Deviation from Fit: An Advantage When Environments Change

Firms often deviate deliberately from strategies that fit their environments. Mobility barriers, resources, and multiple conflicting contingencies constrain firms in the strategies they can follow. Also, when environmental change is imminent, firms often choose to deviate from currently fitting strategies. This paper examines the consequences of deviating from fit when environments change. The regulatory environment of the US Savings and Loan Association (SLA) industry changed dramatically in the early 1980s. The paper finds that SLAs that deviated from fit during this period, benefited as a consequence.