A Combinatorial Model of Organizational Innovation: the Case of Pilkington plc

Based on an in-depth case study of Pilkington Plc, this study illustrates that received perspectives in organization theory and theory of the firm fall short of explaining organizational evolution. The framework of organizational evolution developed in this paper is combinatorial in two ways. First, it shows how factors drawn from different perspectives can be combined in understanding organizational evolution. Second, it shows the explanatory and prescriptive potential of a combinatorial approach to resources and organizational configurations. This approach helps distinguish those features of organizational history that are ineffective and those that are instead effective for the firm survival. In Pilkington, the successful changes of firm boundaries have been predominantly linked to the combination of complementary resources rather than the resolving of transactional problems or realizing economies of scope through related diversification. The changes of internal structure have been successful due to a combination of waves of decentralization and centralization with a stable, robust coordination by communities at the level of research activities. Acknowledgements This study has been possible thanks to the commitment, interest, and valuable reflections on Pilkington organizational change of Paolo Scaroni, CEO of the Pilkington group at the time of the project, and David Vernon-Smith, HR Director of the Pilkington group. We would like to thank Mike Hobday, Ed Steinmueller, and Fred Tell for their valuable comments on earlier drafts of the paper. An abridged version of this paper was presented at the LINK Conference, held in Copenhagen in November 2002. We would like to thank Nicholas Argyres, Nicolai Foss, Bruce Kogut, Luigi Marengo, and Peter Maskell among other participants. Authors’ names are in alphabetical order. Sections 1, 3.3, and 4 have been jointly written. Sections 2.3 and 3.2 can be attributed to Anna Grandori, sections 2.1, 2.2, and 3.1 to Andrea Prencipe.