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CROSSROADSMicrofoundations of Performance: Balancing Efficiency and Flexibility in Dynamic Environments

CROSSROADSMicrofoundations of Performance: Balancing Efficiency and Flexibility in Dynamic... Our purpose is to clarify the microfoundations of performance in dynamic environments. A key premise is that the microfoundational link from organization, strategy, and dynamic capabilities to performance centers on how leaders manage the fundamental tension between efficiency and flexibility. We develop several insights. First, regarding structure, we highlight that organizations often drift toward efficiency, and so balancing efficiency and flexibility comes, counterintuitively, through unbalancing to favor flexibility. Second, we argue that environmental dynamism, rather than being simply stable or dynamic, is a multidimensional construct with dimensions that uniquely influence the importance and ease of balancing efficiency and flexibility. Third, we outline how executives balance efficiency and flexibility through cognitively sophisticated, single solutions rather than by simply holding contradictions. Overall, we go beyond the caricature of new organizational forms as obsessed with fluidity and the simplistic view of routines as the microfoundation of performance. Rather, we contribute a more accurate view of how leaders effectively balance between efficiency and flexibility by emphasizing heuristics-based strategies of simple rules, multiple environmental realities, and higher-order expert cognition. Together, these insights seek to add needed precision to the microfoundations of performance in dynamic environments. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Organization Science INFORMS

CROSSROADSMicrofoundations of Performance: Balancing Efficiency and Flexibility in Dynamic Environments

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Publisher
INFORMS
Copyright
Copyright © INFORMS
Subject
Research Article
ISSN
1047-7039
eISSN
1526-5455
DOI
10.1287/orsc.1100.0564
Publisher site
See Article on Publisher Site

Abstract

Our purpose is to clarify the microfoundations of performance in dynamic environments. A key premise is that the microfoundational link from organization, strategy, and dynamic capabilities to performance centers on how leaders manage the fundamental tension between efficiency and flexibility. We develop several insights. First, regarding structure, we highlight that organizations often drift toward efficiency, and so balancing efficiency and flexibility comes, counterintuitively, through unbalancing to favor flexibility. Second, we argue that environmental dynamism, rather than being simply stable or dynamic, is a multidimensional construct with dimensions that uniquely influence the importance and ease of balancing efficiency and flexibility. Third, we outline how executives balance efficiency and flexibility through cognitively sophisticated, single solutions rather than by simply holding contradictions. Overall, we go beyond the caricature of new organizational forms as obsessed with fluidity and the simplistic view of routines as the microfoundation of performance. Rather, we contribute a more accurate view of how leaders effectively balance between efficiency and flexibility by emphasizing heuristics-based strategies of simple rules, multiple environmental realities, and higher-order expert cognition. Together, these insights seek to add needed precision to the microfoundations of performance in dynamic environments.

Journal

Organization Science – INFORMS

Published: Dec 1, 2010

Keywords: Keywords : organizational structure ; strategy ; dynamic capabilities ; ambidexterity ; semi-structure ; microfoundations ; simple rules ; dynamic environments ; cognition

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