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Opportunities associated with discontinuous change typically do not trigger organizational response until the opportunity is perceived as a threat. However, threat perception can then trigger a response that accentuates organizational rigidity. This cognitive paradox is explored using a multilevel, longitudinal case study of a newspaper organization's response to digital publishing. The results suggest that the competing frames of threat and opportunity can coexist within the firm when it creates organizationally differentiated subunits. Such a structure minimizes the need to integrate competing frames at the subunit level, enabling different behaviors to be enacted simultaneously across different units of the firm. This differentiated organizational form places an increased burden on senior teams that have to manage the inconsistencies across subunits. Insight into the structure of competing frames has broader implications for the structure of dynamic capabilities.
Key words: innovation; discontinuous change; resource allocation; cognition; fit
Introduction
Managers must overcome a number of significant challenges when they adapt firm competencies to rapid changes in the environment (Tushman and Anderson 1986, Henderson and Clark 1990, Levinthal 1992, Brown and Eisenhardt 1997). In an effort to understand this phenomenon, an increasing amount of attention has been directed toward building dynamic capabilities that "integrate, build, and reconfigure internal and external competencies to address rapidly changing environments" (Teece et al. 1997, p. 516). In the case of discontinuous technological change, the challenge is not simply to move from one configuration to another, but often to maintain multiple competencies simultaneously. In such settings, the emergence of a new external context (requiring a new competency configuration) may develop while some portion of the historical context continues to evidence tight fit with traditional firm competencies (Siggelkow 2001). Thus, effective response requires managers to maintain competencies that address multiple, even inconsistent, contexts at the same time (Christensen and Bower 1996, Tushman and O'Reilly 1996).
Maintaining multiple capabilities requires managers to embrace otherwise competing cognitive frames. In this paper, I explore the role played by two competing cognitive frames: threat and opportunity. Traditional models of change require performance gaps to trigger organizational response (Cyert and March 1963, Levitt and March 1988, Lant et al. 1992). Some performance gaps may be threat based, the result of poor performance on a profit or product quality measure. Others may...