Balancing Inertia, Innovation, and Imitation in Complex Environments

Since Thorstein Veblen, perennial themes in institutionalist writings have included the role of imitation (or emulation) and the tension between inertia (or conservatism) and innovation in individual and organizational behavior. Prior models of organizational behavior have examined two search processes that represent this tension. One is local search, in which an organization restricts experimentation to a single attribute at a time. In contrast, distant search is associated with changing all of the organization’s attributes, in other words, extreme innovativeness. In both cases, the organization adopts the new form if its fitness is thereby improved. Previous research has established that high levels of complexity favor extreme innovativeness (distant search) over a modest level of inertia (local search). However, it is unclear if organizations balancing inertia and innovativeness at intermediate levels may have an advantage over these extremes (Sorenson 2002). In order to address this gap in our knowledge, we are here concerned with balancing inertia and innovativeness in task environments of intermediate complexity, in other words, when organizational attributes are more or less interdependent. The present work is related to literature which has developed agent-based models of interacting innovators and imitators. Peter Allen and J. M. McGlade (1986) described two distinct search strategies among fishing vessels: “stochasts” who randomly seek out new areas, and “cartesians” who watch where stochasts go and then fish in the most promising areas. The fisheries model is a topical variation on the well-known exploitation-exploration problem (March 1991), with