Organizational change and development

Organizational Change and Development

The critical enterprise consists, ideally, of three aspects: (1) explanation and critique of current systems and the historical currents that have given rise to them, (2) an alternative vision of organizations and society that resolves the problems and oppressions in the current systems, and (3) an account of how one moves from the current system to the envisioned one, either naturally or through planned change. Critical research on organizations has generally been weakest in terms of this third aspect. No doubt this is due, in large part, to the Sisyphean tasks of explaining the subtle and often hidden means of control that pre- serve current systems and going beyond them to en- vision alternatives that are exceptionally difficult to distill and express in terms that make them plausible to most readers. Living in a world dominated by current ideologies and disciplinary practices, many people experience difficulty understanding that there are alternatives, much less accepting them as plausible and attainable. Having devoted extensive labor to developing these two aspects, critical scholars have tended to pay less attention to explaining how one transforms the organization or the process by which transformation takes place.

In some cases, there seems to be a presumption that raising subjects' awareness of control processes will be sufficient to effect change. In others, opening up the organization to increase participation is advocated. Models of open discursive processes such as those advanced by Habermas are used to provide models for a truly participative system (Deetz, 1992). But for the most part critical and post critical work has provided good portraits of what the end point of change should be, but much less insight on change or changing themselves. An exception to this is the work by Deetz (1992, 1995) on transformation of business organizations into ?responsive and responsible workplaces. Like many critical theorists Deetz provides a thorough diagnosis of the problems underlying what he terms ?the corporate colonization? Of contemporary Western society, along with an excellent historical ac- count of these problems and why they are resistant to traditional remedies such as unionization and participatory management. Deetz argues that the change process to overcome existing distortions and power structures occurs not through changing structures per se, but by changing how the organization decides what its structures should be and how work should be managed.

Deetz, drawing on both critical and post-critical sources, describes an open deliberative process based on a conception of ?strong democracy' that is both the ideal end state that change aims for and the means of changing the organization through empowered participation by all members of the organization. Deetz (1995) describes a negotiative organization in which all assumptions are open to challenge, one constantly renewing itself through critical analysis of existing relationships and re- organization so that the organization can meet the unique, locally situated set of goals set by its members and key stakeholders. Such goals are not limited to profit, efficiency, and survival and may include environmental, community building, and personal elements, whatever combination members and key stakeholders arrive at through an open deliberative process. Post critical scholarship has followed much the same trajectory as critical studies.

Post critical scholars have problematized the ideal visions of the critical scholars, often substituting multiple perspectives for the idealized vantage point of critical theory and at- tempting to establish stances in which no position is privileged over any other. Like critical research, these studies have been concerned mostly with analysis of existing organizational phenomena in order to surface silenced or marginalized voices and with articulating alternatives to the taken-for-granted, dominant views. Such analysis is perhaps even more difficult for post critical scholars than for the critical scholar, because they do not enjoy the benefit of the guiding light that the ideal situation gives the critical scholar. As a result, there has not been much attention to the process of change or of changing organizations. Post critical scholars have, however, engaged in much reflection on the grounds of social theory, and this holds insights for the study of change and innovation. One of these, the importance of nostalgia as a reaction to change, will be discussed in the next section. Another insight comes from reflections on the role of time and space in post critical analysis.

Case Study and Empirical Research

Given the many mechanisms identified as important to organizational learning, it is not surprising that many empirical studies have been developed to examine these mechanisms. In a case study of technological transformation at Hyundai Motor Company from 1967 to 1995, Kim (1998) illustrated organizational learning through imitative processes and through the deliberate construction of crises. In this study, Kim showed that Hyundai gained prior knowledge experience through partnerships with Ford and that Hyundai proactively created crises involving a gap between actual and aspired-to performance to intensify search efforts for alternatives while inhibiting the accumulation of structural inertia that might inhibit future change. Garud and Van de Ven (1992) studied the trial-and-error learning process of corporate venturing covering the 12-year venture of cochlear implants. They demonstrated that causal ambiguity, uncertainty, and availability of slack re- sources highly influenced trial-and-error learning as an adaptive process. Specifically, they demonstrated that in the presence of high levels of slack resources and causal ambiguity, unsuccessful corporate ventures tended to persist longer than ventures developed in situations of no slack or ambiguity.

Using a sample of firms in the furniture and computer software industry, Lant et al. (1992) tested the influence of past performance and management interpretation of past learning, including cause-and- effect relationships, on the likelihood of reorientation and strategic change. They found that the likelihood of organizational reorientation and change varied as a function of industry context, past performance, and management interpretation and characteristics. Simulating aspiration level adaptation at the group level, Lant (1992) found that groups reacted to performance feedback and adjusted their aspiration levels analogous to individual trial-and-error processes. A number of other studies have examined the relationship of prior experience and knowledge on performance, organizational learning, and change. For example, in a study of the broadcasting industry Greve (1998) demonstrated the positive effect of aspiration levels on performance evaluation and future organizational change. Greve also demonstrated that current knowledge and perceived probability of successful performance were sensitive to past aspiration levels and experience. Similarly, Cohen and Levinthal (1990) modeled the absorptive capacity of an organization to imitate and assimilate external knowledge as a function of prior knowledge experience and intensity of effort.

Finally, in studying the diversification history of 14 nonfinancial firms in the Netherlands over a 23-year time period, Pennings, Barkema, and Douma (1994) found cumulative and past learning to indicate future diversification moves. Firms were more likely to diversify into fields whose knowledge requirements were related to their past capabilities than into new fully unrelated areas -- a finding compatible with results of Chang (1996) on diversification in U.S. firms.

Symbolic and Affective Aspects of Change

In the past decade there has been an upsurge of interest in "noncognitive" aspects of organizations, such as emotions and symbolism (Ashkanasy, Hartel, and Zerbe, 2000; Staw, Sutton, and Pelled, 1994; Whetten and Godfrey, 1998). This interest has also shaped scholarship on organizational innovation or change (e.g., Fiol and O'Connor, 2002; Gioia and Thomas, 1996; Huy, 1999). Current theoretical thinking on organizational change and innovation is dominated by rational, instrumental viewpoints, which tend to neglect or downplay the non-rational side of human experience. This has not always been the case. Early work on organizational change and development by Lewin and the human relations school emphasized affective processes.

It now appears that these concerns are resurfacing in current thinking.

Change and innovation are passionate processes. Successful planned change requires a commitment grounded in an engaging vision and deep emotional involvement with the program. Visions have a cognitive component, but their appeal does not lie in reason. Rather it stems from their connection to participants' desires and identities, connections made through symbolic appeals that index fundamental values. When change occurs, it has an important emotional component because it involves giving up arrangements in which considerable energy and time has been invested. Fiol and O'Connor's (2002) study of community change offers an excellent illustration of the ways in which change affects and is affected by participant's identities and attendant emotional dynamics. They develop a model in which ?hot emotional interpretations and relatively colder cognitive interpretations interact to initiate, mobilize, and sustain radical change' (p. 532). Symbolic and emotional aspects of resistance to change are also in need of study. One example is the concept of nostalgia. Nostalgia, as discussed by post- modernists, is a common reaction to change.

It involves an imaginary projection of good characteristics onto the past to recreate a past much better than the present situation. This past is constructed by inversion: undesirable characteristics of the present are mirrored with desirable characteristics of the past, which is then regarded as something to recapture and recreate in the present. Disregarding that ?the good old days' were never as good as they are recalled, nostalgia can be a powerful emotional stimulus for resistance and reaction to change and innovation. Exploring the complex web of meaning and interpretation attached to concepts like nostalgia would illuminate aspects of resistance in ways that current rationality-based theories do not. Greater attention to affect, identity, symbolism, aesthetics, and related subjects would provide a useful balance to change and innovation research. It is important to acknowledge the many sides of human beings and consider how they may figure in starting, sustaining, and resisting change.

We shall now propose a process model for understanding institutional change at the organizational field level of analysis. This process model consists of five overlapping stages of institutional change: (1) pressures for change; (2) the sources of new practices from institutional entrepreneurs; (3) the processes of deinstitutionalization and reinstitutionalization; (4) the dynamics of deinstitutionalization and re- institutionalization; and (5) reinstitutionalization and stability. We see this process model as useful for integrating much of the literature on institutional change. While this literature has been criticized for its static focus on convergence toward similar and stable states, it has always included an interest in change, and we use the process model to indicate the specific contributions of existing studies.

At the heart of institutional theory is the notion of institutions as ?socially constructed, routine- reproduced programs or rules systems' (Jepperson, 1991, p. 149). Ways of organizing and acting become taken-for-granted because of their embeddedness and legitimacy. Institutional change, therefore, is the movement from one institutionally prescribed and legitimated pattern of practices to another. As such it involves processes of de- and reinstitutionalization. According to Scott (2001), organizational fields are instrumental in disseminating and reproducing these socially constructed expectations and practices. Organizational fields are ?sets of organizations that, in the aggregate, constitute an area of institutional life' (DiMaggio and Powell, 1983, p. 148) and those patterns of interaction are defined by shared systems of meaning (Scott, 1994). According to Seo and Creed (2002, p. 222), ?during the past two decades, institutional theorists have been able to offer more insights into the processes that explain institutional stability than those that explain institutional change.'

That is, institutional theory has had a primary emphasis on showing how and why organizations adopt institutionalized practices and systems -- the question of why organizations come to be more and more like each other- so there has been an emphasis on the dynamics of convergence and institutionalization. The presumed endpoint of much of this theoretical work has been the steady state, a mature organizational field that has stronger forces holding it together than forces that tend to disruption and change. As Holm (1995, p. 398), put it, ?The processes by which institutions are formed and reformed, which tend to be interest- driven and highly political, have been ignored. The result is an institutional theory that cannot explain how institutions are created and how they change.' However, this focus is changing (Barley and Tolbert, 1997; Dacin, Goodstein, and Scott, 2002; Lawrence, Winn and Jennings, 2001; Oliver, 1992; Tolbert and Zucker, 1996), and recent theorizing has begun to point out the potential for addressing radical as well as convergent change. Indeed, Dacin et al. (2002, p. 45) suggest that ?the topic of institutional change has emerged as a central focus for organizational researchers.' We believe that there is a need for a process model that explains how and why institutions change. Little attention has been given to understanding how the effects of isomorphism are brought about (rather than to the outcome itself), so that little is known of how and why institutionalized practices within a field atrophy or change.

Tolbert and Zucker (1996, p. 175), ), in their excellent review of institutional theory, point out that, ?despite the sizeable body of work defined as part of this tradition, there has been surprisingly little attention given to conceptualizing and specifying the processes of institutionalization.' Similarly, Seo and Creed (2002) argue the processes that provide an essential understanding of institutional change ?have not been adequately delineated in several recent efforts to explain institutional change? (p. 223).