The Effect of Core Change on Performance: Inertia and Regression toward the Mean

Abstract

This paper examines the consequences of changes in the organization's market position on its market share, testing arguments of inertia and regression toward the mean and taking into account recent methodological critiques of studies on the consequences of organizational change. A study of format change in the U.S. radio industry, 1984—1992, shows that changes cause performance to decline, as inertia theory predicts, but this is moderated by organizational size and performance before the change, so change can be beneficial for low-performing organizations but may be harmful for large and successful organizations.