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Renewal Through Reorganization: The Value of Inconsistencies Between Formal and Informal Organization
Open accessAbstract
We develop a theoretical perspective on how inconsistencies between formal and informal organization arising from reorganization can help create ambidextrous organizations. We argue that under some conditions, the informal organization can compensate for the formal organization by motivating a distinct but valuable form of employee behavior that the formal organization does not emphasize, and vice versa—an effect we label compensatory fit. We illustrate the concept of compensatory fit by drawing on qualitative data from a reorganization at Cisco Systems. We also derive formal boundary conditions for compensatory fit using a simple game theoretic representation. We show that compensatory fit can only work when there is a powerful informal organization already in existence, and when the gains from ambidexterity are substantial. Further, depending on the strength of the informal organization, breakdown in the conditions necessary for compensatory fit may lead to performance declines and further reorganizations.
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Cites
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“(Also see Tripsas (2009) and Eggers and Kaplan (2009) for managerial cognition perspectives on organizational change and renewal.”
Cited by
Organizational Ambidexterity: Balancing Exploitation and Exploration for Sustained Performance
Raisch, S., Birkinshaw, J., Probst, G., & Tushman, M. L. (2009) · Organization Science · doi:10.1287/orsc.1090.0428 · Cited by 2,224
Volberda, H. W., Foss, N. J., & Lyles, M. A. (2010) · Organization Science · doi:10.1287/orsc.1090.0503 · Cited by 1,281
Paradox research in management science: Looking back to move forward
Schad, J., Lewis, M. W., Raisch, S., & Smith, W. K. (2016) · Academy of Management Annals · doi:10.5465/19416520.2016.1162422 · Cited by 1,385
Eggers, J. P., & Kaplan, S. (2009) · Organization Science · doi:10.1287/orsc.1080.0401 · Cited by 774
Leadership for organizational adaptability: A theoretical synthesis and integrative framework
Uhl-Bien, M., & Arena, M. (2018) · The Leadership Quarterly · doi:10.1016/j.leaqua.2017.12.009 · Cited by 767
Metadata
- Authors
- Gulati, R., & Puranam, P.
- Venue
- Organization Science
- Published
- 2009-04
- Volume
- 20
- Issue
- 2
- Pages
- 422-440
- ISSN
- 1047-7039 (ISSN-L)
- 1526-5455
- OpenAlex
- W2105278232
- Cited by
- 480
- References
- 8
- FWCI
- 30.64
- Type
- journal article
- Language
- en
- Open access
- green
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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