Refining Adaptation and Its Onset: Signals of Financial Innovation that Trigger Strategic Attention in Financial Services
Abstract
Organizational adaptation is one of the most important concepts in strategic management. Historical conceptions suggest that without it, organizations are likely to succumb to inertia in dynamic environments and with it, organizations are likely to thrive. Despite its rich scholarly history, organizational adaptation continues to lack clarity and is often conflated with market entry, performance, or survival. More importantly, managers do not have a meaningful way to determine whether their organization is well-adapted or maladapted. Knowing when organizations begin to adapt to their changing environments subsequently becomes a difficult question to answer. In this thesis, I develop much-needed clarity to the concept of organizational adaptation while also examining its origins. I distil a clear and precise definition of organizational adaptation as intentional decision-making undertaken by organizational members, leading to observable actions that aim to reduce the distance between an organization and its economic and institutional environments. I then develop a multilevel conceptual framework that evaluates the full spectrum adaptation before zeroing in on a neglected question—how is adaptation initiated? By elaborating on the attention-based view of organizations in the context of financial services and the emergence of financial technologies, I argue that multiple attention-drawing attributes combine to initiate adaptation. I find that combinations of attributes provoke strategic attention to technological artifacts, known as technological innovations, but preclude strategic attention to consumer-based applications, know as market innovations. In addition, these attributes negate the effects of executive technological experience, long believed to be a driver of early adaptation. I demonstrate my results through a novel use of topic modelling and multivariate, mixed effects Bayesian regression. Ultimately, I allude to a return to playfulness in the executive suite and that experience may be an inhibitor to initiating processes of adaptation. In a world filled with large incumbents faced with unprecedented change, initiating adaptation earlier is prudent and simultaneously allows for timely adaptation while avoiding the challenges of suddenly adapting to change.