Evolving efficacy of managerial capital, contesting managerial practices, and the process of strategic renewal

• Author: Biswatosh Saha,Sankalp Pratap
• DOI: http://doi.org/10.1002/smj.2749
• Published date: 01 March 2018
• Date: 01 March 2018

SPECIAL ISSUE ARTICLE

Evolving efficacy of managerial capital, contesting

managerial practices, and the process of strategic

renewal

Sankalp Pratap

1

| Biswatosh Saha

2

1

Strategy, Indian Institute of Management

Tiruchirappalli, Tiruchirappalli, India

2

Strategic Management, Indian Institute of

Management Calcutta, Kolkata, India

Correspondence

Sankalp Pratap, Strategy, Indian Institute of

Management Tiruchirappalli, Pudukkottai Main

Road, Chinna Sooriyur Village, Tiruchirappalli

620 024, India.

Email: pratap.sankalp@gmail.com

Research Summary: This article examines the adaptation

process of a large manufacturer in the Indian steel indus-

try faced with radical sociopolitical shifts in the external

ecosystem. It uses the Bower-Burgelman process model

in combination with Bourdieu’s praxis theory to explain

the emergence of competing managerial initiatives and

associated contests in the company’s internal ecology of

strategy-making in terms of socially acquired disposi-

tions. It illuminates process–practice pathways through

which top management’s resource allocation supported

changes in the efficacy of the different forms of capital of

the contesting managerial classes, thereby legitimizing

the daily “doings”of the rising class and institutionalizing

a (re)defined adaptive rule structure.

Managerial Summary: How do managers’early influ-

ences, including family upbringing and schooling, bear

upon organization’s renewal strategy? Our study finds

that during discontinuities imposed by socioeconomic

upheavals, when organizational performance flounders,

managerial initiatives are driven by deepest dispositions

derived from early age socialization. Competing manage-

rial fractions jostle to impose practices favorable to their

longstanding preferences by putting their weight behind

preferred product-market choices and seeking appropriate

changes in the ineffective internal rule structure. Admin-

istration’s challenge lies in leveraging internal contests to

iteratively allocate resources in search of winning disposi-

tions and configurations aligned with evolving social rela-

tions in the external environment. Internal availability of

managerial groups from diverse social origins is crucial

for the administration to reclaim organizational advantage

by arbitrating between contesting practices and practi-

tioner fortunes.

Received: 7 September 2015 Revised: 15 July 2017 Accepted: 20 July 2017 Published on: 23 January 2018

DOI: 10.1002/smj.2749

Strat Mgmt J. 2018;39:759–793. wileyonlinelibrary.com/journal/smj Copyright © 2017 John Wiley & Sons, Ltd. 759

KEYWORDS

Bourdieu’s practice theory, Bower-Burgelman process

framework, habitus, organizational renewal, resource

allocation

1|INTRODUCTION

Organizational adaptation and renewal are research areas that have drawn sustained interest from

strategy scholars (Agarwal & Helfat, 2009; Ben-Menahem et al., 2013). The Bower-Burgelman

(B-B) model, a longstanding research framework in this area, provides an evolutionary process

perspective proposing an internal ecology of the organization as the key to its successful adaptation

to techno-economic dynamism in the external ecosystem (Burgelman, 1983, 1991, 2002). It shows

that organizations retain fitness across environmental changes through a selection process on autono-

mous competing new initiatives that are allocated resources outside the tightly defined (and slowly

changing) organizational rule structure by the administration, which concurrently ensures strict

adherence to the rules for ongoing routine activities. Over time, the adaptation process triggers a ret-

rospective legitimization of the few new initiatives that succeed and the administration incorporates

them into corporate strategy, modifying the product-market scope of the organization, that is, the

“what”of strategy.

Sudden and wholesale transitions involving radical sociopolitical shifts in the external ecosys-

tem, however, pose problems for this extant conceptualization of the change process as the entire

rule structure of the organization gets delegitimized rather abruptly, raising questions around how

the administration of some organizations might still manage to effect renewal in periods when the

guiding certainty of a rule structure is unavailable. Concomitantly, the sudden collapse of a long-

standing rule structure ties the renewal process to a search for a new rule structure that would guide

the organization, that is, the issue of “how things are done here,”in addition to changes in the

“what”of strategy that the literature has so far focused on. Specifically then, sudden and wholesale

transitions point toward the need to supplement the B-B model to understand renewal in such cases.

In this article, we address this question through an ethnographic investigation into the renewal pro-

cess at Global Steel Company

1

(GSC), a large Indian steel manufacturer, following dramatic macro-

level change precipitated by India’s liberalization program.

The liberalization program effected steep shifts in competitive intensity (Krishna & Mitra,

1998), reducing tariff and nontariff barriers (Topalova & Khandelwal, 2011), making technology

imports cheaper/easier (Kathuria, 2008), and diluting restrictions on raw material imports

(Anderson & Lanen, 1999). It significantly impacted composition of FDI inflows (Kumar, 1998),

the level of internationalization (D’Costa, 2000), and the focus on export markets (Dholakia &

Kapur, 2001). Literature has documented that the challenge of renewal amid such change involves

the modulation of the “what”or scope of organizational strategy in line with the evolving

1

GSC (a pseudonym) is an integrated steel manufacturer established before India gained independence from the British. Operating its

own iron ore and coal mines, it manufactures various grades of steel, serving key sectors like automotive, construction, infrastructure,

engineering, and so on. We study an initiative that originated in the steel rebar department after the liberalization of the Indian

economy.

760 PRATAP AND SAHA

technological and economic conditions (Madsen & Leiblein, 2015; Tripsas, 2008). Additionally

though, liberalization recalibrated societal relations and power equations as well through abolition of

state control on industrial development, shifts in political consciousness (Kohli, 1989), and the shift-

ing viewpoint of policy elite, accounting for a changing social matrix (Pedersen, 2000). It

announced a new consumer culture (Parameswaran, 2004) and the emergence of a new “class”of

consciously cosmopolitan professionals, a new politics of identity, production, and (culture) con-

sumption (Toor, 2000). It thus presented a context of sudden wholesale change, where the old “rules

of the game”(North, 1990) have been dismantled, with new rules yet to emerge. Organizations are

then left with internal capabilities that are not valuable anymore and cause–effect relationships that

seem increasingly ambiguous, all manifested in a preponderance of ineffectual organizational change

(Newman, 2000). Indeed, while changes in technological (Usselman, 1993), regulatory (Smits &

Groeneveld, 2001), and competitive arenas (Segelod et al., 2011) have been studied as triggers of

adaptation, there is a dearth of studies concerning organizational response to sudden wholesale

changes in the macro-institutional context involving radical sociopolitical shifts.

In a seeming response to the sudden institutional transition and accompanying loss in fitness,

data from GSC showed that renewal involved not only targeting a hitherto unaddressed market, the

rural retail consumers with a branded product, but it also entailed dramatic shifts in distribution

practices. The practice of selling steel in bulk deals to large independent city based traders, who in

turn accessed buyers across the country through brokers, was replaced by the practice of selling fre-

quently and in small lots to “formally appointed exclusive”district town–level intermediaries, who

accessed small retailers in delimited territories bound by contractually imposed vertical restraints

(Figure 1). Simultaneously there was a stark reorientation of power equations between practitioners.

A previously insignificant managerial class, characterized by modest parental background and strong

technical education, superseded another hailing from the liberal arts educated societal elite that had

been in control of steel allocation before liberalization (Figure 2). Again, a class of sidelined distri-

bution intermediary located in district towns with small town sensibilities wrested access to steel,

upstaging the erstwhile affluent and dominant trader class bred in the city culture (Figure 1). The

challenge of renewal amid such wholesale change transcended modulating the “what,”that is, the

scope of organizational strategy, to also establishing a new rule structure, that is, (re)defining “how

FIGURE 1 Shift in material flow pattern through intermediaries at GSC

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