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Organizational response to change: A resource -based view from the commercial banking industry

Donna M Gallo, University of Massachusetts - Amherst

Abstract

This dissertation investigates the relationship between organizational resources and organizational response to events in the external environment, specifically regulatory change in the commercial banking industry. The transformation of organizations arising from change and upheaval in the external environment dates back to Joseph Schumpeter's notion that economic structures in capitalist societies are continually reshaped in a process he called 'Creative Destruction'. Such changes in the external environment, many have argued, are accompanied often by fundamental transformation within individual organizations and have been referred to as 'Schumpeterian Shifts' resulting from exogenous shocks. Organizations invest in resources to build certain competitive capabilities that enable sustainable financial performance and the ability to respond to these shocks. I argue that organizational response to exogenous shock is influenced by the resource profile of the organization. ^ The regulatory environment is a rich domain in which to perform this study. Examples abound regarding the impacts of regulation and deregulation on organizations. In the past three decades industries such as financial services, transportation, telecommunications, and health care have been significantly challenged by regulatory change. In industries where competition was once negligible are faced with competitive forces that pose serious threats to traditional organizations. The empirical part of the research is done in the commercial banking industry.^ The theoretical framework brings together theories of organizational change with the resource-based view of the firm literature, including ideas from industrial organization economics. The research is executed by conceptually developing and then empirically testing a set of hypotheses that predict certain relationships between internal resource profiles and organizational responses. The results do not show predictable or similar patterns among firms as hypothesized. This study indicates that firms are greater than their bundle of resources. Internal practices, knowledge, and managerial decisions on obtaining and utilizing resources may be stronger strategic factors influencing response to shifts in external environments.^ This study adds a new perspective to the organizational change and resource-based view literatures. It brings together two major areas of the strategic management ideology, the influence of the external environment on organizations and the influence of resources on organizational response to the external environment. ^

Subject Area

Business Administration, Management|Sociology, Organizational|Business Administration, Banking

Recommended Citation

Donna M Gallo, "Organizational response to change: A resource -based view from the commercial banking industry" (January 1, 2008). Doctoral Dissertations Available from Proquest. Paper AAI3337036.
http://scholarworks.umass.edu/dissertations/AAI3337036

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