Summary of Literature Review


Summary of Literature Review

The Organizational Change and Transition Process: How Executives and

Organizational Structure Influence Growth


How and why organizations change and experience transitions have been central questions for scholars of varied disciplines. Likewise, understanding and successfully managing different events such as leadership structure evolution and transition in individual tasks as they unfold over time has been quite difficult. The purpose of this review is to begin to close this knowledge gap through insightful research and discussion.

This review provides an analysis of the change and transition process that an organization experiences as it transitions from an entrepreneurial firm to a structured organization. A comprehensive review of scholarly articles, and reports was conducted, focusing on the organizational change and transition process. Data provided in the literature reviewed is based on longitudinal research and empirical evidence that demonstrates the relationship between concepts and theories, and how they apply to change and transition in organizational life.

Academic research findings and suggestions are reviewed here.


Organizations face frequent changes to their structure and procedures in terms of technological advances, competition, and the need to improve performance. To successfully implement change, an organization must develop and administer a change strategy that integrates structure, process and personnel. Given that organizational structures and processes are integrated, one cannot be changed without altering the other, and both are influenced by company leaders.

The theory that organizations tend to assume a linear progression from birth to decline is based on the organizational life cycle, which is validated by many companies. As organizations evolve over time they encounter opportunities and constraints (Hayes & Wheelwright, 1979) and must therefore adapt superior management systems and controls (Steven, 1988), and design the required structures as well as develop measurement scales in order to determine structural differences quantitatively (Pugh, 1973). According to Kilzer & Glausser (1984), obstacles faced by entrepreneurs can be successfully managed through careful time and growth planning, contingency planning, tactical planning, maintaining an operating budget, and equitable treatment of all stakeholders.

Change has brought certain challenges for leaders in terms of transcending and adjusting their behavior and skills. Tice (2007) explains that a great leader require skills that are “tailored to today’s environment.” These leaders must behave in a manner that is exemplary to staff (Kotter,

2007; Tice, 2007). They must be adaptable, self aware, purposeful, decisive, and collaborative, possess people skills, foster innovation, and execute their strategy (Tice, 2007).

Literature Review: The Organizational Change and Transition Process 1

Research revealed several factors which can be learned and measured that give rise to growth.

These factors include competitive advantage, market size, organizational culture, psychological characteristics of the leader, and the ability and capacity to manage growth (Eggers, 1999).

Organizational growth strategies must therefore be aligned with the organization’s internal and external environments. They must be responsive, easily adapted to changing competitive environments, based on informed choices, and incorporate scenario planning for multiple contingencies. O’Niell (1983), Scott & Bruce (1987) maintain that managers need to engage in strategic planning in order to develop a system of management that transitions with company growth. Once the leader identifies the firm’s functions, promotes and trains employees, and provides opportunities for skill development, the company will grow.

Organizational growth is based on “talent management” and the leader’s conceptual ability

(Olivier 2004). Consequently, in order to accommodate growth, leaders must develop their management skills (Stevens 1988), apply appropriate management styles at the right time

(Johnson, 1989; Olivier 2004; Waldrop, 1987), and make adjustments to their behavior and attitude. Change and transition also require managers to adjust their individual goals, operational abilities, managerial abilities, and strategic abilities (Churchill and Lewis 1983). Great managers are characterized as, administrators, entrepreneurs, and integrators. The degree to which they utilize certain characteristics depends on the situation. Thus the individual’s needs and those of the business determine the most appropriate management style (Johnson, 1989).

There should be a balance between the entrepreneur and the organization. Organizational leaders must be able to understand the different psychological phases they experience which are likened to the stages of the grieving process (Greco, 1996). Likewise, they must be open to succession planning (O’Neill, 1983). Successful companies are not based on their leader’s competence, experience, and credentials alone (Osborne, 1994; Fenn, 1996). Company growth can be attributed to an organization’s team of employees (Fenn, 1996), its business concept, and its ability to generate capital (Osborne, 1994; Churchill & Lewis 1983; Eggers, 1999).

Organizational transformation initiatives require managing changes in workforce behavior.

According to Ford (2005) an organization must prepare its employees for change so they are capable of shifting their tasks. These changes can be initiated by leaders in terms of communicating the organization’s vision and viable strategies. Research has found that strong leaders are able to reinforce their values through vision communication which in turn affects organizational-level performance (Baum, 1998). Changes may also be achieved through strong corporate culture, and facilitating employee work-related learning (Lang, Wittig-Berman &

Ursula, 2000) which develops employee cognition, skills, behaviors, and attitudes. Based on

Hayes and Wheelwright’s (1979) study, organizations need to keep current not only on technological developments, and maturing markets but also maintain a learning curve.

Structural changes are growth strategies that emerge out of company crisis as well as environmental gaps. Scott and Bruce (1987) indicated that each distinct stage of growth for a business is associated with a crisis point. In order for the organization to thrive it must develop effective strategies in the form of new structures and systems to accommodate the effects of growth (O’Neill, 1983; Olson & Terpstra, 1992).

Literature Review: The Organizational Change and Transition Process 2

Research indicates that size of the organization determines its structure, while a level of dependence on other organizations and social environments will most likely cause a concentration of authority (Pugh, Hickson, Hinings & Turner 1969a). Olson & Terpstra (1992) contend that organizational structural changes are the result of the firm’s transition from start-up to the growth stage of development that is characterized by complexity, formalization, and decentralization. Their theory is comparable to that of Pugh which identified six areas of organizational structure which include specialization, standardization of control and workflow, formalization, centralization and configuration. His research findings revealed four structural dimensions: structuring of activities, line of control, concentration of authority, and size of supporting constituents (Pugh, Hickson, & Hinings, 1968). The structure of a small organization is largely influenced by resource availability (Churchhill & Lewis, 1983) and technology, while the size of the workforce in a large organization is influenced by technology (Pugh, Hickson &

Pheysey 1969b).

Managerial hierarchies with the appropriate structures and processes, human resource practices, and growth methods are essential for continuous improvement (Jaques, 1992). Managerial hierarchies enable the matching of individuals to tasks to facilitate the creation of value in each task. Once these organizational forms are in place creativity, productivity, and morale are likely to increase (Jacques, 1990). An organization’s social structure can be defined in terms of its industry and its technologies, which in turn affects the structure of tasks (Perrow, 1967). The product life-cycle also affects the organization’s structure of tasks (Hayes and Wheelwright,



Extensive review of the literature revealed that successful organizational change and transition requires change in the organization’s behavior and the organizational system and structure. The literature explained some organizational change and transition processes. However, it also revealed that scholars still lack a comprehensive understanding of the dynamics between the organization’s structure, processes, and leader, how they function, and how and why the firm transitions to a structured organization. Further research is therefore warranted.

Literature Review: The Organizational Change and Transition Process 3


Baum, R. J., Kirkpatrick, S. A., Locke, E. A. (1998). A longitudinal study of the relation of vision and vision communication to venture growth in entrepreneurial firms. Journal of

Applied Psychology , 83 (1), 43-54.

Churchill, N. C. & Lewis, V. L. (1983). Growing Concerns: The five stages of small business growth. In D. E. Gumpert (Ed), Harvard Business Review , 30-50.

Eggers, J. H. (1999). Developing entrepreneurial growth. Ivey Business Journal , 63 (4), 76-81.

Retrieved September 2, 2000, from PerAbs_FT database (01831649).

Fenn, D. (1996). Breakthrough leadership: Higher ground. Inc , 18 (15), 92-99.

Ford, S. (2005). Making your organization change-ready. Harvard Management Update , 4.

Greco, S. (1996). Replace yourself. Inc. Retrieved August 30, 2000, from AIB_INFORM database (01337440).

Hayes, R. H., & Wheelwright, S. G. (1979). The dynamics of process-product life cycles.

Harvard Business Review , 57 (2), 127-136.

Hickson, D. J., Pugh, D. S., & Pheysey, D. C. (1969b). Operations Technology and

Organization Structure: An Empirical Reappraisal. Administrative Science Quarterly , 14,

378- 396.

Jaques, E. (1992). Managerial Accountability. Journal for Quality and Participation , 15 (2), 40-

44. Retrieved September 4, 2000, from AIB_INFORM database (00725529).

Jacques, E. (1990). In praise of hierarchy.

Harvard Business Review , 68 (1), 127-133.

Johnson, K. (1989). Building your management skills. Managers Magazine , 21-23.

Kilzer, J., Glausser, G. (1984). Closing the small business management gap. Management

Accounting , 65, 57-61.

Kotter, J. (2007). Leading change. Harvard Business Review , 86 (1). Retrieved January 18,

2007, from Business Source Elite (00178012).

Lang, D., Wittig-Berman, U., Ursula, S. (2000). Managing work-related learning for employee and organizational growth. Advanced Management Journal , 65 (4). Retrieved January

18, 2007, from (07497075).

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Olivier, A. (2004). Entrepreneurs and entrepreneurial executives. Proceedings of BIOSS/Third

Foundation Systems ’96: International conference on managing complexity


Johannesburg . 1-14.

Olson, P. D., & Terpstra, D. E. (1992). Organizational structural changes: Life-cycle stage influences and managers’ and interventionists’ challenges. Journal of Organizational

Change Management , 5(4), 27-40. Retrieved September 2, 2000, from PerAbs_FT database (00667378).

O’Neill, H. M. (1983). How Entrepreneurs Manage Growth.

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Osborne, R. (1994). The myth of the renaissance man: The balance between enterprise and entrepreneur. Review of Business, 16(3), 36-40. Retrieved August 30, 2000, from

ABI_INFORM database (00865738).

Perrow, C. (1967). A framework for the comparative analysis of organizations. American

Sociological Review , 32, 194-208.

Pugh, D. S. (1973). The measurement of organization structure: Does context determine form?

Organizational Dynamics , 1, 19-34.

Pugh, D. S., Hickson, D. J., Hinings, C. R. (1968). Dimensions of organization structure.

Administrative Science Quarterly , 65, 64-105.

Pugh, D. S., Hickson, D. J., & Hinings C. R. (1969a). An empirical taxonomy of structures of work organizations. Administrative Science Quarterly , 14, 115-125.

Pugh, D. S., Hickson, D. J. Hinings, C. R., & Turner, C. (1969). The context of organization structures. Administrative Science Quarterly , 14, 91-113.

Scott, M., Bruce, R. (1987). Five stages of growth in small business. Long Range Planning ,

30(3), 45-52.

Stevens, M. (1988). Guiding a business through it life cycle. D & B Reports , 36 (3), 38-49.

Tice, C. (2007). Building the 21 st

century leader.

Entrepreneur , 64-69.

Waldrop, H. (1987). How to manage a growing company. Working Woman , 12 (4) 39-42.

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