PATH DEPENDENCY AND ORGANIZATION CHANGE: THREE PARABLES

Posted by Kathryn Schwartz on February 23, 2014
Organizational Practices

An automobile company hired a prestigious professor who was a guru of job enrichment. To compete with ambitious foreign auto companies based on low cost and competitive quality, it chose to transform the nature of jobsthrough work redesign. First of all, it administered diagnostic tests to evaluate the nature of current jobs, to detect problems of current systems, and to assess the employee attitudes toward their work. After appraising the whole process, the professor advised top executives that it was essential to reform the production sequence and processesin order to give enrichedjobs to employees. Such changes in the production processes would have required the rearrangement of machines and adoption of new technology. Unfortunately, this company had purchased almost 1 billion dollars’ worth of new robots to aid with the automation of manufacturing the previous year. The restructuring of production processes might make these new robots obsolete. After long discussions with board of directors, the C.E.O.of this company informed the professor that management had decided to nullify the professor’s suggested changes.

The executive of a major software companywas worried about her company’s falling revenuesand market shares. To remedy this, first, she used solutions that had been used to solve similar problems in the past, such as providing contingent incentive plans, hiring talented software programmers from competitors, and asking for recommendations from consultants. After implementing these practices, she found that circumstances did not change, but actually worsened. She could not understand why solutions that had worked in the past were no longer effective and why her firm continued to lose its competitiveness even though there were no fatal errors or dysfunction in current management systems.

The above three examplesrepresent common problems that companies have faced when trying topursueorganizational change (OC), which involves adopting new management practices or reforming old ones. Possible factors contributing to such problems can vary, including organization culture, lack of resources or leadership, and mistrust between employees and employers (Aldrich, 1986; Boeker, 1997; Pettigrew, 1985). As a complementary perspective to these explanations, this paper adopts path dependency theory to explain the challenges of pursuing organizational changes by adopting new management practices.

Tags: , ,