The Paradox of Organizational Rigidity

Abstract

This article proposes that similar rigidity effects that occur under conditions of resource scarcity and threat also occur in opportunistic environments characterized by resource abundance. As organizations acquire more resources, they become constrained in their ability to process information at the individual, group, and organizational levels of analysis. As a result, organizations are less likely to identify and adjust to potential threats in the environment, increasing the likelihood that exogenous shocks will lead to organizational decline and failure. A contingency model is developed to identify how managers can be mindful of the decision-making limitations caused by both opportunities and threats in the environment.

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