1. Explaining development and change in organizations
Van de Ven & Poole, 1995
It is not true that all development represents progress from a lower, simpler state to a higher, more
complex one. This is one possible path development may follow, but it is not the only one (e.g.
regressive path in case of decline).
How and why change unfolds in organizational entities
Driving Force
Life cycle
Change is imminent (= bound to happen): entity progresses through a necessary and pre-
defined sequence of stages, of which the specific content is prescribed by an institutional,
natural, or logical program.
External environmental factors can influence how the entity expresses itself, but are always
mediated by the immanent logic, rules, or programs that govern the entity’s development.
Cumulative sequence: characteristics acquired in earlier stages are retained in later stages
you have to learn how to crawl before you can walk.
E.g. FDA approval regulations for the development and commercialization of new drugs.
Teleology
Entity proceeds towards an envisioned goal or end state. Once this is attained, a new goal
will be constructed.
Views development as a repetitive cycle of goal formulation, implementation, evaluation,
and modification of goals based on what was learned or intended by the entity. This sequen-
ce emerges through purposeful social construction among individuals within the entity
(necessary for these individuals to be like-minded and to act as a single collective entity).
Teleology does not prescribe a necessary sequence of events, and its goals can be adjusted
along the way, making it unpredictable.
Dialectic
Requires two or more distinct, opposing entities to engage in confrontation and conflict.
Opposing force (anti-thesis) challenges the status quo (thesis) in the hope that a synthesis
will be produced. Over time, the synthesis can become the new thesis.
The synthesis is a novel construction / a compromise that departs from both the thesis and
anti-thesis.
,Evolution
Explains change as a repetitive, cumulative, and probabilistic cycle of variation (novelty,
emerging by blind or random chance), selection (in order to compete for scarce resources)
and retention (maintaining the status quo). Competition for scarce resources between
entities within a population generates this sequence.
Unit of change: change focus on a single entity or on the interaction between multiple entities.
Life-cycle forces are a function of potentials immanent within the entity.
Teleological theories require only a single entity’s goals to explain development.
Dialectical theories at least need to fill the roles of thesis and anti-thesis.
Evolutionary forces impact populations.
Model of change: sequence is prescribed (predictable) or emerges as the change process unfolds.
Life-cycle realizes immanent form by cumulative steps; in evolution the accumulation of
small individual events will gradually change the nature of the larger population.
In teleology goals can be changed intentionally at the will of the entity; the dialectical conflict
and confrontation between thesis and anti-thesis is highly uncertain.
Prescribed mode creates first-
order change – change within an
existing framework that produces
variations on a theme. Construc-
tive mode generates second-order
change – break with the past basic
assumptions or framework (syn-
thesis).
,2. Organizational identities and the hazard of change
Hannan, Baron, Hsu & Koçak, 2006
Examines how high-technology firms are affected by (1) altering the founders’ blueprints for the
employment relations, and (2) replacing a founder – CEO by an outsider.
Both events destabilize organizations, but changes in employment blueprints are tied more close-
ly to the organizational identity and are thus more destabilizing.
Altering an organization’s core features has detrimental effects, because (inertia theory):
Technical account – disruption entailed in reorganizing routines (deep change causes reliabil-
ity and accountability to fall, organizations to incur costs of reshaping operations and miss
opportunities during periods of reorganization) destabilizing operations;
Non-technical account – might be viewed as violations of deep-seated, taken-for-granted
expectations by key organizational constituents destabilizing identity.
The nature of an organization’s employment relations forms a key aspect of its identity. Organiza-
tions embody particular blueprints for organizing, which guide development. Blueprints that foster
reliability and accountability can enhance survival prospects. Altering a blueprint once it is imprinted
is risky and costly, particularly when the changes challenge existing, well-established bases of identity
and therefore go to the organization’s core. Changes in identity features are likely to meet with resi-
stance and opposition, since members usually want to retain the status quo.
H1: Changes in blueprints for employment relations:
a) Increase the hazard of failure
Blueprint changes markedly increase the chances of failure, tripling the (net) hazard.
b) Lower the hazard of IPO (Initial Public Offering)
Neither change in the blueprint nor appointment of an outsider CEO significantly affect-
ed the possibility of IPO.
c) Depress the rate of growth in market capitalization
Blueprint changes depress growth rates and have more harmful effects than the appoint-
ment of an outsider CEO.
H2: Appointment of an outsider as CEO destabilizes organizations less than changes in blueprints
for employment relations.
Top-management turnover disrupts work routines and communication patterns and creates
insecurity among employees, leading to increased conflict in the workplace and ultimately
lowered performance. Weberian reasoning suggests that it is not the replacement of leaders,
but rather the changes in premises and practices associated with succession that cause de-
stabilization.
More severe effects when an outsider replaces a top executive, because it brings greater
organizational and cultural change.
Appointing an outsider as CEO has no substantial net effect on the hazard of failure, but it
does depress the rate of growth in market capitalization.
Changing the organizational blueprint diminishes chances of early success. Specifically, it
increases the odds of failure and reduces growth in market capitalization / value.
Founders impose cultural templates and altering these destabilizes organizations.
, 2. Organizational change and employee stress
Dahl, 2010
Examines the relationship between organizational change and employee (mental) health.
Change significantly increases the risk of developing negative stress (i.e. receiving stress-
related medication). This is especially the case for employees who work at organizations that
undergo broad simultaneous changes along several dimensions.
Organizational changes – shifts in strategies and goals – can threaten values as trust, reliability and
commitment, and affect the wellbeing of employees, which can lead to decreased focus, motivation,
loyalty and productivity, and increased absenteeism, turnover and dissatisfaction.
Change generates uncertainty and fear about the future direction of the firm, which could result in
turnover or stress. During periods of change, new processes and structures can distract employees
from ongoing operations, leading to (temporary or permanent) lower performance.
Certainly some level of stress is positive for productivity and alertness in the workplace, but when it
is above a critical threshold (when insomnia and depression emerge) stress can become a serious
health issue for the individual and the organization.
Reasons for the disruptive and problematic (emotional) outcomes associated with change:
Firms fail to account for the feedback effects of their actions and decisions e.g. firm cuts
costs, staff reacts with increased desire to leave, and bruised motivation and loyalty.
Change can be associated with a violation / breach of the contract between employee and
firm, since expectations have to be altered. This can be seen as an unmet promise, resulting
in feelings of betrayal, anger, unfairness, frustration, resentment, and decreased motivation.
H1: Organizational change increases the probability of negative employee stress.
Change process involves increasing frustration, uncertainty, fear, and emotional insecurity.
H2: Broader and more extensive organizational changes increase the probability of negative em-
ployee stress compared to relatively minor and less extensive changes.
The broader the change, the more employees exposed to the change whole organization
(broad) vs. few departments (focused).
Breath of change: the more dimensions targeted for organizational change, the bigger the
chance of influencing fundamental structures and routine, which increases the likelihood of
affecting employee health.
Reduce the complexity of change to reduce / avoid stress (don’t target multiple dimensions).
Change overall has less harmful effects on white collars, management and CEOs they
usually have more say in the actual change and greater outside options.
Change implemented to increase coordination and cooperation across firms is especially
harmful for employee health requires increased linkages and added communication
channels between different and previously less integrated parts of an organization. This
could lead both to altered sources of authority and changes (or increases) in the number and
characteristics of the individuals with whom an employee needs to coordinate and communi-
cate (confusion, frustration, lost productivity) This effect is especially true for larger firms,
because this type of change requires even more alignment here.
