Change and Complementarities in the New Competitive Landscape: A European Panel Study, 1992–1996

Abstract

This paper addresses three weaknesses in the literature on new organizational forms: the limited mapping of the extent of contemporary organizational change; confusion about how contemporary changes link together; and the lack of systematic testing of the performance consequences of this kind of change. Drawing on a large-scale survey of organizational innovation in European firms, the paper finds widespread but not revolutionary change in terms of organization structure, processes, and boundaries. Using the economics notion of complementarities, the paper develops contingency and configurational approaches to suggest that organizational innovations will tend to cluster in particular ways and that the performance benefits of these innovations depend on their clustering. Complementarities in performance are explored from both inductive and deductive perspectives. Consistent with the expectations of complementarity theory, high-performing firms appeared to be innovating more and differently than low-performing firms. Again consistent with complementarities, piecemeal changes—with the exception of IT—were found to deliver little performance benefit, while exploitation of the full set of innovations was associated with high performance. Though few European firms were found to exploit the complementarities of new organizational practices, those that did enjoyed high-performance premia.