Locked-in organizations carry latent inefficiency that surfaces when change demands new action.

Evidence

From a strategic, future-oriented point of view, rigidity therefore always means potential inefficiency. If an organization or a significant practice (e.g., combining specific R&D capabilities with marketing skills) has become locked-in, there is inherently the danger of becoming inefficient, either in the face of new, more efficient alternatives or changed internal or external circumstances calling for new solutions. Latent inefficiency becomes manifest when an organization confronted with these change requirements cannot adopt new measures because it is confined to the existing path of action, which binds it to the historical solutions (Leonard-Barton, 1995; Schreyo¨gg & Kliesch, 2007). — Jörg Sydow, Georg Schreyögg, and Jochen Koch, Organizational Path Dependence, 52

Categorization

• XREF: Connects to economics of path dependence (David, Arthur) and to innovation literature on core rigidities.
• SEED: Angle: how successful firms turn their winning routines into cages at the exact moment the market shifts.