Organizational Change - Chapter 3 PDF

Chapter 3: Organizational design, structure and change The meaning of organization structure At a simple level, structure is something managers design and put in place to enable eJcient produc$on and delivery of the organiza$on’s outputs. It ‘describes the way an organiza$on is con=gured into work g...

Chapter 3: Organizational design, structure and change The meaning of organization structure At a simple level, structure is something managers design and put in place to enable eJcient produc$on and delivery of the organiza$on’s outputs. It ‘describes the way an organiza$on is con=gured into work groups and the repor$ng and authority rela$onships that connect individuals and groups together’. Design refers to the way a structure might be drawn on an organiza$on chart. Organiza$onal designs are ‘managerialist responses’ to the con$ngencies thrown up by the environment and the main framework for understanding organiza$onal design is called conngency theory. Design shows the formal repor$ng rela$onships and areas of responsibility drawn to impress the organiza$on’s various stakeholders. 16 The dimensions of structure Organiza$on structure can vary in many ways, but a classic study iden$=ed the following six primary dimensions (Pugh, Hickson, Hinings and Turner, 1969): 1. Specializa$on: the extent to which there are di:erent specialist roles and how they are distributed. 2. Standardiza$on: the extent to which an organiza$on uses regularly occurring procedures that are supported by bureaucra$c procedures of invariable rules and processes. 3. Formaliza$on: the extent to which wriCen rules, procedures, instruc$ons and communica$ons are set out for employees. 4. Centraliza$on: the extent to which authority to make decisions lies with the top of the organiza$on. Decentraliza$on: pushing decision making down to lower levels in the hierarchy. 5. Con=gura$on: the shape and paCern of authority rela$onships; how many layers there are and the number of people who typically report to a supervisor. 6. Tradi$onalism: how many procedures are ‘understood’ in contrast to being wriCen; how commonly accepted is the no$on of ‘the way things are done around this organiza$on’. Derek Pugh and his colleagues established four underlying dimensions: 1. Structuring of ac$vi$es: the extent to which there is formal regula$on of employee behaviour through the processes of specializa$on, standardiza$on and formaliza$on. 2. Concentra$on of authority: the extent to which decision making is centralized. 3. Line control of work8ow: the extent to which control of the work is exercised directly by line management rather than through more impersonal procedures. 4. The support component: the rela$ve size of the administra$ve and other non-work8ow personnel performing ac$vi$es auxiliary to the main work8ow. Support for these dimensions was provided by Child (1988) who added: - The way sec$ons, departments and divisions are grouped together. Systems for communica$on, the integra$on of e:ort and par$cipa$on. Systems for mo$va$ng employees such as performance appraisal and reward. Structural types Bureaucrac structure Three ideas that are central to the concept of bureaucracy are: the idea of ra$onal legal authority, the idea of ‘oJce’ and the idea of ‘impersonal order’. These ideas are based on: - A con$nuous organiza$on of oJcial func$ons bound by rules. A speci=ed sphere of competence, i.e. di:eren$a$on of func$on. The organiza$on of oJces (i.e. posi$ons) follows the principle of hierarchy. The separa$on of members of the administra$ve sta: from ownership of produc$on or administra$on. No appropria$on by the incumbent of their oJcial posi$on. Administra$ve acts, decisions and rules are formulated and recorded in wri$ng, even in cases where discussion is the rule or is essen$al. Bureaucracy 17 Bureaucracy Weber speci=ed several characteris$cs of his ideal organiza$on structure of which the main four are: 1. Specializa$on and division of labour. Work is =nely divided between well-de=ned and highly specialized jobs or roles. 2. Hierarchical arrangement of posi$ons. Roles are hierarchically arranged with a single chain of command from the top of the organiza$on to the boCom. 3. A system of impersonal rules. The incumbents of roles (or posi$ons) carry out their du$es impersonally in accordance with clearly de=ned rules. 4. Impersonal rela$onships. Coordina$on of ac$vi$es relies heavily on the use of rules, procedures and wriCen records and on the decision of the lowest common superior to the people concerned. Jackson and Carter (2000) o:er a convincing argument for the view that structure is not, in the case of organiza$ons, something concrete and objec$ve, but essen$ally abstract. Adop$ng what they term a ‘post-structuralism’ approach to explaining structure, they maintain (in contradic$on to Weber) that there is no obvious and natural way of ordering the management of organiza$onal ac$vi$es. Fla*er structures In 8aCer structures, widening the span of control (the number repor$ng to a supervisor) reduces the number of levels in the structure, while retaining the same number of sta:. One rule is that the more similar jobs are at any one level (job standardiza$on), the more people managers can coordinate and control. Another rule is that the more decision making is decentralized and therefore reducing the burden on each manager, the broader the span of control can be. Other factors that a:ect the span of control are the physical loca$on or geographical spread of subordinates, the abili$es of subordinate sta: and the ability and personal quali$es of the manger concerned. Horizontal di+erenaon – the departmentalizaon of work The decision on which way to departmentalize frequently relies on the characteris$cs of the work to be done, the size of the organiza$on, the physical loca$ons of ac$vi$es and the need to maintain a balance between high-level strategic decision making and lower-level opera$onal impera$ves. Mulfunconal Structures Mul$func$onal structures are a common structural form par$cularly in the stages of an organiza$on’s development when the early entrepreneurial phase gives way to a more seCled phase of sustained growth. Common func$onal specialisms are purchasing, produc$on, marke$ng and =nance. Func$onal structures serve organiza$ons well as they move from Greiner’s ‘growth by crea$vity’ stage in a company’s development to the ‘growth by direc$on’ stage. However, as they grow and diversify in customer and product markets they pass through what Greiner calls a ‘crisis of autonomy’. Advantages of a funconal structure Each func$on has its high-level representa$ve to guard its interests. Disadvantages of a funconal structure Coordina$on of ac$vi$es across func$ons can become more diJcult. Tight control is possible at the top. Func$onalism some$mes encourages narrow thinking which works against innova$on. 18 It encourages development of specialist skills and exper$se and provides a career structure within the func$on. Training can be organized along specialist lines, and whose technical skills also give a compe$$ve advantage. Important market intelligence can be overlooked. Limit the opportunity for the development of general managers. Con$ngency factors (Cummings and Worley, 2009): - Stable and certain environment. Small to medium size. Rou$ne technology, interdependence with func$ons. Goals of eJciency and technical quality. Muldivisional structures Mul$divisional structures are built around outputs rather than inputs. They overcome the dangers of poor coordina$on and responsiveness and allow faster responses to market condi$ons. Departmentaliza$on by product or service has advantages of maximizing the use of employees’ skills and specialized market knowledge. Advantages of a muldivisional structure There is more opportunity for innova$ve ideas for new or modi=ed products to 8ourish Product di:eren$a$on facilitates the use of specialized capital. Product divisions can be made pro=t-centers in their own right, making them responsible for budgets and sales. Di:eren$a$on by product makes it easier to concentrate on di:erent classes of customer. Where a product division has its own set of business func$ons, these can be coordinated towards the product markets. Good opportuni$es for the training of general managers. Matrix organizaon The essence of a matrix design is that a typical ver$cal hierarchy is overlaid with a horizontal structure commonly designed around big projects. Employees =nd that they report to di:erent people for di:erent areas of responsibility Bartol and Mar$n (1994) maintain that organiza$ons which ul$mately adopt a matrix structure usually go through four iden$=able stages: Disadvantages of a muldivisional structure There can be overlap of func$ons from one product division to another (= duplica$on of central service and other support ac$vi$es). Overall administra$on costs tend to be higher than in pure func$onal structures. Top management may have more diJculty in controlling what happens at the product divisional level. Limit the opportunity for the development of general managers. Coordina$ng policy and prac$ce across product areas can be complex. - - Stage 1 is a tradi$onal structure, usually a func$onal structure, which follows the unity-of command principle Stage 2 is a temporary overlay, in which managerial integrator posi$ons are created to take charge of par$cular projects, oversee product launches, or handle some other issue of =nite dura$on that involves coordina$on across func$onal departments. These managers o>en lead or work with temporary interdepartmental teams created to address the issue. Stage 3 is a permanent overlay, in which the managerial integrators operate on a permanent basis, o>en through permanent interdepartmental teams. Stage 4 is a mature matrix, in which matrix bosses have equal power. Cummings and Worley (2009) suggest that matrix structures are appropriate under three important condi$ons: 1. There needs to be pressure from the external environment for a dual focus. 2. A matrix structure is of bene=t when an organiza$on must process a large amount of informa$on. This is par$cularly useful when organiza$ons operate in an environment of unpredictability or need to produce informa$on quickly. 3. There must be pressures for sharing resources which matrices support. Advantages of a matrix structure Specialized and func$onal knowledge is connected to all projects. Increased 8exibility in being able to form and reform cross-func$onal teams. These teams can monitor their own localized business environments and move quickly to adapt to changes. Matrices facilitate mechanisms for dealing with mul$ple sources of power. Loyal$es to the projects are built. Flexible use of human resources and the eJcient use of support systems Disadvantages of a matrix structure Complex and can be administra$vely expensive. Can be diJcult to introduce. There can be confusion over who is ul$mately responsible for sta: and project outcomes. The poten$al for con8ict can increase, par$cularly between the func$onal and project managers. Unhelpful power struggles and con8ict can arise. Sta: may have to juggle their $me between di:erent projects or divisions. Matrix structures work well when: - A dual focus on unique product demands and technical specializa$on is crucial There is pressure for high informa$on-processing capacity There is pressure for shared resources (e.g. resources are scarce) New organizaonal forms The main point about new organiza$onal forms is that they are an aCempt to go beyond the classic bureaucra$c models. According to Morgan (1989), the project organiza$on carries out most of its ac$vi$es through project teams. Func$onal departments exist but only have a suppor$ng role. The main work of the organiza$on is done wholly through teams that rely for their success on being ‘dynamic, innova$ve, powerful and exci$ng’ and to which senior management tries to give free rein within the strategic direc$on of the organiza$on: The organiza$on is much more like a network of interac$on than a bureaucra$c structure. The teams are powerful, exci$ng, and dynamic en$$es. Coordina$on is informal. There is frequent crossfer$liza$on of ideas, and a regular exchange of informa$on, especially, between team leaders and 20 the senior management group. Much e:ort is devoted to crea$ng shared apprecia$ons and understandings of the nature and iden$ty of the organiza$on and its mission, but always within a context that encourages a learning-oriented approach. The organiza$on is constantly trying to =nd and create the new ini$a$ves, ideas, systems, and processes that will contribute to its success (Morgan, 1989). The project organiza$on has overlapping characteris$cs with what Mintzberg (1983) calls the ‘Adhocracy’. The adhocracy is an ad hoc of people who are brought together for a single purpose associated with a par$cular project. Adhocracies are characterized by having few formal rules and regula$ons or standardized rou$nes. The shape of the organiza$on is 8at, but with horizontal di:eren$a$on generally high because adhocracies are sta:ed mainly by professional, each with their own specialism. The loosely coupled organic network describes a form of structure that, rather than employing large numbers of people directly, operates in a subcontrac$ng mode. The small number of permanent sta: set the strategic direc$on and provide the necessary opera$onal support to sustain the network. Three types of network: internal, ver$cal and dynamic. Advantages of network organizaons Flexible and adap$ve responses to fast-moving environments and have the poten$al to create ‘the best of the best’ organiza$on to focus resources on customers and markets. Fast pace and 8exible nature, each organiza$on can leverage its dis$nc$ve competence. Can expand rapidly. They can produce synergis$c results Disadvantages of network organizaons Managing lateral rela$ons across autonomous organiza$ons is diJcult. DiJcult to mo$vate members to give up some of their autonomy to join the network. Issues rela$ng to sustaining membership, and bene=ts can be problema$c. Networks may give partners access to knowledge and technology that one partner may want to keep con=den$al. Network structures work well when: - Opera$ng environments are complex and uncertain Fit organiza$ons of all sizes it situa$ons where organiza$onal specializa$on and innova$on are cri$cal Operate well in worldwide opera$ons Internal networks The internal network ‘typically arises to capture entrepreneurial and market bene=ts without having the company engage in much outsourcing’ (Snow et al., 1992). Internal networks are typical of situa$ons where an organiza$on owns most or all of the assets associated with its business. It has usually created ‘businesses within the business’ that are s$ll owned by the organiza$on, yet operate independently. Vercal networks The ver$cal network is typical of the situa$on where the assets are owned by several =rms but are dedicated to a par$cular business. The core organiza$on spreads asset ownership and risk across a number of other independent organiza$ons and gains the bene=ts of dependability of supply and/or distribu$on. 21 Dynamic, loosely coupled networks The dynamic network organiza$on is the one that has ‘pushed the network form to the apparent limit of its capabili$es’. This form operates with a lead =rm (some$mes called ‘server’, ‘broker’ or ‘network driver’) that iden$=es and assembles assets which are owned by other companies. The dynamic network is probably the form nearest to Morgan’s loosely coupled organic network. However, whether dynamic networks operate in a par$al or pure broker capacity, they are unlikely to func$on e:ec$vely without good and e:ec$ve communica$ons between their component parts. The virtual organizaon Virtual organiza$ons use informa$on and communica$on technology to link people, assets and ideas to create and distribute things without having to rely on conven$onal organiza$onal boundaries and loca$ons. They have been de=ned as ‘a geographically distributed organiza$on whose members are bound by a long-term common interest or goal, and who communicate and coordinate their work through informa$on technology’ (Ahuja and Carley, 1998). Characteris$cs of the virtual organiza$on: - Informal communica$on is high because of general lack of rules, procedures and repor$ng rela$onships. Formal communica$on is less because there is less formal hierarchy. Communica$on networks: extensive informal communica$on reveals paCerns of communica$on. Groups exist, dispersed and connected by electronic communica$ons, but the group members do not meet much if at all. They are non-hierarchical and decentralized (in theory at least). Virtual organiza$ons are less permanent than alterna$ve structures and can break apart when their objec$ves are met. Network and virtual organiza$ons are only able to o:er stable, secure employment to a few. Structuration theory, actor networks and institutional theory Structuraon theory Structura$on theory o:ers an alterna$ve view of organiza$onal structure as structura$on theorists regard structure, not so much as ‘paCerned regularity’ but, as something that emerges from ‘the rou$ne behaviour of people’, (which in turn) in8uences those behaviours’ (Cunli:e, 2008). Structura$on theory (developed by Giddens, 1984, 1991) focuses on the reciprocal nature of interac$ons between structures and the actors within them. Giddens explains structura$on theory as o:ering a way of understanding how actors create the social systems in which they work while simultaneously being crea$ons of them. We create structures and then become dependent on them. According to structura$on theory, structures only exist in so far as we con$nue to reinforce them. They do not exist in and by themselves. Giddens (2001) argues that although we are constrained by aspects of society the same aspects ‘do not determine what we do’. Structuraon and change What this means for organiza$onal change is that the paths followed and outcomes achieved are in8uenced by how actors understand the organiza$on and the social seLngs that they are in. Giddens introduced the concept of structura$on to explain how social structure is made and remade. Structure and ac$on are intertwined since the constant repe$$on of ac$on strengthens the constraining structure. Giddens called this the duality of structure: ‘all social ac$on presumes the 22 existence of structure. But at the same $me structure presumes ac$ons because “structure” depends on the regulari$es of human behaviour’. Structura$on theory explains therefore how the constant repe$$on of behaviour perpetuates structures whether they be good, bad or indi:erent. It is only through behavioural change that old structures and the constraints that go with them are dismantled and re-made. Actor-Network Theory (ANT) The actor-network concept (Latour, 2005) recognizes that actors build networks involving other actors which can be human or non-human. Non-human actors could be management systems in place before a change is aCempted or a species around which human actors are manoeuvring. Successful transla$on involves four stages: 1. Problema$za$on: here the project is ‘sold’ to actors as a way of tackling their problems if they sign up to it. 2. Interessement: this is about transla$ng/projec$ng the ra$onal for and the concerns that go with a project onto others involved and then stabilizing a network. 3. Enrolment: if Interessement occurs then the behavior of those involved is geared to achieving the outcomes desired by the enrolling actors. 4. Mobiliza$on: if enrolment is successful then a new network will exist that works towards outcomes and solu$ons that =t the ini$al ra$onale for project set-up. ANT explains how and why the networks that are ini$ated are more or less successful. Actor-network theorists regard structure ‘as the process of organizing’ people, technology, knowledge and other things into a stable network (Cunli:e, 2008). Instuonal Theory Ins$tu$onal theory, which has much in common with structura$on theory, emphasizes the cultural in8uences on decisions about design and structure (Amis and Aissaoui, 2013). The people who decide what organiza$ons should look like are ‘suspended in a web of values, norms, rules, beliefs and taken for granted assump$ons that are at least par$ally of their own making’. Ins$tu$onal theory is not a theory of change but it is a way of explaining the similari$es of arrangements that are o>en found in a sector and can explain why things do not change. Barley and Tobert (1997) describe ins$tu$ons as ‘socially constructed templates for ac$on, generated and maintained through ongoing interac$ons’ and herein lies the similarity to structura$on. They go on to de=ne ins$tu$ons as ‘shared rules and typi=ca$on’s that iden$fy categories of social actors and their appropriate ac$vi$es or rela$onships’. Ins$tu$onal theory is useful to explain why things exist as they do, and stay as they are, but is less informa$ve about how change to ins$tu$ons occurs (Kondra and Hinings, 1998). One of the reasons for this is the idea of isomorphism which refers to the tendency of organiza$ons in the same =eld to adopt the same or similar structures and ways of thinking and doing, which lead to isomorphism of performance. Three reasons for this can be put forward: 1. People who think they can see ways of improving things do not bother to pursue their ideas because compliance with norms I much easier. 23 2. Mime$c behavior occurs and is perhaps more likely to persist when performance measures are not well de=ned as is the case with the public-sector organiza$ons. 3. Mime$c behavior can also occur because of risk aversion. “ If the coali$on can be con=dent of return X in the future, why seek greater than X when there is a risk that the actual returns could be less than X?" Greenwood and Hinings (1996) propose three characteris$cs of neo-ins$tu$onal theory (includes developments to the original theory): - - - Ins$tu$onal context – organiza$on embed ins$tu$ons even though these ins$tu$ons have liCle or no impact on performance. The professional partnership from of organizing stems from the philosophy that professionals in a business venture should be jointly liable for their professional decisions. This is an ins$tu$onal feature rather than a ra$onal analysis of the most eJcient way to organize. Templates – pressures from ins$tu$ons push organiza$ons in the same sector to adopt the same or similar forms and designs, that is, templates for organizing, shaped by underpinning ideas and values. Resistance to change – templates for organizing cover not just designs and forms but also ways of thinking and thus iner$a. Ins$tu$onal theory therefor emphasizes the stability of arrangements and while accep$ng that change occurs it sees change as ‘reproduc$on and reinforcement of exis$ng models of thought and organiza$on’. In)uences on structure Choosing how to structure is not straighYorward and choices are closely linked to many factors. One of the most important links is the rela$onship between strategy and structure – as an organiza$on changes its strategy to respond to environmental triggers, so also should its structure change. The organiza$on’s own use of technology, par$cularly informa$on technology, will a:ect the way in which it is structured. Less tangible are the roles that organiza$onal culture and poli$cs play on structure. The consequences of de'cient organizaonal structures 1. Mo$va$on may be low because decisions are inconsistent, arbitrary or poorly communicated. People may hold unclear responsibili$es or have confusing repor$ng lines. 2. Decisions may be inadequate because informa$on may be inadequate. Decisions may not be communicated e:ec$vely, or decision making may be fragmented. 3. There may be problems of con8ict between departments because of a lack of coordina$on. People rarely work in teams from across departments and there is liCle aCempt. 4. Costs may be rising because excessive paperwork and procedures are both costly and distract people from important issues, such as mee$ng client needs. Strategy structure 't ‘Strategy is the long-term direc$on of an organiza$on’ (Johnson, Scholes and WhiLngton, 2014). There are two advantages of this de=ni$on: 24 Ge 1. It can include both deliberate, logical strategy and more incremental, emergent paCerns of strategy, as well as allow for both deliberate and unplanned ac$ons and outcomes. 2. It can include both strategies that emphasize di:erence and compe$$on, and those that recognize the roles of coopera$on and even imita$on. Strategies can exist at three levels: corporate level, business level and opera$onal level. Chandler’s strategy-structure thesis As strategies led to restructuring, Chandler concluded that structure follows strategy. The ‘structure follow strategy’ dictum is the reason why di:erent structures associated with di:erent strategies was simply economic eJciency. Amburgey and Dacin (1994) show that although there is a strategystructure rela$onship it is not a simple, one-way path; strategy has a stronger in8uence on structure than structure has on strategy. Mintzberg’s forces and forms Mintzberg (1991) o:ers the concepts of forces and forms that can be loosely translated as strategy and structures. The seven forces which drive the organiza$on are: - - - - The force for direc$on, which can be likened to having a ‘strategic vision’. This gives a sense of where the organiza$on must go as an integrated en$ty. The force for eJciency, which balances the costs and bene=ts – the lower the ra$o of costs to bene=ts, the higher the eJciency. The force for eJciency tends to encourage standardiza$on and formaliza$on, focusing on ra$onaliza$on and restructuring for economy. The force for pro=ciency, that is for carrying out tasks with high levels of knowledge and skills. The force for concentra$on, which means the opportunity for par$cular units to concentrate their e:orts on serving par$cular markets. This is necessary in organiza$on that are diversi=ed in structure. The force for innova$on, which encourages the search for new products or services or for di:erent ways of delivering them. The force for innova$on encourages adapta$on and learning. – The forces for coopera$on and compe$$on, are the forces Mintzberg calls ‘cataly$c’. Coopera$on describes the pulling together of ideology, that is, the culture of norms, beliefs and values that ‘knit a disparate set of people into a harmonious, coopera$ve en$ty’. Compe$$on describes the pulling apart of poli$cs in the sense of poli$cs as the nonlegi$mate, technically non-sanc$oned organiza$onal behavior. Mintzberg uses the term ‘con=gura$on’ to describe an organiza$on is driven towards by the system of forces. Mintzberg’s organizaonal forms - - Entrepreneurial form – tends to be low in formaliza$on and standardiza$on, but high in centraliza$on with authority located in a single person. Machine form – high formaliza$on and standardiza$on, centralized authority vested in rules and regula$ons, func$onal departments. - Professional form – high in complexity and formaliza$on, but low in centraliza$on; allows the employment of trained specialist sta: for the core work of the organiza$on. Adhocracy form – very low in standardiza$on and formaliza$on, liCle hierarchy, much use of temporary project teams. Diversi=ed form – a combina$on of func$ons and products, with products domina$ng; they can be of matrix form or organized as divisions on the basis of products/markets. Other in8uences on structure - - - Size: size posi$vely correlated to overall role specializa$on and formaliza$on of procedures. Large organiza$ons performed beCer when bureaucra$cally. However, in current $mes, organiza$ons could be considered large even though they do not directly employ many people. Technology: The choice of technology (e.g. small batch, large batch, mass produc$on) has a big in8uence on organiza$onal structure and par$cular forms of organizing (e.g. role specializa$on and formaliza$on of work) are best suited to par$cular systems of produc$on (Woodward, 1965). Perrow (1967) de=ned technology more generally and suggested that technology could be viewed as a combina$on of two variables: ‘task variability’ and ‘problem analysability’. Informaon technology: Informa$on and communica$on technology gives managers the ability to push informa$on closer to the point where it is used and to increase responsibility on employees to use it e:ec$vely. It also supports decentraliza$on, assists matrix and network structures, increases rou$niza$on of jobs, reduces hierarchy, creates closer links across supply chains and makes the boundaries between divisions less fuzzy. The in8uence of the external environment on structure Environmental stability and turbulence Organiza$ons had di:erent structures depending on whether they operated in stable environments or dynamic ones. Two main structural types were found: mechanis$c structures (bureaucracies and Mintzberg’s ‘machine’ form) that were more suited to stable unchanging environments; and organic structures (Mintzberg’s ‘adhocracy’ and ‘diversi=ed’ forms and Matrix/Project/Loosely coupled network organiza$on, which were more suited to the unpredictable, more dynamic environments. Robbins (2003) characterized environments in terms of three key dimensions: 1. Capacity of the environment, which refers to the degree to which it can support growth. 2. Stability in the environment; stable environments are low in vola$lity whereas unstable environments are characterized by a high degree of unpredictable change. 3. Environmental complexity, that is the degree of homogeneity or heterogeneity among environmental elements. 26 Given these three-dimensional de=ni$on of environment, Robbins concludes that the scarcer the capacity and the greater the degree of instability and complexity, the more organic a structure should be; the more abundant, stable and simple the environment, the more mechanis$c a structure should be. Socio-cultural inuences The desire of employees for more 8exible ways of organizing their home/leisure/work rela$onships, coupled with the opportuni$es for self-employment and/or virtual forms of working, may force organiza$onal structures into newer forms. Those working in organiza$ons are more likely to remain in organiza$ons whose structures, with their par$cular degrees of centraliza$on, formaliza$on, specializa$on and tradi$onalism, suit their individual and group preferences and needs. Organizational structure and change Even if changes in strategy, size, technology and environmental factors do build forces for changes in organiza$onal structure, there are other factors that may accelerate or, more likely, imped this process. Therefore, successful structural change is diJcult to achieve without some sort of unintended adverse consequences. Structural inera and populaon ecology Internal forces crea$ng iner$a include: - - Past investment in plant, technology and people that is not easily switched into other tasks. Decision makers having to work with incomplete informa$on about environments (bounded ra$onality). Because people have incomplete informa$on, they cannot be sure that decisions will bring about the desired changes – so unless the situa$on is dras$c people stay with the structure they know and wait un$l new informa$on is obtained. Structural change which means disturbance to the ‘poli$cal equilibria’ that exist at any point in $me. Organiza$onal history leads to ways of opera$ng that become embedded. Organiza$ons survive because they have sets of successful rou$nes that are used to solve problems and which automa$cally come into play following par$cular signals form the environment. By their embedded nature, these rou$nes are very diJcult to modify. External forces include: - - The barriers to exi$ng one industry and entering another such as regula$on, capital investment and market knowledge. The costs of acquiring specialist knowledge about unfamiliar markets. Organiza$ons acquire a certain public legi$macy from their past ac$ons which can act as an asset. ACempts to move into new areas can be compromised by lack of legi$macy in those areas. A successful adap$ve strategy for one organiza$on may not lead to successful adapta$on by another – there is no general strategy that organiza$ons follow. Iner$a theory suggests that because older organiza$ons have more stable and standardized rou$nes they will have higher iner$a. Likewise, as size increases, so does predictability and in8exibility and thus iner$a. Hence, both age and size should increase resistance to change. Organiza$onal complexity is also assumed to raise iner$a. 27