Stickiness, Dissonance, and Strategic Renewal: A Temporal Perspective.

Strategic renewal is undertaken by organizations for a variety of reasons, one of which is in response to an industry shock. Although research has investigated strategic renewal retrospectively, lack of empirical data has led to cross-sectional analysis; we know much less about how the process occurs over time. In this research, we take advantage of a unique data set that allows us to study a firm's attempt at strategic renewal over a period of 10 years. We analyze Nortel, a Canadian-based leading telecommunications manufacturer, which undertook a strategic renewal process in response to a major industry shock that occurred in 2000/2001. We employ path constitution analysis to identify the firm's strategic renewal efforts and outcomes from 2001 to 2009. Our findings indicate that, as a firm makes efforts to engage in strategic renewal and to move off path, dissonance between initial and newly introduced self- reinforcing processes reduces strategic options and, over time, erodes firm resources, preventing strategic renewal. We contribute to theory on strategic renewal and path dependence by identifying the mechanisms that can prevent a firm from altering strategic paths. [ABSTRACT FROM AUTHOR]