Dimensions

The dimensions of strategic renewal are the antecedents, the processes, and the outcomes (Schmitt et al., 2018). These three dimensions describe the fac- tors influencing strategic renewal. The antecedents are the fundamental sources of strategic renewal, the processes describe who initialises strategic renewal, and the outcomes describe the purpose of strategic renewal (Schmitt et al., 2018). As the literature is not uniform in the definition of stra- tegic renewal, all the three dimensions have also been described using differ- ent and partly contradictory theoretical perspectives (Schmitt et al., 2018).

Because of this unaligned research, each of the three dimensions can be de- fined using two separate theoretical perspectives. To help clarify the theoret- ical contradictions, this chapter describes the three strategic renewal dimen- sions using their distinctive theoretical perspectives. Figure 3 shows the per- spectives behind the three dimensions.

The antecedents dimension refers to the organisational sources of strategic renewal. This dimension has been mostly studied using either a learning per- spective or a resource perspective (Schmitt et al., 2018). The learning per- spective, based on organisational learning theory, sees the source of strategic renewal as exploration of new avenues while simultaneously exploiting the organisation’s existing knowledge (Crossan & Berdrow, 2003; March, 1991).

The challenge of the learning perspective is how to balance the tension be- tween the explorative and exploitative learning activities that are contradic- tory and resource-competitive but also beneficial to each other (Crossan et al., 1999; March, 1991).

The resource perspective is based on the resource-based view to organisa- tions and on the dynamic capabilities literature (Barney, 1991; Teece et al., 1997). According to this perspective, strategic renewal results from leverag- ing existing organisational competences and developing suitable new ones (Danneels, 2002). This ability to mindfully create, integrate, and reconfigure organisational capabilities is defined as a dynamic capability (Teece et al., 1997). By building dynamic capabilities, organisations are more capable in

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undertaking future strategic renewal actions (Agarwal & Helfat, 2009). The challenge of the resource perspective is similar to the challenge of the learn- ing perspective: Managing the tension between supporting existing capabili- ties and reconfiguring resources to build novel capabilities (Agarwal &

Helfat, 2009). Although the resource and learning perspectives have been studied mostly separately, they clearly share a similar idea on the source of strategic renewal. Both perspectives believe that competitive advantage comes from exploitation of existing knowledge or capabilities and explora- tion of new ones (Danneels, 2002).

The processes dimension refers to who in the organisation initiates and leads strategic renewal (Volberda et al., 2001). Here major contradictions exist be- tween the induced and the autonomous perspectives (Schmitt et al., 2018).

The induced perspective, based on the upper echelons theory, sees strategic actions resulting from the choices of the top management team (Hambrick, 2007). According to this perspective, the top management team composition and processes, as well as the top executives’ values, personalities, and inter- pretations play a major role in the execution of strategic renewal (Hambrick, 2007; Schmitt et al., 2018). However, the challenge of the induced perspec- tive is that an excessive reliance on top-down-led renewal efforts may create barriers for bottom-up initiatives, for example, through institutionalisation of acceptable and unacceptable processes and behaviours (Schmitt et al., 2018; Verbeke et al., 2007).

The autonomous perspective, based on the strategy process theories, sees strategic renewal as autonomous behaviour initiated by entrepreneurial in- dividuals at the operational levels of an organisation (Burgelman, 1983;

Schmitt et al., 2018). According to this perspective, the entrepreneurial indi- viduals should be majorly supported by the organisation: Middle-managers need to assist with conceptualising the entrepreneurial initiatives while the top management must be willing to allow these initiatives to alter the organ- isational strategy (Burgelman, 1983). However, the challenge of the autono- mous perspective is that uncoordinated bottom-up efforts can fail to gain the organisational traction needed for strategic renewal (Floyd & Lane, 2000).

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The outcomes dimension focuses on the results and purpose of strategic re- newal (Schmitt et al., 2018). Two possible purposes for strategic renewal are extensively discussed in the literature: co-alignment and co-creation (Schmitt et al., 2018). The co-alignment perspective, based on population ecology and institutional theory, sees the purpose of strategic renewal as re- creation of a satisfactory fit between the renewing organisation and its chang- ing environment (Huff et al., 1992; Schmitt et al., 2018). According to this perspective, organisations are inert and only initiate strategic renewal when organisational stress and outputs become unsatisfactory due to changing and realignment-demanding environmental conditions (Huff et al., 1992). In contradiction, the co-creation perspective, based on complexity theory, sees organisations constantly engaging in strategic renewal to remain agile in their competitive environment (Agarwal & Helfat, 2009). This perspective believes that strategically renewing organisations try to proactively create new market opportunities and influence the direction and evolution of their focal industry, instead of only reacting to the industry’s changes (Eggers &

Kaplan, 2009; Kim & Pennings, 2009; Martens et al., 2012; Peltola, 2012).

The next chapter continues the topic of strategic renewal by focusing on stra- tegic renewal in practice. The goal of that chapter is to provide a detailed un- derstanding of the practical enablers of a successful strategic renewal. To ac- complish this coherent understanding, the chapter provides an overview of the current literature on how to carry out a successful strategic renewal.

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