Environmental shifts and change strategies

In organization theory, the best strategy for coping with an environmental shift remains an open question. This article investigates whether a firm should adapt to such a shift by directly modifying its value chain to fit the new environment or whether it should proceed in two steps: first, create an autonomous unit to develop an alternative value chain, and second, integrate it with the original. Our simulation model highlights that a key discriminant factor is the distribution of the changes to be made: when scattered along the value chain, the first strategy dominates, whereas when grouped in one part of the chain, the firm benefits from the second strategy. We discuss the implications of our findings in relation to transitions and managing change.