The Rise, Fall and Regeneration of Interest in the Field ... · The Rise, Fall and Regeneration of Interest in the ... Organizations: Theory, Design, Future, Chapter 5 in APA ...

Andrew M. Pettigrew, OBE, FBA

Professor of Strategy and Organisation

Saïd Business School

University of Oxford

[email protected]

Presentation to Copenhagen Business School,

7th September 2011

The Rise, Fall and Regeneration of

Interest in the Field of Organisation

Design

George P. Huber (2011), Organizations: Theory, Design, Future,

Chapter 5 in APA Handbook of Industrial and Organizational Psychology, (Ed.) Sheldon Zedeck, APA, Washington DC, pp 117-

160

ORGANIZATION THEORY

• Population Ecology and Evolutionary Theory

• Institutional Theory

• Resource Dependency Theory

• Transaction Costs Theory

• Contingency and Congruence Theory

• Network Theory

• Strategic Choice Theory

• Critical Management Theory

• Post Modern Theory

ORGANIZATION DESIGN

ORGANIZATIONS IN THE FUTURE

Danny Miller, Royston Greenwood and Rajshree Prakash (2009),

What Happened to Organization Theory? Journal of Management Inquiry, Vol. 18, No. 4, December, pp 273-270

THE IMPORTANCE OF ORGANIZATION DESIGN

DESIGN IN TODAY’S ORGANIZATION THEORY

RESEARCH RECOMMENDATIONS

• Embrace richness and complexity in our studies

• Respect differences in organizational types

• Use time as a searchlight

• Study interdependencies among design elements

• Study more types of organization and contexts

Royston Greenwood and Danny Miller (2010), Tackling Design

Anew: Getting Back to the Heart of Organizational Theory, Academy of Management Perspective, November, pp 78-88

• WHAT IS ORGANIZATION DESIGN TODAY?

• WHY IS ORGANIZATION DESIGN IMPORTANT TODAY?

• WHY THE CONTINUING NEGLECT OF ORGANIZATION

DESIGN?

• MOVING FORWARD: SOME RECOMMENDATIONS

The Three Conclusions

• The need for empirical studies which progressively map the contours of change in organizational form and process

• The need to commit programmatic resources to map changes in organization design within and across nations and regions

• Studies linking organizational design choices and changes to performance which generate “What To” and “How To” knowledge

Contextualizing Organization Design

• The era of universal organizational forms

• The rise and persistence of the contingency studies and

the contingency idea • Absence of related theories of choice, change and

learning • The easy slip into the rhetoric of design • Design and performance deeply embedded in industrial

economics • Exporting the American way of management:

Marshall and McKinsey • The social sciences make America the universal pattern

Contextualizing Organization Design

• The strategy-structure preoccupation, but rebalancing over time

• The promise of configuration, but complementarities has the edge

• Organization design sidelined by academia, but innovative

practitioners maintain interest and momentum • 1980‟s new focus on choice, change, process, culture, power

and politics, networks and inter-organizational relations • 1990‟s revitalization of field with rise of new context, new

competition and new forms of organization • New forms place structure and design back stage and

strategy and process front stage.

Contextualizing Organization Design

• The interest in dynamism and the linguistic turn from

organization to organizing • The challenges of holism, complementarities thinking

and action and divergent forms of capitalism • The now real challenge of business and society

• Power

• Legitimacy

• Responsibility

• Governance

• Regulation

of the modern corporation

What are the links with organization design?

New Forms of Organization:

4 Themes

• Greater permeability of organization boundaries, the

development of networks, webs, co-operative

relations, alliances and clusters

• Compressing the structural and cultural features of

hierarchy through delayering, downsizing, and

building more co-operative forms of managerial style

• Associated drives to develop more creative, agile,

learning forms (competition as an innovation contest)

• The linguistic turn from organization to organizing

Examples of New Forms

• The „N‟ Form or Network Form

• The Horizontal Corporation

• The Boundaryless Organization

• The Cellular Form

• The Federal Form

• The Virtual Organization

• The Learning Organization

• The Web

The primary questions

? Progress How far have new organisational forms been

implemented?

Performance ? What are the performance effects?

Process ? What are the managerial processes?

Research method

• Four surveys in:

• UK

• Continental Western

Europe

• Japan

• USA

• 18 Case studies in

• 8 UK

• 10 Continental

Western Europe

Progress and

performance

questions

Process

questions

Three dimensions of change

changing

structures

changing

processes

changing

boundaries

The multiple indicators

processes

Horizontal

& vertical

communication

Invest

in I.T.

Practice

new HR

boundaries

Outsource Downscope

Develop

strategic

alliances

structures Decentralise

Project forms

of organizing Delayer

Progress/Mapping Questions

1. Over the limited time period was there any evidence of major changes in forms of organizing?

2. If change was occurring was it uniformly evident across structures, processes and boundaries?

3. Was there parallel change, convergent, or divergent change across the 3 nations/regions?

4. Was there evidence of differential pace of change, albeit from different starting points?

5. Were new forms supplementing or supplanting existing organizational and managerial practices?

The Innovating Organization

(Eds) Andrew Pettigrew and Evelyn Fenton

London, Sage, 2000

Innovative Forms of Organizing:

An International Perspective

(Eds) Andrew Pettigrew et al.

London, Sage, 2003

Key Outputs

Convergence/Divergence Debate

Do managerial practices (including forms of organizing) reflect the nation state institutional configurations within which firms are embedded?

Are there variations in the tightness of interaction or coupling of such institutional arrangements which provide more or less receptive contexts for ideas and imitation from the international competitive system?

European, Japanese and US

Comparisons 1992-1997

• Overwhelming Finding

• Common direction of change, but from different starting point

and some variation in pace across the 3 regions.

• Evidence of parallel organizational change, but little evidence

to support the thesis that firms are converging towards:

• A Single Type

• Or Set of Organizational Practices

• Across the 3 regions is greater evidence of boundary and

process changes than structure changes in the period 1992-

1997.

European, Japanese and US

Comparisons 1992-1997

• Incremental and Radical Change Was Assessed

• European and US firms show much higher

percentage of radical change compared with their

Japanese comparators over the time period of

1992-1997.

European, Japanese and US

Comparisons 1992-1997

• The results do not confirm previous conjecture about revolutionary

change in forms of organizing.

New forms of organizing are emerging across the 3 regions, but they

are supplementing not supplanting existing forms.

• For our European and US samples:

• Operational and Strategic Decentralization

• Alliance Formulation

were positively and significantly related to:

Knowledge Intensity

AND

Extent of Internationalization of the Firm

What are the benefits of complementary changes?

Strategic complementarities

• “Doing more of one thing increases the returns of

doing more of another”

Milgrom and Roberts, 1995

• Investing in one practice makes more profitable

investing in another, setting off a potential virtual

circle of high performance

Two key propositions

The Positive Proposition:

• Changing only a few of the system

elements at a time may not come close

at all to achieving all the benefits that

are available through a fully co-

ordinated move

The Negative Proposition:

• Partial moves may drive down

performance

Measuring performance

• „High‟ performance companies are:

• Upper quartile of sector adjusted return on

capital employed

or

• Answered „a lot higher‟ to “How would you

assess the financial performance of this

company compared with other companies in

our sector”

Systemic change:

Europe, Japan and US, 1992-1997

The 3 Dimensions

Structure

Processes

Boundaries

The 4 Systems

System 1 (S+P+B)

System 2 (S+P)

System 3 (P+B)

System 4 (S+B)

Europe

30.3%

74.9%

44.9%

Europe

13.0%

25.1%

34.2%

16.4%

• Very few companies adopting whole system of change

Japan

6.2%

53.7%

30.7%

Japan

1.2%

4.7%

18.7%

1.6%

US

16.5%

82.3%

57.0%

US

8.9%

12.7%

46.8%

11.4%

One symbol, + or -, indicates weak positive or negative significance; two

symbols, ++ or --, indicate strong positive or negative significance.

Systemic change and performance:

Summary of regression results

The 4 Systems

System 1 (S+P+B)

System 2 (S+P)

System 3 (P+B)

System 4 (S+B)

Pooled Sample of

Western Firms

++

-

-

UK

+

--

-

US

+

--

• The adoption of a full set of changes (System 1) increases

the probability of improving corporate performance

• The adoption of partial systems (System 2 and System 3) is

likely to reduce performance

Performance gains require

doing many practices

together

Performance effects depend

upon whole system

thinking and action

Two big issues

• Transition Issue:

Perils of the J-Curve

• Complementarities Traps

BP:Complementary Change & Performance 1990 – 1999

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

H O R TO N S I M O N B R O W N E

The Dangers of Transitions and the

Perils of the J-Curve

Performance

Extent of Change

over Time

Things may get worse before they get better

Need for strong leaders to survive transition processes

The Three Conclusions

• The need for empirical studies which progressively map the contours of change in organizational form and process

• The need to commit programmatic resources to map changes in organization design within and across nations and regions

• Studies linking organizational design choices and changes to performance which generate “What To” and “How To” knowledge

Thank you for listening

Questions and discussion?