The Boiled Frog in Organizational Learning: Sensing, Adapting to, and Surviving Environmental Change

Radical change in a firm’s environment is often viewed as discontinuous. We introduce the concept of continuous radical change by which old beliefs are rendered fallacious at an incremental pace. We theorize that incremental change can be as harmful as discontinuous change because it can remain undetected for too long by incumbent organizations. Specifically, we argue for a curvilinear relationship between the pace of environmental change and the organizational lifespan. We test out predictions using data from some 31,000 restaurants in the New York City Metropolitan area between the years 2007-2018. We use a fixed effects regression model to test for differences in the lifespan of restaurants located in areas of slow but radical gentrification versus those located in areas with accelerated and radical gentrification. We find support for an inverted U-shape between the pace of gentrification and restaurant lifespan. We explore whether this relationship is driven by differences in restaurants’ adaptation behavior."