Knowledge that Transforms

This paper examines the impact of downsizing strategy on dimensions and types of organizational structure. Four downsizing strategies are developed to address organization and environment decline. ...

Research on organizational decline suggests that some organizations cope with decline by becoming more rigid, while others become more flexible and risk taking. Few studies have examined the specific managerial activities that lead to the more flexible course. This study reanalyzes a case of organizational decline in a small midwestern school district that coped successfully by implementing a carefully structured participation process. Administrative leaders in the district, in particular the superintendent, “opened a conversation” through a carefully arranged and supported task force with a broad group of citizens, staff, teachers and students about the goals and priorities of the district. The citizens' committee efforts continued for six months and resulted in a strong consensus for action (a tax levy, closing a school, restatement of program priorities and staff rollbacks). The case points to managerial actions that other organizations could follow to remain flexible and vitalized during decline. Critical steps included: shaping the perceptual fields of participants through information and disclosure in order to help participants recognize a serious and urgent problem without introducing crisis; careful management and operational support of task formats for broadened participation, with minimal influence on the substance of their recommendations; leadership through coaching of submanagers who facilitated the process indirectly; anticipating and dealing directly with conflicts by balancing views and channeling different interests into shared governance opportunities where heterogeneity was valued and institutional knowledge could be gained. The authors advance a political model, based on management as a process of governance, to explain how the leadership in this organization conceptualized its role. Management acted as a steward for decisions about organizational goals and legitimacy that others would make. By surrendering the power to shape reality for others and instead allowing them through discourse to establish a coherent policy out of heterogeneity, the superintendent created commitment to the organization during a time of stress and eventually a robust consensus which became the basis for action. A model of shared governance that was in harmony with the community's history and values and that reflected the superintendent's personal philosophy was implemented through specific activities. The shared governance model provides a unified conceptual explanation for why the superintendent acted as he did, and it highlights the specific functions managers might perform if the organization is to respond flexibly during decline. The political interpretation extends and refines current theoretical models of organizational decline processes and suggests approaches that are potentially applicable to other organizations.

Honesty is a key element of ethical behavior in organizations, yet has received little theoretical or empirical attention. This article derives a model of the antecedents of deception in organizations. Self-interest theories, such as agency theory, and prosocial behavior theories of behavior are reviewed and an argument developed that intrapersonal conflict may meld the divergent theories and explain lying in organizations. Role theory identifies potential sources of intrapersonal conflict in organizations that may serve as antecedents to lying. Different types of role conflict are examined, each of which may lead to distress, and, in turn, may be resolved through deception: People may behave according to one role demand, and then state, or create the impression of, having behaved according to another role demand.

In 1990, in the first issue of Organization Science, Paul Hirsch and his co-authors Ray Friedman and Mitchell Koza published a caveat to researchers about possible pitfalls of using economic models in behaviorally oriented strategy and policy research (Hirsch et al. 1990). “Crossroads” provides a context for a reply to this paper and Todd Zenger and William Hesterly have taken the opportunity to do so. They seek to clarify where economics stands with respect to fundamental assumptions about humans, organizations, markets and investors. They concur with many of Hirsch, Friedman, and Koza's (1990) warnings concerning the adoption of unrealistic assumptions, but disagree that the assumptions they impute to economics are universally held by economic models, particularly those models most often used by strategy and policy researchers. Zenger and Hesterly show that there are significant differences among economic theories in their fundamental assumptions. Finally, they suggest how strategy and policy researchers might constructively respond to economic approaches to strategy and organization. They argue that there is more to economic assumptions and models than was noted in the initial article and suggest ways in which collaboration may and does occur between economics and behavioral approaches to the study of organizational strategy and policy. Taken together, the papers by Hirsch et al. and by Zenger and Hesterly serve to illuminate and extend an important debate (Introduction by Peter J. Frost).