What Makes Agility Fragile? A Dynamic Theory of Organizational Rigidity

Jin Li (), Arijit Mukherjee () and Luis Vasconcelos ()
Additional contact information
Jin Li: Faculty of Business and Economics, The University of Hong Kong, Pok Fu Lam, Hong Kong
Arijit Mukherjee: Department of Economics, Michigan State University, East Lansing, Michigan 48823
Luis Vasconcelos: UTS Business School, University of Technology Sydney, Ultimo, New South Wales 2007, Australia; Nova School of Business and Economics, Universidade Nova de Lisboa, 2775-405 Carcavelos, Portugal

Management Science, 2023, vol. 69, issue 6, 3578-3601

Abstract: We present a novel explanation of why organizations tend to lose their agility over time despite their efforts to foster worker initiative in adapting to local information. Worker initiative ensures efficiency but requires strong incentives. When incentives are relational and the firm faces shocks to its credibility, it may adopt standardized work processes that ignore local information but yield satisfactory (though suboptimal) performance. The adoption of such standardized processes helps the firm survive the current shock but inflicts inefficiencies in the future. Although the firm may recover, it becomes more vulnerable to future shocks, and consequently, more reliant on the standardized work procedures.

Keywords: organizational rigidity; worker initiative; standardized work processes; relational contract (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2022.4512 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:6:p:3578-3601

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().