This paper integrates content-based predictions of transaction cost economics with process-based predictions of organizational change to understand adaptation to deregulation in the for-hire trucking industry. We predict and find that firms whose governance of a core transaction is poor (according to transaction cost reasoning) will realize lower profits than their better-aligned counterparts and that these firms will attempt to adapt so as to better align their transactions. Results show that several organizational features affect the rate of adaptation: (1) firms with large investments in specialized assets adapt less readily than firms that rely on generic assets, (2) firms with unions adapt less readily than firms without unions, (3) firms that must replace employee drivers with owner-operators adapt less readily than firms that must replace owner-operators with employee drivers, and (4) entrants adapt more quickly than incumbent carriers. There is evidence of institutional isomorphism in that although carriers move systematically to reduce misalignment, they do so less assiduously when this will make their governance of drivers look less like that of nearby, similar carriers. Finally, our results indicate that firms that ultimately exited adapted more quickly than firms that survived.

In this paper, we challenge the traditional understanding of organizational routines as creating inertia in organizations. We adapt Latour's distinction between ostensive and performative to build a theory that explains why routines are a source of change as well as stability. The ostensive aspect of a routine embodies what we typically think of as the structure. The performative aspect embodies the specific actions, by specific people, at specific times and places, that bring the routine to life. We argue that the ostensive aspect enables people to guide, account for, and refer to specific performances of a routine, and the performative aspect creates, maintains, and modifies the ostensive aspect of the routine. We argue that the relationship between ostensive and performative aspects of routines creates an on-going opportunity for variation, selection, and retention of new practices and patterns of action within routines and allows routines to generate a wide range of outcomes, from apparent stability to considerable change. This revised ontology of organizational routines provides a better explanation of empirical findings than existing theories of routines and has implications for a wide range of organizational theories.