Strategic Renewal of Activity Systems : An Interdependency Perspective

A growing literature stream conceptualizes organizations, their strategy, and business models as complex systems of interdependent activity choices. Accordingly, firms have to make decisions about which activities to engage in and to what extent. Choices made are interdependent with one another and thereby influence whether the system as a whole is internally consistent and fits its environment. The interdependencies among activity choices are found to be central to understanding sources of competitive advantage and the system's ability to undergo continuous strategic renewal. Despite the prominent role of interdependency in activity systems, little is known about the sources of interdependency in activity systems. Moreover, the literature does not agree on the role of interdependency on strategic renewal. While some studies suggest that interdependencies among activities lead to inertia, other studies suggest that they create variety and conflict, which can lead to strategic renewal.
In three essays, I revisit the extant literature on activity systems and strategic renewal with a particular focus on interdependency to address these gaps. In the first essay, I explore the constituting elements of an activity system and identify the influence they have on the overall interdependency design. In the second essay, a theoretical framework that distinguishes between interdependency structure and rules is proposed to reconcile paradox findings of the relationship between interdependency and strategic renewal. In the third essay, I analyze different types of interdependency modularity and concentration in activity systems on the likelihood of activity domain recombination. Hypotheses are tested and supported in a longitudinal sample of the European banking industry between the years 2000 and 2011. Overall, the central claim of this thesis is that interdependencies can enable and inhibit strategic renewal and that this is dependent upon the distribution of interdependencies and the set of rules they follow.

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