Strategic Commitment Architecture Under Persistent Market Volatility
DOI:
https://doi.org/10.66203/manexia.01107Keywords:
commitment architecture, escalation thresholds, persistent market volatility, reversibility capacity, strategic commitmentAbstract
Persistent market volatility has transformed competitive environments from episodic disruption to structural ambiguity, intensifying the risks associated with irreversible strategic commitments. While existing research emphasizes dynamic capabilities, governance oversight, and organizational learning as mechanisms for navigating turbulence, comparatively limited attention has been devoted to how commitments themselves are architected ex ante. This article develops a theory of strategic commitment architecture to explain how firms structure commitment intensity, escalation thresholds, reversibility capacity, and embedded optionality under persistent volatility. We argue that volatility does not directly generate instability; rather, its destabilizing effects are moderated by the architectural configuration of commitments. Highly concentrated intensity, ambiguous continuation thresholds, low reversibility, and absent optionality amplify escalation traps and reactive oscillation. Conversely, calibrated intensity, explicit thresholds, preserved reversibility, and embedded optionality attenuate volatility transmission and enable disciplined recalibration. By integrating insights from strategic commitment theory, escalation research, and uncertainty management, the framework introduces commitment architecture as a structural moderator of stability under sustained turbulence. The study advances strategy scholarship by reframing commitment as systemic configuration rather than discrete strategic act and outlines avenues for empirical examination across industries.
References
Aguilera, R. V., Judge, W. Q., & Terjesen, S. A. (2018). Corporate governance deviance. Academy of Management Annals, 12(2), 920–952. https://doi.org/10.5465/annals.2016.0036
Argyris, C., & Schön, D. A. (1978). Organizational learning: A theory of action perspective. Addison-Wesley.
Arthur, W. B. (1989). Competing technologies, increasing returns, and lock-in by historical events. Economic Journal, 99(394), 116–131.
Baker, S. R., Bloom, N., & Davis, S. J. (2016). Measuring economic policy uncertainty. Quarterly Journal of Economics, 131(4), 1593–1636. https://doi.org/10.1093/qje/qjw024
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Bhamra, R., Dani, S., & Burnard, K. (2023). Resilience: The concept, a systematic review and future directions. International Journal of Management Reviews, 25(2), 130–156. https://doi.org/10.1111/ijmr.12290
Bromiley, P., Rau, D., & Zhang, X. (2017). The risk sources scale: An approach to assessing risk in firms and portfolios. Strategic Management Journal, 38(7), 1379–1402. https://doi.org/10.1002/smj.2551
Christensen, H. K. (1981). Corporate economic performance: Diversification strategy, structure, and economic performance. Strategic Management Journal, 2(4), 291–301. https://doi.org/10.1002/smj.4250020402
Crossan, M. M., Lane, H. W., & White, R. E. (1999). An organizational learning framework: From intuition to institution. Academy of Management Review, 24(3), 522–537. https://doi.org/10.5465/amr.1999.2202135
Dess, G. G., & Beard, D. W. (1984). Dimensions of organizational task environments. Administrative Science Quarterly, 29(1), 52–73.
Duchek, S. (2020). Organizational resilience: A capability-based conceptualization. Business Research, 13(1), 215–246. https://doi.org/10.1007/s40685-019-0085-7
Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: What are they? Strategic Management Journal, 21(10–11), 1105–1121. https://doi.org/10.1002/1097-0266(200010/11)21:10/11<1105::AID-SMJ133>3.0.CO;2-Z
Elton, E. J., & Gruber, M. J. (1995). Modern portfolio theory and investment analysis (5th ed.). John Wiley & Sons.
Filatotchev, I., & Wright, M. (2017). Methodological issues in governance research. Corporate Governance: An International Review, 25(6), 454–460.
Gavetti, G. (2012). Toward a behavioral theory of strategy. Organization Science, 23(1), 267–285. https://doi.org/10.1287/orsc.1110.0683
Gennaioli, N., Shleifer, A., & Vishny, R. (2018). A model of narrative-driven economic fluctuations. Journal of Finance, 73(3), 1099–1140. https://doi.org/10.1111/jofi.12682
Ghemawat, P. (1991). Commitment: The dynamic of strategy. Free Press.
Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28(3), 383–396.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2020). Strategic management: Competitiveness and globalization (13th ed.). Cengage Learning.
Hoskisson, R. E., Hitt, M. A., & Ireland, R. D. (2017). Strategic management: Concepts and cases. Cengage Learning.
Kaplan, S., & Orlikowski, W. J. (2013). Temporal work in strategy making. Organization Science, 24(4), 965–995. https://doi.org/10.1287/orsc.1120.0792
Markowitz, H. M. (1952). Portfolio selection. Journal of Finance, 7(1), 77–91. https://doi.org/10.1111/j.1540-6261.1952.tb01525.x
McGrath, R. G. (1997). A real options logic for initiating technology positioning investments. Academy of Management Review, 22(4), 974–996.
Palich, L. E., Cardinal, L. B., & Miller, C. C. (2000). Curvilinearity in the diversification–performance linkage. Strategic Management Journal, 21(2), 155–174.
Powell, T. C., Lovallo, D., & Fox, C. R. (2011). Behavioral strategy. Strategic Management Journal, 32(13), 1369–1386.
Rumelt, R. P. (1974). Strategy, structure, and economic performance. Harvard University Press.
Shapiro, C., & Varian, H. R. (1999). Information rules: A strategic guide to the network economy. Harvard Business School Press.
Shiller, R. J. (2017). Narrative economics. American Economic Review, 107(4), 967–1004. https://doi.org/10.1257/aer.107.4.967
Stein, J. C. (1997). Internal capital markets and the competition for corporate resources. Journal of Finance, 52(1), 111–133.
Staw, B. M. (1981). The escalation of commitment to a course of action. Academy of Management Review, 6(4), 577–587.
Staw, B. M., Sandelands, L. E., & Dutton, J. E. (1981). Threat rigidity effects in organizational behavior. Administrative Science Quarterly, 26(4), 501–524.
Sydow, J., Schreyögg, G., & Koch, J. (2009). Organizational path dependence. Academy of Management Review, 34(4), 689–709.
Teece, D. J. (2007). Explicating dynamic capabilities. Strategic Management Journal, 28(13), 1319–1350. https://doi.org/10.1002/smj.640
Teece, D. J., Peteraf, M. A., & Leih, S. (2016). Dynamic capabilities and organizational agility. California Management Review, 58(4), 4–22.
Tong, T. W., & Reuer, J. J. (2007). Real options in strategic management. Strategic Management Journal, 28(4), 331–350.
Tripsas, M. (2009). Technology, identity, and inertia. Organization Science, 20(2), 441–460.
Williamson, O. E. (1985). The economic institutions of capitalism. Free Press.
Wenzel, M., Stanske, S., & Lieberman, M. B. (2021). Strategic responses to crisis. Academy of Management Annals, 15(2), 579–612. https://doi.org/10.5465/annals.2019.0074
Zona, F., & Zattoni, A. (2007). Beyond the black box of demography. Corporate Governance: An International Review, 15(5), 852–864.
