The post-crisis scenario

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1 MASTERS THESIS IN STRATEGY, ORGANIZATION, AND LEADERSHIP The post-crisis scenario A study of organizational identityʼs affect on performance Situationen efter krisen En studie av organisationsidentitetens påverkan på prestationsförmågan Supervisor: Wolfgang Sofka Author: Claes Anders Olsson xxxxxx - xxxx Copenhagen Business School Pages: 63 Date: Characters:

2 Abstract The objective of this thesis is to study how organizational identity affects performance as of a crisis. In order to study organizational identity 11 semi-structured interviews have been performed and secondary sources in terms of Volvo Cars internal house magazines for employees, newspapers, industry specific magazines, and the company s annual reports have been used. The results show that the identity of the Volvo Cars has affected performance after The stable identity had in the sort-term a positive impact, while the static identity in the long-term was negative. Also, multiple identities were found as an effect of static identities, which caused implications for performance post The conclusion is that members point of reference generates different levels of performance. When members face identity threats, they will enhance their level of performance until such threat mitigates, or when other points of reference are taken into consideration that ease the stress. 2

3 Table of contents 1. Striving with new challenges Losing sense of who you are as an organization Organization and performance as a phenomenon Losing identity after a crisis The we-ness in an organization A field of study in motion Sense-giving and sense-making in an organization Identity is not Culture Introducing failure to understand success Identities in organizations as of a crisis Part Introduction The paradox of enduring identities while going through a crisis Several identities at the same time Identity and Performance Performance: productivity, adaptation and creativity The post crisis scenario Engage in organizational behavior Research aim and question Research design Data collection and participants of study Measuring variables Ethics and validity Analytical outline Volvo Cars a Swedish company in Chinese hands Volvo having Swedish Governance Acquired by Ford, sold to Geely Volvo Cars post Perceptions from the inside Perception of performance Experiencing a crisis Organizational identity according to employees Image and culture The identity of CDC Stable identities Static identities Multiple identities Confirmations and contextualization with management Making impacts on performance Stable identity Static identity Multiple identities conflicts over identity The heritage of industrial sense of belonging Detected behaviors in the organization Study identities to understand competitive advantage Further Research

4 9. Conclusion References Appendence 1 Interview Guide Appendence 2 Data collection Table of figures Figure 1: Outline of Variables 33, 50 Figure 2: Post-crisis performance: Short-term..51 Figure 3: Post-crisis performance: Long-term..53 4

5 1. Striving with new challenges What you are is not always what you see! Periods of negative growth may stall coherence regarding interpretation over what an organization is and stands for. Employees might feel urgency to safeguard ideas of who they are, as an organization, based on what they believe themselves to have been in the past. Accordingly, managers in quest for a vast recovery may grasp any chance of salvation, switching towards new focuses based on a perceived fit with an evolving context. Altered beliefs, existing next to one another in the same organization, guiding individuals and expressing a sense of belonging is an implication. Especially for an organization that is dependent on various roles and responsibilities ability to cooperate in order to executing given tasks. Organizational identity is a theoretical field for organizational studies that establish each organization as an actor by understanding its sense of belonging. There is a difference between how one perceives herself sense of belonging working for a school or a hospital. Yet, there are similarities as well. In some sense each organization depends on a foundation to stand on. We base or beliefs regarding, for example, hospitals on what we know from our past experience. Finding oneself, as an individual or, as an organization in a situation where the mere existence of oneself is threatened, each entity face a challenge of having to adapt to be able to remain as an organization. However, adapting too much, for example a school that abandon ordinary education to just focus on religion might lose its core sense of belonging. Is it a school than, or a religious institution? Studies of organizational identities have found that individuals prefer not to change, staying the same or as close to the idea held of oneself built up from past experience. A crisis situation is therefore interesting related to organizational studies since organizations having to cope with a fierce environment or periods of negative growths have to change to be able to stay the same, or in other terms stay competitive. Yet, changing too much from how members perceive the organization next to other similar entities may develop a lack of support for management s intentions leading to lack of progress and difficulties in getting out of unfavorable situations. Organizational identity may provide alternative explanations regarding how competitive edge is being lost over time. Having a coherent interpretation in an organization on how to perform 5

6 daily work is beneficial since diversity of knowledge and experience is needed to accomplish complex tasks, especially so when an organization faces external stress. Volvo started as a small niche actor back in the 1920 s to later become one the largest industrial groups in Scandinavia in the end of the 20 th century. However, at this point in time, management of the Volvo Group did not believe in a future profitability of cars produced under the Volvo brand anymore. Volvo Cars was therefore sold to Ford in 1999, and later on to Geely in Due to these changes employees at Volvo Cars have being forced to deal with new governance structures that see the identity of the company differently, compared to past owner structure. Historical challenges might have affected the organizational identity held; hence Volvo Cars is an interesting company to explore further when studying how performance has been affect by turbulent situations. The research question addressed in this thesis is: how has organizational identity affected performance as a result of a crisis situation? Accordingly, this study will integrate a theoretical framework of organizational identity specifically directed towards seeing how performance alters after the financial crisis of Despite the concentration to a specific case, this research attempts to understand how competitive edge vanishes due to obstacles faced when organizations strives with new challenges. 6

7 2. Losing sense of who you are as an organization The phenomenon of organizational identity appears whenever members of an organization ask themselves who are we?, what business are we in?, or what do we want to be? (Hatch and Schultz, 2004; p. 3) According to Hatch and Schultz (2004), studying organizational identity is becoming increasingly interesting due to the problematic nature of organizations in the 21 st century. The theoretical contribution of organizational identity offers insights in strategic positioning, differentiation, and involvement of employees, communication, and relations with stakeholders. Hatch and Schultz (2004, p. 1), emphasize a wider take on organizational identity since the 21 st century demand a broader focus than that provided by a strictly corporate point of view. During the 1980 s Womack et al. (2007) conducted a study to better understand differences in the automotive industry throughout the world. The study found several differences between production sites and made a huge impact on the future development on the automotive industry. Their study emphasizes Lean as the outstanding paradigm for production. Within the range of their study, Womack et al. (2007) and their colleagues made a visit back in the early 1980 s to Volvo s factory in Uddevalla, Sweden. According to the authors, the Uddevalla factory at the time was of special interest for the study since few productions sites throughout the world had another way of distributing production than the classical Fordian assembly line. Womack et al. (2007) praise the initiative of craftmanship since all too few throughout the world dared to test new ideas within the industry to structure production. Accordingly, experimenting was needed with new organizational designs since it could provide future competitive advantages. However, the system developed did not impress the authors for a simple reason; it was not productive. Especially not in relation to the Asian structure which is presented as superior throughout their study. Not successful since, the factory of Uddevalla, changed to a more classic Foridan assembly approach. However, on the 5 st of July, 2013, the last manufactured car rolled out of the factory since Volvo Cars has chosen to re-distribute its production capacity to other locations (Bohuslänningen, 2013). Employees at the factory were told the news already in A few months after the workforce was given the news that they would be forced to find new jobs in due time, the productivity in the factory went up significantly. Productivity reached levels never realized before, in terms of quality and delivery, but also measures of absence for sickness went down. 7

8 Due to this, the employer gratitude the employees with cakes a couple of times since performance sky-rocketed and stayed at high levels over several moths. Getting underneath the skin of an organization, like Volvo Cars, a broader view besides the strict corporate view outlined in for example newspapers could be found. According to Diamond (1988) organizational identity is useful when studying the inter-subjective meaning of organizational behavior. Furthermore, studying individuals feelings about their organizations based on perceptions rooted in history, relationships present inside an organization could add important insight when trying to explain unconscious motivation affecting performance. One may for example enhance understanding for why productivity went up, and not down, after announced cancelation in the Uddevalla factory. With the organizational identity perspective one may also elaborate on decreasing productivity from the organizational member s point of view. Doing so provides the broader focus emphasized by Hatch and Schultz (2004) above which is interesting when in search for other reasons for a decreasing productivity besides the one offered from a strict corporate view. Building upon the Hatch and Schultz (2004) take on organizational identity, members of an organization have a lot of impact on defining an identity and shape it towards future demand. Of particular importance in this study is a crisis situation, were the true existence of a company is being challenged. In such situation the preferred vision set by managers, could be challenged from multiple point of views (Glynn, 2000), since stakeholder s beliefs and assumptions concerning what the organization is and what it should be may not align with the preferred vision set by management (Hatch and Schultz, 2008). Therefore, in modern times where fierce competition impacts the firm s ability to survival; enhancing understanding regarding organizational identity could be beneficial when companies wish to find out how it lost momentum, or strive to make a comeback from times of decreasing profit. 8

9 3. Organization and performance as a phenomenon In this section, the theoretical position is introduced, and elaborated upon. Doing so, the intention is to strengthen the theoretical foundation and motivate why organizational identity and performance are variables worth studying, especially in relation to the phenomenon of organizational crisis. The disposition of the literature review is as following. First, an introduction is made were identity and crisis is presented next to one another. Thereafter, the concept of organizational identity being defined and further elaborated next to similar concepts to enhance the intended distinction to be used here. Third; crisis as a phenomenon is defined. Forth; in-dependent variables used in this study is being introduced based on a development made out of the theoretical field. Firth; performance, the dependent variable is being introduced. Lastly, consequences of how organizational identity affects performance are briefly mentioned based on the intention to deepen understanding regarding were to find this phenomenon of organizational identity studying everyday practices in organizations. 3.1 Losing identity after a crisis Reading this paragraph you will find an introduction to organizational identity and the concept crisis which intends to evoke an interest for why identity have an important contribution in dealing with a crisis situation. Retrenchment involves the definition of organizational identity because it requires the use of budgeting priorities which in turn require an answer to the question of who and what an organization is and what it wants to be (Albert and Whetten, 1985; p. 99). In situations when profits decrease or vanishes organizations needs to consider its truce essence in finding a way back to normal or out of obstacles encountered. Finding the true meaning of an organization, one may look at how an organization perceives itself in the light of others. Hatch and Schultz (2004) argue by referring to Cooley (1934), Mead (1929) and Goffman (1959) that organizational identity is being shaped and maintained thorough an interaction and social comparison process. Organizational identity, what is distinct and enduring about organizations, exists since individuals tend to make constant comparison with other similar entities (Albert and Whetten, 1985). In this sense, an organization may claim a position of how it wants to be perceived, an identity, saying for 9

10 example; we are the X kind of business in this industry. Identity claims therefore is a reaction or an assimilation towards something that is already there. According to Albert and Whetten (1985, p. 98) it is important to examine how; organizations choose (or back to) one role rather than another, and how that action affects organization s internal and external identity. Identity claims are to some extent irreversible (Whetten, 2006). An organization cannot choose to be perceived luxurious during summer and then change to be perceived as budget during winter without jeopardizing the overall perception held about the company among stakeholders. Losing an enduring character may provide fuzzy interpretations regarding what an organization is. If so, the social comparison made by stakeholders next to similar entities leave room for hesitation (Hatch and Schultz, 2008). Becoming dis-attached from core base of customers, employees and so forth put organizations in a position in which it have to re-vitalize itself in order to rebuild legitimacy among key stakeholders (Light and Kiddon, 2009). Otherwise the organizations put itself at risk of determination. The only legitimacy left then will be related history and something that once was (Lutz, 2011). Discussions and concerns over identity usually remains silent in times crisis. Once an organization found itself in a retrenchment situation, leaving room for reflection over questions like; who are we and who have we become?, are most often being left out (Albert and Whetten, 1985; p. 99). Retracement is being forced upon organizations due to negative growth. Simply put, the revenue is less than actual money being spent while trying to keep the organization in its current form. Temporal ideas over what to do next are in negative growth frequently on the agenda (Schultz and Hernes, 2013). Unfortunately, reflections over the true essences of an organization are seldom dealt with (Collins, 1999). External stress, exposed to an organization, may challenge the sustainability of organizational identity (Ravasi and Schultz, 2006; p. 436). Managers in these situations feel urgency in accomplishing change to deal with retrenchment. Yet every new idea suggested in getting things back to normal could contribute to part of organizational identity is being lost (Weick, 1988). Even if questions regarding identity are silent in times of retrenchment (Albert and Whetten, 1985), identity claims made during these phases have a long lasting impact on organizations (Schultz and Hernes, 2013). Therefore, conflicts over the sole of a company may erupt as soon as a crisis hit an organization between different entities (Lutz, 2011). Or it could stay latent until the crisis start decreasing in strength (Lutz, 2011). Either way, internal conflicts over identities are negatively correlated with a positive performance, especially when 10

11 organizations lack a shared view regarding what is going on (Voss et al., 2006). No matter the urgency to overcome a crisis; the question of who we are as an organization will serve the long lasting performance of the same organization (Albert and Whetten, 1985). Since the enduring character is what makes others believe in your purpose (Hatch and Schultz, 2008). 3.2 The we-ness in an organization When groups of individuals come together to accomplish a given task they are in a sociological sense starting to develop a sense of belonging, a we-ness (Corley et al., 2006). Organizations exist in order to accomplish a given task (Bruzelius and Skärvad, 2004). The difference between an organization and a loosely connected gathering of individuals, that for example meet up for scuba diving, is that organizations exist in order to a reach a specific goal. Since organizations are founded upon a rasion d étere, set by the founders, the purpose for an organization is to a large extent to achieve these set goals (Melin, 1999). Therefore, being part of organizations implicitly make each individual submit to the common held goal set by the organization in order to reach an accomplishment. However, this sense of belonging could be made up by more or less sense of belonging; weness (Corley et al., 2006). Both the individual and the common identity of individuals, the we-ness, is what make up the w theoretical field distinguished as organizational identity (Hatch and Schultz, 2004). Complex as it is, individual identities of humans and collective identity of organizations impact one other. Identities are in this sense to be found in several layers of an organization. There are, individual identity (Albert and Whetten, 1985), unique to every member of an organization, there are group identities found besides one another in each organizations (Glynn, 2000). Finally there is the overall identity of an organization; which refers to the external perception and reputation of an organization, usually described as organizational image (Ravasi and Schultz, 2006). Each individual, therefore are form an organizational identity point of view included in several spheres of identities at the same time. All of which are open for a constant self-referential re-interpretation (Corley, et al., 2006) due to held perception of oneself (Mead, 1934). This occurs in relation to others (Albert and Whetten, 1985), which in turn is based on past made identity constructions (Schultz and Hernes, 2013). Using identity in the field of organizational studies it is important to be clear about concepts in order to make a valid study. Corley et al. (2006) define organizational identity to be a self- 11

12 referential process, at its core, based on Albert and Whetten (1985) theory referring to social comparison. There are different levels of analysis were identity aims to capture the essence in entities as individuals attempt to define themselves in relation to others (Corley et al. 2006; p. 87). Since identity of organizations build upon a self-referential basis, individual organizations as such behold meaning by making comparison within the organizations as well as with the surrounding context (Albert and Whetten, 1985). Based on this categorization and a confirmation of the same, through repetitive interaction and participation, an institutions member s makes up a we-feeling (Corley et al. 2006; p. 87). This shared understanding/idea regarding definitions serves as the glue in making organizations identities coherent over time. The focus for this study is the self-referential process, the enduring nature, and the categorization of one self next to other entities, which explains individual feelings about organization. Organizational identity does in this way explain interpersonal relationships found inside an organization, and it also shows the unconscious motivation that governs the behavior of organizational members (Diamond, 1988). The dilemma of conducting a study of organizations and identity is related to the critique that everything seems to be identity. In some ways, yes; everything is identity related since one has to understand oneself in order to interact with others. For example; think of Descartes who claimed that an individual is a living entity due to her understanding of her own existence. This yields true for an organization as well; sustaining a living organism of an organization, its members need to think and react towards what is happening in the surrounding context. Just as argued by Albert and Whetten (1985), organizations react towards something that is already there, for example a distinction or assimilation next to perceived similar entities, therefore it could remain its existence A field of study in motion This paragraph broadens the perspective on organizational identity by elaborating on the difference between preferred corporate identity and the living social comparison process existing underneath the skin of every organization. Afterwards, organizational culture is introduced to make a distinction of organizational identity next to this similar way of understanding what is going on inside organizations. 12

13 An implication of the field of organizational identity is still its infancy. Even though several contributions have been made, the idea of organizations having identities is not yet water proof and easy to grasp and use for whom with little insight in the field of study. Not surprisingly, the field has given room for disagreement over what is a suitable usage (Corley, et al. 2006). Whetten (2006, p. 220) denote that there are authors whom seem to use the concept in ways making room interpretations, and therefore is the concept of organizational identity suffering from an identity crisis. The result, and therefore also a valid critique of current studies of organizational identity to some extent is that; it seems as if everything is identity (Corley, et al. 2006; p. 86). Not falling in the trap of align everything that is going on in an organizations with the definition of identity introduced here, below is a comparison of image and culture next to how the concept of identity are used here Sense-giving and sense-making in an organization Using identity for analyzing organizations require a profound understanding. The field of study has grown during recent years adding more concepts. Ravasi and Schultz (2006) make an important distinction useful for this case. They separate organizational identity in a Social Actor Perspective and a Social Constructionist Perspective. Together, the social actor and social constructionist view suggest how organizational identities arise from sense-making and sense-giving processes through which members periodically reconstruct shared understanding and revise formal claims of what their organizations is and stands for (Ravasi and Schultz, 2006; p. 436). Understanding how identities are created and maintained in organizations emphasize incorporating both; intended corporate identity claimed by managers and; self-referential interpretations of these claims in relation to past built up identities made by organizational members (Schultz and Hernes, 2013). Therefore, what happen as a response to a crisis situation is to a large extent affected by the interplay between sense-making and sense-giving mechanisms (Ravasi and Schultz, 2006). Contextual impact that generates identity threatening situations fosters reflection over who are we as an organization among members of the same. Sense-giving, trying to proclaim an identity and active driving change towards the same identity is a matter of influence. Important is the social comparison process (Albert and Whetten, 1985) relative to other organizations. Claiming a relevant position in relation to others enables legitimate appearance. Therefore, the idea of working with sense-giving to a large extent refers to organizational image and what others think, interpret and perceive about 13

14 an organization to be (Ravasi and Schultz, 2006). Sense-making, on the other hand, is used when trying to understand how substantial organizational changes tend to require alternations in the way members interpret what is central and distinct about their organizations (Ravasi and Schultz, 2006; p. 435). Conducting a major change, members of organizations are forced to make new interpretations of who they are as an organization, to deal with new requirements imposed on the same based on environmental shifts. There is in other words a possible conflict between giving sense, this is how we should be as an organization, and making sense; this is who we think we are as an organization based on what we have experienced in the past. Yet, both perspectives are needed to facilitate an adaptation towards the surrounding context that is ever evolving. Understanding identities of organizations in this case refers to looking at how members perceive the organization and not by looking at what others say the organization is. Still, as noted by Ravasi and Schultz (2006) above, what others say affect how members look upon themselves Identity is not Culture First of all, the concept of organizational identity used here is similar, yet different from organizational culture and image. Applying the concept of organizations having identities seek to deal with questions like; who are we?, who are we becoming and so forth (Corley et al. 2006; p. 88). Meanwhile; an image of an organization refers to a projection of identity related notions to external audience (Corley et al. 2006; p. 88), (Gioa, et al. 2000). Culture is to be looked upon as the same as identity. Moon et al. (2012, p. 111), claiming that an organization s culture is an emergent strategic system of shared values and norms that define the interpersonally appropriate attitudes and behaviors for organizational members. Even though organizational cultures may be unique, the identity of organizations is what makes up a distinction relative other organizations belonging in the same category (Albert and Whetten, 1985). Therefore; an organization s culture is not its identity even though the identity could be found when analyzing the culture of an organization. Looking through a cultural lens, identities of organizations the self-referencing process is guiding the cultural life and progress inside the organization (Whetten, 2006; p.227; Hatch and Schultz, 2000). Culture could also be distinguished in relation to identity as something comparable while yet more of belonging to the organization. Obviously, identities of organizations will also change 14

15 in relation to strategy shift. However, identities will shift based upon a sense-making process rather than a sense-giving process (Ravasi and Schultz, 2006). The interpretation of yet loose and shifting distinctions between culture and identity in organizations opens up for a separation where culture provides a descriptive sense of belonging. Identity on the other hand, more refers to the inter-subjective meaning in understanding commitments, motives and reasons why changes among self-perceptions occur next to other similar entities occur. 3.3 Introducing failure to understand success This part elaborates on the context for this study, namely crisis situations; and what is happens in an organization after a crisis. Barney (1991), states that competitive advantages could be found and understood by looking at and analyzing a company s history. The idea here is rather reverse. If we can understand organizational crisis and difficult times, we may understand reasons why some companies tend to lose their competitive edge over time. Weick (1988, p. 305) define a crisis to be a low probability/high consequence events threatening the most fundamental goals of an organization. Every organization should to some extent be crisis cautious since every institution is vulnerable, no matter how great. No matter how much you ve achieved, no matter how far you have gone, no matter how much power you ve garnered, you are vulnerable to decline. There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall and most eventually do (Collins, 2009; p. 8). In relation to Weick s (1988) definition above, crises are to be understood as something that happens over an extended period of time. In other words, a crisis is realized due to several silent factors that in the end erupts. Collins (1999, p. 5) using a metaphor to highlight an important paradox of organizational crisis; I ve come to see institutional decline like a staged diseases: harder to detect but easier to cure in early stages, easier to detect but harder to cure in later stages. An institution can look strong on the outside but already be sick on the inside, dangerously on the cusp of a precipitous fall. Being able to get out of a crisis situation, according to Collins (1999), it is urgent to deal with the brutal facts and not fall into the trap trusting quick fix solutions to overcome obstacles encountered. Reacting by just establish a new change program, new visions or strategies, cultures, values nor will 15

16 acquisitions provide a long lasting silver bullet to master a long lasting decline (Collins, 1999). Finding oneself in a crises situation were a new strategy has proven to be of little help, vastly shift to another one which seem successful for competitors will most likely not provide a sustainable solution to why the firm ended up in the situation in the first place (Hamel, 2007). Therefore, finding the core problem(s) is what could get an organization back on track. The problem related to challenge oneself in search for core problems is that members of an organization exposed to stress tend to search for, and confirm, information that is consistent with their expectations (Weick and Sutcliffe, 2007). Therefore, getting underneath the skin of an organization, a more complex notion over encountered obstacles could be reached. Merging organizational identity with crisis theory may in this way explain what is happening with performance after an organization has undergone a crisis. The idea here is to understand crisis as something exogenous (Moon et al., 2012). In other words, crisis hit an organization and changing its context. The organization has to be deal with its consequences. Therefore, internal processes may provide help to overcome a crisis, yet also making it worse (Collins, 1999). In terms of exogenous crisis, companies tend to end up here due to problems with performance, both internally as well as on the external market sphere. This is usually related to an eroding strategic position in which industry profits decreases due to fierce competition. Several reasons are to be seen as a cause for this, for example; lack of technology and product development, economic recession and so forth; If a company fail to foresee changes in the external environment in time, or fail to conduct a generation change of product and services, fail to re-position, or fail to save money in time; the competitiveness will erode while the company turn into a crisis situation (Bruzelius and Skärvard, 2004; p. 103). According to Hamel and Green (2007), several companies have developed a system/a design and/or processes to enact proactive changes in order to foresee a crisis. However, this idea of endogenous crisis management and pro acting will not be included in this study. Lack of such a design however, realize a crisis, sooner or later. The reason for not introducing the concept of endogenous crisis management is related to; having such a structure one cannot study failure, only lack thereof. 16

17 3.4 Identities in organizations as of a crisis Part Introduction This part introduces the variables of stable and static identity. Stable identities are to bee seen as something positive, stabilizing an organization in terms of overcoming difficulties encountered like decreasing profits. Think of the section just introduced above; stable identities will not fall into the trap, or overcoming ideas, of just establishing any change program to master a crisis. Instead action while being treated will be taken related to ideas of who are we as an organization (Albert and Whetten, 1986; p. 98). Static identities on the other hand refer to an identity so enduring and distinct in its character that it has negative impact in times of difficulties. The social comparison process of organizational members denial that changes are sometimes required. Thus in turn deepen the gap between management intentions to overcome hard times; causing a lack of support among members. Lack of support emerge since the social comparison process differ inside an organization in terms of who are we. In other words, a stable identity aligns identities while a static do the opposite The paradox of enduring identities while going through a crisis Albert and Whetten (1985) made a contribution in using the temporality as an essential concept in organization identity. Weick (1993) emphasize that change in organizations occur at constant basis, no matter more or less radical. Since an organization s surrounding is never static, changes are required to be able to cope with external pressure to change in order to fulfill the corporate mission (Weick, 1993). As organizations changes part of the identity is being lost. Organizational identity is according to Albert and Whetten (1985); most acute to an organization while it undergoes retrenchment. Periods of slow or negative growth raise concerns over budgets, future paths and strategies, which in turn trickle down to fundamental questions like; who and what an organization is and what it wants to be? (Albert and Whetten, 985; p. 99). According Gioia, Schultz, and Corley (2000), organizational identity is a dynamic phenomenon. The stability of an organizational identity is how it refers to labels used by the organization to express it in terms of whom or what it believes itself to be. In other words, they challenge Albert and Whetten (1985) notion of organizational identity as something stable and enduring. We argue that the instability of identity arises mainly from its ongoing interrelationships with organizational image, which are clearly characterized by a notable 17

18 degree of fluidity. Perhaps most important, we argue further that the instability of identity is actually adaptive in facilitating organizational change in response to environmental demands (Gioia et al., 2000; p. 350). This in turn raises an important paradox in dealing with organizations and its relationship with the surrounding environments. On the one hand, the creation and maintenance of an apparently enduring identity are essential to long-term success; on the other hand, organizations must possess the ability to adapt quickly to increasingly turbulent environments as an essential condition for well-being and even survival. Given the preference for order and stability in light of the need for change, one might thus reason that organizations must learn to change and yet somehow stay the same (Gioia et al., 2000; p. 351) Based on this paradox, the authors claim the concept of adaptive instability to demonstrate change in modern organizations. Since organizations, as well as individuals, seek order and stability in an even more complex world most organizations strategies should depart from a wish to change in order to stay the same. Inbuilt in this dilemma is the idea that individuals tend to preserve identity (Albert and Whetten, 1985). However, doing so an organization will stagnate in the face of an inevitably changing environment (Gioia et al., 2000; p. 351). Therefore, an organizations capability to conduct change in reaction to a retrenchment situation is rather limited. Schultz and Hernes (2013) found that identity re-construction is a matter of looking backward in order to move forward. The more an organization founding future claims on past built up identity, the better alignment inside the organization, which in turn impact possibilities of making progress to overcome a crisis. The authors also acknowledge an important factor in relation to changing organizational identity that differs from earlier contributions in the field; identity may be viewed as simultaneously enduring and changing (Schultz and Hernes, 2013; p. 33). Therefore, with reference to Mead (1934), does the authors claim that the past is not there in itself, the memory enables the past to be open to the future, leading to; that the past is open for (re)interpretation (Schultz and Hernes, 2013; p. 3) as an organization undergo a changes. In the same vain; Gioia et al. (2000, p. 361), emphasize that change in organizations imply inconsistency with previous identity. Organizations therefore may need to anchor change initiative and motivation in a crisis situation on the historical identity built up in the past. Organizational identity may be adjusted to suit various situations and problems encountered. Yet, the identity to some extent remains the same. For the organization it is therefore of great 18

19 importance to nature a stable identities while adapting it to changing conditions, trying to get rid of static influences stalling progress. Based on the two takes on identity introduced in this paragraph; on the one hand distinct and enduring, on the other adaptive, further elaboration is needed to make a clear distinction. Since identity needs to be both stable and adaptive according to theory introduced above, these may alter influences of identity on the organization in times of a crisis. Whit this said, in times of a crisis when reflection over the true essence of the company is usually left out it could be both beneficial and vulnerable in trying to adapt or stay exactly the same. Therefore, as explained in the introduction to this paragraph, extending the work of Gioia et al. (2000), identity could be looked upon as stable or static. Doing so, stable refers to an identity that is able to remain important characteristics of an identity to overcome the crisis. For example an organization and its members may perceive themselves to be the best in the industry and therefore work as hard as it takes to regain such a position once realized external stakeholders having lost the same interpretation. On the other hand, static identity is to be considered a preservation of a past held identity, which makes it difficult to overcome the situation phased. This scenario refers to, for example that; individuals do not develop new sense of who they are next to other similar entities. Instead past made claims remains no matter what happens in the surrounding contexts Several identities at the same time Based on the idea that individuals, out of a social comparison process, see more or less urgency to adapt or deal with new difficulties encountered various groups of interests emerge inside an organization. This paragraph introduces conflict over identities, groups that favor its own identity, its social comparison process and distinction, over other similar entities in the same organization. Therefore, during a crisis, or after the same, when the true existence of an organization is being neglected conflict over interests emerge between multiple identities. This happens since identities existing inside the same organization have different takes in terms of who they are in relation to others, no matter making comparisons inside or outside the boundaries of their organization. Building upon the work of Albert and Whetten (1985) Glynn (2000, p. 285) incorporates the idea that in times of retrenchment or as a response to environmental change one organizational identity is emphasized over others. This occurs because groups resist 19

20 attempts to label their particular function or activity as peripheral, preferring instead to champion their own group s identity and, indirectly, to promote selected elements of the hybrid organizational identity to the exclusion of others Glynn (2000, p. 287). Popular in times of retrenchment is to get rid of the old and in with the new, meaning that organizational identity is particularly salient in times of crisis (Schultz and Hernes, 2013; p. 4). However, as noted by of Albert and Whetten (1985) there is an enduring and distinct character of organizational identity. A distinct and enduring identity could make up barriers when managers tried to impose changes in an organization, that are non-consistent with the view held organizational members (Glynn, 2000), the interplay between sensegiving and sensemaking introduced above. The dilemma outlined in Glynn s (2000) text goes in line with Moon et al. (2006) who are saying that performance is particularly difficult in large organizations. The larger the organization the more likely multiple identities co-exist next to one another. Any institution, like a cultural institution of an orchestra in Glynn s (2000) text, has various identities since multiple professions are needed to fulfill missions in large organizations. Focusing on different tasks enables organizational achievement, since each individual may focus on her expertise. However, an organization in which members promote various aspects of the organization over others may face difficulties since actors are likely to cherish aspects in their own favor (Glynn, 2000). In relation to the Mead (1934) and Goffman (1959), it could be argued that Glynn (2000; p. 293) see an interactive process which make it possible to grasp the link between; professional identity, who am I, and organizational identity, what kind of organization is this?. Just like mentioned earlier, identities exist on several layers; organizational, group and individual. Understanding how competitive advantage is being lost, therefore, to some extent could be understood by looking at the interactive and self-comparison process that stalls organizations ability to adapt with an evolving context. Being able to get rid of this polarization, between entities in an organization, during times of retrenchment self-reflection is again important. Doing so challenge the organization s ability to personify and support various identities to work alongside each other to reach set goal and achievements (Albert and Whetten, 1985, p. 288). Enable individuals to focus on getting things back to normal rather than argue in between over influence and interpretation of what is going on seems therefore favorable in times of crisis as members need to make sure their responsibilities are taken care of. 20

21 Managers should therefore support various identities rather than promote its own and pushing others towards the periphery as the organization undergoes a crisis. Doing so it is more likely that problems related to static identities, which denial that changes are required to survive as an organization, could be dealt with. 3.5 Identity and Performance Thus far we have seen that identities of organizations are a self-reflecting process conducted by members that in turn provides a stable sense of how we are as an organization. Since identity serves as something distinct and enduring about an organization it is of outmost interest to see what happens when a common held belief is being challenged. Schultz and Hernes (2013) argue that, changes introduced are ever present affecting what an organization will be in the future. Since members have, no matter implicit or explicit, a saying in what an organization will become in the future (Ravasi and Schultz, 2006), they also have an impact on performance based on their perception about what the organization already is (Voss et al, 2006). According to Druckman, Singer, and Van Cott, (1997) performance like effectiveness and satisfaction is a concept that has no objective reference. This is due to that any kind of performance is exclusive for the given situation. In other words, one cannot transfer a performance and measure it in another context at another time since there is no parallel universe. Therefore, performance is a construct in the minds of the definers (Druckman et al., 1997; p. 39). At its core, performance s relation to identity establishes a link between performance and a shared perception over identity (Voss et al., 2006). Thus in turn, situations in which lack of a shared perception over identity is held, performance is being affected negatively (Glynn, 2000). Aligning performance with identity, Voss et al. (2006) affirms a relation between bad performance and disagreement within an organization. Bounded rational organizations that fail to incorporate diversity of knowledge and out of this make trustworthy decisions tend to decrease productivity since members start lacking motivation and perceived participation (Prahalad and Bettis, 1986). This further support that lack of participation foster static identities that tend to engage in conflict over individual interests. Most of all, Voss et al. (2006), elaborate on leader s disagreement to find that conflicting views provide room for increasing levels of miss understandings, which in turn undermines co-operation. A consequence that tends to emerge is time and money being spent on 21

22 negotiating what to do rather than how to do things (Prahalad and Bettis, 1986). Doing so postpone important decisions and alter ideas of how to deal with the situation, which is urgent in times of crisis (Collins, 2009). Another example of decreasing performance based on a social comparison process inside an organization is Glynn s (2000) study of a group conflict, resulting in lacking support for management, which in turn extended the crisis. Therefore, conflicts over power and interests demolish performance (Voss et al., 2006;). It is important to note here that conflict to some extent also is beneficial for organizations as they seek to progress and enhancing performance when trying to master a crisis situation (Prahalad and Bettis, 1986). Conflict and disagreement is making room for diversity and various interpretations of the situation. Furthermore engaging members and provide them with a sense of participation (Voss et al., 2006). When individuals are given access to participation, their willingness to cope with decisions made afterwards is enhanced. Detecting a crisis as an organization therefore incorporates the idea that master the same is a matter of participation and involvement once trying to figure out how to get things back to normal. In this regard, stable identities could be beneficial in overcoming a crisis since members of an organization may use their sense of who they are, their identities, to strengthen the true essence of the company Performance: productivity, adaptation and creativity Since performance could be related to all kinds of possible constructs; Moon et al., (2012) has developed a framework that broaden the concept of performance used in organizations. With this concept it is easier to grasp variations of performance. In order to survive as an organization, more than a high productivity shall be reached, beholding a competitive edge. According to them there are three outcomes of performance; productivity, creativity and adaptation. Productivity at any level of an organization can be assessed by considering the level of overall output given either a fixed amount of inputs or number of employees (Moon et al., 2012; p. 115). Productivity could be measured in all kinds of quantitative ways. Creativity is related to innovation and explains way some firms outgrow other and why some firms products are more valued then others (Moon et al., 2012; p. 115). Creativity therefore refers to value creation while, adaptability, lastly, instead refers to viability. As expressed by Moon et al. (2012, p. 116) creativity is more concerned with creating markets (internally driven, proactive) while adaptation is more concerned with reacting to market conditions (externally driven, reactive). 22

23 Based on this idea, a good performance could be reached through a mixture of initiatives maximizing productivity while exploring competencies to develop markets all with severe respect to contextual changes that might threaten possibility to progress and ability to adapt to these. Therefore, assessing work being performed is more complex than just look at the over all output being made. By looking at ability to adapt or develop markets, performance could give a hint in understanding how an organization may or may not master the situation of a crisis. Large organizations have particular problem in reaching good performance since they have to blend productivity, creativity and adaptability together in order to survive (Moon et al., 2012). Therefore, manufacturing a product in the best possible way is not enough. Large firms needs to create new markets and be aware of enhancing levels of competition while finding ways to deal with new comers in the industry, yet bounded by past practices and investments previously taken. Seeing performance like Moon et al., (2012) synthesizing with identity. As stated by Albert and Whetten (1985), whenever, for example, questions over budget issues emerge organizational identity should be taken into consideration. When making decisions of productivity, creativity and adaptation; the self-reflective process named organizational identity guides organizational members at all levels. Therefore, performances, is affected by identity since decision over how to reached a social constructed measurement of performance is taken in relation to ideas held among organizational members regarding; who are we as an organization. 3.6 The post crisis scenario This part build upon the theory introduced above to narrow problems when studying organizational identity and crisis. Also last part of this paragraph intends to lift understanding of where to detect this problem studying organizations in the 21st century. As stated above, identity has an impact on performance. Crisis situations demand a quick response to deal with the upcoming obstacles. Yet it has to be founded on a core understanding of perceptions held inside the organization and its developing context. Finding a new way to encounter problems could therefore be inappropriate, which in turn may deepen the crisis (Prahalad and Bettis, 1986). Also, the impact of initiatives taken during a crisis will have a long lasting impact on the organization afterwards (Schultz and Hernes, 2013). This gives room for a dilemma of organizational identity related to crisis situations. A vast response is on the one hand emphasized. On the other, thoughtful reflection is needed to 23

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