COPING WITH DECLINE IN DYNAMIC MARKETS: CORPORATE ENTREPRENEURSHIP AND THE RECOMBINATIVE ORGANIZATIONAL FORM

Managers of corporations that are facing fading product-market domains are often inertial in their response to such decline or engage in endgame strategies within these markets. For managers operating in dynamic markets, however, such responses are often ineffective. Rather, such markets often demand a corporate entrepreneurship response whereby managers move their businesses into new market opportunities as the value of current market domains inevitably begins to fade. The emphasis is on exiting from declining markets while simultaneously capturing and exploiting opportunities in more promising markets. In this chapter, we describe the recombinative organizational form (i.e. structure and process) by which this can occur. We focus on the modular organizational structure (i.e. modularity, relatedness, and loose-coupling) and corporate dynamic capabilities (i.e. probing, patching, and recoupling processes) by which managers can cope with the inevitable decline that is the nature of dynamic industries. An example from recent empirical research provides an illustration of such corporate entrepreneurship.