Strategic change and environmental change in the global microcomputer hardware industry, 1980-1995

The model developed in this study predicts that organizations that are accustomed to rapid incremental environmental change will gain competence at learning during such change. However, accurate learning for these firms under conditions of major environmental change will continue to be problematic. This research explores both direct and indirect effects of incremental and major environmental change on the competitive strategies of PC makers. As emphasized by an organizational learning perspective, it is essential to understand how a firm's past experience affects its future capabilities for change in order to understand this ability to respond to a dynamic environment (Lant & Mezias, 1990; 1992). This study contributes to the foundation of an organizational learning perspective by suggesting that successful firms have the ability to make risky, innovative decisions both carefully and quickly, yet effect safe and incremental implementations of those innovations (Cyert & March, 1992; March & Simon 1993; March & Olsen, 1976).; The primary findings of this study support the basic idea that organizations use environmental information and feedback in addition to performance feedback over long periods of time. Traditional adaptive organizational learning theory suggests that organizations should be more likely to change their course of action when faced with negative performance feedback and less likely to change when given positive performance feedback. However, this research indicates that organizations are more likely to change elements of their strategies' after their performance improves. The main effects of incremental and major environment change were positively related to strategic change. However, change in the other two industries, hard disk drives and software operating systems, did not impact strategic change significantly. The present findings are consistent with a relatively new notion in adaptive organizational learning proposed by Milliken and Lant (1991) that organizations in rapidly changing environments may become accustomed to organizational change on a regular basis. This research found that organizations in this fast-paced industry use both performance and environmental feedback mechanisms in strategic decision making; and, both have positive associations with strategic change.