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HOW MANAGEMENT PRACTICES INFLUENCE ORGANIZATIONAL CULTURE
AND BEHAVIORS. A MULTILEVEL ANALYSIS OF CULTURAL PROPERTIES AND
THEIR EFFECTS
Bruno Bolognini
Università di Genova
Dipartimento di Scienze politiche e sociali
Largo Zecca 8/16
16121 Genova
ITALY
Tel: 0039102099015
Fax: 0039102099027
e-mail: bologni@unige.it
CeSMO Working paper 2007-05-03
This research has benefited from financing by Università di Genova, ex 60%
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HOW MANAGEMENT PRACTICES INFLUENCE ORGANIZATIONAL CULTURE
AND BEHAVIORS. A MULTILEVEL ANALYSIS OF CULTURAL PROPERTIES AND
THEIR EFFECTS
Abstract
Practices of organizational governance influence results and performance, but it is not always
clear how they do so. The study analyses practices through the perceptions of organizational
members in order to verify hypotheses concerning the connection between these perceptions and
collective behaviors. On the basis of data collected in 61 organizations in diverse sectors by
means of questionnaires administered to circa 4000 employees, the multilevel analysis reveals
significant connections at both the individual and collective level.
According to Adam Smith, the wealth of nations results from equilibrium in economic
exchanges. Also organizations produce wealth, doing so by establishing equilibrium among
their members. The invisible hand is the metaphor for the regulation of economic equilibria, but
the relations among organizational members respond to other criteria (Simon, 1957;
Williamson, 1975; Ouchi, 1980). These relations and their effects are a recurrent theme in the
literature. The economy of incentives (Barnard, 1938), the exchange between contributions and
incentives (Simon, 1957), and the power relations model (Crozier, 1963) are some of the
explanations put forward for these complex mechanisms.
Interpreting work relations according to economic exchange (Arrow, 1985) or alternatively
social exchange (Blau, 1964), or the psychological contract (Rousseau, 1995), has substantial
practical significance because it suggests managerial solutions that help establish organizational
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equilibria, influencing behaviors and the results that ensue from them. If people are managed
with attention paid to social exchanges, and not solely to economic exchanges, the results seem
to be better: Tsui, Pearce, Porter and Tripoli (1997) have shown that social exchange based on
mutual investment is more effective than purely economic exchange based on quasi-spot
contracts. The impact of human resources management and of high performance practices on
organizational results has been examined by numerous studies (Arthur, 1994; Huselid, 1995;
Macduffie, 1995; Becker & Gerhart, 1996), but there is no consensus on the effect of these
practices or on how they influence results (Cappelli & Neumark, 2001; Preuss, 2003; Gittell,
Von Nordenflycht, and Kochan, 2004). The same practices do not always produce the same
effects. In the majority of cases, analyses have dealt with the relation between management
practices and results; less attention has been paid to the intervening variables in the intermediate
dimension providing entry to the black box that helps explain the linkage between human
resources systems and firm performance (Becker & Gerhart, 1996).
One difficulty in developing tools with which to describe organizational relations arises from
the ‘competencies trap’. Organization psychologists concentrate on micro phenomena and the
features of individuals, while sociologists tend to focus on macro phenomena. The consequent
misunderstandings have been stressed (Granovetter, 1985), and so too has the need to develop a
meso level of analysis (Cappelli & Sherer, 1991), or a meso paradigm (House, Rousseau, &
Thomas-Hunt, 1995). On other hand, there is a need for multilevel studies which shed light on
organizational phenomena which manifest themselves at several levels (Rousseau, 1985;
Kozlowski & Klein, 2000).
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The aim of this study is to analyse management practices from the point of view of
employees’ perceptions of them, the purpose being to show their implications at both the
individual and the collective levels. The idea is that the set of these perceptions within an
organization gives rise to diverse equilibria, and that the latter have significant effects on
collective behaviors and therefore on organizational results. The study has two distinctive
characteristics. The first is that it introduces the concept of ‘code’ as a means with which to
describe organizations in terms of the equilibria generated by managerial practices, with the
consequent possibility of identifying these equilibria as distinctive cultural properties of
organizations. The second innovative feature of the study is that it focuses on the effects of
different contextual settings on organizational behavior; effects which have significant
implications for governance practices.
ORGANIZATIONAL PROPERTIES
The idea that the functioning of organizations can be explained in terms of certain properties
which distinguish among them has prompted discussion on the difference between obtrusive and
unobtrusive properties (Webb & Weick, 1979), on the organizational climate and its dimensions
(Sims & LaFollette, 1975; Reichers & Schneider, 1990; James, James, & Ashe, 1990), on an
organization’s being or having a culture (Smircich, 1983). The organizational properties of
interest to me here concern the relations among organizational members, and the
institutionalization of those relations in the form of behavior-regulating cultural codes (Louis,
1980).
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The action of people in organizations produces relations whose complexity differs according
to the activities performed and the technologies used, and according to environmental
conditions. Behaviors must comply with rules, for which reason the institutional nature of
organizations has been frequently stressed (Selznick, 1957; March & Olsen, 1989; Scott, 1995).
According to March and Olsen (1989), rules and meanings are the essential terms for
understanding behavior in organizations. Crawford and Ostrom (1995:582) define institutions as
“enduring regularities of human action in situations structured by rules, norms and shared
strategies”. For North (1990), the function of institutions is to reduce uncertainty and to create
regularity. The normative character of institutional ties is therefore widely recognized. The
problem that I shall address here is whether it is possible to describe these ties empirically and
to measure their effect on behaviors. However, I shall analyse only certain forms of relation, my
purpose being to verify whether, and to what extent, they help establish rules and behaviorregulating criteria.
Organizational Codes
The concept of ‘code’ relates to a structure which produces linguistic expressions, cultural
meanings, or regularities of behavior. In this sense one talks of codes of conduct. The notion can
also be used to define institutional mechanisms which stabilize patterns of behavior (Douglas,
1986). Various disciplines employ the concept to construct their theories. It has been used in
organization studies in relation to organizational communication (Louis, 1980; Broms &
Gamberg, 1983; Manning; 1979; Donellon, Gray, & Bougon, 1986). Gagliardi (1986) describes
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the cultural code of an organization as a system of rules which govern the attribution of
meaning, March and Olsen (1989) consider codes to be variants of rules.
The notion of ‘code’ can be considered from another point of view. Cognitive psychology has
developed the idea that the human mind functions like a computer which processes information
by means of scripts (Schank & Abelson, 1977). The term ‘schema’ or ‘script’, and in particular
of higher-order schemata, has been proposed in order to denote abstract mental structures which
assign meanings to environmental features (James, James, & Ashe, 1990). They act as
evaluation or support criteria for value judgements constructed at individual level. For James,
James, and Ashe (1990), measuring the psychological climate is equivalent to measuring these
schemata. A code can be related to the notion of schema in the sense that it is a criterion for
judgement. Codes are criteria which guide decisions and actions, but because they regulate
relations among several subjects, they have a social connotation.
Sensemaking is a complex phenomenon which occurs at both the individual and social level
(Weick, 1995). Examples of sensemaking processes are those by which individuals define their
identities by attributing a meaning to their selves in relation to others (Dutton & Dukerick,
1991). Organizational codes are consolidated through sensemaking processes which transform
perceptions of interpersonal relations into expectations on the basis of reciprocities which tend
to become stabilized. As Weick (1995) pointed out, sensemaking processes are rooted, inter
alia, in the formation of expectations which may be confirmed or disproved but which in
general tend to consolidate until they influence perceptions and alter reality itself. Also
Luhmann (1985) gave great importance to the mechanisms which consolidate reciprocal
expectations as explaining how behavior-regulating rules are formed.
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My hypotheses are based on the idea that the action of organizational governance produces
perceptions among employees in regard to their relations with the organization and those who
run it. These perceptions tend to change into expectations which, as they consolidate, generate
codes of behavior by interconnecting perceptions, expectations and codes, these being
understood as properties of organizational collectives. March and Olsen (1989) cite
sensemaking processes to explain, in terms of cognitive congruence mechanisms, how meanings
are defined and consolidated in institutions via expectations. Organizational codes have also
been related to organizational principles, which Zander and Kugat (1995) define as ways in
which relations among individuals and groups are structured and coordinated (McEvery,
Perrone, & Zaheer, 2003).
In empirical terms, organizational codes can be defined as emergent relational properties of a
cultural nature and describable as latent non-observable constructs whose effects can be
analysed. Emergent properties are collective phenomena: they originate in individuals but they
are manifest at a higher level. Kozlowski and Klein (2000) relate these emergent phenomena to
formal and informal factors which act as concurrent forces.
Some Fundamental Organizational Relations
The relations best suited to defining social exchange in organization have been studied for some
time. Two main perspectives have been adopted in their analysis: the point of view of
employers, and that of employees. Contrary to the approach used by Tsui et al. (1997), here I
shall assume the employees’ point of view to study their perceptions of organizational practices
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and the expectations that derive from those perceptions. It will thus be possible to analyse how
these perceptions and these expectations contribute to the consolidation of codes of behavior in
organizations. I shall concentrate on three forms of relation in particular: empowerment,
identity, and trust.
Empowerment. When employees perceive that the organization to which they belong sets
value on them, the bases are laid for empowerment relations. Empowerment is principally an
interpersonal relation connected with the conferring of power to those of subordinate positions:
in this sense it is connected to the traditional idea of delegation. The concept of empowerment
has attracted a great deal of attention. In the majority of cases, study has been made of its
psychological features by measuring subjective dimensions such as meaning, competence, selfdetermination, or impact (Spreitzer, 1995; Conger & Kanungo, 1988; Thomas & Velthouse,
1990). In a recent study, Seibert, Silver and Randolph (2004) distinguish between psychological
empowerment and empowerment climate, by which they mean in the former case the motivation
to work, and in the latter shared perceptions on the extent to which an organization uses policies
and practices to empower its employees. The dimensions in this case are information sharing,
autonomy through boundaries, team responsibility, and accountability.
Empowerment is therefore viewed as an attribute of both individuals and organizations.
Moreover, the concept is associated with a wide variety of meanings, although all of them link
with the idea of valorising employees. I adopt this general idea by proposing a measure of
empowerment which concerns the extent to which employees feel that their organization sets
value on them by implementing certain management practices.
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The empowerment perceived in organizations stems from explicit managerial choices, from
the way in which managerial practices are implemented. But there are other relations, like
identity and trust, the perception of which is less directly relatable to explicit practices but which
is just as much tied to governance and to the way in which this develops through
communication, leadership styles, and the decisions that mark organizational activity.
Identity. The multiple identities of individuals, and of organizations, are always constructed
through relations (Albert & Whetten, 1986; Pratt & Foreman, 2000). Burke & Reitzes (1991)
associate the identity of individuals with commitment and therefore view identity as mediating
the relation between individual and organization. However, to explain organizational identity
one must go beyond this individual level of analysis and focus on the relations among the
various actors who help determine organizational action. Scott and Lane (2000) explain the
formation of identity as action by top management to construct the organization’s image by
means of a mechanism based on the reciprocity of relationships. From this perspective, attention
focuses on the relationship between the management and employees, examining the way in
which the organization is able to confer identity on its employees and analysing it in terms of
the perceptions of the employees themselves.
All individuals define their identities by associating a fundamental oppositional system
consisting of “Ego versus non-Ego” with the elements of another oppositional system variously
recognized in social groupings or diverse fields of experience. Identity is a property of
organizations which thus assume institutional significance. As ‘legitimated social groupings’,
institutions codify expectations and enable uncertainties to be curbed by defining a shared
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identity (Douglas, 1986). It is therefore important to describe organizations as institutions
because of their ability to confer identity.
Trust. Trust can be considered an asymmetrical relation between two or more subjects who
perform different roles as trusters and trustees. Given its relational character, trust can be
defined in many different ways (Bigley & Pearce, 1998): as willingness to accept that one is
vulnerable (Mayer, Davis, & Schoorman, 1995), as a psychological state (Rousseau, Sitkin,
Burt, & Camerer, 1998; Dirks & Ferrin, 2001), as expectation and intention or volition
(McEvery, Perrone, & Zaheer, 2003; Luhmann, 1979); or as an attitude characterized by risk or
hazard (Luhmann, 1979; Coleman, 1990). Empirical as well as theoretical analysis of trust
relations has concentrated on interpersonal relationships (Colemann, 1990; Granovetter, 1985).
Luhmann (1979), however, distinguished between familiarity-based trust and system trust. In
fact, Luhmann evidenced a sort of continuity between these two forms of trust, which he
considered concepts able to explain different levels of complexity. On the other hand, the
different ways of considering trust depend on the disciplinary approaches taken by researchers.
Whatever the case may be, the distinction between these two types of trust may correspond
empirically to different levels of analysis. Hence if one looks at individual perceptions and how
people manifest their trust expectations towards others, one may speak of interpersonal trust,
whereas if one looks at the aggregate perceptions of several organizational members towards
their organization, then one can speak of system trust.
In what follows, I shall study organizational properties. I shall therefore consider trust also
from the structural and cultural point of view, bearing in mind its function as a governance
mechanism (Bradach & Eccles, 1989; Williamson, 1993) and therefore as an organizing
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principle which enables solution of problems of interdependence and uncertainty (McEvery,
Perrone, & Zaheer, 2003).
Empowerment, identity and trust define a number of important social relations which arise
among members of organizations and produce different equilibrium systems. Analysing them
according to the manner in which they are perceived may shed light on organizational
governance actions and on their effects.
Organizational Performance
The question of performance in organizations involves a certain ambiguity as to its definition
and measurement: indeed, some authors have talked of the paradox of performance (Meyer &
Gupta, 1994; Rousseau, 1997). Moreover, one need only consider the literature on high
performance practices to see how many measures of performance have been proposed (Becker
& Geherart, 1996).
In order to analyse the effect of organizational codes, I use the term ‘performance’ in a
particular sense. Weick and Roberts (1993) put forward the concept of a collective mind as a
model for appropriate organizational action when high reliability is necessary, as in the case of
aircraft carriers. What matters is the quality or style of the performance. In fact, performance
may not only be high or low, productive or unproductive, satisfactory or unsatisfactory, but also
heedful or heedless. Attentive performance is achieved when actions involving reciprocal
adaptations are modelled so that they form a ‘collective mind’. Rather than the reification of a
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social entity, according to Weick and Roberts this is the representation of a system produced by
interrelated individual actions.
The concept of performance associated with that of collective mind mainly applies to
organizations which pursue reliability rather than efficiency. However, Weick and Roberts
(1993) point out that high-performance organizations need to integrate their processes in order
to obtain high levels of quality in much the same way as high-reliability organizations are
required to do so. In effect, although in these cases there is much less risk of catastrophic events
in the short term, the possibility of not surviving in highly competitive situations should not be
neglected.
The dependent variable used in this study is related to the concept of heedful performance in
order to define the collective behavior prevalent in an organization and to determine its
connection with the forms of relation described above. I shall call this variable ‘collective
involvement’.
Summary and hypotheses
Organizational governance practices are decisive for results because they influence people’s
behavior. But in their turn they are influenced by how people perceive their relations with others
and with the organization as a whole. In fact, it is on the basis of these perceptions that
expectations of behavior and patterns of action are formed. The perceptions of practices are
consequently an important object of analysis because they enable definition of practices that
have consolidated in the form of meanings and rules of behavior. The hypotheses of this study
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concern the way in which these regularities come about and the likelihood that they will be
transformed into behavior-regulating codes.
When endeavouring to measure organizational culture, Hofstede, Neuijen, Ohayv, and
Sanders (1990) found that the dimensions termed ‘organizational practices’ had a good capacity
to differentiate among organizations, while those termed ‘values’ did not discriminate among
them equally well. Subsequent studies by Hofstede (1998) have confirmed this finding:
‘practices’ are cultural properties of organizations, while ‘values’ and ‘attitudes’ are individual
properties.
Bearing these considerations in mind, I shall seek to verify whether the way in which people
perceive organizational relations is a purely subjective phenomenon or whether it is influenced
by significant differences among organizations.
Hypothesis 1. Measuring individual perceptions of organizational relations –
empowerment, identity, and trust – aggregated at organizational level enables
organizations to be distinguished in a statistically significant manner.
The second hypothesis is intended to test, at the individual level, the effect of how intraorganizational relations are perceived on how collective behavior is perceived.
Hypothesis 2. There is a positive correlation between perceptions of empowerment,
identity and trust measured at the individual level and perceptions, again at the
individual level, of collective involvement: those who more intensely perceive the
presence of these relations also perceive a greater collective involvement of the
organization’s members.
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The third hypothesis concerns the transformation of perceptions of relations into emergent
organizational properties. The idea is that the way in which the relations among people, and
between these people and the organization, consolidated by everyday routine, give rise to
particular emergent properties.
Hypothesis 3. Individual perceptions of organizational relations manifest themselves as
emergent properties and, when measured at the organizational level, display significant
correlations with individual perceptions of collective involvement.
These three hypotheses are illustrated by Figure 1.
-------------------------------Insert Figure 1 about here
-------------------------------METHODS
The sample
Subject to analysis were 71 Italian organizations for a total of 4568 persons. Due to the
homogeneity of data collected I use in the study responses from 61 organizations and 4077
persons. The organizations in the sample were operating in diverse industrial sectors which can
be classified into four categories: 27 private manufacturing firms, 14 private service firms, 10
public administration organizations, and 10 social cooperatives. This differentiation takes
account of Glick’s (1985) recommendation that a diversified sample of organizations should be
used in order to obtain sufficient variance. The sample of interviewees was on average, for the
organizations in the four categories, respectively, 77, 57, 98, and 22.
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Collecting the Data
A questionnaire, created ad hoc, was administered to a representative sample of employees
belonging to all organizational areas whose replies testified to how current practices are
perceived. They were asked to indicate the frequency with which these practices were apparent:
for example, “pay policies in my organization encourage individual initiative”. The reply
options consisted of a scale from 0 to 10, with 0 = never and 10 = always. This method tended
to blur the distinction between ‘respondents’ and ‘informants’ (Seidler, 1974; Rousseau, 1990).
Replies to the questionnaire depicted situations which characterized the everyday experience of
the respondents, and they concerned subjective perceptions and interpretations of the facts
reported. The aim was to measure the way in which people perceive organizational relations
and, consequently, their reciprocal expectations. The focus of the items was descriptive rather
than evaluative. Moreover, they referred to the organization as a whole.
Measures
The hypotheses required one dependent variable and three independent variables.
Collective involvement. The dependent variable measured the prevalent forms of behavior in
regard to the degree of collective involvement that the respondents perceived in their
organizations. Concepts like that of ‘commitment’ (Mowday, Steers, & Porter 1979; Mowday &
Sutton, 1993; Mowday, 1998) or ‘organizational citizenship behavior’ (Organ 1988) measure
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attitudes, psychological states, or attributes of individual behavior connected with dispositional
factors and motivations (Organ, 1990). My intention was instead to measure collective behavior.
The testimonies of the respondents furnished a representation of collective behavior. Each
respondent belonged to the collective examined, but s/he was simultaneously an observer: s/he
observed everyday behaviors and evaluated the degree of collective involvement. Used to
measure this dimension was a single item1 which asked the respondent how frequently the
organization’s personnel showed maximum commitment.
The three independent variables were measured by means of scales constructed ad hoc. The
measures used were derived from a preliminary study by means of exploratory factor analysis.
In order to adopt more rigorous validation criteria, then performed were a number of tests using
confirmatory factor analysis. These procedures reduced the initial number of items: some were
eliminated because the analysis revealed their ambiguity in that they were correlated with more
than one dimension; others because they were used on a relatively small number of
organizations compared to the standards required for this type of analysis (Anderson & Gerbig,
1984; Bollen, 1989; Hu & Bentler, 1995). A total of nine items, three for each dimension, were
considered for the measures. The confirmatory factor analysis, for a total of 61 organizations,
yielded the following overall fit: chi squared = 24.22 with pr > 0.34 (22 df); GFI = 0.92;
RMSEA = 0.04; CFI = 0.99; NFI = 0.96. The r-squared values for the individual indicators
1
This proxy links with the concept of collective mind by virtue of its connection with another proxy which reports
the respondents’ perception of the degree of carefulness with which the members of his/her organization worked
(Pearson correlation coefficient 0.94 for 36 cases). I did not use this latter proxy in my model because of the
relatively small number of cases in which it was used.
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ranged from a minimum of 0.57 to a maximum of 0.91. Thus defined were the following
measures.
Empowerment. The empowerment that the organization conferred on its employees was
measured with three items regarding pay policies, the organization’s concern with selection, the
organization’s concern with training. The alpha coefficient for the three items was 0.85.
Identity. Three items were used to ascertain the extent to which the organization was able to
confer identity: the first verified whether threats to the organization originated internally, the
second whether the subjects felt proud at belonging to their organizations, the third the degree of
attention paid by the organization to it employees’ sense of belonging. The alpha coefficient for
the three items was 0.88.
Trust. Three items were used to ascertain the level of trust present in the organization. They
concerned the sharing of goals, the sharing of strategies, and trust in senior management. The
alpha coefficient of the three items was 0.93.
Table 1 presents descriptive statistics and correlations for all study variables.
------------------------------Insert Table 1 about here
--------------------------------
Levels of Analysis
The explanatory variables were measured at two levels of analysis: individual and
organizational. That the levels of analysis should be clearly defined has been frequently
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recommended (Klein, Dansereau, & Hall, 1994; Kozlowski & Klein, 2000; Bliese, 2000;
Morgeson & Hofmann, 1999; Gavin & Hofmann, 2002).
At individual level, the data measured the respondents’ perceptions of the organizations to
which they belonged and of the relations that they had experienced. The data were then
aggregated at the level of the organization as a whole, because this was the object to which the
individual items referred. The aggregation was not compositional in the strict sense (Bliese,
2000). In itself, it is not necessary to think of isomorphism between the meaning of the variable
at individual level and aggregate level. The aggregate indicates the strength of reciprocal
expectations and their capacity to transform themselves into collective behavior-regulating
criteria. We may accordingly talk of partial isomorphism or of bottom-up fuzzy composition
processes (Bliese, 2000). Finally, I used the average at organizational level in order to measure
the intensity of these aggregate values, not because this is based on the sharing of perceptions
but because the average is an indicator that enables one to graduate the strength with which
organizational properties operate, according to the measurement scale.
RESULTS
Tests of the hypotheses
Hypothesis 1. The first hypothesis was that it is possible to differentiate among organizations
with the measures used to define their cultural properties. Calculation of the intraclass
correlation coefficients (ICC(1)) produced the following values for empowerment, identity and
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trust respectively: 0.23, 0.24 and 0.29. Around one quarter of the variance among the replies
from the circa 4000 subjects in the sample can therefore be explained by their membership of
their respective organizations.
The ICC(1) for perception of collective involvement – the dependent variable for hypotheses 2
and 3 – was 0.11: a value lower than that obtained for the other variables but nevertheless
significant because it showed the non-independence of the individual observations and
suggested that multilevel analysis was required to reduce the probability of statistical errors in
the estimates of the parameters describing the relations among the variables (Kreft & de Leeuw,
1998).
Hypothesis 2. In order to test the second hypothesis, I first conducted multilevel analysis on
the equation: collective involvementij = interceptj + empowermentij. This produced the following
estimate of the parameters (data centered at the organization means; standard errors in brackets):
collective involvement = 6.61 (0.11) + 0.29 (0.02) empowerment
The perception of empowerment practices was associated with the perception of collective
involvement: the increase was 0.29 for every point of empowerment perceived. The equations
estimating the relationship between the other two properties and the perception of collective
involvement were the following:
collective involvement = 6.62 (0.11) + 0.30 (0.02) identity
collective involvement = 6.62 (0.11) + 0.22 (0.02) trust
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The parameters of the equations were average values which differed among the organizations.
These differences were defined by the estimates of the residuals2 reported in Table 2.
-----------------------------Insert Table 2 about here
-----------------------------The estimates of the fixed effects for the three factors considered did not differ greatly. The
same applies for the random parameters. In particular, comparisons among these latter for the
three models showed that introducing the explanatory variable into the single intercept model
there was a significant reduction of deviance, which is a good indicator of goodness of fit (Kreft
& de Leeuw, 1998).
These models were the first step in verifying hypothesis 2. Multiple regression with the three
explanatory variables produced the following estimates:
collective involvement = 6.61 (0.11) + 0.20 (0.02) empowerment + 0.16 (0.02) identity + 0.06
(0.02) trust
The standard errors of the coefficients remained at a level such that hypothesis 2 was not
rejected: each respondent’s perception of organizational relations, in the three forms of
empowerment, sense of identity and trust, enabled prediction of how s/he would perceive
collective involvement in his/her organization. Moreover, as we can see from table 2, the model
2
Only the intercepts were assumed as random parameters in the analysis described. Analysis of a more complex
model in which also the slopes were random did not reveal significant changes in the fixed parameters. As Kreft
and de Leeuw (1998) point out, the trade-off with multilevel procedures is between the advantage of yielding more
reliable estimates of the parameters and the disadvantage of increasing the complexity of models and making them
more unstable, the more they are complex.
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with tree explanatory variables produces a reduction of residuals and a considerable
improvement of fitting. Yet the prediction is not much accurate. The explained variances in the
models are R2W 0.08 for empowerment, R2W 0.06 for identity, and R2W 0.04 for trust. For the
multiple regression the explained variance is R2W 0.10.
Hypothesis 3. The third hypothesis was that individual perceptions of relations aggregated at
organizational level may manifest themselves as emergent cultural properties. The presence of
these properties was determined by their correlation with individual perceptions of collective
involvement. In order to test the hypothesis it was therefore necessary to consider the
independent variables both at the individual level and when aggregated at the level of the
organization.
Analysis of the date yielded the following three equations:
collective involvement = 6.45 (0.08) + 0.29 (0.02) empowerment + 0.55 (0.07)
mean_empowerment
collective involvement = 6.50 (0.09) + 0.30 (0.02) identity + 0.59 (0.08) mean_identity
collective involvement = 6.54 (0.09) + 0.22 (0.02) trust + 0.45 (0.07) mean_trust
The random parameters relative to these models are set out in Table 3.
-----------------------------Insert Table 3 about here
-----------------------------Taken individually, therefore, the three variables revealed their contextual effect. When
evaluating the fixed parameters it had to be borne in mind that the variables at individual level
were centered at organization means and variables at level 2 were centered at grand mean. Thus,
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the regression coefficients at level 2 represented the group-level relation between the level 2
predictor and the dependent variable plus the influence of the level 1 predictor (Hofmann &
Gavin, 1998). The texts of the differences between the two parameters in the three models give
the following estimates: 0.25 (0.08) for menan_empowerment, 0.29 (0.09) for mean_identity,
and 0.23 (0.07) for mean_trust. Moreover the addition of the organization-level explanatory
variable reduces the between-organizations variance, so that we have the following R2B: 0.55 for
mean_empowerment, 0.50 for mean_identity, and 0.44 for mean_trust.
The model describing the combined effect of these models was the following:
collective involvement = 6.44 (0.09) + 0.20 (0.02) empowerment + 0.16 (0.02) identity + 0.06
(0.02) trust + 0.55 (0.07) mean_empowerment
In this model, the only aggregate-level effect that maintains statistical reliability is the effect
for empowerment. The reason for the disappearance of the other effects at aggregate level is
probably the collinearity among these variables. Whatever the case may be, the results for the
fixed effects show an incremental prediction on the outcome over and above individual level
predictors (Hofmann & Gavin, 1998).
Besides the advantage of yielding more reliable estimates of the parameters when the data are
not independent, multilevel analysis can be used to identify components of variance due to the
context. Table 3 relative to the random parameters shows that there were differences among the
organizations due to variance of the intercepts.
Interpretation of these random effects is of great interest: when a person reports a certain
degree of empowerment in his/her organization, it is of importance to know the value of the
intercept in the equation tying the perception of empowerment to the perception of collective
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involvement. In fact, the lower the intercept, the more likely it is that, for that person,
corresponding to the level of perception of empowerment there will be a perception of a level of
collective involvement lower than the level which s/he would perceive in an organization with a
higher intercept. To say that another way: if two persons report the same value of empowerment
in two organizations, s/he whose organisation has a lower intercept will probably perceive a
lower level of collective involvement;
The sensemaking effect distinguished by the relation yielded by the fixed parameters must
therefore be interpreted in each individual organization because, as the random parameters
show, the values of the intercepts differ significantly. It is consequently the organization that
makes the difference. A high intercept signifies widely shared organizational codes, behavior
expectations characterized by reciprocity, and a greater likelihood of involvement-based
behavior. A low intercept signifies highly differentiated perceptions of relations (and of
collective involvement), less reciprocity-based expectations, and a likelihood of behavior at
odds with what Weick and Roberts (1993) call the ‘collective mind’.
Overall, one may conclude that the contextual effects due to the aggregate values pass the test
of statistical significance when these properties are considered individually. When these same
variables are considered jointly, the only one of them which exerts an effect as an emergent
property is empowerment.
DISCUSSION
24
The analysis of data collected from a sample of 61 organizations and more than 4000 employees
has shown that organizations differentiate the ways in which people perceive both
organizational relations and collective involvement. The data evince the presence, at individual
level, of cognitive congruence mechanisms in perceptions of organizational relations and
collective behaviors that can be interpreted as sensemaking processes. Finally, the analysis has
highlighted that individual perceptions are influenced by contextual effects: some relations
present to a marked extent in people’s perceptions seemingly generate reciprocal expectations of
involvement. The emergence of these phenomena at collective level can be interpreted as
resulting from an equilibrium of forces which, once it has reached a certain intensity, produces
contextual effects: that is to say, it significantly strengthens the impact of effects due to
cognitive congruence at individual level.
The idea of organizational codes as resulting from emergent processes and as regulating
collective behavior relates to certain ways of interpreting organizational culture both as the
effect of collective sensemaking (Weick, 1995) and as an expression of ‘basic assumptions’
(Schein, 1984), modes of thought, not always conscious, which guide people’s choices.
Moreover, the definition of codes in quantitative as well as qualitative terms derives from the
study by Hofstede et al. (1990) on the measurement of organizational culture. This approach
enables contribution to be made to an area of inquiry that has attracted particular in recent years
regarding the effects of organizational practices oriented to commitment (Arthur, 1994) or high
involvement (Lawler, 1992) and, more generally, the use of high performance work practices.
This study has proposed a number of variables which may shed clearer light on the connection
between management practices and organizational performance.
25
More generally, the study helps resolve the problem of how to handle the effects of cultural
properties on behavior in empirical terms. These properties derive from the way in which
organizational members perceive relations among themselves and with the organization. The
data on these perceptions thus acquire importance at both the individual and collective levels.
Considered at individual level they have been used to test the hypothesis of congruence between
the perception of intra-organizational relations and the perception of behaviors. Considered at
organizational level they have been used to test the hypothesis of emergent processes such to
transform the perceptions of organizational members into properties of organizations
themselves.
Managerial Implications
These results have a number of practical implications. Firstly, they suggest a way to develop
diagnoses of an organization’s cultural state by measuring indices which define cultural
properties. Knowledge of these indices is necessary if suitable choice is to be made of
managerial solutions and coherent governance actions. If it is true that a person’s perception of
collective involvement in his/her organization is connected to his/her mode of perceiving the
fundamental relations of identity, trust and empowerment, then it is necessary to develop
management practices which foster those perceptions. For example, among the various
professional characteristics of managers, priority should be given to the ability to inspire trust, to
create a sense of identity, and to foster empowerment. Empirical analysis may enable
assessment of these abilities and adjustment of governance actions to the pursuit of these goals.
26
To be stressed, however, is the risks that arise if human resources management policies are
devised in individualistic terms and based mainly on actions ad personam. The emergent
processes identified by this study suggest that the focus should be on team building, seeking to
consolidate common perceptions of relational properties. Discussion of the third hypothesis
highlighted the importance of contextual effects: the perception of collective involvement
springs not only from how each organizational member perceives fundamental relations but also
from how these relations are perceived on average in the organization. Improving the
equilibrium of organizational forces deriving from the greater diffusion of a mode of perceiving
relations entails strengthening the effect of emergent properties and increasing the likelihood
that a more widespread perception of collective involvement will generate reciprocal
expectations of committed behavior. These conclusions correspond to those reached by Weick
and Roberts (1993) concerning the features of the collective mind and the need to develop not
only new ways to measure performance but also to implement governance practices which
foster social integration.
Limitations and Future Research
One limitation of the research reported by this study concerns the sample used, which was
relatively small. Nevertheless, in view of the difficulty of collecting data on numerous
organizations in a reasonable space of time, I have decided to propose this model in exploratory
rather than confirmatory terms (Jöreskog, 1993).
27
Another limitation is due to the cross-sectional design of the research. The causal relation
hypothesised between perceptions of organizational relations and perceptions of collective
involvement is obviously not demonstrated by the correlation yielded by the equations. The
effect may also operate the other way round. Moreover, there may be reciprocal causality
relations. Considering perceptions of organizational relations as the basis for consolidating
expectations, and considering these latter as necessary for generating committed behavior, is the
theoretical core of this study. Only further research based on longitudinal analysis or
experiments could reinforce this theoretical structure.
Despite these limitations, attempts to operationalize the above concepts would, I believe,
furnish comparative and cumulative analyses which improve understanding of the relations
among management practices, organizational behavior and corporate performance. Developing
this line of inquiry will require its extension to a larger sample of organizations which also
covers different national and cultural contexts. Also required are longitudinal studies and
experimental projects which substantiate the hypotheses of a causal relation between the
variables considered. Moreover, the concept of organizational code should not be restricted to
the relational equilibria defined by the independent variables examined by this study. Another
codes, for example, control, procedure or supervision could be examined to determine the effect
of bureaucratic cultural attitudes on perceptions of collective involvement.
28
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FIGURE 1
A Multilevel Model: Management Practices and Perceptions of Collective Involvement
Organizational
Management
Aggregate
level
Practices
Perceptions
of collective
Expectations
Involvement
H3
Perceptions
Codes
H1
Individual
Perceptions
level
Of relations
of collective
Empowerment
involvement
Identity
Trust
H2
Perceptions
38
TABLE 1
Descriptive Statistics and Correlationsa
Variables
a
Mean
s.d.
1
2
3
4
Mean
s.d.
1. Collective involvement
6.53
2.37
.75**
.73**
.67**
6.67
0.97
2. Empowerment
4.91
2.22
.30**
.89**
.80**
5.28
1.21
3. Identity
5.59
1.99
.28**
.52**
.87**
5.84
1.12
4. Trust
5.84
2.27
.23**
.49**
6.08
1.37
.54**
Organization-level means, standard deviations, and correlations (n = 61) are above the diagonal; individual-level means, standard deviation,
and correlations (n = 4077) are below the diagonal.
** p < .01
39
TABLE 2
Multilevel Models of Organizational Relation Perceptions.
Individual level.
Dependent variable: collective involvement.
Estimates of random effects (s.e.)a
Models
a
intercept
residuals
deviance
I = intercept only
0.66 (0.15)
5.14 (0.12)
18197.5
II = I + empowerment
0.65 (0.15)
4.75 (0.11)
17463.1
III = I + identity.
0.66 (0.15)
4.84 (0.11)
17382.7
IV = I + trust
0.66 (0.15)
4.94 (0.11)
17525.6
V = I + II + IV + VI
0.67 (0.16)
4.63 (0.11)
16623.1
I estimated these parameters with data centred on the organization mean.
40
TABLE 3
Multilevel Models of Organizational Relation Perceptions.
Individual level and organizational level
Dependent variable: collective involvement.
Estimates of random effects (s.e.)a
Models
intercepts
residuals
deviance
0.66 (0.15)
5.14 (0.12)
18197.5
0.30 (0.07)
4.74 (0.11)
17423.1
III = I + identity + mean_identity
0.33 (0.08)
4.84 (0.11)
17345.7
IV = I + trust + mean_trust
0.37 (0.09)
4.93 (0.11)
17496.2
0.31 (0.08)
4.63 (0.11)
16583.4
I = intercept only
II = I + empowerment +
mean_empowerment
V = I + empowerment + identity +
trust + mean_empowerment
a
I estimated these parameters with data centred at individual-level on the
organization mean, and at organization-level at the general mean.