Structural Inertia and Organizational Change Revisited II: Complexity, Opacity, and Change*

This paper extends a formal theory of structural aspects of organizational change initiated by Hannan, Polos, and Carroll (2002a, hereafter HPCa). This analysis focuses on the implications of limited foresight of the cascades of consequences of architectural changes. Foresight is generally limited by complexity (defined with respect to calculative capacity of actors) and opacity (defined with respect to the presence of enclaves). Complexity and opacity lead actors to underestimate the lengths of periods of reorganization and the associated costs of change, thereby prompting them to undertake changes with adverse consequences. The key theorem holds that the deleterious consequences of architectural change increase with an organization’s complexity and opacity.