To Change or Not To Change? : Uncovering The Challenges with Inertia, Adaptation and Ambidexterity

Abstract: To align firm strategy with the changing environment has always been a challenge for executives. The business literature consists of different perspectives on how to solve the problem and whether to resist change, adapt or do both at the same time. Each got their own implications, inertia could lead to rigidness, adaptability might negatively influence reliability and ambidexterity is seen as a combination of both. The core is exploiting present capabilities meanwhile exploring future opportunities. To study these notions we have conducted a cross-sectional study including four Swedish service-firms which operates in either a stable or dynamic environment. Executives were interviewed and asked to elaborate on their strategies. By doing this we were able to construct a model who suggests when to adapt, when to resist change depending on environmental stability. We also observed that capital- and knowledge-intensity has been somewhat neglected in previous research and could be studied further.