Markus C. Becker

Dynamics of Organizational Routines: A Generative Model

This paper introduces a generative model of organizational routines and their change over time. The model demonstrates that variation and selective retention of patterns of action are necessary and sufficient to explain the features of organizational routines that are most relevant in relation to dynamic capabilities, such as formation, inertia, endogenous change, and learning. The model directly links micro‐level actions to the macro‐level dynamics of routines. The results suggest that focusing on action provides a useful and parsimonious foundation for a theory of organizational routines and capabilities.

Managing Dispersed Knowledge: Organizational Problems, Managerial Strategies, and Their Effectiveness

While there has been much progress in understanding organizational knowledge and knowledge management practices, some questions still remain unresolved. This paper argues that at least one important driver of knowledge‐related organizational problems has been rather neglected so far: that is, the dispersed nature of organizational knowledge. The paper analyses the organizational problems and managerial responses arising from dispersed knowledge. It identifies three drivers by which the dispersedness of knowledge leads to management problems: namely, it creates large numbers, asymmetries, and uncertainty. A number of managerial strategies for dealing with the different components of the problems created by the dispersedness of knowledge are identified and their effectiveness analysed, thereby informing managers as to how best to deal with dispersed knowledge. The analysis of uncertainty‐related implications of dispersed knowledge uncovers an overlooked distinction that is helpful for understanding dispersed knowledge and its managerial implications. This is the distinction between uncertainty and ambiguity, i.e. a strong form of uncertainty that cannot be remedied by the standard strategy of increasing the information available.

Organizing new product development: Knowledge hollowing‐out and knowledge integration – the FIAT Auto case

The paper analyses the organization of the new product development process at FIAT from a resource‐based perspective. The focus is on organizational resources for integrating dispersed specialist knowledge required in the development of complex products. The analysis shows how the application of a resource‐based perspective is able to uncover negative long‐term effects of outsourcing on the knowledge base (hollowing out), despite beneficial short‐term effects on cost.

The limits of design and engineering outsourcing: performance integration and the unfulfilled promises of modularity

Outsourcing design and engineering tasks in product development is increasingly popular. However, firms that outsource design and engineering tasks often experience problems. So far, no satisfactory answer exists regarding the question to what extent design and engineering tasks can be outsourced before negative consequences occur. We address this gap. This paper identifies the limits of design and engineering outsourcing in product development, and the sources of these limits. To do so, it investigates the organizational challenges that a major European automotive manufacturer faced when it decided to adopt an extreme form of design and engineering outsourcing. Based on an in-depth case study, we identify the sources of problems with outsourcing design and engineering tasks in product development, and shed light on the limits of design and engineering outsourcing in product development.

Inertia in Routines: A Hidden Source of Organizational Variation

Traditionally, routines have been perceived as a primary source of inertia, which slows down organizational change and hinders organizational adaptation. Advancing prior research on routine dynamics, this study examines how inertia in routines influences the process of organizational adaptation, both in the absence and presence of endogenous change of routines. Contrary to conventional wisdom, our analysis suggests an overlooked mechanism by which routine-level inertia may help, rather than hinder, organization-level adaptation. We demonstrate this mechanism by using a simple theoretical model in which the organization is characterized as a configuration of interdependent routines and study the process by which this configuration adapts to cope with its task environment. We find that inertia in routines may engender potentially useful variation in the process of organizational adaptation because reduced rates of routine-level changes may lead to temporal reordering when these changes are implemented. In our nuanced perspective, inertia is not only a consequence of adaptation or selection as perceived in prior research, but also a source of variation that turns out to be useful for adaptation. This logic is helpful to better understand why apparently inertial organizations keep surviving and from time to time exhibit outstanding performance. We conclude by discussing how this advanced understanding of the role of routines in organizational adaptation helps elaborate the theory of economic evolution.

THE ENTREPRENEUR AT A CRUCIAL JUNCTURE IN SCHUMPETER’S WORK: SCHUMPETER’S 1928 HANDBOOK ENTRY ENTREPRENEUR

This essay introduces the first translation of Schumpeter’s article Entrepreneur, originally published in 1928. We describe the background of Entrepreneur and use new archival sources to situate the article in time. Entrepreneur marks a transition of Schumpeter’s conception of entrepreneurship that took place between 1911 and 1926. Entrepreneur also contains Schumpeter’s most profound vision on economic selection, a vision that Schumpeter never elaborated further. We consider the most important implications of the new material in Entrepreneur and the reasons for the apparent shift in Schumpeter’s thought.

The Past, Present and Future of Organizational Routines: Introduction to the Handbook of Organizational Routines

To understand routines is to understand organizations.1 Routines are ubiquitous in organizations, and an integral part of organizations. One is hard put to identify an organization where no routines are present. A large part of the tasks carried out in organizations, such as manufacturing, marketing and selling goods and services, are accomplished in routinized ways. This is not only true for trivial operations, such as manufacturing, but also pervades processes such as decision making, strategizing or even change and innovation. Organizational routines are the building blocks of organizations: they capture the typical ways in which organizations accomplish their tasks. As it turns out, understanding organizational routines is not a trivial undertaking. So far, just getting an overview of the concept of organizational routines and what we know about organizational routines was quite difficult. For one, no obvious point of reference was available, the 1996 Industrial and Corporate Change article documenting the discussion of the Santa Fe group perhaps being the only exception (Cohen et al., 1996). The Handbook of Organizational Routines addresses this gap. In this introduction, I will not attempt to describe comprehensively the present state of the research on organizational routines. As James March (1965: ix) so eloquently put it, ‘no editor, and least of all a sympathetic one, should attempt to summarize that state. It is what it is; and what it is can best be discovered by reading the detailed chapters’. Rather, I want to use the occasion to sketch an overarching framework for the chapters in this volume, and highlight some threads that link them in ways that are not always obvious from the individual chapters themselves. The Handbook is structured around four topics, corresponding to its four sections. Each mirrors an important set of questions in the literature on organizational routines.

Innovation Routines: Exploring the Role of Procedures and Stable Behaviour Patterns in Innovation

This book showcases advanced empirical research that applies the concept of organizational routines to understanding organizations and how they change and evolve.

Division of labor and division of knowledge: Why the nature of the causality matters for the evolutionary theory of the firm

This article considers the role and interrelation of the division of labor and the division of knowledge, and its relevance for knowledge-based and evolutionary theories of the firm. As is well known, Adam Smith focused on the effect of the division of labor, while Charles Babbage focused on the effect of the division of knowledge. We are not the first to argue that both are connected in a loop, the division of labor guiding the division of knowledge via learning by doing, and the division of knowledge, in turn, guiding the development of competences for accomplishing steps of the work process. In this article, our main argument is that even knowledge-based and evolutionary approaches to the theory of the firm have focused more on the Smithian than the Babbagian part of the loop. We argue that the impact of the division of knowledge should not be glossed over and perhaps be considered first. The reason is that in the division of knowledge cognition enters the picture and makes a difference, amongst other things on the division of labor. Taking the division of knowledge into account also helps cast light on such important issues as understanding the emergence of routines.

Routines: A Brief History of the Concept

This book is based on the premise that mainstream economics has become excessively specialized and formalized, entering a state of de facto withdrawal from the study of the economy in favour of exercises in applied mathematics. The editors believe that there is much scope for synergies by engaging in an encounter with economics and the other social sciences. The chapters in this book offer important new contributions to such a development.