Adaptation or Expiration in Family Firms
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Adaptation or Expiration in Family Firms

Organizational Flexibility in Emerging Economies

Andrés Hatum

Andrés Hatum explores determinants of organizational flexibility in this examination of four family-owned companies, two flexible and two less flexible, from the edible oil and pharmaceutical industries. By means of an innovative analysis – including longitudinal analysis, coding analysis, statistical analysis and the use of original display charts – he illustrates the determinants of flexibility and sheds light on the process of transformation and adaptation of family firms, an area that has not yet been the subject of extensive empirical inquiry.
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Chapter 2: Adaptation, Innovation and the Flexible Organization

Andrés Hatum


2. Adaptation, innovation and the flexible organization INTRODUCTION The business literature on organizational change is replete with prescriptions regarding the management and design organizations require to confront highly competitive and changeable environments. Such characteristics include decentralization of decision-making, flatter structures, risk-taking attitudes, empowerment and innovations of different sorts. In spite of all the business literature offering these signposts for flexibility, there is little theory on the determinants of organizational flexibility. However, it is necessary to develop such a theory in order to understand how organizations can adapt rapidly to the sudden environmental and market changes that occur in volatile contexts (D’Aveni, 1994). The chapter is divided into six sections. After this brief introduction, the second section sets out to understand how and why firms adapt. In particular we are interested in the environmental pressures exerted on firms, and organizational and managerial processes influencing their adaptation. Inertial approaches are used as an explanation of those factors that may prevent organizations from adapting. In the third to fifth sections we describe how three alternative literatures can be used to build a more precise understanding of how organizations adapt under conditions of environmental turmoil. This combined approach includes literature on the determinants of organizational flexibility, organizational innovativeness and institutional embeddedness. The third and fourth sections deal with both determinants of organizational flexibility and determinants of organizational innovativeness as related and sometimes overlapping concepts. The research on institutional embeddedness in the fifth section sheds light on the strategic and organizational constraints...

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