Organizational Change
Chapter 14
IBUS 681, Dr. Yang
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Learning Objectives
Define organizational change
Learn why managing change is an
important part of international
management
Understand the individual, group, and
structural levels of change
Know what internal and external factors
influence organizational change
IBUS 681, Dr. Yang.
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Learning Objectives (cont.)
Explain the role of national and organizational
culture on organizational stability and change
Understand the processes involved in
planning organizational change, including
sources of resistance to change and ways to
overcome them
Understand how macro level theories of
organizational change influence the
management of change
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There is no permanent
organizational chart for the world…
It is of supreme importance to be
ready at all times to take
advantage of new opportunities.
Roberto C. Goizueta
Former Chairman and CEO
Coca-Cola Company
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Organizational Change
Reconfigures components of an
organization to increase efficiency and
effectiveness
Including any alternations in people,
structure, or technology
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Levels of Organizational Change
Levels of analysis:
Structural change
Group change
Individual change
Cross-culture variation
in restructuring
U.S.
Japan
Germany
China
South Africa
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Internal Change Factors
Technical Production
Processes
Production
New Technologies
Quality
Political Processes
Organizational
Culture
Values
Norms
New Member
Socialization
New Organizational Goals
Conflict
New Leadership
IBUS 681, Dr. Yang
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External Change Factors
Immediate
Environment
General Environment
Domestic Competition
Population Trends
Social Trends
Government Actions
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Foreign Competition
Social Movements
Political-Economic
Movements
Technology
Professionalization
Culture Contact
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External Change Factors for Germany Inc.
Factors
Post WWII
How it is changing
Organizational
change
Big companies and financial
institutions controlled stakes
in one another, offering
Ownership mutual protection from
Structure hostile takeovers and outside
pressures. This stability
helped Germany rebuild
shattered industries.
Companies are unwinding
their stakes in on another to
profit from a cut in the
capital-gaining tax in 2001,
free up capital for their main
businesses and reduce the
risk that non-core holdings
will generate losses.
Companies are
subject to more
intense capital
market pressures
Co-determination gave labor
50% of seats on corporate
management boards, laying
the foundation for decades of
labor peace.
A center-right government is
likely to assume power and
try to curtail unions,
weakening ties between
labor and management.
Supervisory boards
are giving CEOs
more decisionmaking power
Foreign investors have little
or no say in running
companies or forcing
management changes.
Cross-border mergers were
rare.
A glut of foreign investment,
including private equity
funds that now total $54
billion, is putting pressure
on German companies to
restructure.
Spin-offs, mergers
and plant shutdowns
are accelerating.
MGMTLabor
Relations
Outside
Capital
IBUS 681, Dr. Yang
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National Culture and
Organizational Change
Time Orientation:
Resistance to Change
Past
Present
Future
Short-term vs. longterm oriented
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Tradition
Habit
Resource Limitations
Power and Influence
Fear of the Unknown
Values
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Resistance to Change in Different
Clusters of Countries
Dimension Scores
Resistance level PD
4
(strongest)
3 (strong)
ID
UA
Country Clusters
high
low
high
Most of Latin America, Portugal,
Korea, the former Yugoslavia
med
med
high
Japan
high
high
high
Belgium,France
high
med
high
Spain, Argentina, Brazil, Greece,
Turkey, Arab Countries
high
low
med
Indonesia, Thailand, Taiwan,
Iran, Pakistan, African countries
IBUS 681, Dr. Yang
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Resistance to Change in Different
Clusters of Countries (cont.)
Dimension Scores
Resistance level
2 (medium)
PD
ID
high
low
low
med
Austria, Israel
high
Italy, Germany, Switzerland,
South Africa
med
UA
high
low
med
1 (week)
0 (weakest)
Country Clusters
Philippines, Malaysia, India
Singapore, Hong Kong, Jamaica
med
high
low
low
high
low
IBUS 681, Dr. Yang
Anglo countries, Nordic
countries, Netherlands
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Managing Change
Organization development
Lewin’s model of change
Managing resistance to change
Impact of cultural values
OD model
Consulting
Power versus employee participation
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Lewin’s Model of Change
Phase
Phase
Phase
Phase
Phase
1
2
3
4
5
-
Diagnosis
Unfreezing
Movement
Refreezing
Renewal
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Managing Resistance to Change
Education and communication
Participation and involvement
Negotiation and agreement
Manipulation and cooptation
Coercion
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The Interaction of National and
Organizational Cultures
National culture
Organizational culture
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Change Strategies for Different
Groups of Countries
Dimension Scores
Change
Strategy
PD
ID
MA
UA
Country Clusters
5 (power)
High
low
high
high
Columbia, Ecuador,
Venezuela, Mexico
4 (power,
manipulation
/persuasion)
High
low
med
high
Rest of Latin America,
Spain, Portugal, former
Yugoslavia, Greece, Turkey,
Arab countries, Korea
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Change Strategies for Different Groups of
Countries (cont.)
Change
Strategy
Dimension Scores
PD
ID
MA
UA
Country Clusters
med med
high high
high low
high high
med high
med low
high low
med low
med
high
low
low
2 (manipulation/
persuasion,
consultation)
low med
med high
med
high
high
med
Austria, Israel
Italy, Germany,Switzerland,
South Africa
1 (consultation,
participation)
low
low
high
low
low
low
Anglo countries
Nordic countries, Netherlands
3 (manipulation/
persuasion)
high
high
Japan
Belgium, France
Indonesia, Thailand, Taiwan,
Iran, Pakistan, African countries
Philippines, Malaysia, India
Singapore, Hong Kong, Jamaica
IBUS 681, Dr. Yang
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Macro-organizational Change
Theories
Life-cycle theory
Teleological theory
Dialectical theory
Evolutionary theory
Cultural implications
IBUS 681, Dr. Yang
12-17
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Convergence or Divergence?
Competitive pressures
Attempts to standardize
product quality on a
worldwide basis
Diffusion of advanced
management techniques
Transfer of technological
innovations
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Problems with diffusion
of organizational
innovations
Culture and local
conditions as barriers to
change
Cultural and legal
conditions influence and
limit change and
methods for change.
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Implications for Managers
Culture influences organizational change.
When formulating a change program, it is necessary
to assess need for change, what changes are
appropriate, nature of resistance to change, and how
to implement planned changes.
Be aware of internal and external forces for change
and how different cultures may respond to them.
Understand larger processes affecting organizational
change and how they may limit change.
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12-19
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