This paper aims to examine how the efficacy of organizational routines varies and the mechanism through which organizational routines improve firm performance.
A theoretical model is proposed and tested using data from 53 interviews with financial services experts and 291 survey responses from financial advisors.
Operational and adaptive routines work through absorptive capacity to positively contribute to firm performance. The positive effects of adaptive routines are magnified under market governance.
The examination of organizational routines is focused on routines at the firm level. Therefore, higher corporate-level routines were not measured. Response rate for the survey is a possible concern, so future research will benefit from increasing the response rate from the focal population.
This study benefits firms facing the dual role of customization and discipline in working with clients toward service delivery. The findings suggest that firms should develop both operational and adaptive routines, particularly when operating under market governance.
This study identified two categories of routines (operational and adaptive) and the circumstances in which the causal link between routines and performance varies. This study examined the potential moderating influence of a governance mode (market vs hierarchy). Absorptive capacity was identified as a mediator between the use of routines and firm performance.
