Capability erosion dynamics
Name
Rahmandad&Repenning2016-CapabilityErosion_Submission3_FinalWithAuthor.pdf
Size
1.22 MB
Format
Adobe PDF
Checksum (MD5)
8dfc59ea652d6232e8f8e043fe4e2123
Author(s)
Rahmandad, Hazhir
Repenning, Nelson
Date Issued
March 2016
Journal
Strategic Management Journal
Publisher
Wiley Blackwell
Citation
Rahmandad, Hazhir, and Nelson Repenning. “Capability Erosion Dynamics.” Strategic Management Journal 37, 4 (January 2015): 649–672 © 2014 John Wiley & Sons, Ltd
Version
Author's final manuscript
Abstract
The notion of capability is widely invoked to explain differences in organizational performance, and research shows that strategically relevant capabilities can be both built and lost. However, while capability development is widely studied, capability erosion has not been integrated into our understanding of performance heterogeneity. To understand erosion, we study two software development organizations that experienced diverging capability trajectories despite similar organizational and technological settings. Building a simulation-based theory, we identify the adaptation trap, a mechanism through which managerial learning can lead to capability erosion: well-intentioned efforts by managers to search locally for the optimal workload balance lead them to systematically overload their organization and, thereby, cause capabilities to erode. The analysis of our model informs when capability erosion is likely and strategically relevant.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
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DOI of Published Version
https://doi.org/10.1002/smj.2354
