Organizational Flexibility in Emerging Economies
Chapter 2: Adaptation, Innovation and the Flexible Organization
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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