategic change. Theoretical develop-
ments and implications for managerial practice are suggested.
Since the late 1970s a large body of theoretical
and empirical literature has been devoted to
understanding why and how strategic change in
organizations occurs (Kelly and Amburgey, 1991;
Rajagopalan and Spreitzer, 1996; Van de Ven
and Scott, 1995). A common assumption of this
literature is that major sources of strategic and
organizational change are related to external
factors in terms of environmental upheavals
(e.g. regulatory changes, technological revolu-
tions) as well as organizational or internal factors
(e.g. managerial actions, resources and capabil-
ities). However, the lack of consensus on the
relative importance that researchers have tradi-
tionally attributed to the potential ‘drivers’ of
strategic change and their degree of ‘manage-
ability’ is notorious.
Researchers within the adaptive approach
advocate that strategic change is a rational
reaction of decision-makers (namely, the man-
agers), who are able to implement new strategies
as a ‘best response’ to the perceived mismatch
between organizational and environmental char-
acteristics. From this view, we find some
1
This paper has benefited from comments and sugges-
tions from Professors David C. Wilson, Stephen
Cummings, Emili Grifell Tatje
´, Miguel A. Garcı
´a
Cestona, Pere Ortı
´nA
´ngel, Stefan Van Hemmen, an
anonymous reviewer, the associate editor, Celeste P. M.
Wilderom, and participants at the British Academy of
Management Conference 2003 and the Academy of
Management Annual Meeting 2004. We also thank the
Spanish Commission for Science and Technology-
FEDER (SEC2001-1756), Junta de Castilla y Leo
´n
(SA099A05) and Universidad Rey Juan Carlos (PPR-
2004-35) for their financial support.
British Journal of Management, Vol. 17, 93–114 (2006)
DOI: 10.1111/j.1467-8551.2005.00483.x
r2006 British Academy of Management
straightforward indications for practice: do hire
highly qualified and experienced managers and do
keep their individual interests aligned with the
organizational goals. But authors supporting the
inertial perspective strongly disagree with this. In
their opinion, even ‘good’ managers confront
severe constraints to implement the ‘best course
of action’, despite the fact that they are able to
identify it. Investors, employees, suppliers and
other powerful stakeholders can be reluctant to
adopt new practices, which are viewed as hazar-
dous and contentious. From this alternative view,
organizations tend to avoid substantial changes as
they get older, larger and more complex, and
consequently, they can become more inert entities.
Under such circumstances, managers can only
contribute marginallyto improving organizational
performance.
There is a large number of empirical studies
devoted to providing answers to the controversy
created over the last two decades between those
who argue for the predominance of a strategic
adaptation view of strategic change (i.e. those that
recognize the ability of the firm to change strategy
over time) and those others who support a more
inertial view (i.e. those that argue that firms can
be strongly constrained in their ability to change
strategy over time). Despite the great number of
papers devoted to providing empirical answers to
the controversy between the adaptive and the
inert views, the evidence remains inconclusive.
The role of managers as a determinant of strategic
change is confirmed by some studies (e.g. Barker
and Duhaime, 1997; Goodstein and Boeker, 1991;
Lant, Milliken and Batra, 1992; Miller, 1993;
Wiersema, 1992; Zu´ n
˜iga-Vicente, Fuente-Sabate
´
and Sua
´rez-Gonza
´lez, 2005) but not supported by
others (e.g. Boeker, 1997; Osborn et al. 1981;
Sakano and Lewin, 1999). Proxies for organiza-
tional inertia such as firm size can reveal a
negative impact on strategic change (e.g. Dela-
croix and Swaminathan, 1991; Fombrum and
Ginsberg, 1990; Ruef, 1997; Stoeberl, Parker and
Seong-Jong, 1998; Zu´ n
˜iga-Vicente, Fuente-Sabate
´
and Sua
´rez-Gonza
´lez, 2005), an irrelevant one
(e.g. Aldrich et al. 1994; Kelly and Amburgey,
1991; Mitchell, 1989; Tucker, Singh and Mein-
hard, 1990; Wholey and Burns, 1993) or even a
positive one (e.g. Boeker, 1997; Nickerson and
Silverman, 2003; Washington and Ventresca,
2004; Zajac and Kraatz, 1993; Zajac, Kraatz
and Bresser, 2000), and similar diverse findings
hold for firm age and environmental conditions as
potential explanatory factors of strategic change.
Several reasons justify these ambiguous results
(Ginsberg, 1988; Lewin and Volberda, 1999;
Rajagopalan and Spreitzer, 1996; Van de Ven
and Scott, 1995). One source of this evidential
puzzle can stem from the diversity of samples and
methods – in terms of time-periods of study,
variables and measures, cross-sectional versus
longitudinal analysis, statistical models applied,
etc. – for estimating and testing empirical models
of strategic change. An additional reason is that
the empirical results found (and their compar-
ability) are severely conditioned by the presump-
tive theory that the researcher chose as a
background for her empirical analysis (Boeker,
1997, p. 152). For instance, supporters of the
‘inertial’ (‘adaptive’) perspective can find no sense
in including ‘CEO succession’ (‘organizational
age’) as an independent variable in their expla-
natory model, which precludes an effective
comparison of the relative performance of the
underlying theoretical frameworks. Recent em-
pirical research has attempted to overcome this
shortcoming by suggesting a sort of ‘additive’
model, namely an explanatory framework in-
cluding both kinds of proxy variables: those
suggested by the adaptive approach and those
others proposed by the inertial view in a single
specification. This methodological strategy makes
it possible to assess the explanatory power of
adaptation-based and inertia-based views on a
comparative and homogeneous basis (e.g. Baum,
1990; Ginsberg and Buchholz, 1990; Miller and
Ming-Jer, 1994; Zajac and Kraatz, 1993). Still,
most of these empirical studies offer mixed results
and as yet inconclusive interpretations on the
adaptation-inertia debate.
Our main goal in this article is to explore an
additional potential source of the aforementioned
inconclusive evidence and to examine its implica-
tions for research and practice. Specifically, we
wonder if adaptive and inertial explanations could
operate in a ‘sequential’ or ‘time-dependent’ way,
especially when environmental conditions suffer
drastic alterations. From a methodological per-
spective, we approach this question by testing the
structural stability (time-invariance of coefficients)
of an ‘additive’ empirical framework, i.e. an
explanatory model which includes as independent
variables a list of proxiesclaimed to be relevant by
both explanations (adaptive and inertial). This
94 J. D. Vicente-Lorente and J. A. Zu
´n
˜iga-Vicente
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