Opportunity/Threat Perception and Inertia in Response to Discontinuous Change: Replicating and Extending Gilbert (2005)

Abstract

We use extensive longitudinal data from companies in the book retailing and telecommunication industries to replicate and extend Gilbert’s qualitative study on the influence of opportunity/threat perceptions on resource rigidity and routine rigidity in incumbents’ responses to discontinuous change. After discovering important anomalies in an empirical generalization study, we engage in a generalization and extension study to unbundle opportunity/threat perception into the dimensions of gain/loss framing and perceived control and induce a revised theory of the effect of such appraisals on incumbent inertia. Specifically, we induce that (a) imminent loss framing relaxes resource rigidity only when decision makers perceive a moderate level of control; (b) resource rigidity also relaxes in response to gain framing, at least when decision makers perceive the discontinuity as a particularly relevant strategic issue and strongly sense that they can control it; (c) loss framing and low perceived control can amplify routine rigidity by exacerbating resource rigidity; and (d) structural separation creates perceptions of gain and control by fostering the emergence of a local organizational identity in the unit implementing the discontinuous change. We resolve long-debated contradictions in studies on managerial and organizational cognition and discontinuous change, particularly between studies invoking threat rigidity theory and studies invoking prospect theory. We also demonstrate the usefulness of replicating qualitative research that is based on multiple case comparison.

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