REQUISITE VARIETY AND FIRM PERFORMANCE: AN EMPIRICAL EXPLORATION

Timothy J. Vogus Kathleen M. Sutcliffe University of Michigan Business School

Abstract The organizational demography, sensemaking, and high reliability literatures often assert that requisite variety enables organizations to notice more, develop a broader repertoire of responses, and be more adaptive over time. While this assertion remains intuitively appealing it has received little focused empirical attention. The empirical tests that have claimed to test requisite variety have focused on variety to the exclusion of requisite. We rectify this gap by testing the effects of requisite variety on risk detection (noticing), innovation (responding), and firm performance (adapting) on a sample of 174 IPO software firms.