Overcoming the inertia of organizational competence: Olivetti’s transition from mechanical to electronic technology

This historical case study of Olivetti, the Italian office products firm, argues that technological competence becomes socially embedded in a firm over time as it is legitimized, backed by powerful agents, and supported by resource allocation. Paradoxically, these three building blocks of a competence—legitimacy, power, and resources—both promote inertia and enable change. Inertia can be overcome when firms employ three levers of transition: organizationally separating an emerging technology to protect it, co-opting legitimacy by using the new technology to serve the incumbent technology, and diverting resources for the emerging technology’s development. Over time, the emerging technology achieves enough legitimacy, power, and resources in the firm to overtake, and ultimately displace, the incumbent competence. We develop an integrative model of technology transition that contributes to literature on resources, dynamic capabilities, competence-destroying change, and ambidexterity.