| In emerging economies (e.g., China), as elsewhere, change is constant (Hoskisson, Eden, Lau, & Wright, 2000). Firms face unstable markets, turbulent technology, and unforeseen transitions of social and economic systems (Zhan & Chen, 2008; Zhou, Tse, & Li, 2006). To adapt to these changing environments, firms alter their organizations by introducing new technologies, administrations, and processes (Battilana & Casciaro, 2013; Zhou et al., 2006). Organizational change offers a popular way to satisfy customer needs and gain competitive advantages (Armenakis & Harris, 2009; Ye, Datelina, & Jagdip, 2007). For example, in 2009, to respond to rapid growth in its network traffic, Huawei, the largest telephone-network equipment maker in China, launched the world’s first 100G end-to-end solutions. However, organizational change also is difficult: Approximately 70% of all change initiatives fail (Beer & Nohria, 2000). Therefore, organizational change remains an issue of great strategic importance, especially in terms of its impact on firm performance. Can organizational change enhance firm performance? Do firms that change fly—or do they die? Existing findings about the effect of organizational change on firm performance are inconsistent. Some research indicates that organizational change enhances firm performance (Judge, Naoumova, & Douglas, 2009; Zhou et al., 2006); other studies find negative effects (Graham & Richards, 1979; Kraatz & Zajac, 2001; Naranjo-Gil, Hartmann, & Maas, 2008) or no impact (Kelly & Amburgey, 1991; Wischnevsky, 2004; Zajac & Shortell, 1989). Table 1 contains a review of prior studies related to the performance impacts of organizational change. The inconsistent findings may be the result, at least in part, of the potentially nonlinear relationship between organizational change and firm performance (Zhang & Rajagopalan, 2010). Moreover, prior studies devote only limited attention to the various aspects of organizational change, framing it as a single-dimensional strategy, with the notable exception of Zhou et al. (2006). By following their approach, such that they differentiate organizational change into technical change and administrative change forms, we seek to advance extant research and propose that the effects of such changes on firm performance are both curvilinear and differential across conditions. Technical change relates to basic work activities, including products, services, and processes. Administrative change instead refers to organizational structures, administrative processes, and management systems (Tsoukas, 1996; Zhou et al., 2006). Accordingly, we examine the differential effects of technical and administrative change, with the recognition that—according to the dynamic capability perspective—such changes not only enhance adaptability and enable firms to leverage knowledge (Amburgey, Kelly, & Barnett, 1993; Leana & Barry, 2000; Teece, 2007) but also increase coordination costs and—according to an organizational inertia perspective—prompt organizational conflict (Greenwood & Hinings, 2006; Hannan & Freeman, 1984; Leana & Barry, 2000). Thus, we assume that the effects of technical change and administrative change on firm performance are U-shaped and that customer participation and innovation ambidexterity act as moderators of these links |
