Representing change: a system model of organizational inertia and capabilities as dynamic accumulation processes

Using system dynamics models and methods, in this paper we suggest a feedback representation of the ecological theory of organizational inertia and change. The paper pursues two main objectives related to the representation and specification of organizational theories. The first is to identify and specify dynamic elements that are left implicit in the original theoretical narrative. The second objective is to explore conceptual connections between core features of ecological and evolutionary theories of organizations that are typically believed to lead to incommensurable empirical models. We perform a series of simple simulation experiments to explore the behavioral consequences of our representations and identify issues that future research on dynamics of organizations may help to clarify. The main insight offered by our model-based exploration is that organizational inertia––defined as the tendency of formal organizations to resist change––and organizational capabilities––defined as the ability of organizations to innovate and reconfigure their internal resources––should be represented as paired concepts, each understandable only in terms of the other.