How history matters in organisations: The case of path dependence

Abstract

The quest to consider the historical side of managerial and organisational action has become increasingly accepted. An open question still is how this can be achieved systematically. In this paper we refer to the theory of organisational path dependence as an interesting candidate to fill this gap. The problem with the notion of path dependence is, however, that while being much quoted, its actual meaning and logic have remained vague and ambiguous. In order to provide a clear template for the consideration of historical relations and how they impact on present and future developments, we present a comprehensive theoretical framework clarifying how organisations become path-dependent. The process of an organisation – or some of its subsystems – becoming path-dependent is conceptualised along three distinct stages: preformation, formation and lock-in phase. A case from the German publishing industry is used to demonstrate the potential explanatory power of this processual framework. The case study focuses on a book club that has, after years of huge success, persistently suffered a decline and losses for more than 10 years. Reasons are given for why and how this book club has become path-dependent and, finally, locked-in.

Key words:

• business history
• case study
• complementarity
• media industry
• organisation theory
• path dependence
• process theory