Decay, shock, and renewal: Operational routines and process entropy in the pharmaceutical industry

Gopesh Anand, John Gray, Enno Siemsen

Research output: Contribution to journalArticlepeer-review

50 Scopus citations

Abstract

In this study, we examine decay in adherence to operational routines over time. Our empirical setting is the worldwide pharmaceutical industry, and we focus on operational routines used to maintain product quality. Based on an analysis of longitudinal data from U.S. Food and Drug Administration (FDA) inspections, we find that the tendency of operational routines to decay is widespread. Our results also illustrate that FDA inspections act as external renewals that halt decay in adherence to routines. In addition, manufacturing plants are found to vary significantly in their level of decay. Using data on mergers and acquisitions affecting these plants, we find that mergers appear to cause decay in adherence to routines. However, acquisitions appear to serve as renewals and halt such decay. Based on our overall findings, we present theoretical implications for research in organizational routines and practical insights for companies and regulatory authorities.

Original languageEnglish (US)
Pages (from-to)1700-1716
Number of pages17
JournalOrganization Science
Volume23
Issue number6
DOIs
StatePublished - Dec 1 2012

Keywords

  • Acquisitions
  • Mergers
  • Operational routines
  • Process entropy
  • Quality control

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