Not complacent but scared: another look at the causes of strategic inertia among successful firms from a regulatory focus perspective

Abstract

While complacency is the most commonly offered explanation for the lack of strategic change among successful firms, research in management psychology suggests otherwise. Based on regulatory focus theory, we propose that competitive success prompts an increased sense of responsibility in managers, causing them to assume a defensive attitude and to concentrate on preserving the status quo instead of becoming complacent. Data collected from the Markstrat simulation support our predictions. The findings imply that efforts to encourage strategic change by pressurizing managers will backfire, because they will aggravate managers' defensive attitude. Instead, firms should loosen the pressure on managers and allow them to experiment with innovative strategies.

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