Chapter 2

Why Organizations Change?:

Contemporary drivers and pressures
(Chapter 3_text book)

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 Why Change?

• Change is a risky activity – many

organizational changes fail or do not realize
their intended outcomes. This raises the
question: why is change is so prevalent?

• Pressure to change comes from:

– External - environmental pressures
– Internal - organizational pressures

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Environmental Pressures for Change 1

Pressure Description

Fashion Neo-institutionalism: mimetic isomorphism. Managers imitate

pressures practices associated with successful organizations

As population characteristics change, so do the

Demography nature/motivation of the workforce and the demand for
various products/services

External Neo-institutionalism: coercive isomorphism. An organization

mandate changes through formally or informally mandated
requirements

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 Environmental Pressures for Change 2

Pressure Description

Globalization
and Macroeconomic changes (or crises) place pressure on
geopolitical
developments organizations to change the way they operate.

Hyper- The highly intensified rate of business – including shortened

competition product life cycles and rapid responses by competitors –
pressures produces pressure for change at the organizational level.

In light of recent corporate governance scandals, the

Credibility and
pressure to maintain a good reputation and high level of
reputation
credibility has increased.
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Why Do Organizations Not Change After
Crises?

Factors may include:

•Organizational learning difficulties

•Second-order and third-order causal factors are not

understood

•Lack of a ‘psychologically safe environment’

•‘Defensive’ agendas designed to prevent something

happening (again) can be less appealing/rewarding
than ‘innovative’ agendas focused on the development
of something new (e.g., products, markets, systems)
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Internal Organizational Change Drivers

Pressure Description

Growth Existing systems and processes in an organization may no longer

pressures be applicable when the size of the organization increases.

Integration
Integration and creating economies of scale can lead to pressure
and
for change in organizations.
coordination

A common organizational identity and the unified commitment of

Corporate
staff in different areas/departments of an organization can be
Identity
difficult to manage and may encourage change.

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Internal Organizational Change Drivers
(…cont)

Pressure Examples Description

Bank of
America Change at the senior management level –
New Chief
particularly of CEO - can often be a catalyst for
Executive
Harper’s significant changes in an organization.
Bazaar
Morgan
Stanley
Power relationships and politicking can
Power and
change internal processes and decision
politics Roche
making.
NYPD

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