Path Dependence of Power Relations, Path-Breaking Change and Technological Adaptation

Mikko Valorinta, Henri Schildt and Juha-Antti Lamberg

Industry and Innovation, 2011, vol. 18, issue 8, 765-790

Abstract: We study the path dependence of technological systems and power relations inside companies. While the existing literature suggests power relations and technology to be path dependent and influenced by each other, interactions across these evolutionary processes remain poorly understood. We studied the history of four retail firms over 40 years, applying event structure analysis to explicate key dynamics. Companies exhibited two episodes of converging path dependency, where power relations further increased technological inertia. In each case, power initially concentrated outside the central headquarters. Path-breaking change led all firms to centralize power and implement networked IT systems supporting central control. We discuss the ability of converging technological and organizational path dependencies to create competitive disadvantage. New widely available technological innovations can disadvantage a firm vis-á-vis its competitors when the firm's established power structure prevents it from fully exploiting the innovation, and the path dependence of power relations prevents adaptation. Thus, company owners should create path-breaking disruptions in power relations when technological adoption provides value.

Date: 2011
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DOI: 10.1080/13662716.2011.621745

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