When truces collapse: A longitudinal study of price-adjustment routines

Mark J. Zbaracki, Mark Bergen

Research output: Contribution to journalArticlepeer-review

110 Scopus citations

Abstract

We analyze the microfoundations of the routine in a study of price-adjustment processes at a manufacturing firm. Existing theory says that truces balance cognitive and motivational differences across functions, but there is scant evidence on how truces work. We show both stability and change in routines. For minor price adjustments, routines incorporate truces in stable but separate market interpretations by the sales and marketing groups. Major price changes put truces at risk, as latent conflict over information and interests becomes overt. The ensuing battle shows how interests, information, and truces are intertwined in performing the routine. Routines are not just stable entities, but adaptive performances that include conflict. We illustrate how our approach addresses fundamental problems such as how firms perform economics, how routines incorporate economic theory, and how routines shape macroeconomic dynamics. We argue that our approach can be extended to any routine-based organizational work.

Original languageEnglish (US)
Pages (from-to)955-972
Number of pages18
JournalOrganization Science
Volume21
Issue number5
DOIs
StatePublished - Sep 1 2010

Keywords

  • Economic theory
  • Evolutionary theory
  • Organizational routines
  • Price adjustment
  • Truces

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