Organization Development and Change
Chapter Twenty Two:
Transorganizational Change
Thomas G. Cummings
Christopher G. Worley
Learning Objectives
for Chapter Twenty Two
To understand the rational behind
transorganizational interventions

To compare and contrast the three types of
transorganizational OD interventions: mergers
and acquisitions, strategic alliance interventions,
and network interventions within each category
HS 22-2
Transorganizational Rationale
Transorganizational strategies allow
organizations to perform tasks that are too
costly and complicated for single organizations
to perform
Goods and services are exchanged between
organizations and transactions occur
Transorganizational strategies work best when
transactions occur frequently and are well
understood
HS 22-3
Transorganizational Systems
Members maintain their separate organizational
identities and goals
 Tend to be underorganized and member
organizations are loosely coupled
 Different from mergers and acquisitions
 Network interventions may be appropriate

HS 22-4
Mergers and Acquisitions

Merger - the integration of two previously
independent organizations into a completely new
organization

Acquisition - the purchase of one organization by
another for integration into the acquiring
organization.

Distinct from transorganizational systems, such as
alliances and networks, because at least one of the
organizations ceases to exist.
HS 22-5
Merger and Acquisition Rationale
Diversification
Gaining access to global markets,
technology, or other resources
Achieving operational efficiencies,
improved innovation, or resource sharing
HS 23-6
Merger and Acquisition
Application Stages

Pre-combination Phase
 The organization must identify a candidate organization,
work with it to gather information about each other, and
plan the implementation and integration activities

Legal Combination Phase
 The two organizations settle on the terms of the deal, gain
approval from regulatory agencies and shareholders, and
file appropriate legal documents

Operational Combination Phase
 Implementing the operational, technical and cultural
integration activities
HS 22-7
Strategic Alliances
When two organizations formally agree to
pursue a set of goals
 There is sharing of resources, intellectual
property, people, capital, technology, capabilities
or physical assets
 Common alliances are licensing agreements,
franchises, long-term contracts, and joint
ventures

HS 22-8
Alliance Intervention
Application Stages
Alliance Strategy Formulation
 Clarify the business strategy and why an alliance is needed
Partner Selection
 Leverage similarities and differences to create competitive
advantage
Alliance Structuring and Start-up
 Build and leverage trust in the relationship
Alliance Operation and Adjustment
Bridging Role
HS 24-9
Network Interventions



Involves three or more companies joined together for a
common purpose
Each organization in the network has goals related to
the network as well as those focused on self-interest
Characterized by two types of change: creating the
initial network (transorganizational development) and
managing change within an established network
HS 22-10
Application Stages for
Transorganizational Development
Identification
Who should
belong to the
transorganizational
System (TS)?
• Relevant skills,
knowledge,
and resources
• Key stakeholders
Convention
Should a TS
be created?
• Costs and
benefits
• Task
perceptions
Organization
Evaluation
How to organize
for task
performance?
• Communication
• Leadership
• Policies and
procedures
How is the TS
performing?
• Performance
outcomes
• Quality of
interaction
• Member
satisfaction
HS 22-11
Managing Network Change
Create instability in the network
Manage the tipping point
The Law of the Few: Salespeople, Mavens,
Connectors
 Stickiness
The Power of Context
Rely on self-organization
HS 23-12
2-13