Organizational change and individual experience: inertia and learning in formula one racing

Structural inertia theory argues that changes in the organizational core, by disrupting internal routines, reset the liability of newness clock. The negative consequences of change are greatest immediately following the change and then, as the organization adjusts to its new routines, these negative consequences gradually disappear. Organizational learning literature suggests that new routines can be learned from other organizations through, among other means, mobility of individuals across organizations. In this paper I examine how the hiring of individuals with experience with the content of change affects organizational performance. In addition to finding support for the basic structural inertia arguments for core technological change of both a key supplier and a key individual interfacing with this supplier, I include the effect of previous experience of this individual with the key supplier. I argue, and find support, that previous experience mitigates the immediate negative consequences of technological change. However, by reducing the amount of problemistic search, it also reduces the long term performance of the organization. I test my hypotheses in Formula One racing teams from 1992 to 1999 and their change of engine suppliers and drivers.