Induced variation in administrative systems: Experimenting with contexts for innovation

Abstract

Purpose: The purpose of this paper is to revise Burgelman’s idea (1991, 1994) that induced strategic processes is necessarily variation-reducing. In doing so, the authors explore whether major change in a firm’s administrative system can be managed in an evolutionary fashion via induced variation-increasing mechanisms. In particular, the authors focus on a multi-business multinational firm in which different administrative systems were experimented simultaneously as a way to determine which of these systems provided the most conducive context for innovation and capability development. Design/methodology/approach: The authors adopted an inductive perspective and developed a single case research project aimed at documenting the process of experimentation and subsequent selection and adoption of a new administrative system by a large multi-business multinational firm. Findings: The paper’s main contribution is the concept of “induced variation”, understood as intra-organizational variation-increasing mechanisms deliberately created at the top level of the organization to trigger an intra-organizational evolutionary process of management innovation. This finding extends and modifies Burgelman’s discussion of induced and autonomous strategic behavior by showing that induced processes need not necessarily be variation-reducing, but may actually be variation-increasing. Additionally, the authors explain how an evolutionary process aimed at learning about the relative merits of alternative administrative systems through in vivo “reflection in action” (Schön, 1983) unfolds in a complex global organization. Research limitations/implications: While the work provides several insights on the development of an evolutionary process leading to management innovation, its inductive nature limits its external validity and requires the development of further work for such purpose. Practical implications: The authors explore the roles of regional organizations in creating new corporate capabilities for the MNC. Social implications: – The authors show how management capabilities developed in the Latin American context were rolled out to other locations. Originality/value: The authors' findings confirm that major drastic reorganization initiatives can actually be approached using an evolutionary approach.