The contingent effects of industry conditions on relationship between structural complexity and strategic change.

ABSTRACT

In research on strategic change authors have given little attention to interactive effects of industry conditions and structural complexity on implementation of strategic change. In this paper we examine the independent and interactive effects of structural complexity and environmental conditions on implementation of strategic change. We develop argument supporting the independent effects of structural complexity and environmental conditions on changes and modifications in the organizational strategies. Moreover, we argued that the interactive effects of structural complexity and environmental dynamism, munificence, and complexity will have a significant impact on managerial perceptions and capabilities in managing strategic change. Formal propositions are derived from this theoretical framework.

1. INTRODUCTION

Organizations competing in today's global economy need to be cognizant of the dynamic and complex forces in their environments. The globalization of markets has pressured firms competing in single and multi-markets to sense and respond to forces in their environment by creating a more flexible structure and capabilities to implement strategic change. Barnard (1938) indicated that maintaining equilibrium between complex organization and continuously changing industry environment requires on going readjustments of internal strategies. Managers' decisions on magnitude and nature of strategic change tends to be contingent on their reference to sets of internal and external factors that are considered influential both on the decision-making processes, and the degree to which organizational strategies can be altered (e.g., Hall, 2002; Ginsberg, 1988).

A number of researchers have examined how changes in the organizational strategies are influenced by shifts in market trends and dynamics of industry environments (e.g., Bartlett & Ghoshal, 2000; Hout, Porter & Rudden, 2000). Moreover, reconfiguration of business processes and changes in the organizational strategies have been shown to have positive relationship with structural complexity, organizational size, possession of specialized assets, and managerial perceptions of environment (e.g., Hall, 2002; Andrews, 1987; Porter, 1985; Chandler, 1962; Williamson, 1985; Rumelt, 1986; McKinley & Scherer, 2000; Mitchell, 1989; Nelson and Winter, 1982; Hammer & Champy, 1993). Previous research, however, has given little attention to the interactive effects that environmental conditions and structural complexity may have on managerial perceptions and decisions about implementing and managing strategic change. The present research examines how the interaction between environmental conditions of complexity, dynamism and munificence with structural complexity influences the relationship between structural complexity and strategic change. The central premise of this paper is that the relationship between structural complexity and strategic change tends to be contingent on environmental conditions and managerial interpretations of their industry environment. This paper adds to existing knowledge in two important ways. First, we argue that interactive effects of the relationship between structural complexity and strategic change may vary under various environmental conditions. Second, we present theoretical support for how interpretations and perceptions of industry environment tend to influence managerial capabilities to manage strategic change. We have laid out the paper in three primary parts. First, we will discuss definitions and literature review. Second, we examine the contingent effects of structural complexity and environmental conditions on strategic change. Third, the paper examines the interactive effects of structural complexity and environmental conditions on strategic change, and managerial capabilities in managing strategic change.

2. DEFINITIONS AND LITERATURE REVIEW

In this article we defined strategic change, structural complexity, and environmental conditions of munificence, dynamism, and complexity. Organizations change and modify their strategies in response to internal contingencies and changes in the marketplace. Similar to Ginsberg (1988), we defined strategic change as changes and modifications in the organizational product and services portfolio. Past research has shown that structural complexity has a significant impact on coordination, control and implementation of change. Heeding Blau and Schoenherr (1971) and Hall (2002), in the present research structural complexity is defined as the number of departments within organization. In addition to intra-organizational factors conditions in organizational environment influence managerial perceptions about environmental trends and decisions on strategic orientation of organization with respect to such trends. Previous researchers have argued that conditions of munificence, dynamism and complexity tend to be major environmental dimensions that influence organizational change (e.g., Scott, 2003; Dess and Beard, 1984). Environmental munificence has been measured as the environmental capacity to support sustained growth and also levels of slack or scarcity of resources (e.g., Dess and Beard, 1984; Aldrich, 1979). Complexity of the task environment has been defined as the degree of its heterogeneity and number of elements within organizations' environment (Thompson, 1967; Duncan, 1972; Child, 1972; Aldrich, 1979). Within complex environments organizations tend to establish an elaborate information-processing mechanism in order to scan their environment more effectively (Lawrence & Lorsch, 1967). Environmental dynamism has been defined as discontinuous changes within environment. Hyper-competitive environments tend to be dynamic and difficult to predict in the direction of change. Such environments also create high rates of change and tend to be a major source of uncertainty for managers (e.g., Hall, 2002; Bartlett & Ghoshal, 2000). Organizations competing in dynamic markets tend to actively scan various trends in their industry and assess their capabilities in managing change in response to changes in industry trends. In line with past research we defined three environmental dimensions of munificence, dynamism and complexity as major variables influencing managerial decision on implementation of strategic change. Managerial perceptions of changing trends under various environmental conditions tend to lead to changes in strategic alternatives and implementation of novel courses of action. Moreover, to ensure continuous flow of valued resources managers tend to scan and interpret the information within their environment for formulation of change strategies and reallocation of resources from existing courses of action to future strategies.

3. EFFECTS OF STRUCTURAL COMPLEXITY AND ENVIRONMENTAL CONDITIONS ON STRATEGIC CHANGE

3.1 Effects of Environment on Strategic Change

Previous researchers have primarily adopted a rational view of organizations and implementation processes (e.g., Galbraith & Kazanjan, 1986; Herbariak & Joyce, 1984; Ansoff & McDonnell, 1990). Historically two main themes have dominated research on implementation process of strategic change within large and structurally complex organizations. One stream of research has focused on sequential rationality. That is, implementation of strategic change as a rational process (e.g., Andrews, 1987; Nutt, 1989). In this view, implementation of new strategies requires a rational diagnosis of existing problems and information about changes in organization's environment. Moreover, top managers are viewed as rational individuals that employ norms of rationality to interpretation of information from organizational environment and recognize structural contingencies. Top managers are capable of sensing and interpreting the complex and dynamic environmental changes and reallocate resources through systematic selection of best alternative with known outcome (e.g., Bourgeois & Brodwin, 1984). Another body of research has pointed to the challenges faced by managers in complex organizations. In this view, top managers may have sufficient choice in selection of novel strategies. However, there are constraining factors that influences the managerial decisions about future courses of action. Managerial perception of environment contributes to significant variations in organizational response to changes in the environmental conditions. This tends to explain the variation in strategic orientations by organizations in same industry and similar environments. The reaction of top managers to environmental conditions is contingent on the decision makers' perception that environmental pressures will impact the inflow of the valued resources to the organization. The information from the environment assists decision makers in selecting new strategies or maintaining the existing courses of actions. Environments with munificence resources may offer greater opportunities to organizations and managers tend to exploit such opportunities by implementing new strategies such as greater product diversity and entry into new markets.

A number of researchers have argued that environmental complexity and dynamism influences the managerial interpretation of events. As such, top managers tend to create their own measures and adopt new strategies accordingly. According to Wieck (1969), if the administrative apparatus are over conscientious about trying to plan rationality for the future, they may produce a plan that artificially simplifies the complexity involve. As such, attempts to implement strategic changes in structurally complex organizations tend to lead managers to introduce excessive simplifications, which in turn, reduce their capabilities in managing the process of organizational change. Moreover, over simplification encourages managers to reduce efforts on information collection and integration from environment into change processes. This will create greater internal turbulence and strains the organizations' capacities to manage change. The uncertainty associated with complexity and dynamic changes in the marketplace creates unpredictable difficulties, such as resistance to change (e.g., Ansoff, & McDonnell, 1990; Govindarajan, 1988). In the next section we will explore the effects of structural complexity and environmental condition on strategic change.

3.2 Effects of Structural Complexity on Strategic Change

Organizations with complex structures contain greater numbers of subunits which require high levels of coordination and integration. Managers tend to respond to pressures for coordination and control by decoupling the structure and decentralizing decision making processes. This will allow various subunits to assess the risk and return for implementation of new and novel strategies. However, increased decentralization creates differentiated groups with incongruent goals and interests. As such, implementation of strategic change tends to face resistance by subunits and groups that perceive change as a threat to their share of resources. There are competing views about the relationship between structural complexity and strategic change. The inertia argument centers attention on organizational difficulties in changing their strategies and adapt to changes in the marketplace. The case for IBM dramatic decline in mainframe market during 1990s is a clear example that managers in structurally complex organizations tend to allocate little time to emergent market trends and opportunities. Ghemawat (1991) attributes managerial difficulty in implementing strategic change to prior strategic commitments to existing programs and objectives. Resource allocation and reallocation within structurally complex organizations tends to be a political process division or departmental managers resist any reduction of their share of resources. As such, the higher the structural complexity and interdependence between subunits reduces the lower the likelihood of initiating strategic change by top managers. IBM's major investment in mainframe computers and managerial stake in this technology inhibited the organization to reallocate resources to new strategies and product lines. Nisbett and Ross (1980) have suggested that the perception of individuals is most likely to be influenced by vividness, frequency, recency and propinquity of events. For managers, the most vivid cues may come from complexity of coordination and control of internal structure. As such, in implementing strategic change managers may give more attention to intra-organizational contingencies than to cues from industry environment (e.g., Baker & Cullen, 1993). Even though structural contingencies play a major role in shaping strategic direction of the organization, a focus on its primacy as a strategic imperative may result from managers bounding their rationality and assessing limited information from internal sources.

A number of researchers have argued that structural complexity have a positive relationship to changes in organizational strategies. In this view, structural complexity influences distribution of power and resources among the subunits (e.g., Scott, 2003). Organizations with complex structures are more likely to decentralize decision-making processes among autonomous subunits. This decentralized system of distribution of power allows for greater flexibility in implementation of change. Hall (2002) argued that complexity leads to decentralization of the structure and power positions which allows top managers to promote evolutionary or incremental changes in the strategy. Complex organizations consist of mosaic of differentiated departments with distinct tasks and unique task environments. Such concentration of specialists in concert with decentralized power positions allows various subunits to pursue changes in response to their particular environment. Within this stream of research a common theme that emerges and interweaves many of the past studies is the emphasis on top management's reactions to the state of disequilibrium between existing structure and required adjustments in response to internal changes.

3.3 Effects of Environmental Conditions on Strategic Change

A central theme of structural contingency theory is that the relative success of organizations tends to be a function of environmental conditions (e.g., Ketchen, Thomas, & Snow, 1993). The exposure of the organization to its environment and growing importance of the resources that are available in various environments have convinced top managers that cues from conditions in industry can provide opportunities of more than marginal significance. Changes in environmental conditions signal top managers to modify existing strategic positions and adapt to new market conditions.

The recent trends toward globalization has created an extremely difficult competitive environment in a large number of industries, and only those organizations that are responsive to cues from conflicting forces within environment can survive and prosper (e.g., Bartlett & Ghoshal, 2000). Past researchers have examined the relationship between changes in environmental conditions and strategic change (e.g., Tushman & Romanelli, 1985; McKinley, 1993; DeWitt, 1993; Mintzberg & Quinn, 1998). In the absence of environmental pressures changes in strategic orientation of organizations with respect to their environments tend to occur in an incremental process (e.g., Tushman and Romanelli, 1985; Quinn, 1980). Moreover, stable environments encourage managers to persist with current strategies and allocation of resources and maintain existing power structure.

According to Pfeffer and Salancik (1978), changes that require shifts in the power positions and loss and control over resources tend to be resisted within organizations. However, radical shifts in the organizational environment would generate a revolutionary move toward a discontinuous change and pressure organizations to implement drastic strategic changes. High external pressures maintaining status quo would seem detrimental to the organization, and a more fundamental transformation will be required to coalign the organization's internal capabilities with its external environment. Most organizations in various industries or sub-groups within industries tend to approach a stable state that reflects long-term decisions and actions and costly to change. Moreover, decisions to implement strategic change seem to be contingent on managers' cognitive order and interpretation of their environment (e.g., McKinley & Scherer, 2000; Lawrence & Lorsch, 1967; Porter, 1985).

Various industry conditions and organizational characteristics such as structural complexity and organizational size interact and pressure organizations to develop capability or competence for managing strategic change. As environment become more complex and dynamic organizations develop structural mechanism, and information systems in order to interpret complex information within environments and adapt to market conditions. Without such mechanisms implementation efforts can deviate from the organizational and subunit objectives and create greater conflict, thereby undermining the effectiveness of implementation efforts (e.g., Ansoff & McDonnell, 1990). According to Porter (2000), the relationship between changes in the existing strategies and risk of failure tends to be moderated by two critical factors, resource munificence the support growth potential and organizational capabilities to transfer knowledge and share investments and costs across different products lines.

3.4 Interactive Effects of Structural Complexity and Munificence on Strategic Change

Past research has centered attention on independent effects of structural complexity and environmental conditions (Figure 1) on organizational change (e.g., Hannan & Freeman, 1984; Tushman & Romanelli, 1985). A number of researchers have argued that benevolent domains provide sufficient resources for organizations that seek market expansion and product differentiation (e.g., Pitts and Lei, 1996). Others have argued that organizations with complex and differentiated structures tend to have access to multiple munificence domains (e.g., Rumelt, 1986), and alternative resources. As such, organizations with complex structures are capable of using resources within munificence domains and leveraging various organizational capabilities to implement strategic change. Having access to alterative resources enables complex organizations to renew and change portfolio of products and services by shifting resources from existing activities and routine and reallocating them toward novel strategies.

[FIGURE 1 OMITTED]

Munificent environments also enable organizations with differentiated structures to pursue and implement evolutionary changes in existing strategies. Evolutionary changes in existing strategies reduces the pressures organizations to bear the costs associated with drastic change and enables them to reallocate resources from existing strategies to new courses of action. According to Bartlett and Ghohal (2000) access to resources enables complex organizations to be dynamic and capable of change. Such capabilities for change are facilitated through allocation of slack resources to integration of process, increased learning and capabilities and implementation of new strategies. Similarly, Scott (2003) remarked that munificent environments provide organizations with resources for growth potential and enable top managers with information to select novel strategies and alternative courses of action. The above arguments lead us to the following proposition.

Proposition 1a: Environmental munificence will significantly and positively interact with structural complexity to predict implementation of strategic change.

3.5 Interactive Effects of Structural Complexity and Environmental Complexity on Strategic Change

Kaufman (1985) argued that increase in internal structural complexity follows from the greater varieties of skills and knowledge and resources needed to maintain the continuity of operations. However, creation of such complex structure tends to be a direct consequence of inter-organizational relationships, interrelatedness and interconnection of the network of organizations in a complex environment. As a result of this interconnectedness, the organizations in a network seem to be less autonomous and more constrained by their complex environment and not capable of adopting new strategies environmental change. March and Olson (1989) examined the relationship between change and structural complexity from a political processes perspective. The authors argued that environmental complexity pressures organizations to establish structures with greater complexity, which tends to result in polities built around the principles of division of labor and specialization and partitioning the experts and officials into self-contained separate domains. As such, complexity will affect communication and decision-making processes and slow the process of strategic change. According to Scott (2003), environmental complexity pressures top managers to implement an information processing mechanism to scan and monitor multiple domains for opportunities and competitive forces. However, the complexity and volume of information would require an elaborated decision-making process, and as such, such processes are not designed to make fast-pace decisions. Williamson (1985) argued that as organizations expand into various domains the complexity of the structure and create problems in the information processing mechanism. This in turn, pressure administrators to decompose the existing structure into quasi-autonomous departments and permit sub-units to establish a decision processing subsystem that is relatively independent of the total system (e.g., Simon, 1973). Such decomposition of structural form creates challenges for top managers to institute strategic changes throughout organization.

Proposition 1b: Environmental complexity will significantly and negatively interact with structural complexity to predict implementation of strategic change.

3.6 Interactive Effects of Structural Complexity and Environmental Dynamism on Strategic Change

In stable environments change may occur in a relatively linear and incremental fashion. In contrast, discontinuous changes within dynamic environments increase the scanning activities with organizations and add new groups to deal with changes in each environmental segment (e.g., Scott, 2003). Dynamics of elements within organizational environment tend to pressure organizations to restructure and to become more adaptive and flexible by selecting new strategic options. Tushman and Romanelli (1985) argued that within dynamic environments changes are unpredictable and discontinuous. Such turbulent environments pressure organizations to develop greater capability to institute strategic renewal. Organizations with complex structures tend to develop capabilities in collecting and interpreting relevant data in response to discontinuous shifts in the environmental trends. According to Hitt, Ireland and Hoskisson (2001), the critical factor in scanning the dynamic environments is the meaning managers attach to various events. Such interpretations of environmental events lead to implementation of new strategies in product or service markets.

The dynamism of organizational environments pressure top managers within organizations with high structural complexity to establish an information processing mechanism within the formal structure that responds to internal critical task demands. This would enable organizations to create a team-based structure and increase organizational response to shifts in marketplace. According to Galbraith (1994), organizations with complex structures respond to environmental dynamism by designing lateral organizational system that is capable of instituting timely strategic changes. Lateral organizational structures tend to create capabilities through leveraging the competencies of various subunits and integrate knowledge and learning from various subunits into renewal process. Moreover, lateral communication mechanisms tend to provide a more effective decision-making process capable of establishing new routines and strategies.

Proposition 1c: Environmental dynamism will significantly and positively interact with structural complexity to predict strategic change.

4. CONCLUSION

Strategic change is an integral part organizational adaptation process. Moreover, strategic change is an important phenomenon in dynamic industries and organizational sectors that participate in global competitive markets. However, greater percentage of academic writings on strategic change has been confined to financial and performance consequences. We have proposed that managing strategic change tends to be contingent on organizational size and complexity, and conditions within external environments. Large organizations that are principal focus of this theory tend to be endowed with greater variety of resources, which enables them to institute new strategies and expand into new markets. Similarly, organizations with complex structures tend to create a greater capability to implement strategic change. The structural differentiation of subunits and concentration of specialists within individual subunits constitute a valuable knowledge base, which enables organizations to make timely decisions in response to changes in market conditions. Moreover, such knowledge base enhances organizational capabilities to leverage their resources across subunits reflecting the flexibility and response to changing conditions at organizational level.

Environmental conditions influence managerial decisions on maintaining or changing the strategic posture within various markets. Environments that present greater complexity and discontinuous change pressure managers to develop capabilities for sensing, analyzing and responding to potential opportunities and challenges. Recent emergence of competitive landscape in global economy has increased dynamism and complexity in organizational environments and poses a challenge to the internal governance capacity of large and structurally complex organizations. As such, the task of top managers is becoming more centered on scanning organizational environment by gathering and interpreting information, and creating new internal governance requirements as competitive and environmental conditions change. Increased complexity within environment pressures organizations to establish new subunits and departments to keep pace with changes and opportunities in various markets. Subunit managers tend to have greater flexibility to capitalize on such market opportunities through quasi-independent formulation and implementation of novel strategies.

In an environment of often turbulent and unpredictable change, however, incremental operational refinement is not enough; corporations require the ability to manage strategic change. Strategic managers must establish mechanisms in which internalized information and established routines are continuously challenged. Corporations are required to integrate existing capabilities and be capable of modifying and changing existing strategies. The strategic change process continuously modifies existing strategies and formulates new strategies based on corporate competencies. Moreover, strategic managers need to pressure for rationalization and restructuring of existing businesses to achieve continuous improvement of organizational performance through reallocation of resources toward new programs and strategies. Strategic managers should coordinate the complex trades-offs between strategic change and status quo. That is, the ability to mange the tension between formulating new strategies and building new capabilities and maintaining existing resources. For example, Asea Brown Boveri (ABB) corporation changes corporate strategies by allowing local management to sense, react, and implement new strategies. As a global organization, ABB utilize technology transfer to transfer skills and technology to area that needed improvement. They are able to leverage a worldwide learning.

In contrast to complex and dynamic environments, organizations within munificent environments tend to realize lesser degree of pressure to implement change. Benevolent environments create opportunities to undertake new activities and enhance growth prospects within markets with long-term potential. Within munificent environments large organizations capitalize on availability of resources and modify the existing portfolio of products and services.

Implementation of strategic change within large organizations tends to be contingent on environmental conditions. Organizations with complex structures tend to respond differently to various environmental conditions. Within munificent environments differentiated subunits capitalize on availability of resources and modify existing strategies by seeking growth and innovating new products. The resource availability reduces the risk of failure in new ventures. Moreover, organizations with complex structures are capable of developing information systems that monitors changes in market by sensing and collecting variety of information. Such information systems enable complex organizations to manage environmental complexity and implement changes in their strategies in response to changes in various segments of environment. According to Galbraith (1995), high volume of information flow from various markets pressures complex organizations to establish effective communication mechanism and create structures based on lateral groups. Such structural arrangements enable managers to establish a faster decision processes and implement new strategies without lengthy vertical process. Moreover, flexible structures based on lateral groups in concert with loose coupling of various subunits enable managers to make timely strategic adjustments within dynamic environments with discontinuous change.

We conclude by discussing the implications of theoretical framework developed in this paper for future theory building and future managerial decision-making regarding strategic change. The article provides an explanation for effects of intra-organizational characteristics and environmental conditions on likelihood of strategic change (Figure 1). Likelihood of strategic change may be contingent on organizational size and structural complexity. Moreover, environmental conditions may influence the organizational capabilities to successfully implement changes in their existing strategies. The effects of environmental complexity on strategic change may vary in organizations with different sizes and structural complexity. Similarly, availability of resources in high munificent environments may encourage large and complex organizations to implement new strategies and test innovative ideas within new markets. The theory in this article also indicates that discontinuous changes in dynamic markets require large and structurally complex organizations to be flexible and change strategic positions at the similar pace as changes in the environment.

The present research indicates that there is an injunction, overtime, between top managers' decisions on strategic change and interaction between intra-organizational factors and environmental conditions. Managers are required to be cognizant of information sensing and gathering in each environmental condition prior to implementation of strategic change. Complex environments pose a challenge for managers in terms of complexity and inflow of high volume of data to organizational subunits. Munificent environments provide greater resources to organizations and managers may have greater opportunities to test new ideas and make errors in decisions regarding allocation of allocations. Sensing and scanning of dynamic environments create necessity for managers to gather appropriate data and interpret such data for strategic decisions. The extent the future program in strategic management researchers is encouraged to examine the moderating effects of industry type and organizational size on implementation of strategic change. Moreover, future research may focus on comparative analysis on likelihood of strategic change within various organizational sizes and structural differentiation.

REFERENCES

Aldrich, H. E., Organizations and Environments, Prentice Hall, New Jersey, 1979.

Andrews, K. R., The Concept of Corporate Strategy, Irwin, Illinois, 1987.

Ansoff, H. I., The New Corporate Strategy, Wiley, New York, 1988.

Ansoff, H. I. and McDonnel, E., Implementing Strategic Management, Prentice Hall, New York, 1990.

Baker, D. D. and Cullen, J. B., "Administrative Reorganization And Configurational Context: The Contingent Effects of Age, Size, And Change In Size", Academy of Management Journal, Vol. 36 (6), 1993, 1251-1277.

Barnard, C., The Function of Executive, Harvard University Press, Cambridge, 1938.

Blau, P. M. and Schoenherr, R. A., The Structure of Organizations, Basic Books, New York, 1971.

Bartlett, C. A. and Ghoshal, A., Transnational Management, Texts, Cases And Readings In Cross-Boarder Management, Irwin-McGraw-Hill, San Francisco, 2000.

Bourgeois, J. and Brodwin, D., "Strategic Implementation: Five Approaches to an Elusive Phenomenon", Strategic Management Journal, Vol. III (5), 1984, 241-264.

Chandler, A. D., Strategy and Structure, The MIT Press, Cambridge, 1962.

Child, J., "Organizational Structure, Environment, and Performance: The Role of Strategic Choice", Sociology, Vol. I (6), 1972, 1-22. 1972.

Dess, D. D. and Beard, D. W. (1984) "Dimension of Organizational Task Environment", Administrative Science Quarterly, Vol. II (29), 1984, 52-73.

DeWitt, R. L., "The Structural Consequences of Downsizing", Organization Science", Vol. IV (4), 1993, 30-40.

Duncan, R. B., "Characteristics of Organizational Environments and Perceived Environmental Uncertainty", Administrative Science Quarterly, Vol. I (13), 1972, 313-327.

Galbraith, J. B. and Kazanjian, R., Strategy Implementation: Structure, Systems and Process, Minnesota, West, 1986.

Galbraith, J. B., Competing With Flexible Lateral Organizations, Addison Wesley, California. 1994.

Ghemawat, P., Commitment: The dynamic of strategy, New York: Free Press, 1991.

Ginsberg, A., "Operationalizing Organizational Strategy: Toward an Integrative Framework", Academy of Management Review, Vol. II (9), 1988, 548-557.

Govindarajan, V., "A contingency Approach to Strategy Implementation at the Business-Unit Level: Integrating Administrative Mechanisms With Strategy", Academy of Management Journal, Vol. II (31), 1988, 828-853.

Hall, R. H., Organizations: Structures, Processes, and Outcomes, Prentice Hall, New Jersey, 2002.

Hammer, M. and Champy, J. A., Reengineering the Corporation: A Manifesto for Business Revolution, HarperCollins, New York, 1993.

Hannan, M. T. and Freeman, J. H., "Structural Inertia and Organizational Change", American Sociological Review, Vol. I (49), 1984, 149-64.

Hitt, M. A., Ireland, R. D. and Hoskisson, R. E., Strategic Management: Competitiveness and Globalization, South-Western, United States, 2003.

Hout, T. Porter, M. E. and Rudden, E., "How Global Companies Win Out", in Bartlett, C. A. and Ghoshal, S. (Eds). Transnational Management, Texts, Cases and Readings in Cross-Boarder Management, Irwin-McGraw-Hill, San Francisco, 2000, 348-358.

Ketchen, D. Thomas, J. and Snow, C. C., "Organizational Configurations and Performance: A Comparison of Theoretical Approaches", Academy of Management Journal, Vol. II (36), 1993, 1278-1313.

Lawrence, P. R. and Lorsch, J. W., Organizations and Environment, Irwin, Illinois, 1969.

March, J. G. and Olsen, J. P., Rediscovering Institutions: The Organizational Basis of Politics, The Free Press, New York, 1989.

McKinley, W. and Scherer, A. G., "Some Unanticipated Consequences of Organizational Restructuring", Academy of Management Review, Vol. IV (25), 2000, 735-753.

McKinley, W., "Organizational Decline and Adaptation: Theoretical Controversies," Organizational Science, Vol. I (4), 1993, 1-9.

Mintzberg, H. and Quinn, J. B., Reading in the Strategy Process, Prentice Hall, New Jersey, 1998.

Mitchel, W., "Whether and When? Probability and Timing of Incumbents' Entry into Emerging Industrial Sub-Fields", Administrative Science Quarterly, 34, 1989, 208-230.

Nelson, R. R. and Winter, S. G., An Evolutionary Theory of Economic Change, Harvard University Press, Massachusetts, 1982.

Nisbett, R. and Ross, L., Human Inferences: Strategies and Shortcomings of Social Judgment, Prentice-Hall, New Jersey, 1980.

Nutt, P. C., "Selecting Tactics to Implement Strategic Plans", Strategic Management Journal, Vol. I (1), 1989, 45-61.

Pfeffer, J. and Sutton, R. I., The knowing-Doing Gap: How Smart Companies Turn Knowledge Into Action, Harvard Business School Press, Boston, 2000.

Pfeffer, J. and Salancik, G. R., The External Control of Organizations, Harper & Row, New York, 1978.

Pitts, R. and Lei, D., Strategic Management: Building and Sustaining Competitive Advantage, West Publishing Company, Los Angeles, 1996.

Porter, M. E., Competitive Strategy, Free Press, New York, 1980.

Porter, M. E., Competitive Advantage, Free Press, New York, 1985.

Porter, M. E., Competitive Advantage of the Nations, The Free Press, New York, 1990.

Porter, M. E., "The Competitive Advantage of the Nations", In Bartlett, C. A. and Ghoshal, S. (Eds). Transnational Management, Texts, Cases and Readings in Cross-Boarder Management, Irwin-McGraw-Hill, San Francisco, 2000, 216-239.

Quinn, J. B., Strategies of Change: Logical Incrementalism, Irwin, Illinois, 1980.

Rumelt, R. P., Strategy, Structure, and Economic Performance, Harvard Business School, Boston, 1986.

Scott, W. R., Organizations: Rational, Natural, and Open Systems, Prentice Hall, New Jersey, 2003.

Simon, H. A., "The Architecture of Complexity", Proceedings of the American Philosophical Society, 1973, 467-82

Simon, H. A., "Applying Information Technology to Organization Design", Public Administration Review, Vol. I (3), 1973, 1-16.

Simon, H. A., Administrative Behavior: A Study of Decision Making Process in Administrative Organizations, Free Press, New York, 1997.

Thompson, J. D., Organizations in Action, McGraw-Hill, New York, 1967.

Tushman, M. L. and Romanelli, E., "Organizational Evolution: A Metamorphosis Model of Convergence and Reorientation", In Research in Organizational Behavior, (Eds) Cummings, L. and Staw, B. M., JAI Press, Connecticut, 1985.

Williamson, O., The Economic Institutions of Capitalism, Free Press, New York, 1985.

Winter, G., "Organizing For Continuous Improvement: Evolutionary Theory Meets the Quality Revolution", in Evolutionary Dynamics of Organizations, (ed.) Baum, A. C. J. and Singh, J. V. Oxford University Press, New York, 1990, 90-108.

Mohsen Modarres, is an Assistant Professor of management in School of Business and Global Studies at University of La Verne. He received his Ph.D. in Business Administration from the Washington State University in 1996. Dr. Modarres has consulted with Aero-Space corporations in the information technology area, his current research interests include structural and strategic change in complex corporations during periods of corporate growth and decline.

Mehdi Beheshtian Ardekani is an associate professor of Information Technology in School of Business and Global Studies at University of La Verne. His Research Interests are in the area of E-Commerce, Data base Management Systems, Information Systems Integration (Federated DBMS, GIS, DSS, Simulation). He received his Ph.D. from University of Texas at Austin in 1983. Dr. Beheshtian has more than 17 years of Information System consulting nationally and internationally.

Ahmed Spahani is a professor of Economics in School of Business and Global Studies at University of La Verne. He has received his Ph.D. in economics from University of Southern California. His research interests are in comparative international economic and political systems.