Structural Inertia and Organizational Change Revisited III: The Evolution of Organizational Inertia

Building on a formal theory of the structural aspects of organizational change initiated in Hannan, Polos, and Carroll (2002a, 2002b), this paper focuses on structural inertia. We define inertia as a persistent organizational resistance to changing architectural features. We examine the evolutionary consequences of architectural inertia. The main theorem holds that selection favors architectural inertia in the sense that the median level of inertia in cohort of organizations presumably increases over time. A second theorem holds that the selection intensity favoring architectural inertia is greater when foresight about the consequences of changes is more limited. According to the prior theory of Hannan, Polos, and Carroll (2002a, 2002b), foresight is limited by complexity and opacity. Thus it follows that the selection intensity favoring architectural inertia is stronger in populations composed of complex and opaque organizations that in those composed of simple and transparent ones.