TY  - CHAP
AB  - We challenge the premise that the CEO's job is to keep the corporation alive and thriving at all costs and under all circumstances. We briefly review the differing normative views of strategic management theorists and organizational theorists about organizational inertia. We then develop an economic model of incumbent behavior in the face of challenger competition that accommodates complementary assets. The model predicts and describes conditions under which organizational inertia, as subsequent organizational failure, is optimal. We then extend the logic and propose that the failure of entrepreneurial firms does not necessarily imply the failure of entrepreneurs. We conclude with a call to study “exit” as a viable strategic option.
VL  - 23
SN  - 978-1-84950-435-5, 978-0-76231-338-9/0742-3322
DO  - 10.1016/S0742-3322(06)23003-1
UR  - https://doi.org/10.1016/S0742-3322(06)23003-1
AU  - Dew Nick
AU  - Goldfarb Brent
AU  - Sarasvathy Saras
ED  - Joel A.C. Baum
ED  - Stanislav D. Dobrev
ED  - Arjen Van Witteloostuijn
PY  - 2006
Y1  - 2006/01/01
TI  - Optimal Inertia: When Organizations Should
T2  - Ecology and Strategy
T3  - Advances in Strategic Management
PB  - Emerald Group Publishing Limited
SP  - 73
EP  - 99
Y2  - 2024/04/24
ER  -