A Perception-Based View of the Employee: A Study of Employees’ Reactions to Change doc

Research Issues The starting point for this research is the challenge of “managing change in organizations.” Managing organizational change is problematic: situations in which changes a

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A Perception-Based View of the Employee: A Study

of Employees’ Reactions to Change

DISSERTATION

of the University of St Gallen, Graduate School of Business Administration,

Economics, Law and Social Sciences (HSG)

to obtain the title of Doctor of Business Administration

submitted by Chaiporn Vithessonthi

from Thailand

Approved on the application of Prof Dr Markus Schwaninger

and Prof Dr Günter Müller-Stewens

Dissertation no 3040

D-Druck-Spescha, St Gallen 2005

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The University of St Gallen, Graduate School of Business Administration, Economics, Law and Social Sciences (HSG) hereby consents to the printing of the present dissertation, without hereby expressing any opinion on the views herein expressed

St Gallen, January 20, 2005

The President:

Prof Dr Peter Gomez

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Abstract

Drawing on several theoretical perspectives (e.g., individual motivation, behavioral decision-making, social exchange theories, organizational justice theories, social cognition, institutional theories and neoclassical economics theories) from different disciplines (e.g., organizational psychology, strategic management, and economics), this dissertation developed a perception-based approach to examine a possibility that employees’ perceptions and/or attitudes will be associated with their decisions in an organizational setting Specifically, this dissertation examined the effects of employees’ perceptions and/or attitudes on their reactions to organizational change

This dissertation addressed two major research questions relevant to organizational change management, organizational behavior and applied psychology First, it addressed a question of what perceptions and/or attitudes influence employees’ resistance to change Second, it addressed a question of what perceptions and/or attitudes influence employees’ support for change? This was done by drawing on several theoretical perspectives and examining relationships between perception and/or attitude variables and resistance to change and support for change

Based on data obtained from two samples of respondents from two different settings (i.e., a downsizing in Study 1 and a privatization in Study 2), this dissertation found significant relationships between perceptions and/or attitudes and resistance to change and/or support for change The findings provide some empirical support for the perception-based view of the employee Using multinomial ordered probit modeling, some perceptions and/or attitudes were found to be significantly predictive of employees’ reactions to change The potential practical value of using perceptions and/or attitudes as predictors of employees’ reactions to change is discussed, as are implications and suggestions for future research

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Acknowledgements

This dissertation began with a conversation with Professor Dr Markus Schwaninger, a professor of management at the University of St Gallen, in the summer of 2003, when I was about to finalize my master’s degree in international management at the same university During this conversation we discussed organizational change, and since I had thought that it might make an interesting piece of research, I asked him about the possibility to write the dissertation that lies before you today As I expected, his response was clear, insightful, interesting, and encouraging He enthusiastically agreed to supervise my dissertation and told me to proceed with my ideas So it began

I am reminded as I finalize these notes of my good fortune in being able to do something I enjoy, and to complete my research It is the rarest of privileges for me, with

my limited ability, to do that in a relatively short span of time; this seems tremendously precious to me But this work could not have been completed without support from many people I owe a debt of gratitude to the 315 respondents who took time out of their busy schedules to complete and return the questionnaire I am extremely grateful to Prof Dr Markus Schwaninger, who has been not only the referee for this dissertation but also my mentor throughout the past years, for offering his invaluable help, comments, perspectives, and suggestions, and for showing great interest in my research Undoubtedly, he has pointed

me in the direction of a fascinating landscape, not for the first time and, I hope, not for the last

I also want to express my sincere gratitude to Professor Dr Günter Müller-Stewens, who has magnanimously taken time out of his busy schedule to become the co-referee, for offering his valuable insights and perspectives on the theoretical, methodological and empirical aspects of my dissertation I am very grateful to Dr Klaus Edel as well, not only for offering his valuable suggestions and solutions to statistical issues with enthusiasm, but also for allowing me to use his computer and statistical applications I am also grateful to Silke Bucher, Bernd Beuthel, and Jasmina Hasanbegovic for their thoughtful and constructive feedback on earlier versions of this dissertation And, of course, I thank Linda Roberts, my editor and proofreader, at Western Illinois University, who shouldered the editorial and proofreading work on my unpolished lines of English Last but not least, I would like to thank my parents for their love, incredibly great confidence, and unbounded support throughout the course of this journey and beyond

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Table of Contents

Abstract i

Acknowledgements ii

List of Tables vi

List of Diagrams and Figures viii

List of Abbreviations x

1 Introduction 1

1.1 Research Issues 1

1.2 Research Questions 3

1.3 The Importance of the Research Questions 6

1.4 The Scope of the Dissertation 8

1.5 The Intended Contributions of this Dissertation 10

2 Core Concepts and Relevant Literature 12

2.1 Theories of Change 12

2.2 Perceptions 16

2.3 Attitude 19

2.4 Emotion 21

2.5 Individual Decision-Making 23

2.6 Reactions to Change 27

3 Theoretical Development and Research Model 31

3.1 Perception-Based View of the Employee 32

3.2 Research Model and Hypotheses 35

3.2.1 Perceived Organizational Support 38

3.2.2 Perceived Procedural Justice 40

3.2.3 Perceived Participation in Decision-making 42

3.2.4 Perceived Need for Change 45

3.2.5 Attitude towards Organizational Change 48

3.2.6 Fear of Known Consequences of a Change 50

3.2.7 Fear of Unknown Consequences of a Change 52

3.2.8 Perceived Change in Power 54

3.2.9 Perceived Change in Status 56

3.2.10.Perceived Change in Pride 58

3.2.11.Job Satisfaction 60

3.2.12.Job Security 62

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3.2.13.Job Motivation 64

3.2.14.Perceived Employability 66

3.2.15.Self-Confidence for Career-Relevant Learning 69

3.2.16.Affective Commitment 71

3.2.17.Trust in Management 73

3.2.18.Colleagues’ Reactions to Change 75

4 Research Methodology 77

4.1 Context, Sample and Procedure 78

4.1.1 Study 1 – Context, Sample and Procedure 78

4.1.2 Study 2 – Context, Sample and Procedure 79

4.2 Alternative Methods of Data Analysis 80

4.3 The Multinomial Ordered Probit Model 81

4.4 Measures of Theoretical Constructs 83

4.4.1 Dependent Variables 83

4.4.2 Independent Variables 84

4.4.3 Control Variables 87

4.5 Data Analysis Procedures 87

5 Results and Discussion 89

5.1 Study 1 – Results and Discussion 89

5.1.1 Analyses of Correlations among Dependent Variables 89

5.1.2 Analyses of Correlations among Independent Variables 90

5.1.3 Results for Hypotheses – The Multinomial Ordered Probit Models 94

5.1.4 Discussion of Study 1 106

5.2 Study 2 – Results and Discussion 108

5.2.1 Analyses of Correlations among Dependent Variables 109

5.2.2 Analyses of Correlations among Independent Variables 110

5.2.3 Results for Hypotheses – The Multinomial Ordered Probit Models 114

5.2.4 Discussion of Study 2 127

5.3 General Discussion 131

5.3.1 Key Contributions of the Dissertation 131

5.3.2 Limitations to this Dissertation 136

5.3.3 Implications and Directions for Future Research 138

5.3.4 Implications and Directions for Practice 139

6 Conclusions 140

References 142

Appendices 165

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Appendix A: Questionnaire Survey Items for Studies 1 and 2 165

Appendix B: Study 1 – Diagrams and Correlations 171

Appendix C: Study 2 – Diagrams and Correlations 195

Appendix D: Additional Regression Analyses for Study 2 219

Curriculum Vitae 236

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List of Tables

Table 1: Characteristics of Alternative Regression Models 81

Table 2: Study 1 – Correlations for All Final Variables 93

Table 3: Study 1 – Regression Results of Active Resistance to Change 95

Table 4: Study 1 – Regression Results of Passive Resistance to Change 96

Table 5: Study 1 – Regression Results of Active Support for Change 97

Table 6: Study 1 – Regression Results of Passive Support for Change 98

Table 7: Study 2 – Correlations for All Final Variables 113

Table 8: Study 2 – Regression Results of Active Resistance to Change 115

Table 9: Study 2 – Regression Results of Passive Resistance to Change 116

Table 10: Study 2 – Regression Results of Active Support for Change 117

Table 11: Study 2 – Regression Results of Passive Support for Change 118

Table 12: Summary of Results for Hypotheses in Study 1 and Study 2 132

Table 13: Study 1 – Correlations for All Dependent Variables 182

Table 14: Study 1 – Correlations for Active Resistance 183

Table 15: Study 1 – Correlations for Active Resistance (cont.) 184

Table 17: Study 1 – Correlations for Passive Resistance 186

Table 18: Study 1 – Correlations for Passive Resistance (cont.) 187

Table 20: Study 1 – Correlations for Active Support 189

Table 21: Study 1 – Correlations for Active Support (cont.) 190

Table 23: Study 1 – Correlations for Passive Support 192

Table 24: Study 1 – Correlations for Passive Support (cont.) 193

Table 26: Study 2 – Correlations for Dependent Variables 206

Table 27: Study 2 – Correlations for Active Resistance 207

Table 33: Study 2 – Correlations for Active Support 213

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Table 36: Study 2 – Correlations for Passive Support 216

Table 39: Summary of Regression Results of Indicators for Resistance to Change 223

Table 40: Summary of Regression Results of Indicators for Support for Change 224

Table 41: Regression Results of Active Resistance to Change 1 225

Table 44: Regression Results of Passive Resistance to Change 1 227

Table 47: Regression Results of Active Support for Change 1 230

Table 50: Regression Results of Passive Support for Change 1 233

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List of Diagrams and Figures

Figure 1: Dimensions for Categorization of Reactions to Change 29

Figure 2: A Categorization of Reactions to Change 30

Figure 3: Alternative Models Relating Perceptions and Reactions to Change 31

Figure 4: Conceptual Diagram of the ‘Direct Effects’ Model 37

Figure 5: Five Stages of Organizational Decline 46

Figure 6: Summary of Measures of Reactions to Change 84

Figure 7: Summary of the Sequence of Data Analysis 88

Figure 8: Study 1 - Indicators for Active Resistance to Change 171

Figure 9: Study 1 - Indicators for Passive Resistance to Change 171

Figure 10: Study 1 - Indicators for Active Support for Change 172

Figure 11: Study 1 - Indicators for Passive Support for Change 172

Figure 12: Study 1 - Indicators for Perceived Organizational Support 173

Figure 13: Study 1 - Indicators for Perceived Procedural Justice 173

Figure 14: Study 1 - Indicators for Perceived Participation in Decision-Making 174

Figure 15: Study 1 - Indicators for Perceived Need for Change 174

Figure 16: Study 1 - Indicators for Attitude towards Organizational Change 175

Figure 17: Study 1 - Indicators for Fear of Known Consequences of a Change 175

Figure 18: Study 1 - Indicators for Fear of Unknown Consequences of a Change 176

Figure 19: Study 1 - Indicators for Perceived Change in Power 176

Figure 20: Study 1 - Indicators for Perceived Change in Status 177

Figure 21: Study 1 - Indicators for Perceived Change in Pride 177

Figure 22: Study 1 - Indicators for Job Satisfaction 178

Figure 23: Study 1 - Indicators for Job Security 178

Figure 24: Study 1 - Indicators for Job Motivation 179

Figure 25: Study 1 - Indicators for Perceived Employability 179

Figure 26: Study 1 - Indicators for Self-Confidence for Learning 180

Figure 27: Study 1 - Indicators for Affective Commitment 180

Figure 28: Study 1 - Indicators for Trust in Management 181

Figure 29: Study 1 - Indicators for Perceptions of Colleagues’ Resistance to Change 181

Figure 30: Study 2 - Indicators for Active Resistance to Change 195

Figure 31: Study 2 - Indicators for Passive Resistance to Change 195

Figure 32: Study 2 - Active Support for Change Indicators 196

Figure 33: Study 2 - Indicators for Passive Support for Change 196

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Figure 34: Study 2 - Indicators for Perceived Organizational Support 197

Figure 35: Study 2 - Indicators for Perceived Procedural Justice 197

Figure 36: Study 2 - Indicators for Perceived Participation in Decision-Making 198

Figure 37: Study 2 - Indicators for Perceived Need for Change 198

Figure 38: Study 2 - Indicators for Attitude towards Organizational Change 199

Figure 39: Study 2 - Indicator for Fear of Known Consequences of a Change 199

Figure 40: Study 2 - Indicators for Fear of Unknown Consequences of a Change 200

Figure 41: Study 2 - Indicator for Perceived Change in Power 200

Figure 42: Study 2 - Indicators for Perceived Change in Status 201

Figure 43: Study 2 - Indicators for Perceived Change in Pride 201

Figure 44: Study 2 - Indicators for Job Satisfaction 202

Figure 45: Study 2 - Indicators for Job Security 202

Figure 46: Study 2 - Indicators for Job Motivation 203

Figure 47: Study 2 - Indicators for Perceived Employability 203

Figure 48: Study 2 - Indicators for Self-Confidence for Learning 204

Figure 49: Study 2 - Indicators for Affective Commitment 204

Figure 50: Study 2 - Indicators for Trust in Management 205

Figure 51: Study 2 - Indicators for Perceptions of Colleagues’ Resistance to Change 205

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List of Abbreviations

AR Active resistance to change

AR1 Indicator 1 for active resistance to change AR2 Indicator 2 for active resistance to change AR3 Indicator 3 for active resistance to change

AS1 Indicator 1 for active support for change AS2 Indicator 2 for active support for change AS3 Indicator 3 for active support for change e.g Exempli gratia; (for example)

etc Et ectera (and so forth)

i.e Id est; (that is)

IIA The independence of irrelevant alternatives IPO Initial Public Offering

PBV Perception-Based View (of the employee) POS Perceived organizational support

PR Passive resistance to change

PR1 Indicator 1 for passive resistance to change PR2 Indicator 2 for passive resistance to change PR3 Indicator 3 for passive resistance to change

PS1 Indicator 1 for passive support for change PS2 Indicator 2 for passive support for change PS3 Indicator 3 for passive support for change

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1 Introduction

1.1 Research Issues

The starting point for this research is the challenge of “managing change in organizations.” Managing organizational change is problematic: situations in which changes are undertaken are shifting, it is harder for organizations, and in particular top managers as well as change agents, to prepare for and manage the change in ways that satisfy the demands of both the organization and its employees.1 How do organizations go about making “structured” and

“unstructured” decisions concerning how to cope with resistance to change, so that they achieve the goals of their organizational change efforts? It is not surprising that, over the years, resistance to change has attracted increasing attention from researchers, practitioners, and the general public A great deal of research has focused on understanding the sources and determinants of resistance to change The media and the general public are generally interested in various forms of active resistance to change such as strikes or protests Other forms of resistance such as passive resistance, although less observable, have not gone unnoticed and thus have also warranted extensive research over the years.2 Not surprisingly, resistance to change is frequently reported as being one of the sources of organizational change failures (Coch and French, 1948; Kotter, 1995; Kotter and Cohen, 2002)

Broadly speaking, the concept of organizational change (e.g., Meyer, 1982; Nadler, 1998) refers to an effort or a series of efforts designed to modify certain aspects or configurations of an organization: for example, identity, goals, structure, work processes or human resources Furthermore, ideas of organizational learning (e.g., Argyris, 1990; Argyris and Schön, 1978; Fiol and Lyles, 1985; Crossan and Berddrow, 2003) or strategic flexibility (e.g., Harrigan, 1985; Sanchez, 1995; Raynor and Bower, 2001) that emphasize the extent to which a firm is capable of learning and adapting itself to changing environments are associated with the antecedents and outcomes of organizational change We can thus see that the growing attention to these concepts has enhanced both the frequency and scale of organizational change efforts Hence, one can reason that the likelihood of employees facing some type of organizational change is higher than ever before

1

According to the institutional school of organizational thought, individuals in organizations have their own interests and generally try to make use of organizations for their own interests For a more detailed discussion of these problems, see Selznick (1965) or Meyer and Rowan (1977)

2

To me it seems that we should distinguish between active resistance and passive resistance This view is consistent with those of Hultman (1998) and Judson (1991) For a more extensive discussion of reactions to change, see Section 2.6 of this dissertation

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In addition to the greater level of exposure of employees to organizational change, managers within most organizations are also experiencing greater internal and external pressures to initiate change within their organization in order to maintain or improve firm performance These pressures include, for example, increased competitive pressures (Meyer, Brooks and Goes, 1990), new government regulations (Meyer et al., 1990; Haveman, 1992; Fox-Wolfgramm, Boal and Hunt, 1998), technological change (Haveman, 1992), or declining firm performance (Bibeault, 1982)

Given the above-mentioned environments, research on organizational change has been enriched by both empirical and theoretical studies investigating many aspects of organizational change such as change strategies, change processes, or antecedents and outcomes of different forms of change.3 To search for conditions that promote successful change in organizations, it is crucial to know the implications or organizational change for employees, and more importantly, the reactions employees will have Much of the past research on employees’ reactions to change seems to have been implicitly based on a rational choice theory about employees’ behaviors4, thereby giving little attention to the potential effects of perceptions, attitudes, or social influence on decisions and behaviors Indeed, rational choice theories5 have long dominated the research in organization theory, which encompasses research on organizational change and development In their roughest form, rational choice theories would assert that when organizational change efforts are understood to be beneficial to a firm, employees in this firm should support such changes This raises the question of whether all employees do in fact share the same view on this change What are the implications for their decisions if they do not share the same view? Within the large body of research on decision-making in the literature on strategic management or management science, several concepts and underlying assumptions—for example, cost-benefit analysis and human rationality—seem to have conditioned both the theoretical and empirical research in organizational change and employees’ reactions to

of decision-making, see Simon (1957) and March and Simon (1958) For a more extensive discussion of the concept

of rationality, see Section 2.5 of this dissertation

5

Simon (1978, 1985, 1986) pointed out that there are at least two main forms of human rationality in social science: one of them is in an area of cognitive psychology; and the other is in an area of economics In this dissertation, unless stated otherwise, both rational choice theories and human rationality shall refer to the form of human rationality in the field of neoclassical economics It is important to note that in economics there are variations in the concepts of rationality

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change This view is consistent with that of Rumelt, Schendel, and Teece (1991), who have suggested that the logic of economics has dominated the field of strategic management Only recently have researchers become aware of the limitations of decision-making models

in economics, and thus have applied a cognitive paradigm in their research on strategic decision-making (e.g., Schwenk, 1984, 1995; Tversky and Kahneman, 1974).6

Employees who are confronted with changes in their organization face an inevitable choice: whether they should support or resist such changes in order to still (or best) achieve their personal goals and objectives Despite a large body of normative literature on techniques for managing change, for example, models of implementing change by Judson (1991), Kotter (1995), Galpin (1996), and Kotter and Cohen (2002), empirical studies of their application seem to be too sparse to indicate convincingly and conclusively whether the techniques presented in those models have had significant influences on employees’ reactions to change Because I do not share the views and assumptions of some prior researchers7, this dissertation theoretically deviates from the mainstream research on change management by introducing a perception-based view of the employee as an alternative approach to understand employees’ reactions to change

1.2 Research Questions

Researchers and practitioners alike posit that employees’ reactions to change have critical implications for change implementation and firm performance (e.g., Kotter, 1995; Kotter and Cohen, 2002) For instance, the issue of intraorganizational conflict as a serious challenge for managers in making strategic asset decisions has been highlighted (Amit and Schoemaker, 1993) The question of how firms, managers or consultants can minimize employees’ resistance to change is a subject of debate and further research There are a number of theoretical and practical questions, some of which lie more in the area of philosophy than in the area of change management or social science In this dissertation I

am particularly concerned with the role of perceptions and attitudes and how these might constitute determinants of employees’ reactions to change These perceptions and attitudes about change (e.g., perceived need for change, perceived change in power, and job security) are theorized to be factors leading to subsequent conscious or unconscious decisions and/or behaviors in response to changes in organizations, which may significantly impact the

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change implementation and firm performance In particular, this dissertation attempts to answer two research questions:

• What perceptions and/or attitudes influence employees’ resistance to change?

• What perceptions and/or attitudes influence employees’ support for change?

With the above research questions, I advance and test an argument that perceptions and/or attitudes influence employees’ reactions to change Rather than hindering or substituting for current change management models where the main focus is on human rationality, well-understood effects of perceptions and/or attitudes may actually promote more comprehensive, effective and pragmatic change management models designed for promoting employees’ support for change and/or for reducing employees’ resistance to change In response to seemingly limited empirical evidence on the effectiveness of most change management models, well-understood effects of perceptions and attitudes on reactions to change narrow the domain of potentially key factors influencing employees’ reactions to change to which an organization should pay attention In addition, these research questions are consistent with contemporary research on the role of psychological factors in predicting employees’ behaviors in response to various types of decisions of organizations, but the role of several psychological factors require empirical verification Thus, this dissertation attempts to fill a gap in current empirical research by empirically examining relationships between several perceptions and/or attitudes on the one hand and resistance to and support for change on the other hand

Despite evidence that certain change management practices during organizational change are related to employees’ resistance to and/or support for change rates (i.e., a percentage of the total number of employees who support or resist a change to the total number of employees) at the organizational level, it would be a fallacy to then assume that such practices are similarly and/or directly related to employees’ resistance to and/or support for change decisions at the individual level Thus, it is critical to explain the relationship between any type of change management practices and resistance to and/or support for change at the individual level The results in this dissertation may help scholars explain such relationship by providing a connecting answer Rather than answering the question of the effect of change management practices on employees’ reactions to change directly, empirical evidence of the role of perceptions and/or attitudes in predicting employees’ reactions to change may promote a better understanding of psychological factors influencing employees’ reactions to change If certain change management practices were found to influence these perceptions and/or attitudes, then such practices may thereby

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have the effect on employees’ reactions to change Thus, the findings in this dissertation add

to the change management literature by examining relationships between perceptions and/or attitudes held by employees and their reactions to change Given these research questions, this dissertation has three major objectives

• In order to provide foundations for developing a theoretical framework in this dissertation, the first objective is to review prior research on perceptions, attitudes, decision-making, theories of change, and employees’ reactions to change It should

be noted that the literature review on decision-making focuses on the normative and cognitive decision theories in the fields of management and economics

• The second objective is to conceptualize a theoretical framework representing the link between various perceptions and attitudes on the one hand, and resistance to change and support for change, on the other hand Here I propose to bring several theoretical perspectives together, creating a more realistic model of employees’ reactions by combining different conceptions of human rationality The main aim of the research model is to investigate which perceptions and attitudes are associated with resistance to change and/or support for change Additionally, it aims to provide theoretical and, perhaps, practical insights to organizations, top managers, as well as change agents to assist them in developing tools that may detect and alter employees’ perceptions and attitudes in order to (minimize resistance to change and) optimize support for change

• The final objective is to empirically test the hypothesized relationships presented in the research model by gathering and analyzing relevant empirical data in a systematic way

After having identified the main research questions, the next step is to decide the appropriate level of analysis: employee, top manager, or firm level To answer the research questions above, the employee, not the firm, will be the unit of analysis in this dissertation Using the employee as the unit of analysis, one can explore a perception or attitude as a predictor of employees’ reactions to change Further, examination at the decision level of analysis—that is to say, resistance to change and support for change—diminishes at least two concerns First by relating perceptions and attitudes rather than decision-making process to reactions to change, casual ambiguity is not an issue since (1) the relationships between perceptions and reactions to change are more direct; and (2) such analyses do not have to deal with the extent to which an employee uses rational decision-making processes Second, to use the decision level of analysis, it is not necessary to assume that employees

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consistently use specific processes across time or decisions, thereby allowing the notion that different decision-making processes may be at work for each reaction to change

Past research has posited that it is a key interest of a firm to appropriately deal with resistance to change in order to achieve the goals of organizational change efforts (Coch and French, 1948; Kotter, 1995; Kotter and Cohen, 2002) However, it is important to know whether resistance to change always has a negative impact on change efforts and thus firm performance, or whether there might at times be a counter-intuitive implication, i.e., a positive effect, on change efforts and thus firm performance Despite the claim that resistance has a negative effect on change efforts and therefore should be minimized (e.g., Kotter, 1995; Kotter and Cohen, 2002), the question is, then, whether resistance to change may be strategically valuable or positive when it acts as a means to ensure that the change is indeed designed and implemented to promote an organization’s goals Thus, one can question the accuracy of the claim made by some researchers (e.g., Coch and French, 1948) that resistance to change is alwaysundesirable This question seems to have gone unnoticed, providing little recognition of the conditions under which resistance to change may result in superior outcomes of organizational change Although identifying conditions in which resistance to change has positive or negative outcomes on change processes is not the goal

of this dissertation itself, it deserves mention so as to reflect on this issue

In order to state that resistance to change always has negative implications for the firm, one would have to show that such resistance can legitimately be considered negative at any given moment and in any particular circumstance If this same resistance does not create a negative implication for the firm at another moment and in another similar circumstance, one may not legitimately and precisely conclude that resistance to change is always undesirable and negative On the other hand, it is probable that resistance to change may at times have a positive effect on the outcome of organizational change, and that it may

be strategically valuable to an organization For example, it is imaginable that resistance to change could be constructive by entailing a high degree of objective evaluation of the change This should suggest that researcher should not make the critical assumption that resistance to change always has negative effects on the outcomes of organizational change Instead, they should investigate how to benefit from resistance to change

1.3 The Importance of the Research Questions

Clearly, improved firm performance is one of the main objectives of organizational change, but intermediate outcomes are more proximal indicators of its success or failure Employees’ performance can be considered as an immediate outcome or a path through which changes in organizations affect firm performance Therefore, one can also reason that

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employees’ resistance to or support for change which are arguably predictive of their performance at the time of the organizational change, can be seen as an indicator predicting the probability of success of the change (Kotter, 1995; Kotter and Cohen, 2002) Thus, the optimization of resistance to change and support for change may enhance the probability of success of organizational change, thereby improving firm performance In order to optimize these levels of resistance to change or support for change, we need to understand the factors that play an important role in creating or changing them In this dissertation I focus on the direct relationships between perceptions and attitudes on the one hand, and resistance to change and support for change on the other hand This perspective assumes that employees’ perceptions and attitudes are likely to influence their reactions to change I take this a step further by proposing that if we know which perceptions or attitudes affect levels of resistance to change and support for change, we will then have opportunities to develop tools to properly influence reactions to change

Although individual decision-making processes are not programmed, they are programmable (Mintzberg, Raisinghani and Theoret, 1976): the underlying basis of this argument is that strong evidence indicates that a basic logic or structure underlies the actions of a decision-maker and that this structure can be identified by a systematic study of his or her behavior8 If individuals have patterns of decision-making processes, the study of employees’ reactions to change may yield some valuable insight That is, if certain perceptions or attitudes are associated with certain decisions at a given moment and in a particular setting, the same pattern of relationships may persist at other moments and in other settings

One assumption in this dissertation is that employees’ decisions are based on their interpretation and evaluation of the data available to them As this data is collected and interpreted, different employees may arrive at different perceptions, interpretations and understandings of the same data Consistent with Simon’s (1957) concept of ‘bounded rationality’ in decision-making processes9, I argue that there are potential gaps between the object’s (e.g., organizational change’s) ‘objective’ (what they actually are) characteristics and ‘perceived’ (what people believe or perceive them to be) characteristics, and that the

8

Note that in this dissertation, words like “decision”, “behavior”, or “reaction” are used interchangeably since they all refer to an employee’s resistance to change and/or support for change In its simplest form, one may find that resistance to change and support for change can be considered as one kind of decision, and that both resistance to change and support for change are expressed in terms of behaviors or reactions

9

Simon (1957) has discussed the two main problems with the economic model of decision-making; first, managers seldom have perfect information and thus often have to make decisions under uncertainty Second, managers are not cognitively capable of processing all of the information that they would need to make a profit-maximizing decision Therefore, Simon (1957) has introduced the concept of “bounded rationality” for the model of decision-making

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‘perceived’ characteristics rather than the ‘objective’ characteristics are used as inputs in the decision-making processes determining decisions Thus, perceptions of the object play an important role in decision-making processes and result in decisions that at least partially reflect these perceptions

As I reflect on economic theories that seem to explain well the utilitarian side of human behavior, but seem to fail to explain the side of human behavior that goes beyond outcome-driven self-interest, I want to explore an alterative approach in understanding employees’ reactions to change, and label this approach the “perception-based view of the employee.” In short, using perception-based logic, this dissertation focuses on the role of perceptions and attitudes as the driving forces leading employees to either support or resist organizational change Understanding the ways in which employees react to change will certainly provide a potential avenue for developing new change management strategies that may bring employees’ perceptions into alignment with ones desired, thereby eliciting desired reactions to change

1.4 The Scope of the Dissertation

Obviously, the field of organizational change and its scientific investigation is manifold For instance, archetypes of a firm’s organizational change can be neatly classified into five groups or dimensions: (1) identity; (2) strategy; (3) business processes; (4) structure; and (5) human resources Each of these dimensions has different implications for an organization as well as its employees.10

In view of the fact that organizational change can take on many forms, this dissertation focuses on two aspects of organizational change: “downsizing,” which can be subsumed into the “firm structure” dimension, and “privatization.” which is part of the “firm strategy” dimension.11 In Study 1, a downsizing effort was chosen because this kind of change typically has direct and significant implications for employees, who directly experience the effects of these changes For example, employees may have to increase their productivity (Hambrick & Schecter, 1983) or risk losing their jobs Further, downsizing has often been employed as a means to improve firm performance (Freeman & Cameron, 1993) Additionally, firms in a crisis situation often downsize as part of their turnaround strategies (Robbins & Pearce, 1992; Appelbaum, Everard & Hung, 1999) Similarly, there were

10

Donaldson (1987) pointed out that organizational change can be thought of as an adjustment of strategy, structure,

or processes of an organization For a more extensive discussion of organizational change, see Section 2.1 of this dissertation

11

It is noteworthy that from different perspectives, any kind of organizational change can be classified into more than one category

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numerous reasons for choosing privatization as a context of the study First, many owned enterprises in several countries are, or will eventually be, in a process of privatization, and this privatization has several implications for markets, other firms, and their employees Second, in addition to being a change in itself, privatization is also a source

state-of other changes within an organization—for example, changes in corporate strategies and corporate structures Consequently, it is important to note that a study of employees’ reactions to privatization not only has to deal inclusively with reactions to privatization but also with reactions to a set of changes that come along with the privatization initiative in a broader sense

This dissertation aims to develop a research model which suggests relationships between perceptions and attitudes on the one hand and resistance to change and support for change on the other hand, and to empirically test it by using data gathered from employees currently facing organizational change The number of variables examined in this dissertation is limited predominantly due to two key reasons: theoretical aspect (the greater the number of variables in the model, the less the degree of parsimony of the model), and practical aspect (the greater the number of variables in the model, the lower the response rates in the survey)

This dissertation focuses on empirical evidence gathered at a particular point in time from employees in two organizations In Study 1, a survey was distributed to a random sample of 100 teachers at a large private school in Thailand where the management has recently decided to reduce the number of teachers Of those sampled, 91 teachers returned the surveys (91% response rate) In Study 2, a survey was distributed to 500 employees at a large state-owned company in Thailand where top managers have attempted to privatize the organization Of those sampled, 224 employees returned the survey (44.8% response rate) The focus of this dissertation is strictly limited to the examination of the relationships between perceptions and attitudes on the one hand and reactions to change on the other hand

at the given moment in time rather than during different points in time Thus, it is not a longitudinal study This implies that these studies did not investigate feedback-loops or a so-called dynamic model12 that addresses: (1) the effects of employees’ resistance to and support for change on the change efforts (e.g., the change goals and processes); and (2) the perceptions of the modifications in organizational change efforts at time t1 as a consequence

of employees’ reactions at time t0 on their reactions to such modifications at time t1 One

12

As March (1955) pointed out problems in determining influence order, one may consider that the influence relationships in this dissertation may represent closed-loop systems For a detailed discussion of this issue, see March (1955)

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reason why this dissertation does not include the feedback-loops model concerns the casual link between perceptions or attitudes, and reactions to change If we were to find such a relationship at one moment in time, then we might expect to find that relationship at another moment in time Another reason concerns the practical aspect of developing and validating the feedback-loops model using data from the questionnaire surveys: this would require not only comparing results of different surveys but also gathering data from the same respondents at different times, which would be too problematic or beyond the scope of this study

It is important to note that the nature and magnitude of the impact of organizational change on employees depends on, among other things, the type of change and the way in which the change is introduced For example, changes can be initiated either from top management (a so-called top-down approach) or from employees (a so-called bottom-up approach) Because I assumed that the strength of the impact of the change was inherently expressed in the perceptions of the employees, it was not necessary to separately explore the effects of the change on the employees, or distinguish how the changes were introduced However, because the changes studied in this dissertation entailed organization-specific, situation-specific, time-specific, and relationship-specific contexts, the extent to which the findings can be generalized to other contexts is limited It is also useful to note that the implications of cultural differences on reactions to change are not within the scope of this dissertation Thus, the examination of relationships between predictors and outcomes within one culture (Thailand) is conducted

1.5 The Intended Contributions of this Dissertation

The principal thesis that emerges from the research model is that employees who are confronted with any form of organizational change tend to develop the initial and subsequent reactions to this change through a variety of decision-making processes Consistent with the bounded rationality framework (Simon, 1957), this dissertation further argues that certain perceptions and attitudes enhance or prohibit their choices of reactions to change

Specifically, this dissertation focuses on employees’ perceptions and attitudes in a downsizing situation (in Study 1) and a privatization situation (in Study 2) These perceptions and attitudes are theorized to be factors leading to subsequent conscious and/or unconscious decisions and/or behaviors in response to the changes, which may significantly impact the change implementation and firm performance This dissertation attempts to contribute to the research on organizational change, especially employees’ resistance to change and support for change, in three ways

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First, this dissertation examines a variety of actions that employees may choose in response to a change in the organization Drawing upon prior research, it identifies two primary types of employees’ reactions to change: resistance to change and support for change These are further divided into: active and passive resistance, and active and passive support

Second, using perception-based logic, this dissertation examines a number of perceptions and attitudes that may influence employees’ choice (conscious or unconscious)

to support or resist change, thus shedding light on whether perceptions and attitudes impel, impede or exert no effect on employees’ behavior and decisions Although the organizational change literature is rich, there seems to be a surprising gap in the literature concerning the role and nature of employees’ perception of change in organizations In particular, this dissertation aims to contribute in this area by examining the link between various perceptions and attitudes on the one hand and resistance to change and support for change on the other hand Consensus on these issues will allow theories of employees’ reaction to change to move forward in a systematic fashion

Third, based on the findings in this dissertation, it is probable that we will be able to develop a variety of tools for predicting employees’ reactions to change More importantly, understanding the ways in which employees establish certain reactions to change will provide a potential avenue for developing a range of change management strategies that may bring employees’ perceptions in alignment with those desired, thereby strengthening the degree to which employees support organizational change Specifically, the key findings are mainly relevant to the design, implementation, and closing phases of change management strategies in Thailand Nonetheless, it goes without saying that part of the knowledge derived from the present dissertation will be applicable and transferable to firms

in other geographical settings and industries wishing to introduce a change, any change, to their organization

The findings in this dissertation will also be informative for consultants, as a way to improve the current change management practices in dealing with employees’ resistance to change As discussed earlier, employees’ resistance to change is reported to be a source of problems for organizations and has subsequent negative effects on firm performance Understanding employees’ perceptions and attitudes before, during, and after the implementation of organizational change may prove to be valuable to firms, managers, and consultants

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2 Core Concepts and Relevant Literature

This section discusses the central tenets of theories of change, perception, attitude, emotion, individual decision-making, resistance to change and support for change, focusing on the core theoretical and empirical arguments It is important to note that I neither seek to provide an exhaustive literature review, nor seek to explicitly review an extended list of the critiques of the core arguments previously made This narrow focus is deliberate, for my purpose is to concisely outline the main tenets of concepts and theories concerning these topics, to assess how they are conceptualized, to provide a basis for establishing the link between key concepts, and to develop my research model

2.1 Theories of Change

There are several relevant questions concerning change What is it? Why do firms need to change? Under which conditions will firms initiate changes in their organization? What kinds of outcome will a change bring to firms? Certainly, these questions already suffice to show that there is need for research on organizational change.13 The wide range of past research on organizational change has focused on four main categories One category has to

do with content issues, and it mainly focuses on factors related to successful or unsuccessful change attempts (e.g., Hofer 1980; Bibeault, 1982; Hambrick and Schecter, 1983; Barker and Duhaime, 1997) Another category concerns process issues, mainly focusing on steps, phases, or actions undertaken during the implementation of an intended change (e.g., Judson, 1991; Kotter, 1995; Galpin, 1996) An additional category deals with context issues, focusing on internal or environmental forces or conditions affecting a change in an organization (e.g., Schendel and Patton, 1976; Slatter, 1984; Robbins and Peace, 1992) The final category concerns reaction issues, and it focuses on employees’ responses to organizational change (e.g., Weiss and Cropanzano, 1996; DeWitt, Trevino, and Mollica, 1998; Patterson and Cary, 2002)

The literature suggests several internal and external factors that lead a firm to commence a change Examples of these factors include: (1) increased competitive pressure (Meyer, Brooks and Goes, 1990); (2) new government regulation (Meyer et al., 1990; Haveman, 1992; Fox-Wolfgramm, Boal and Hunt, 1998); (3) technological change (Haveman, 1992); and (4) management team change (Castrogiovanni, Baliga and Kidwell, 1992)

13

As mentioned earlier, research on organizational change is one of the areas in organization theory research

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Firms that undertake change, any change, in their organization often aim to improve their performance in terms of, for example, higher profits, better responsiveness to the market, and long-term competitive advantage For example, past studies on corporate turnaround (e.g., Hofer 1980; Bibeault, 1982; Hambrick and Schecter, 1983; Barker and Duhaime, 1997) have found several actions or strategies that can revive the troubled firms through corporate turnaround We can thus conclude that the real value of organizational change rests on its ability to alter an organization’s identity, strategy, structure, operation or human resources as a means to enhance firm performance

Now let us consider the characteristics of change Change is defined as a movement away from a current state toward a future state (George and Jones, 1995) In the organizational change literature, at the abstract level, there are two distinct modes of change: first- and second-order change The phrase “first-order change” is used to describe organizational changes that occur within a relatively stable system that remains mostly unchanged; and for a system to remain stable or unchanged, it requires frequent first-order changes (Weick and Quinn, 1999).14 On the contrary, second-order change or so-called episodic change modifies or transforms fundamental structures or properties of the system (Weick and Quinn, 1999) The concept of first- and second-order change is very popular and powerful, and its fruits have been many To give but a brief sample of some of the works that have benefited from this concept, it has advanced several theoretical models such

as Argyris and Schön’s (1979, 1996) single- and double-loop learning by individuals, Miller and Friesen’s (1984) adaptation vs metamorphosis by organizations, and Tushman and Anderson’s (1986) competence-enhancing vs competence-destroying changes in technology In summary, there are several patterns or types of change (Miller, 1980; Johnson-Cramer, Cross and Yan, 2003): small or large (Ledford et al., 1989), planned or emergent in nature (Johnson-Cramer et al., 2003), radical or incremental (Weick and Quinn, 1999)

Another aspect of change is that it can occur at differing organizational levels First, change can occur within a population of organizations For example, changes occurring at

an industry level (e.g., changes in customers’ demands and preferences) have implications for most, if not all, companies within the industry Similarly, changes occurring at a country level have implications for most, if not all, organizations within the country In addition, changes can occur in a single organization, having implications for the whole organization

14

As the phrase “continuous change” is used to describe organizational changes that tend to be ongoing, cumulative, and evolving (Weick & Quinn, 1999), the terms “first-order change” and “continuous change” seem to be used interchangeably

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or for specific parts of the organization Last but not least, changes can occur at the level of individuals within an organization—that is, at the level of employees or managers The important point for us to observe is that changes at differing levels may share some common characteristics but may also possess certain unique characteristics

One of the central issues of organizational change concerns the ability of the organization to enact change.15 The ability may be partly limited by organizational inertia; that is, the organization may not be inclined to search for new solutions (Meyer and Rowan, 1977; Zucker, 1987) This raises the question of whether organizations can change themselves.16 That is a difficult question, and no single answer will adequately answer it

My answer is that they cannot, due to the fact that from a legal perspective, an organization

is a non-human entity; therefore, we can argue that it is not the organization that changes itself but rather the people in the organization that change themselves and thereby change the organization But this leads to the question of whether an organization’s capability to adapt is conditioned by its employees’ capability to adapt, which may be determined by the levels of inertia at the individual level

Research has been done on organizational inertia, which examines the role and impact

of organizational inertia on organizational structure and design.17 In the organizational inertia literature, it is argued that various factors generate several forms of inertia in the organization (e.g., strategic, structural, or cultural inertia) Organizational change may be limited by internal factors such as an organization’s investments18 in plant, equipment, and specialized personnel (Hannan and Freeman, 1989) It is also possible that top managers or decision makers may receive limited or insufficient information to the extent that they may

15

The question concerning the degree to which organizations or managers can change the ways organizations work in response to changes in their operating environments is one of the main questions in the organization theory research There are two contrasting views: The first perspective is that organizations or individuals in organizations can undertake a surveillance of their environments and change their internal properties to promote their survival The second view is that organizations or individuals in organizations are constrained by limitations to the possibility for change

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fail to make a decision on organizational change or adaptation.19 If internal politics exist in

an organization, they may also contribute to organizational inertia; that is, political disequilibrium in an organization may lead to resistance towards certain proposed changes Indeed, most organizational changes are designed to benefit the organization as a whole; and these benefits are likely to take time to be realized; however, any political resistance within the organization generates short-run political costs that may either exceed the potential benefits or be high enough that top executives may decide against the intended change (Hannan and Freeman, 1989).20 Likewise, external factors such as the dynamics of political coalitions, costly or limited information with regard to relevant environments, and legal and other barriers to entry or exit from the market may also restrict the nature and degree of organizational change or adaptation in organizations (Hannan and Freeman, 1984)

Research on organizational change has led to various views and perspectives However, there are at least three most prominent views on organizational change The first view, based on population ecology theory,21 argues that most of the variations in organizational structures occur through the creation of new organizations and organizational forms, and the demise of old ones (Hannan and Freeman, 1977, 1989; Freeman and Hannan, 1983) According to Hannan and Freeman (1989), this perspective, which may be called

“selection theory,” argues that existing organizations, particularly the largest and most powerful ones, seldom change their strategy and structure quickly enough to keep up with the demands of uncertain and changing environments The second view, based on random transformation theory, proposes that endogenous processes induce structural changes in the organizations, but the changes are loosely associated with the goals of the organization and the demands of the uncertain and changing environments (March and Olsen, 1976; Weick, 1976) The third view, based on the rational adaptation theory developed by March and Simon (1958), argues that organizational variability generates changes in strategy and structure of organizations in response to threats, opportunities, and environmental changes

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There are some variations in this view For example, strategic contingency theories22 focus

on structural changes that match organizational structures (Thompson 1967), whereas resource dependence theories23 focus on structural changes that neutralize sources of environmental uncertainty (Pfeffer and Salancik, 1978)

In summary, as the review of the literature has shown, organizational change, regardless of its form, will have implications for the organization as well as its employees Simon (1991: 32) noted that “employees, especially but not exclusively at managerial and executive levels, are responsible not only for evaluating alternatives and choosing among them but also for recognizing the need for decisions.” Accordingly, it is useful to understand how employees view and react to organizational change In support of this view, the main focus of this dissertation is on the implications of organizational change for employees rather than for organizations and, specifically, on how employees respond to organizational change

2.2 Perceptions

As this dissertation will deal to a high degree with perceptions and reactions to change, it is especially important to elaborate on the nature and implications of perceptions on decisions Although research on perceptions is rich and comprehensive, the intent of this literature review is not to present an exhaustive list of extant definitions of perception Instead, my intent is to establish two key points First, perception, as a psychological construct, is associated with other constructs such as attitude or emotion Despite the differences among these constructs, most, if not all, of them seem to share common properties that shall be seen later Second, perceptions influence the ways in which humans understand the world around them and how they make decisions With deeper insights into how people understand the world, we can better comprehend the ways in which humans make decisions and why they behave in certain ways

First of all, what is perception? Perception can be defined as a “complex process by which people select, organize, and interpret sensory stimulation into a meaningful and coherent picture of the world” (Berelson and Steiner, 1964: 88) In the same vein, perception is “about receiving, selecting, acquiring, transforming and organizing the

22

The strategic contingency theory assumes that owners and managers of organizations establish organizations that allow them to monitor the goals and procedures in the organization so that they will be able to respond to external problems See Thompson (1967) for a theoretical approach along these lines

23

Slightly different from the logic of the strategic contingency theory, the resource dependency theory argues that managers strategically create organizational structures and procedures that help organizations mitigate the effects of external environments on the organization See Pfeffer and Salancik (1978) for more complete references

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information supplied by our senses” (Barber and Legge, 1976: 7) The research on perceptions can be traced back to Bartlett’s (1932) influential works on the constructive nature of cognition, which argues that schematic thinking dominates human perception in ways that human generic beliefs about the world influence and shape information processes Several researchers (e.g., Allport, 1954) have extended Bartlett’s (1932) work and have advanced our understanding of perception, attitude, judgment, and several other concepts.24 The preceding discussion has suggested that from a psychological perspective, individuals’ perceptions have a directive influence upon their decision-making and the outcome of their decisions; thus, it is not surprising that organization theorists are now interested in relationships between perceptions and various aspects of organizations For example, a work by Anderson and Paine (1975) has posited the influences of the perception

of uncertainty in the environment on the perception of the need for change in a firm’s strategies

The research on the roles and effects of perceptions on people’s decisions and behaviors is yet to be completed, and the search for a better understanding of various perceptions on employees’ behaviors such as turnover or commitment in the field of human resource management continues its momentum However, empirical research has begun to show that in organizational settings, certain perceptions such as the perception of uncertainty are associated with people’s behaviors An empirical study by Ashford and colleagues (1989), for example, has shown evidence for a positive relationship between perceived job insecurity and intention to quit Another empirical study by Eisenberger, Fasolo and Davis-LeMastro (1990) has demonstrated that employees’ perceived organizational support is related to various attitudes and behaviors In a more recent study, Gopinath and Becker (2000) found that perceived procedural justice concerning the divestment activities of the firm is positively related to post-divestment commitment to the firm

Thus far, I have dealt with a holistic review of perceptions However, the discussion of the general concept of perceptions would be incomplete without mentioning two other related concepts – recognition and action The concept of recognition deals with the ability

to discriminate among familiar classes of objects,25 and it is related to the concept of categorization Thus, at an abstract level, recognition is one’s ability to place objects in a

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category.26 To understand the relationship between recognition and categorization, it is necessary to consider how humans make sense of reality in a complex world Perhaps the key answer to this question is the assertion in psychology that in an attempt to make sense

of a complex world, humans often construct and use categorical representations to simplify and streamline the perception process (Fiske and Taylor, 1984, 1991; Gilbert and Hixon, 1991) In psychology, the term “categorization” is typically regarded as a process in which people group together objects and/or things (Zentall, Galizio, and Critchfield, 2002) Within psychology literature, there are several theories of categorization, for example, exemplar models (Brooks, 1978) and decision bound theory (Ashby and Gott, 1988)

The other relevant concept in connection with perception is “action.” Action refers to one’s activities such as moving the body in response to the perceptual process As pointed out by Argyris (1999), humans possess certain kinds of mental programs on how to act effectively in different types of interaction; and there are two theories of action that humans hold The first one is normally expressed in the form of stated beliefs and values The second one is actually used and can thus only be inferred from observing their behaviors

Up to now, most people studied have a theory-in-use, which is called Model I (Argyris, 1999).27 Model I theory-in-use requires defensive reasoning (Argyris, 1999) In his view, individuals tend to keep their premises and inferences tacit for fear that they may lose control, and the use of defensive reasoning prevents questioning the defensive reasoning.28The consequences of the model of the theory-in-use strategies are that defensiveness, misunderstanding, and self-fulfilling and self-sealing processes are more likely (Argyris, 1999)

If perceptions are derived from or based on incomplete information and limited observation, perceptual biases will occur, and thus affect a person’s decisions and actions.29But what is the point of getting to know the concept of perception? Here, it is the contention that several perceptions of change are acting as determinants of employees’ reactions to

28

This is because most people who follow Model I theory-in-use employ the following prevalent action strategies: advocate your opinion; evaluate the thoughts and actions of others (and your own thoughts and actions); and attribute causes for whatever you are trying to understand (Argyris, 1999)

29

Individuals do not see or receive everything that happens in a particular situation More importantly, they tend to be selective in what they attend to and what they perceive This selectivity in the perceptual process leads to the tendency or bias to perceive one thing and not another This is called “perceptual bias.”

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change That is, humans usually try to make sense of what has happened, what is happening, and what will happen A number of researchers have noted a link between the perceptual process and the interpretation of information; they have argued that the interpretation of information is based on the perceptual process (e.g., Anderson and Pained, 1975) Further, during organizational change processes, employees create their own perspectives and interpretations of what is going to happen, what others are thinking, and how they themselves are perceived Additionally, if there is a lack of information about the change, then evidence of employees’ own perspectives and interpretation of the change is more likely to be observed (Coghlan, 1993)

2.3 Attitude

Like the preceding discussion of human perceptions that has given an overview of how humans perceive and make sense of the world, this section discusses how research on perceptions has advanced our understanding of attitude(s) In psychology, attitude has been examined extensively for a long period of time The main focus of research on attitudes concerns the nature and function of attitudes and how individuals construct them The application of current knowledge on attitude to business settings and the implications of attitude for individuals’ decisions and behaviors are of interest in this dissertation This dissertation asserts that employees’ attitudes can influence their predisposition to formulate

a pre-determined response to a change

The definitions of attitudes have been many In social psychology, the term “attitude” refers to an individual’s preference for or disinclination toward an idea, issue, item or object; it is subjective in nature, and can be positive or negative There are three other definitions that have influenced subsequent studies on attitude.30 One definition is that attitude is “the affect for or against a psychological object” (Thurstone, 1931: 261) Another definition that seems to be more comprehensive is that attitude is “a mental and neural state

of readiness, organized through experience, exerting a directive or dynamic influence upon the individual’s response to all objects and situations with which it is related” (Allport, 1935: 8) A final definition that is slightly different from Thurstone’s (1931) is that attitude

is “a disposition to react favorably or unfavorably to a class of objects” (Sarnoff, 1960: 261) There are two important aspects of attitude: one of them is a belief aspect that uses cognitive processes to describe an object and its relation to other objects, the other is an affective aspect that leads to liking or disliking an object (Katz, 1960)

30

For a detailed review of attitudes, see Greenwald and Banaji (1995)

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Another fundamental question in the research on attitudes is about how individuals acquire attitude In psychology, attitudes arise from concepts, which are constructed through experience; and concepts become attitudes though a process in which an evaluative aspect is added on to them (Rhein, 1958) To understand the role of attitude in human behavior, a model by Fishbein and Ajzen (1975) has suggested that: first, an individual’s positive or negative beliefs about an object form an attitude towards that object; second, this attitude determines the individual’s intention to behave with respect to the object; and finally, this intention to behave is related to the actual behaviors acted

Given this observation, we may assume that attitudes towards organizational change tend to result in pre-determined intentions to behave and then subsequent behaviors In this sense, managers and/or employees who have a negative attitude towards organizational change are more likely to resist efforts to change In the same way, it is probable that managers or employees who have a positive attitude toward organizational change are more likely to support efforts to change

There are two basic assumptions guiding the directions of research on attitude The called traditional view assumes that attitudes are dispositional in nature According to the dispositional approach, the so-called traditional view, attitudes are seen as stable dispositions that have developed within the individual In its roughest form, this view emphasizes the role of an individual’s disposition to the development of attitudes (Salancik and Pfeffer, 1978) A more recent theory, developed in the late 1970s, can be seen as a breakaway from the traditional view on how attitudes are formed is based on the assumption that attitudes are situational in nature According to this approach, attitudes are viewed as reactions to social situations that change when social context changes (Salancik and Pfeffer, 1978) For instance, the social information processing perspective (e.g., Salancik and Pfeffer, 1977, 1978) asserts the role of social information on the behavioral reactions of individuals to situations Both predictions may help us gain insights into how humans acquire and change their attitudes By considering the two different views, whether attitudes are dispositional or situational in nature, my main conclusion is that the two views complement one another Attitudes may be stable dispositions, but may be influenced by social situations

so-There is also the question of whether attitudes are conscious or unconscious in nature Recent research, which has suggested that attitudes are conscious in nature, has been implicitly embedded in much of the prior research on attitudes (Greenwald and Banaji, 1995); and most of the previous studies have focused on conscious cognitive involvement in debate judgments and decisions On the contrary, another group of researchers has begun to recognize the unconscious aspect of attitude The key proposition of this stream of research

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is that there is an implicit operation of attitudes.31 By acknowledging both implicit and explicit operations of attitudes, we can assert that humans’ attitudes can influence thinking, decision-making and behaviors in situations in which people recognize the existence of their attitudes as well as in situations in which they do not recognize the existence of their attitudes

2.4 Emotion

Because the human rationality approach to decision-making in economics has dominated much of the research on organization theory for years (Ashkanasy, Härtel and Daus, 2002), empirical research on the effects of emotion on decision-making and behavior in the field of management has been limited Therefore, we can reason that because of the predominance

of the rational choice models, the concept of emotion has been largely unnoticed or ignored for some time in the mainstream research in management science Whereas there is a relatively sparse body of management literature dealing with emotion, research on emotion

in the field of psychology has been voluminous

Research on emotion has a long history, perhaps starting with Charles Darwin’s book The Expression of the Emotions in Man and Animal (1872) Since then, the development of the literature on emotion has lead to at least four prominent perspectives: the Darwinian, the Jamesian, the Cognitive, and the Social-Constructivist.32 All of these approaches have attempted to provide answers to the same fundamental questions, for example, what is emotion, and how does it evolve? This literature review will not discuss each of the key questions in light of the different perspectives In fact, it will only touch on certain aspects

of the last two Since my objective is to give only a brief overview of the research on emotion and underpin arguments for my research model, this literature review will take us through the research on emotion in the simplest form

The term “emotion” has been defined as “a relative short-term positive or negative evaluative state that involves neurophysicological, neuromuscular, and cognitive components” (Kemper, 1978) Although in the psychology and sociology literature, there seems to be little consensus concerning the meaning of emotion and related terms such as mood, feeling, and sentiments (Kemper, 1987), it is beyond scope of this paper to offer a new definition For that reason I shall simply review the role of and influence of emotion on

31

There has recently been some debate over the views on conscious or unconscious aspects of attitudes The traditional view does not make an explicit distinction as to whether attitudes operate in conscious mode or in unconscious mode, while a recent view explicitly acknowledges that attitudes also operate in unconscious mode For

a detailed discussion of this issue, see Greenwald and Banaji (1995)

32

For an overview of all four perspectives on emotion, see Cornelius (1996)

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people’s decisions and behavior Because emotions exert effects on people’s decisions and behavior, it is important for this dissertation to recognize and understand how and why emotions can exert such effects on employees’ decisions and behavior in the context of organizational change

Previous research on emotion has suggested that humans’ affective states, decisions and behavior are influenced by how they process information For example, a central theme

of the Affective Infusion Model (AIM) proposed by Forgas and George (2001) is that the influence of affective states on individuals’ judgments and behaviors depends on the type of information-processing strategies the individuals adopt in a particular situation In its roughest form, the basic idea is that affect (referring to both moods and emotions) impacts organizational behavior because it influences both what people think (the content of thinking) and how people think (the process of thinking); and most social thinking and action occurs in naturally complex and ambiguous situations, and requires the use of active, constructive information process strategies (Forgas and George, 2001)

According to Forgas (1995), affect infusion can be defined as the process whereby affectively loaded information exerts influence upon and becomes incorporated into an individual’s cognitive and behavioral processes, entering into their constructive deliberations and eventually coloring the outcome in a mood-congruent direction Basically, the AIM model (Forgas and George, 2001) asserts that there are four information-processing strategies based on different affect infusion potentials: (1) a direct access; (2) a motivated processing; (3) a heuristic processing; and (4) a substantive processing Both the direct access and motivated processing strategies require little constructive processing, limiting the extent of mood infusion On the contrary, both the heuristic and substantive processing strategies require a high degree of open and constructive thinking, allowing greater mood infusion to occur, and resulting in the creation of new knowledge from the combination of new information and stored information Moreover, task characteristics, personal variables, and situational features determine processing choices (Forgas and George, 2001), implying that the influence of affect is context-dependent

Central among issues of emotion is whether there is only one direction, either positive

or negative, for each relationship between emotions and the other variables This is crucial because it complicates and shapes how researchers conduct their research on emotions Based on numerous studies on emotions, it is obvious that there can potentially be inverse relationships between moods and emotions on the one hand and behaviors and attitudes on the other hand For example, George and Zhou (2001) theorized that under certain conditions, positive moods might hinder, and negative moods might enhance creative performance This is because when creativity is an objective for people and that they are

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high on clarity of feeling, they may use their mood as input to determine the sufficiency of their efforts In this sense, negative moods may signal that things are not going well and that additional effort is needed Along similar lines, positive moods may signal that things are going well and that an additional effort is not required George and Zhou’s (2001) findings were consistent with their theory, that is, positive mood was negatively associated with creative performance; and negative mood was positively associated with creative performance In other conditions, there may be a positive relationship between positive mood and creative performance (see, e.g., Isen, Daubman and Nowicki, 1987)

According to the literature on mood, its effects on work motivation are manifold First, positive moods may enhance spontaneity and helpfulness toward coworkers (George, 1991) Second, positive moods may facilitate a flexible and open cognitive style in social situations (Forgas, 1999a, 1999b) Last but not least, positive moods may influence the performance

of leaders (George 1995, 2000) In contrast, a negative mood has been linked to several negative decisions and behaviors such as absenteeism and turnover For example, empirical research has shown an inverse relationship between employees’ positive moods and levels

of absenteeism (e.g., George, 1989) Another example is that the interaction between value attainment, job satisfaction, and positive mood is likely to predict turnover intentions among employees (George and Jones, 1996)

2.5 Individual Decision-Making

In economics, research on decision-making and judgment seems to have begun in 1950’s, focusing on a rational approach.33 Since then, research on decision-making (e.g., strategic decision-making in organizations) has been growing Another stream of research on decision-making in the field of psychology has also advanced our understanding of how individuals make judgments and decisions It is important to note that with regard to human rationality, the forms of human rationality in the area of psychology, which differ from those of theories of human rationality in neoclassical economics, have begun to receive greater attention in strategic management research Examples of works that have been influential in strategic management or management science (e.g., Dean and Sharfman,

33

This by no means suggests that the concept of rationality is not being applied in other social sciences Simon (1978,

1979, 1985, 1986) pointed out neatly that most social sciences implicitly or explicitly assume human rationality; however, the forms of human rationality that they adopt may differ Thus there is a point of agreement concerning human rationality: that is, humans have reasons for what they do or for how they behave The differences have to do with the question of what constitutes rationality For instance, economic theories take a special form of human rationality – the rationality of the utility maximizer who will objectively aim for the best possible choice in terms of the given utility function (Simon, 1978)

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1996) are those of Simon (1957), March and Simon (1958), and Tversky and Kahneman (1974) Central to these works are the arguments that there are several forms of human rationality, and that human rationality is bounded to external and/or internal constraints

A review of past research on strategic decision-making has shown that there are several models of the strategic decision-making process.34 One example is Hofer and Schendel’s (1976) model that outlines seven steps of the strategic decision-making process: (1) strategy identification; (2) environmental analysis; (3) resource analysis; (4) gap analysis; (5) strategic alternatives; (6) strategy evaluation; and (7) strategic choice Another

is the model of Mintzberg et al (1976), which suggests three phases and seven steps of the strategic decision-making process: (1) identification phase consisting of decision recognition and diagnosis steps; (2) development phase consisting of search and design steps; and (3) selection phase consisting of screening, evaluation, and authorization steps Likewise, Fredrickson (1984) suggested that from the perspective of a managerial decision maker, the rational decision-making process involves five interrelated cognitive stages: (1) pay attention to a problem or opportunity; (2) gather information; (3) develop a series of options; (4) value the options using expected costs and benefits; and (5) select the option with the greatest utility

Another key aspect in decision-making is learning, which involves developing new understandings The learning process involves the acquisition and interpretation of knowledge (Linsay and Norman, 1977) Learning is the process of modifying one’s cognitive map or understandings (Friedlander, 1983: 194), thereby altering the range of one’s potential behaviors (Huber, 1991) So we may speculate that since learning capability refers to individuals’ ability to develop a new understanding of the world around them, it may promote or limit their understanding of a proposed change

Past research has led to several concepts and theories to explain certain aspects of decision-making with the goal of explaining decision-outcome deviations from normative expectations of the rational decision-making approach One such theory is Beach’s (1990) image theory that incorporates Einhorm and Hogarth’s (1981) idea that humans make use of mental simulation to evaluate options by applying strategies from known situations to new situations.35 Another example is the model called framing effects that has suggested how apparently irrelevant variables can influence decision-making According to Kahneman and Tversky (1979), framing or editing phases occurring during a process of choice concerns

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with the preliminary analysis of alternatives, their outcomes and contingencies.36 Note that the concept of framing effects is theoretically related to the concept of categorization discussed in the previous chapter

Most strategic decision-making models that have been influenced by economic theories assert implicitly or explicitly that a manager as well as an employee, as an agent of

a firm, should arrive at a decision that will achieve the firm’s goals, one of which is the maximization of the firm’s value This observation suggests a key difference between strategic decision-making models for firms and decision-making models for employees That is, decisions (e.g reactions to change) of employees may be oriented towards the individual-level maximization of certain objectives such as career advancement or social status rather than towards the firm’s goals such as maximizing the value of the firm However, we may argue here that the ways in which different individuals arrive at decisions (e.g., as a manager making a choice that achieves the firm’s goals or as an employee making

a choice that achieves his or her personal goals) may not be fundamentally different That is,

as employees react to change, they are likely to carry out: (1) objective identification; (2) decision/outcome alternatives; and (3) evaluation and selection In this sense, employees are assumed to be rational; however, their form of rationality does not necessarily correspond to the form of rationality in economics or the form of rationality that the firm may wish its employees to hold

Let me now turn to a study leading to a model of reaction to change proposed by Isabella (1990) In this empirical work, 40 executives from a medium-sized, urban, financial services institution were asked to describe and discuss five events that had occurred in the organization over the previous five years The results showed that members of the organization construe key events linked to the process of change and that there are four stages that individuals go through as changes unfold The four stages are anticipation, confirmation, culmination, and aftermath In the anticipation stage, people gather rumors, scattered pieces of concrete data, to construct a construed reality In the confirmation stage, following the standardization of events into a conventional frame of reference, people reflect or refer their frames of reference which have worked in the past In the culmination stage, people compare the conditions before and after an event, at which time they amend their frame of reference to either include new information or omit invalid information In the aftermath stage, people review and evaluate the consequences of a change From this

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See Tversky and Kahneman (1981), John et al (1993), and Paese, Bieser, and Tubbs (1993) for empirical research

on framing effects

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example we begin to better understand the process which individuals undergo when they are confronted with a change in their organization

At this point, I shall discuss how individuals interpret data and information The term

“interpretation” has been defined as the process through which people give meaning to information (Daft and Weick, 1994) The process of interpretation is important because it is used to understand information Accordingly, employees use the process of interpretation to give meaning to, and to understand the information concerning a change It is logical to argue that different people may give differing meanings to the same information,37 and that the differing meanings prompt differing decisions Moreover, an individual’s emotions and behaviors depend upon the way they structure their thoughts (Ellis and Harper, 1975) Thus, one can reason that the processes of interpretation and decision-making may be related Indeed, the evaluation phase of a decision-making process requires interpreting information Past research on interpretation processes has suggested several models of the decision-making processes For example, Jaffe, Scott, and Tobe (1994) have proposed a four-stage model of how employees interpret events as an organizational change unfolds The four stages are denial, resistance, exploration, and commitment However, one may argue that this general explanation is an incomplete view of real decision-making processes (Beach, 1993) For instance, personal biases, failures of memory, and misunderstood probabilities have been found to cause decision mistakes (see, e.g., Kahneman, Slovic, and Tversky, 1982) In addition, several researchers have emphasized the existence of intuitive and irrational decision-making (Isenberg, 1986; Fiske, 1992) That is, decision-making processes sometimes involve experience-based mental routines, creating quick decisions without rational thought

Now let us have another look at mood theory Forgas and colleagues have conducted studies on mood theory concerning the manner whereby moods determine behaviors in social (see, e.g., Forgas, 1995) and organizational (see, e.g., Forgas and George, 2001) settings In short, past empirical research on emotions such as positive or negative moods has suggested that emotions may affect people’s attitudes, values, and behaviors toward other objects and their world This observation suggests that the effects of emotion on judgments, thought processes, decision-making, and behaviors should not be neglected when one wishes to study people’s decisions and behaviors

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Let us consider whether we always give the same meaning to the same information—that is to say, whether we sometimes assign differing meanings to the same information in other circumstances If this is the case, then we might reason that it ought to be possible that different people may give a different meaning to the same information

as well

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2.6 Reactions to Change

Resistance to change has been identified as a negative and undesired response for organizations because it can lead to failures of change efforts (Martin, 1975; Regar, Mullance, and Gustafson, 1994; Spiker and Lesser, 1995) Indeed, studies of organizational change often attribute outcomes of change efforts to behaviors of employees, especially acceptance of change and resistance to change (e.g., Kotter, 1995; Galpin, 1996) Given the frequent occurrence and persistence of resistance to change in most change initiatives, it is not surprising that much research has been devoted to examining the problems of resistance

to change, especially the ways in which resistance to change can be minimized It is understandable that research on organizational change management has a pessimistic view

on resistance to change After all, resistance to change may disrupt or suppress efforts to change However, little work has directly addressed the possibility of gaining a positive effect from resistance to change As discussed earlier, the question is whether resistance is always negative It might be that resistance to change can become strategically valuable

If we are to understand why resistance to change has been considered the source of organizational change failures, we need to examine closely the characteristics and role of resistance to change itself It appears that Kurt Lewin (1945, 1947, 1951) was the first author who used the notion of resistance to change According to his field theory38, the status quo represents the equilibrium between the forces supporting change and the barriers

to change Some difference between these forces is therefore required to generate the

“unfreezing” that initiates change To make the change permanent, “refreezing” at the new level is required In this sense, resistance is a system phenomenon It is part of the change process and is not necessarily a negative factor

Many studies have posited that resistance to change is negative and should be removed

or minimized For example, Coch and French’s (1948: 521) view on resistance to change is that it is a combination of an individual reaction to frustration with strong group-induced forces Similarly, Zander has defined resistance to change as “a behavior which is intended

to protect an individual from the effects of real or imaged change” (Zander, 1950: 9) In the same view, Agócs (1997) has defined resistance as a process of refusal by decision-makers

to be influenced or affected by the views, concerns or evidence presented to them by those who propose change In summary, resistance to change generally refers to the behaviors of individuals or groups of individuals who are opposed to or unsupportive of changes that top executives want or decide to implement in the organizations

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For Lewin (1947), a change process consists of three phases: (1) unfreezing, (2) moving, and (3) refreezing

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Ford, Ford, and McNamara (2002) noted that, from a constructivist perspective, resistance to change is a function of the socially constructed reality in which a person lives, and that depending on the nature of that constructed reality, the form of that resistance will vary On the contrary, from a modernist perspective, with the assumption that the same objective and homogeneous reality is shared by everyone, all people involved in a change are believed to confront the same change within the same context An important conclusion

to be drawn from these extremely different perspectives is that we need to develop a better understanding of how individuals really construct reality or see the world However, for the purpose of this dissertation, I suggest that any difference between both perspectives is not of

a great concern since in any circumstance the reality that a person holds will ultimately be expressed in terms of perceptions and/or attitudes

According to Agócs (1997), a typology of forms of resistance consists of: (1) denial of the legitimacy of the case for change; (2) refusal to recognize the responsibility to address the change issue; (3) refusal to implement a change initiative that has been adopted by the organization; and (4) the reversal or dismantling of a change initiative once implementation has begun Recently, some researchers (e.g., Dent and Goldberg, 1999) have argued that people do not resist change, but rather losses of status, pay or comfort, and that this is not the same as resisting change

In the literature on organizational change, several factors are thought to be determinants of resistance to change; they include fear of real or imagined consequences (Morris and Raben, 1995), fear of unknown consequences (Mabin, Forgeson, and Green, 2001), a threat to the ways in which people make sense of the world (Ledford et al., 1989), a threat to the status quo (Beer, 1980; Hannan and Freeman, 1988; Spector, 1989), a threat to social relations (O’Toole, 1995), distrust toward those leading change (Bridges, 1980; O’Toole, 1995), and different understandings or assessments of the situation (Morris and Raben, 1995) Thus, it can be reasoned that a person does not resist organizational change but rather the consequences of organizational change However, it can also be reasoned that the consequences of organizational change are part of change efforts and thus cannot be clearly separated

As discussed above, a central issue raised by previous research in change management

is the role and implications of resistance to change, that is, how resistance to change evolves At least one issue emerges from previous studies Despite the seemingly extensive research on resistance to change, with the exceptions of the aforementioned definitions, seldom has previous research provided a definition of resistance to change It seems that the term ‘resistance to change’ is used as a given Thus, it is useful, if not critical, to examine

Tiêu đề	A Perception-Based View of the Employee: A Study of Employees’ Reactions to Change
Tác giả	Chaiporn Vithessonthi
Người hướng dẫn	Prof. Dr. Markus Schwaninger, Prof. Dr. Günter Müller-Stewens
Trường học	University of St. Gallen, Graduate School of Business Administration, Economics, Law and Social Sciences
Chuyên ngành	Organizational Behavior / Change Management
Thể loại	dissertation
Năm xuất bản	2005
Thành phố	St Gallen

Định dạng
Số trang	249
Dung lượng	2,94 MB

Tài liệu tham khảo	Loại	Chi tiết
1. I am opposing or will oppose this change	Khác
2. I am currently arguing for not making this change	Khác
3. I will let this change happen without any objection. (R) Passive resistance	Khác
1. I certainly withdraw my support for this change	Khác
2. I pay no attention to this change	Khác
3. I ignore this change. Active support	Khác
1. I am embracing this change warmly	Khác
2. I fully cooperate with the organization on this change	Khác
3. This change gets my full support. Passive support	Khác
1. I agree with the organization’s decision to make this change	Khác
2. This change is acceptable to me	Khác
3. I certainly comply with this change. Perceived organizational support	Khác
1. The organization values my contribution to its well-being	Khác
2. The organization really cares about my well-being	Khác
3. The organization would ignore any complaint from me. (R) Perceived procedural justice	Khác
1. Decision-making procedures related to this change have been applied consistently	Khác
2. Overall, the procedures used for making change decisions were fair	Khác
3. There has been two-way communication in decision-making process. Perceived participation in a decision-making process	Khác
1. I am allowed to participate in decisions regarding this change	Khác
2. I am satisfied with ways in which I can express my views on this change	Khác