PATH DEPENDENCY AND ORGANIZATION CHANGE: INTRODUCTION

Posted by Kathryn Schwartz on February 21, 2014
Organizational Practices

INTRODUCTION

Most companies recognize the great importance and high effectiveness of new management practices. For example, Job Characteristics Theory (Hackman & Oldham, 1980) , empirically showed that job characteristics had significant impacts on motivation, job performance, job satisfaction, and has reduced absenteeism and turnover rates. High performance work systems alsoindicated that organizationswould gain significant competitive advantages by putting together the right human resource management systems(Huselid, 1995). In addition, popular business magazines are touting the effectiveness of such managementpractices by covering the success stories of Southwest airlines, SAS, Wal – Mart and GE. As a consequence, many companies continue to adopt management practices to gain superior performance over their competitors.

However, in reality, only a few such firms have actually enjoyed competitive advantages from the adoption of management practices.Why do most companies fail to successfully implement management systems? This paper explains why firms have difficulties to implement management practices with the lens of path dependency theory. Furthermore, this paper suggestspossible ways to overcome the path dependence of the firms while implementing management practices.

An online music download company adopted self -management team practices to encourage their employees to take responsibility and be autonomousto their tasks. The firm changed the nature of work to increase reciprocal interdependence among team members, embraced a skill-based and team-based pay system, empowered teams to make decisions about their tasks, and involved them in peer evaluations. In addition, top management provided full attention and resources to support this new management practices. However, the company had to abandon eventuallythem due to the severe resistance from its unions and middle managers.

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