Organization and strategy research has stressed the need for organizations to simultaneously exploit existing capabilities while developing new ones. Yet this increasingly crucial challenge has been accompanied by an ongoing wave of managerial activity and institutional pressures for process management and control. We argue that these pressures stunt a firm's dynamic capabilities. We develop a contingency view of process management's influence on both technological innovation as well as organizational adaptation. We argue that while process management activities are beneficial for organizations in stable contexts, they are fundamentally inconsistent with all but incremental innovation and change. We argue that process management activities must be buffered from exploratory activities. As dynamic capabilities are rooted in both exploitative and exploratory activities, ambidextrous organizational forms provide the complex contexts for these inconsistent processes to co-exist. 3More than twenty years ago, Abernathy (1978) suggested that a firm's focus on productivity gains inhibited its flexibility and ability to innovate. Abernathy observed that in the automobile industry, a firm's economic decline was directly related to its efficiency and productivity efforts. He suggested that a firm's ability to compete over time may be rooted not only in simply increasing efficiency, but also in its ability to be simultaneously efficient and innovative (Abernathy, 1978: 173;Hayes & Abernathy, 1980). Strategy and organization theorists have similarly observed that dynamic capabilities are anchored in the ability to both exploit and explore (Ghemawat & Costa, 1993;March, 1991;Weick, 1969). A firm's ability to compete over time may lie in its ability both to integrate and build upon its current competencies, while simultaneously developing fundamentally new capabilities (Teece, Pisano, & Shuen, 1997).Twenty years after Abernathy's observations, the pressures for organizations to meet multiple, often inconsistent, contextual demands have escalated (e.g. Christensen, 1997;Tushman & O'Reilly, 1997). The notion of balance between exploitation and exploration, or between incremental and radical organizational change has been a consistent theme across several approaches to research in organizational adaptation (e.g. Brown & Eisenhardt, 1998;Burgelman, 1994;March, 1991;Levinthal & March, 1993;Gavetti and Levinthal, 2000; Romanelli & Tushman, 1985). Yet this need for dual organizational capabilities arises in the context of a wave of managerial activity and institutional pressures focusing on process management and control (e.g. Cole, 1998;Winter, 1994;Hackman & Wageman, 1995;Hammer & Stanton, 1999).Process management, based on a view of an organization as a system of interlinked processes, involves concerted efforts to map, improve, and adhere to organizational processes.Initially building on the seminal work of Deming (1986), Juran (1989), andIshikawa (1985), Although process management techniques were first employed in th...
Repenning, and Toby Stuart for comments on earlier drafts. We are also grateful to ASO Associate Editor Reed Nelson and three anonymous reviewers for careful reviews and helpful suggestions. Thanks also to Linda Johanson for excellent editorial guidance. An earlier version of this paper was published in the 2001 Best Paper Proceedings of the Academy of Management, Business Policy and Strategy Division.This research explores the impact of process management activities on technological innovation. Drawing on research in organizational evolution and learning, we suggest that as these practices reduce variance in organizational routines and influence the selection of innovations, they enhance incremental innovation at the expense of exploratory innovation. We tested our hypotheses in a 20-year longitudinal study of patenting activity and ISO 9000 quality program certifications in the paint and photography industries. In both industries, the extent of process management activities in a firm was associated with an increase in both exploitative innovations that built on existing firm knowledge and an increase in exploitation's share of total innovations. Our results suggest that exploitation crowds out exploration. We extend existing empirical research by capturing how process management activities influence the extent to which innovations build on existing firm knowledge. We suggest that these widely adopted organizational practices shift the balance of exploitation and exploration by focusing on efficiency, possibly at the expense of longterm adaptation.? Process management and its associated set of managerial practices and programs (e.g., total quality management, Six Sigma, ISO 9000) is perhaps the most important managerial innovation of the last 20 years (Cole and Scott, 2000), so much so that it has taken on aspects of a managerial fad (Abrahamson, 1996). Over this period, managers have perfected process methodologies and practices, even as scholars have explored the nature and boundaries of this phenomenon (Cole and Scott, 2000). The promise of process management is that focusing on variance reduction and increased process control will drive both speed and organizational efficiency (e.g., Garvin, 1988;Clark and Fujimoto, 1991;Harry and Schroeder, 2000).The process revolution's initial focus was on manufacturing, but its reach has since extended into administrative, product development, distribution, and resource allocation processes in organizations (Garvin,
Organization and strategy research has stressed the need for organizations to simultaneously exploit existing capabilities while developing new ones. Yet this increasingly crucial challenge has been accompanied by an ongoing wave of managerial activity and institutional pressures for process management and control. We argue that these pressures stunt a firm's dynamic capabilities. We develop a contingency view of process management's influence on both technological innovation as well as organizational adaptation. We argue that while process management activities are beneficial for organizations in stable contexts, they are fundamentally inconsistent with all but incremental innovation and change. We argue that process management activities must be buffered from exploratory activities. As dynamic capabilities are rooted in both exploitative and exploratory activities, ambidextrous organizational forms provide the complex contexts for these inconsistent processes to co-exist. 3More than twenty years ago, Abernathy (1978) suggested that a firm's focus on productivity gains inhibited its flexibility and ability to innovate. Abernathy observed that in the automobile industry, a firm's economic decline was directly related to its efficiency and productivity efforts. He suggested that a firm's ability to compete over time may be rooted not only in simply increasing efficiency, but also in its ability to be simultaneously efficient and innovative (Abernathy, 1978: 173;Hayes & Abernathy, 1980). Strategy and organization theorists have similarly observed that dynamic capabilities are anchored in the ability to both exploit and explore (Ghemawat & Costa, 1993;March, 1991;Weick, 1969). A firm's ability to compete over time may lie in its ability both to integrate and build upon its current competencies, while simultaneously developing fundamentally new capabilities (Teece, Pisano, & Shuen, 1997).Twenty years after Abernathy's observations, the pressures for organizations to meet multiple, often inconsistent, contextual demands have escalated (e.g. Christensen, 1997;Tushman & O'Reilly, 1997). The notion of balance between exploitation and exploration, or between incremental and radical organizational change has been a consistent theme across several approaches to research in organizational adaptation (e.g. Brown & Eisenhardt, 1998;Burgelman, 1994;March, 1991;Levinthal & March, 1993;Gavetti and Levinthal, 2000; Romanelli & Tushman, 1985). Yet this need for dual organizational capabilities arises in the context of a wave of managerial activity and institutional pressures focusing on process management and control (e.g. Cole, 1998;Winter, 1994;Hackman & Wageman, 1995;Hammer & Stanton, 1999).Process management, based on a view of an organization as a system of interlinked processes, involves concerted efforts to map, improve, and adhere to organizational processes.Initially building on the seminal work of Deming (1986), Juran (1989), andIshikawa (1985), Although process management techniques were first employed in th...
New industries sparked by technological change are characterized by high uncertainty. In this paper, we explore how a firm's conceptualization of products in this context, as reflected by product feature choices, is influenced by prior industry affiliation. We study digital cameras introduced from 1991-2006 by firms from three prior industries. We hypothesize and find that: (1) prior industry experience shapes a set of shared beliefs that results in similar and concurrent firm behavior; (2) firms notice and imitate the behaviors of firms from the same prior industry; and, (3) as firms gain experience with particular features, the influence of prior industry decreases. This study extends previous research on firm entry into new domains by examining heterogeneity in firms' framing and feature-level entry choices.
Attention to processes has increased, as thousands of organizations have adopted process-focused programs such as TQM and ISO 9000. Proponents of such programs stress the promise of improved efficiency and profitability. But research has not consistently borne out these prospects. Moreover, the expectation of universal benefits is not consistent with research highlighting the important role of firm-specific capabilities in sustaining competitive advantage. In this paper, we use longitudinal panel data on ISO 9000 practices for firms in the auto supplier industry to study two new issues related to the adoption of process management practices. First, we find that, as the majority of firms within an industry adopt ISO 9000, late adopters no longer gain financial benefits from these practices. Second, we explore how firms' technological coherence moderates the performance advantages of ISO 9000 practices. We find that firms that have a very narrow or very broad technological focus have fewer opportunities for complementary interactions that arise from process management practices and thus benefit less than those with limited breadth in technologically related activities. #
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