College of Business

Recent studies show that the relationship between structure and inertia in changing environments may be more complex than previously held and that the theoretical logics tying inertia with flexibility and efficiency remain incomplete. Using a computational model, this article aims to clarify this relationship by exploring what structural properties enable continuous change in inertia-generating organizations and what their performance consequences are in dynamic environments. The article has three main findings: First, employing managers who anticipate change is not enough to generate continuous change; it is also necessary to raise both the rate of responsiveness and desired performance. Second, continuous change increases average organizational performance and reduces its variation. Third, organizations’ capacity for continuous change is counterintuitively limited by the organizations’ capacity to build inertia. These are important insights, because they suggest that with the right design, organizations may be both more flexible and reliable than commonly believed.

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