Emergence of strategic direction, organizational structure and employee integration : a framework for the Dialectic Organization

Abstract

The main objective of this thesis is to develop a system dynamics model of organizational change. The Organizational Studies, Strategic Management and System Dynamic fields will be reviewed, concluding that there are gaps in the extant literature: none of them has been successful in defining the minimum set of processes and variables required to characterize organizational change. Through an exploratory study using a comparative-case study analysis, it was found that, on the one hand, under low requirements for change (i.e. stable organizational-environment fit), organizations tend to increase their inertia (i.e. tend to be more bureaucratic). On the other hand under high requirements for change (i.e. unstable organizational-environment fit), organizations tend to try to reduce their inertia (i.e. increasing their ability to change), as a way to adapt themselves to the environment. Through an analysis of previous simulation models of the organization and environment interface, it was found that the inertia-performance relationship follows an inverted U-shape. When this relationship is included in current models of organizational change, they become highly instable. Through the development of a system dynamics model, it was found that the stability of the system is achieved through the inclusion of two additional sectors: employee motivation and employee integration. Thus, this exploratory study establishes that apparently three main processes are required, as a minimum, to characterize organizational change: the emergence of strategic direction, the emergence of organizational structure and the emergence of employee integration. Within this view, the organization could be seen as a double-edged reduction of complexity system: on the one hand the organization needs to reduce the complexity of the environment in order to create an "internal order". But on the other hand, it needs to reduce the complexity of the employees in order to motivate them to participate in its internal processes. We define this system as a "Dialectic Organization".