Occupational A Practical Guide For Managers_17

Conclusion 173 organizations through imitation and influence from professionals (Edelman 1990; Sutton and Dobbin 1996; Sutton et al. 1994). The ben-efits of these practices are uncertain even after adoption, as some of the alleged effects are to protect the organization against future lawsuits from employees. As a result, personnel management practices are adopted once and for all, with little chance of being re-evaluated and dropped. By contrast, equally uncertain behaviors like the adoption of securities for coverage by investment analysts also spread by imitation, but these are re-evaluated based on their performance and quickly abandoned if the analyst is disappointed (Rao, Greve, and Davis 2001). Institutions have been argued to differ from the technical core of organizations (Scott and Meyer 1983), which is similar to saying that they are different from activities with consequences that are easily measured. Low performance is not argued to be necessary for an organization to adopt a new institution. Since having certain institutions is a per-formance in and of itself (Berger and Luckmann 1967; Goffman 1990), the spread of new institutions creates a kind of performance shortfall in organizations that do not have them yet (Meyer and Rowan 1977). Per-formance feedback theory and institutional theory thus discuss different causal sequences. In performance feedback theory, the problem comes first, and then managers search for a solution. In institutional theory, the solution comes first, and its proponents search for problems that it may solve (DiMaggio 1988). These do not have to be specific or cur-rent problems, but can consist of claims that organizations without the focal institution will be deficient in some sense or will face problems in the future. New institutions are not solutions to problems, but solutions searching for problems. Researchers taking the perspective of performance feedback theory are likely to believe that the reversed sequence of events will not eliminate the role of performance in the adoption of institutions. Even if the solution comes first, it is easier to argue that it should be adopted in organiza-tions with performance below the aspiration level. From the viewpoint of performance feedback theory, proponents of institutions act as “solu-tion entrepreneurs” who use a problem of low performance to argue for the adoption of their favorite institution. This would predict that orga-nizations with performance below the aspiration level are most at risk of adopting a new institution, an insight that could be applied to studies of the spread of new institutions. Performance feedback theory also offers a challenge to the suggestion thatinstitutionsarekeptovertimeorsucceededbya“newandimproved” institution thought to solve the same problem. Abandoning prevalent institutionsisariskybehaviorthatcouldbetriggeredbylowperformance 174 Organizational Learning from Performance Feedback oftheorganizationoveralloroftheinstitutioninquestion(whenitseffects can be assessed) (Greenwood and Hinings 1996; Oliver 1992). It is thus not clear whether institutions will be kept over time. Indeed, researchers have noted that hallowed institutions such as liberal arts education have been violated by colleges seeking to improve their performance (Kraatz 1998; Kraatz and Zajac 1996). Performance feedback theory suggests a resolution to this theoretical problem. To a given organization, a new institution is an innovation, but established institutions are taken for granted (Meyer, Boli, and Thomas 1987).Deviating fromestablishedinstitutionsisaninnovationthatentails riskbecauseotheractorsmayfailtorecognizeorsupportthefocalorgani-zation if it differs too much from the taken-for-granted form (Deephouse 1996; Oliver 1991). Thus, performance feedback theory predicts that or-ganizationswithlowperformancearequicktoadoptnewinstitutionsand abandon established ones. This prediction clearly deserves to become a part of future research on institutions. On the other hand, institutional theory brings a puzzle to research on aspiration level decision making. The prediction that organizations will do various contentious, strenuous, and risky strategic actions in re-sponse to low performance seems to ignore the easy way out offered by the diffusion of new institutionalized structures or faddish management practices (Abrahamson 1991; Staw and Epstein 2000; Zeitz, Mittal, and McAulay 1999). Surely managers suspect that some of these practices have benign but small effects on the organizational performance. They might use adoption of such practices to act as if they are solving prob-lems without actually taking risks. A sufficiently cynical manager would be tempted to stem criticism through this device, especially one who suspects that the current performance shortfall is temporary. Perhaps managers do adopt more new institutions when the performance is low – performance relative to the aspiration level is rarely studied as a cause of adopting institutions, so we cannot be sure. As the research reviewed in chapter 4 suggests, however, they also engage in risky organizational changes. Managers seem to be making serious effort to recover from low performance, not just putting on a show. A more fundamental challenge from institutional theory is the idea that organizational goals are institutions that may differ across societies and over time, so performance feedback theory is explaining organiza-tional behavior by a variable that keeps changing. In the heyday of PIMS and conglomerates, sales was king, then return on assets took over, and now managers are accountable for the movement of stock prices (M. W. Meyer 1994). How should this affect performance feedback theory and research?It seems that the theory is not much affected, since it does not Conclusion 175 make claims on what kind of goal managers will have. Still, it derives much of its relevance for management practice from the fact that man-agershavebeenpayingattentiontoperformancemeasuresthathavesome connection with organizational competitiveness. The conclusions on or-ganizational adaptation reviewed in section 3.3 hinge on this connection, and performance feedback would be unimportant for competitive ad-vantage if managers were picking measures willy-nilly without worrying about the relevance to organizational competitiveness. Though there is a livelydebateonthequalityofvariousperformancemeasures,wehavenot yetseenmeasuresthataresoarbitrarythattheysuggestthatmanagersare willing to ignore their role in measuring organizational competitiveness. Shifting attention among performance measures is a problem for em-pirical research on performance because it complicates the task of finding the right independent variable. To take a concrete example, the analyses of Japanese shipbuilders reported in chapter 4 took return on assets as the goal variable, as studies of US firms tend to do. This seems to ignore that many practitioners and some researchers have argued that Japanese firms pay more attention to market share than to profits. I think that this specific argument is wrong, and chose ROA deliberately rather than by reflex. Still, the question of generality and stability of performance mea-sures is worth asking. Two arguments have been made. One is that there hasbeenanincreasinghomogenizationoftheworldsocietyandeconomy, especially for corporate actors such as business firms (Meyer, Boli, and Thomas 1987). This has partly been a process of cultural influence, but dependence of firms on an increasingly international capital market has alsocontributed(Useem1996).Thisargumentwouldpredictuniformity across society, but not necessarily stability over time. The other argument is that local cultural influences are very strong, and tend to modify the form and reduce the influence of imported insti-tutions (Guillen 1994). This argument would predict differences across societies but stability over time. The introduction of these issues into the debate is too recent for us to have a good empirical answer to which conception is right. They suggest that researchers need to be sensitive to the institutional context in which organizations operate, as goals can be created and modified through the processes that institutional theory emphasizes. Population ecology. A large body of theory and empirical research on organizations has developed in the field of population ecology (Hannan andFreeman1977,1989).Ecologicalresearchemphasizesorganizational demography – how the birth rates and life spans of organizations are determined, and how this affects the diversity of organizational popula-tions (Carroll and Hannan 2000). At least initially, the theory contained 176 Organizational Learning from Performance Feedback little managerial choice, as environmental forces such as competition and institutionalization were the most-examined causes (Carroll and Hannan 1995b). Emphasizing the founding and failures of organizations as out-comes and environmental forces as causes was controversial and led to debates about the realism and usefulness of such research (Donaldson 1995;Perrow1979).Thisisnotsurprising,asorganizationaltheoryispe-riodicallydrawnintodebatesontheprimacyofenvironmentalorinternal causes that resemble the philosophical debates on free will in individuals (AstleyandVandeVen1983;HambrickandFinkelstein1987;Hrebiniak and Joyce 1985), but the debate had little impact on actual research. An ecological theory of only founding and failure would be useful for predicting the evolution of populations of relatively inert organizations, which was its initial purpose, but would have had little relevance for per-formance feedback theory. Population ecology has expanded its scope to also involve organizational change (Barnett and Carroll 1995), however, which brings it into closer contact with the theory of this volume. The most important point of contact is the theory of organizational inertia, which is both a theory of when organizations change and a theory of the consequences of change (Hannan and Freeman 1984; Peli et al. 1994). According to inertia theory, organizational change is usually detrimen-tal.Changingcorefeaturesoftheorganizationsuchasitsproduct-market strategyorproductiontechnologyweakenstheorganization’sinternalco-hesionanditsadaptationtoenvironmentalactors.Theinternalargument applies the learning-theory finding that organizational routines improve through repeated change, and thus that organizational changes require using new routines that are executed less efficiently (Amburgey, Kelly, and Barnett 1993; Barnett and Freeman 2001). This loss of efficiency causes increased operational costs and may lead to quality problems and mis-steps in the organization’s relation with its resource environment. The external argument notes that the market for resource exchange re-lations is not fully efficient. Thus, replacing the content of exchanges or exchange partners consumes time and resources. Old exchange part-ners may resist changes in the content of exchange, and potential new exchange partners do not immediately trust the organization enough to trade with it on good terms (Barnett and Freeman 2001). The internal and external weaknesses cause organizations that have just changed to be more likely to fail (Amburgey, Kelly, and Barnett 1993; Barnett and Carroll 1995). The argument on why inertia is a common feature of or-ganizations is a simple extension of the argument on its effects. Since change weakens organizations, organizational structures and procedures that encourage change are “lethal genes” that will become scarce through selection processes (Hannan and Freeman 1984; Peli et al. 1994). Conclusion 177 Thereisaclearconflictbetweeninertiatheory’scontentionthatorgani-zational change is rare and hazardous and performance feedback theory’s contentionthatorganizationalchangeisapredictableandoftenbeneficial consequence of low performance. There is also some common ground in these two theories. Performance feedback theory predicts that organi-zations make fewer adjustments in the rate of change in response to low performance than to high, and underpins this kinked curve with inertia theory’s arguments for why routines that encourage change are scarce in organizations. Simulations and empirical research from performance feedbacktheoryhassuggestedthatthekinked-curverelationfromperfor-mance to change is a highly survivable behavioral rule because it lowers the exposure to the hazards of change (Greve 2002b). Thus, both theo-riesrecognizethatchangeishazardous,butperformancefeedbacktheory qualifies this with the argument that not changing is sometimes worse, so correctly timed change can be adaptive. Similar arguments are also seen in inertia theory and empirical work, suggesting that these theories will converge in the future (Barnett and Carroll 1995; Haveman 1992). What seems most important for population ecology to learn from per-formance feedback theory is the contingent relation from current perfor-mance to benefits of change. Organizations changing when performing poorly have little to lose and may benefit from regression towards the mean, so for them the temporary weakening due to change is less im-portant than the long-term benefits. Already inertia studies have started examining performance or competitive relations as a modifier of the ef-fect of change on performance or survival (Greve 1999b; Ruef 1997), and more such research should be expected. This suggests a modifica-tion of the theory of inertia. The prediction from a selection perspective isnolongerthatorganizationswillstayinert,butratherthatthemostsur-vivable relation from performance to change will become more frequent in organizational populations. As always when selection arguments are applied to organizational populations, it is important to keep in mind that the selection advantage of good routines may be too small to allow the organizations with most survivable routines to become predominant (Carroll and Harrison 1994). Simulations have suggested that the most robust performance feedback routines can outcompete other routines when failure rates are high or organizations that are founded mimic the most successful firms in the population (Greve 2002b). What seems most important for performance feedback theory to learn from ecological theory is that organizations may select which parts to change based on their centrality to organizational operations. According to inertia theory, organizations have a core consisting of their (1)mission, (2)formsofcontrol,(3)coretechnology,and(4)product-marketstrategy ... - tailieumienphi.vn