Structural Constraints or Information Overload? Determinants of Problem Intensity in Reorganization Processes

Mühlau, P. and R. Wittek (2004). Structural Constraints or Information Overload? Determinants of Problem Intensity in Reorganization Processes. Unpublished Manuscript.

Best Conference Paper Award
Irish Academy of Management Conference, Strategic Management Track

‘Change or perish!’ is one of the dominant motives in business and organization studies during the last decades. However, many organizational change projects fail or do not yield the expected beneficial outcomes. A crucial antecedent and symptom of failed organizational change are unanticipated problems that emerge during the change process. In this paper, we examine two complementary mechanisms associated with why organizational change processes are frequently problematic. First, external structural constraints increase the likelihood of problems because the organization is in the tight grip of existing relations – e.g. strong dependence on its supplier – or the organization faces the conformative pressure of institutions which restrict its maneuverability. Here, the cause of failure is the discrepancy between the feasible set of actions management can take, and the actions required for smooth and successful change. Second, internal limitations lead to problems because the complexity and opacity of organizational change projects exceed management’s capacity to design and adapt appropriate and successful reorganization plans. Hypotheses associated with these mechanisms are tested with data from a stratified random sample of Dutch companies reporting about more than 500 organizational change processes. Negative binomial regression analysis provide some support for the working of both mechanisms. The severity of problems leading to the reorganization is the best predictor of problem severity encountered during reorganization processes.

Keywords: Organizational Change; structural constraints; bounded rationality; inertia; problems