Proposed factors influencing strategic inertia/strategic renewal in organizations.

Author:Hopkins, Willie E.
Position:Report - Abstract
 
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CONCEPTUAL MODEL AND PROPOSITIONS

The model containing factors that we propose influence strategic inertia/strategic renewal in organizations is presented in Figure 1. In the next several sections of this paper, we define the concepts comprising the model and discuss theory associated with each. We then set forth propositions derived from the discussions. As indicated by P1 in the model, the relationship between the organizational goal of successful strategic renewal/diminished strategic inertia and middle management's commitment to this goal is our lead discussion. To facilitate this lead-in discussion, we define middle management as those positioned two or three levels below the CEO (Dutton & Ashford, 1993) and one level above the operating level (Huy, 2001). We define top management as the individual(s) whose actions and behaviors are the ultimate source of strategic inertia or strategic renewal in organizations (cf. Hambrick & Mason, 1984). We also note that the goal of successful strategic renewal is achieved when organizations have recombined their resources in such a way that they are in an improved position vis-a-vis their competitors (Burgleman, 1991; Ramirez & Wallin, 2000), and the goal of diminished strategic inertia is achieved when the rate of organizational change is in balance with the rate of environmental change (cf. Blettner, 2008; Hodgkinson & Wright, 2002; Gresov, Haveman & Oliva, 1993; Huff, et al. 1992).

Commitment Factor

Exchange theory (March & Simon, 1958; Homans, 1958; Gouldner, 1960) is used in this paper as the theoretical foundation for middle management commitment. Within the context of organizations, a conclusion one might draw from this theory is that middle management's commitment to organizations depend on their perceived balance of reward utilities over input utilities. In other words, if middle managers perceive that there is a balance between their job performance and the rewards they receive for their job performance, the greater should be their commitment to the organization (cf. Hrebiniak & Alutto, 1972). Job satisfaction is concerned with the current balance of reward and input utilities, and is viewed as a main exchange variable (cf. Amernic & Aranya, 1983). Job challenge, as a component of job satisfaction, has been used to assess the current balance of reward and input utilities. The component of job challenge that is most relevant to our exploration is creating change, with individuals having a clear goal to change a situation, but a loosely defined role that gives them the freedom to determine how to accomplish the goal (cf. McCall, Lombardo & Morrison, 1988; McCauley, Ohlott & Ruderman, 1994; McCauley, Ruderman, Ohlott & Morrow, 1999).

Over the years, various definitions of commitment have derived from exchange theory. For example, managerial commitment has been defined as "engaging in and maintaining behaviors that help others achieve a goal" (Cooper, 2006). Similarly, organizational commitment has been defined as a strong belief in and acceptance of organizational goals (Porter, Steers & Mowday (1974). A component of this definition that is relevant to our exploration views a committed individual as one who also possesses a willingness to exert considerable effort on behalf of the organization and engages in and maintains the type of behaviors that help organizations achieve their goals. Drawing on these definitions, and for purposes of this paper, we define middle management commitment as a willingness to engage in and maintain the types of behaviors that help organizations to achieve the desired goal of successful strategic renewal/diminished strategic inertia.

Achieving the goal of diminished strategic inertia may require organizations to undergo significant change to achieve the goal of strategic renewal (Floyd & Lane, 2000), and change management is viewed as being an integral, inescapable part of middle management's role in organizations (Floyd & Wooldridge, 1994). Supporting this view, several other studies (cf. Burgelman, 1991; Burgelman, 1983; Miner, 1994; Nonaka, 1988; Van Cauwenbergh & Cool, 1982) suggest that middle managers can play a key role during the change process by championing change efforts. It has also been argued that a committed layer of middle managers is essential for successful change (Nonaka, 1991). However, exchange theory would suggest that if middle managers perceive that the balance of reward utilities over input utilities is not in their favor, particularly with respect to the challenging component of job satisfaction (i.e., creating change, with individuals having a clear goal to change a situation, but a loosely defined role that gives them the freedom to determine how to accomplish the goal), their commitment to helping organizations achieve the successful strategic renewal/diminished strategic inertia goal is likely to be low.

[P.sub.1] The higher middle management's commitment is to the organizational goal of successful strategic renewal/diminished strategic inertia the higher the likelihood that this goal will be achieved, and vice-versa

Empowerment Factor

Self-determination is argued to form the theoretical foundation for empowerment (Fetterman, 1996), and is considered to be the single and most critical component of this concept (Sprague & Hayes, 2000). Four dimensions of self-determination have been identified in the extant literature: (1) consistency and perseverance in activities, (2) the courage to take risks, (3) initiative and proactivity, and (4) the ability to voice one's opinion (cf. Hur, 2006). Within the context of organizations, self-determination has been defined as the belief that one has autonomy or control over how one does his or her own work (Deci & Ryan, 1985; Wagner, 1995). Consistent with this definition, Quinn and Spritzer (1999) opine that empowered people have a sense that they are free to choose how to do their work and are not micro-managed. An empirical study conducted by Antonioni (1999) confirms the opinions advocated in prior research.

In his study, containing a sample of more than a thousand mid-level managers, Antonioni found that these managers felt most empowered when top management delegated decision-making tasks without requiring them to report back after tasks were completed. He also reported that they experienced autonomy, were able to influence the work they did, and felt confident in their abilities to do the work. What these findings suggest is that when middle managers feel empowered, they perceive that the balance of reward utilities over input utilities is in their favor, with respect to the challenging component of job satisfaction--i.e., creating change, having a clear goal to change a situation, and having a loosely defined role that gives them the freedom to determine how to accomplish the goal). The relationship between exchange theory and self-determination (as the theoretical foundation for empowerment) in organizations is also surfaced. That is, studies are in agreement that perceived empowerment is an antecedent to employee commitment to organizational goals (cf. Bordin, Bartram & Casimir, 2006; Seibert, Wang & Courtright, 2011; Liu, Fellows, & Chiu, 2006). With respect to the organizational goal of successful strategic renewal/diminished strategic inertia, the following proposition seems appropriate:

[P.sub.2] Middle managers who perceive that they are empowered to affect the organizational goal of successful strategic renewal/diminished strategic inertia will be more committed to that goal than middle managers who perceive that they are not so empowered

Mindset Factor

Originally developed within the domain of problem solving (Kulpe, 1904), mindset theory (Gollwitzer, 1990) postulates that the unique tasks associated with one's pursuit of a goal lead to the activation of cognitive procedures, and the sum total of the activated cognitive procedures is referred to as mindset (cf. Bargh & Chartrand, 2000; Heckhausen & Gollwitzer, 1987; Smith & Branscombe, 1987).Within the context of decision-making theory, mindset has been described as a set of assumptions which is so established in the minds of people that it creates a powerful incentive within them to continue to adopt or accept prior choices (cf. Blackburn, 1998; Einhorn & Hogarth, 1981; Pitz & Sachs, 1984). Gollwitzer, Heckhausen, and Steller (1990) contend that the type of information people are attuned to in their environments, how they interpret this information, and the thoughts and actions produced as a result of this process are all influenced by their mindset.

A person's mindset is also argued to serve as a bias by limiting the information they retrieve from their environment, how it is perceived, and the actions taken from it (Taylor & Gollwitzer, 1995). Other decision theory research (e.g., Kahneman & Tversky, 1979) contends that mindset also shape people's predisposition towards risk. As noted earlier in this paper, the actions taken by top management are the ultimate source of strategic inertia/strategic renewal in organizations (cf. Hambrick & Mason, 1984). An inference we draw from the foregoing descriptions of mindset is that top managers with a mindset that is risk oriented are predisposed to take the types of strategic actions that result in strategic renewal, and those with a mindset that is less risk oriented are not so disposed.

In this paper, we consider two types of top management mindsets that reflect these dichotomous risk predispositions. The entrepreneurial mindset (Ireland, Hitt, & Sirmon, 2003; McGrath & MacMillan, 2000) is the first type, and the managerial mindset (Busenitz & Barney, 1997; Manimala, 1992; Miller, 1993) is the second type. The entrepreneurial mindset refers to the extensive use of rules of thumb and individual beliefs in the decisions involved in strategic innovations, where rules of thumb represent simplifying strategies or decision heuristics based on...

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