William McKinley

Downscoping : how to tame the diversified firm

Large, diversified firms face unique challenges as they compete worldwide, and corporate restructuring is one way multinationals strive for competitive advantage. Weighing the pros and cons of a variety of approaches to restructuring, Downscoping offers executives a clear, strategic path through the maze. The authors show that when a multinational conglomerate fails to compete effectively, too much diversification may be the culprit. Whether the result of weak corporate governance or poor corporate strategy, over-diversification can make managers, unfamiliar with some of the markets in which they compete, opt for safety over innovation. This risk-aversion and lack of long-range commitment to innovation lead inevitably to stagnation over the longer term. The answer is not downsizing-closing offices and laying off personnel-but downscoping: a strategic approach to restructuring. The options include incentive and compensation adjustments for executives, leveraged buy-outs and capital structure changes, focusing on core skills, diversifying internationally while focusing on businesses in which a firm has strong competencies, and buying and selling mature businesses where product development is not a great concern. Regardless of the approach, executives must exercise strategic leadership during and after restructuring, including providing strategic direction, exploiting core competencies, deeloping human capital and sustaining the corporate culture. Based on systematic research rather than casual observation, Downscoping provides a strong description of restructuring alternatives and their resulting tradeoffs. Its specific guidelines for maintaining competitiveness will be essential reading for managers involved in corporate restructuring.

SOME UNANTICIPATED CONSEQUENCES OF ORGANIZATIONAL RESTRUCTURING

We explore two consequences of organizational restructuring that are unanticipated by managers. At the cognitive level of analysis, we propose that organizational restructuring has the unanticipated consequence of producing cognitive order for top executives, and at the environmental level, organizational restructuring has the unanticipated consequence of contributing to long-term environmental turbulence. Both feed back to promote further organizational restructuring, making restructuring a self-reinforcing loop. We derive formal propositions from this theoretical framework, discuss issues in testing the propositions, and specify implications for future theory building and management practice.

Ideas, Complexity, and Innovation.

A version of this paper was read at the 1978 meetings of the International Sociological Association in Uppsala, Sweden. The Research Foundation of the City University of New York provided funds for the research. The authors acknowledge suggestions made by John Hammond and especially want to thank Hilary Silver for her help with the computer analysis. We are indebted to the ASQ reviewers, whose detailed criticisms on earlier drafts were extremely valuable.

Complexity and Administrative Intensity: The Case of Declining Organizations

Portions of this paper were presented at the 16th Annual Meeting of the American Institute for Decision Sciences, Toronto, November 1984. The author would like to thank Doug Baker, Joe Cheng, Dick Daft, Linda Pike, Al Schick, and three anonymous ASQ reviewers for their helpful comments and suggestions on earlier drafts of the paper. I am also indebted to Peter Blau for his guidance in the original research on which this paper is based. Address all correspondence to: William McKinley, Department of Management and Systems, Washington State University, Pullman, WA 99164-4726. Recent research has investigated administrative-component changes during organizational growth and decline but has given little attention to whether decline might alter relationships that exist during growth periods between the administrative component and other predictors of it. This study examines the moderating effect of organizational decline on the relationship between technical and structural complexity and administrative intensity. Based on a theoretical discussion of the different conditions present during organizational growth and decline, it is hypothesized that the greater the tendency toward decline, the less positive the relationship between technical and structural complexity and administrative intensity. Results from a study of manufacturing organizations support the hypothesis and suggest that the frequently replicated positive relationship between internal complexity and administrative intensity may be contingent on whether the organizations examined are growing or declining. The results are consistent with the emerging view that different factors determine administrative-component levels during growth and decline and also suggest that decline may be a force for weakening linkages between internal context and structure.

Some Ideological Foundations of Organizational Downsizing

This article explores the ideological foundations of organizational downsizing in the 1990s and focuses on the ideology of employee self-reliance and the ideology of debureaucratization. We document these two managerial ideologies by examining business press articles and popular management literature in which they are being promulgated. Based on past organizational research that has traced the effects of ideologies on organizations, we argue that these two ideologies increase the likelihood of downsizing. This theoretical framework is developed, and its implications for future research, management practice, and government policy are discussed.

Toward an Integration of Organization Research and Practice: A Contingency Study of Bureaucratic Control and Performance in Scientific Settings.

This is an equally coauthored study. We would like tothankJan Beyer, Carlos Kruytbosch, Anthony Cobb, and three anonymousASQ reviewers fortheir helpful comments on earlier drafts of this paper. Portions of this paper were presented at the Albany Conference on Organization Theory and Public Policy, Albany, NY, April 1982. Three characteristics of utilizable research practical relevance, applicability of findings, and specificity -were identified and used as a basis for assessing the usefulness of the results from this study. The focus of the study was the contingency effect of bureaucratic control on organizational performance, and the organizations studied were scientific research units in universities. It was hypothesized that bureaucratic control, exercised through influence from national science policy on the choice of unit research themes, will have a positive effect on research-unit productivity in scientific fields with highly developed paradigms. This effect, however, will decline as paradigm development decreases and will become negative in fields with less developed paradigms. Data from an international sample (N = 288) of academic research units supported the hypothesis. Implications for designing national science policy to foster research productivity are discussed, and suggestions are made for the conduct of organization research that has practical utility for decision makers.

Organizational Theory Development: Displacement of Ends?:

In this essay I argue that organization theory has witnessed a significant displacement of ends over the last 30 years. Whereas in the 1960s and 1970s the dominant goal of the discipline was achieving consensus on the validity status of theories, today the overriding goal appears to be development of new theory. Formerly new theory development was considered a means to the end of attaining consensus on theory validity, but was not the only activity deemed necessary to accomplish that goal. In addition, instrumental standardization and replication were viewed as important. The contemporary displacement of ends toward new theory development creates the paradox that organization theory today is both epistemologically simpler (in terms of the intellectual activity deemed desirable) and more complex theoretically than it was 30 years ago. I discuss the advantages and disadvantages of the displacement of ends toward new theory development in organization theory, and offer some possible remedies that are designed to reallocate priorities and resources toward the instrumentation, theory testing, and replication components of the research process. I also propose an agenda of future research in the history and sociology of organization science that would study the displacement of ends hypothesized here, with a view to improving our understanding of how organization theory has evolved and how its knowledge could be made more useful to managers.

Environmental regulatory influence and product innovation: the contingency effects of organizational characteristics

Abstract This paper examines the relationship between environmental regulatory influence and product innovation in a multi-industry sample of manufacturing organizations. Our theory argues that the influence of environmental regulation on the level of product innovation in a manufacturing organization is at least partially contingent on the organizations internal characteristics—in particular, its structural flexibility and production process flexibility. Hypotheses are derived from our theory and tested, and the results are consistent with the conclusion that structural flexibility and production process flexibility moderate the environmental regulatory influence–product innovation relationship. Whether environmental regulation inhibits or promotes product innovation seems to depend at least in part on certain internal features of an organization. We discuss implications of our results for future organization studies research on environmental regulation, and for research on other types of external constraints on organizational performance.

Decreasing Organizational Size: To Untangle or not to Untangle?

This article presents comments on an article published in a previous issue that discussed the effects that work force decline has on organizational structures. In that article the authors presented two models that outlined the results that declining financial resources and a decreasing work force has on the structure of an organization. This article suggests that their argument about the long-term influences of work force decline needs to be reexamined. The author notes that the process of organizational decline is more complex than suggested in the previous work and attempts to show that the process involves more than just a reduction in the scale of operations. He also asserts that the decline process is not simply the reverse of the growth process, as is suggested in the original work.

Ideological Foundations of Perceived Contract Breach Associated With Downsizing: An Empirical Investigation

This paper explores the effects of three managerial ideologies on the degree of psychological contract breach perceived in connection with a downsizing event. Results from surveys conducted in the U.S. and Singapore suggest that a strong belief in the ideologies of market competition or shareholder interest reduces the perceived contract breach associated with a downsizing, while strong belief in the third ideology, the ideology of employee worth, has the opposite effect. Theoretical implications and suggestions for future research are discussed.