resource rigidity

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Resource rigidity is one dimension of organizational rigidity, one of the factors of organizational inertia to be overcome in order to change the trajectory of the organization, especially in the case of discontinuous environmental change that the organization must adapt to. Resource rigidity is underinvestment in discontinuous change. Reasons for this underinvestment include resource dependency and incumbent reinvestment incentives.

The theory of resource dependency shows that a firm's external resource providers shape and constrain its internal strategic choices. Resource providers can include capital markets and customer markets.

Incumbent reinvestment incentives relates to market power. If an incumbent investment increases the probability of market adoption of a disruptive technology in a way that alters the firm's otherwise dominant position, the firm has strategic incentives not to invest.

Whether constraints on investments in discontinuous technology by an incumbent firm stem from a desire to preserve market power or from blinders created by resource dependence, the represent powerful inertial forces blocking incumbent investment in discontinuous change.

Gilbert, 2005, pp 742.