Efficiency has been defined in at least 2 different ways: in terms of the refinement of existing products, processes or capabilities (static efficiency) or the development of new ones (dynamic efficiency). A study analyzes the tradeoff between these 2 forms of efficiency. It is shown that there is a tendency toward extremes and that the irreversibility of efficiency orientations tends to tip the balance to be struck between static and dynamic efficiency toward the latter. The analysis also advances hypotheses about the industry, business, and corporate factors that mediate between the choice of a particular efficiency orientation and organizational performance.

Keywords:

• Strategic planning
• Organization theory
• Models
• Learning
• Flexibility
• Efficiency