The organizational tension between static and dynamic efficiency
Article first published online: 16 FEB 2007
Copyright © 1993 John Wiley & Sons, Ltd.
Strategic Management Journal
Special Issue: Special Issue
Volume 14, Issue S2, pages 59–73, Winter 1993
How to Cite
Ghemawat, P. and Ricart Costa, J. E. I. (1993), The organizational tension between static and dynamic efficiency. Strat. Mgmt. J., 14: 59–73. doi: 10.1002/smj.4250141007
- Issue published online: 16 FEB 2007
- Article first published online: 16 FEB 2007
- Division of Research
Efficiency has been defined in at least two different ways: in terms of the refinement of existing products, processes or capabilities (static efficiency) or the development of new ones (dynamic efficiency). This paper analyzes the organizational trade-off between these two forms of efficiency. It shows that there is a tendency towards extremes, and that the irreversibility of efficiency orientations tends to tip the balance to be struck between static and dynamic efficiency toward the latter. The paper also advances hypotheses about the industry, business and corporate factors that mediate between the choice of a particular efficiency orientation and organizational performance.