When Truces Collapse: A Longitudinal Study of Price-Adjustment Routines

Mark J. Zbaracki () and Mark Bergen ()
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Mark J. Zbaracki: Richard Ivey School of Business, University of Western Ontario, London, Ontario N6A 3K7, Canada
Mark Bergen: Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455

Organization Science, 2010, vol. 21, issue 5, 955-972

Abstract: We analyze the microfoundations of the routine in a study of price-adjustment processes at a manufacturing firm. Existing theory says that truces balance cognitive and motivational differences across functions, but there is scant evidence on how truces work. We show both stability and change in routines. For minor price adjustments, routines incorporate truces in stable but separate market interpretations by the sales and marketing groups. Major price changes put truces at risk, as latent conflict over information and interests becomes overt. The ensuing battle shows how interests, information, and truces are intertwined in performing the routine. Routines are not just stable entities, but adaptive performances that include conflict. We illustrate how our approach addresses fundamental problems such as how firms perform economics, how routines incorporate economic theory, and how routines shape macroeconomic dynamics. We argue that our approach can be extended to any routine-based organizational work.

Keywords: organizational routines; truces; evolutionary theory; economic theory; price adjustment (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (47)

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