Change Management in Transition Economies: Integrating Corporate Strategy, Structure and Culture

Our study has shown that the organizational identity of over 50 per cent of Polish firms in the metal and textile industries has changed since 1990. The findings for the main identity characteristics are as follows :

• Perfection and high-quality products are perceived as more important to organizational identity in private firms than in state-owned ones.

• The firm s trademark and the firm s position in the market are valued more highly in state-owned enterprises than in private firms.

• Highly qualified personnel are more characteristic of private firms than state-owned ones.

• Job security is more important in state-owned enterprises than in private firms.

Those firms which operate in international markets do not have a dual external identity in relation to Polish and foreign stakeholders or to their perceived organizational identity.To some extent this reflects their adaptation to operating under global conditions.

There is a general tendency among Polish firms to maintain their existing identity in the face of external pressures such as tough competition, particularly foreign competition, market and legal pressure, change in ownership form ( privatization ) and economic downturns. Hence there is not a direct correlation between a general feeling of threat to organizational identity and identity. However threats to identity correlate positively with changes to the organizations structure and strategy.

Our results show that ownership form has a large effect on the nature of organizational identity and that it correlates significantly with many other variables . For example strong leadership is more likely to result in identity change in private firms than in state-owned enterprises, and the stronger the leadership the stronger the changes in identity. Structural changes and strategy reformulation occur more frequently in state-owned enterprises, which are characterized by less satisfaction with their existing identity and more financial difficulties than private enterprises, having been forced by the market and legal regulations to carry out bigger changes.

Privatization is not an important cause of change to organizational identity, although it can present an element of threat to identity, especially in state-owned enterprises.

PR and promotional activities are rather weakly developed in Poland. However the stronger and more utilitarian the organizational identity, the more promotional instruments are used, the better the firm s financial situation and the more frequent the formulation of new strategies. Firms that are oriented primarily towards the market, profits and efficiency are more open and seek better communication with their stakeholders. They are not afraid of the external business environment and try to present an optimum image to the maximum number of customers.

In summary, a strong utilitarian identity and strong leadership are the main factors in identity change and strategy building, and these factors are more likely to be found in private firms. Hence future studies should take more note of leadership strength, and strength and type of organizational identity. Likewise managerial attention to these factors will allow firms to cope better with market competition. On the basis of the data presented in this chapter and the possibility of influencing some of the variables considered , we recommend the following to managers who wish to change their organization s identity:

1. A broad spectrum of public relations and promotional instruments should be used to support organizational changes.

2. The selection of top managers should be careful and thorough in order to ensure that they have strong leadership skills.

3. The privatization of as yet unprivatized enterprises will offer the chance to change the organization s identity.

   Table Appendix 13.1: Correlation table

   Variable	Utilitarianism	Normativeness	Promotional instruments	Pride in firm	Privatization	Leadership	Size(1990)	Size(1998)	Economic situation
   Identity strength	0.00	“0.10	0.16*	0.22**	0.09	0.27**	“0.06	“0.09	0.11
   Utilitarianism		“0.23**	0.22**	0.11	“0.07	0.08	“0.13	“0.02	0.16*
   Normativeness			“0.31***	“0.03	0.02	“0.08	“0.05	“0.08	“0.11
   Promotional instruments				0.07	0.10	0.16*	0.23**	0.30***	0.13~
   Pride in firm					0.01	0.10	0.01	0.02	0.31***
   Privatization						0.01	0.35***	0.37**	0.03
   Leadership							“0.09	“0.06	0.23**
   Size 1990								0.82***	“0.09
   Size 1998									0.02
   	Structure	Strategies	Firm s age	Exports	Length of service	Ownership form	Identity variations	Identity threat	Foreign capital	Identification
   Identity strength	“0.06	“0.03	0.02	0.04	0.00	“0.12~	“0.05	“0.11	“0.04	0.57***
   Utilitarianism	0.13	0.19*	“0.08	0.00	0.17*	0.11	0.26**	“0.01	0.08	“0.01
   Normativeness	“0.05	“0.05	0.00	0.00	“0.11	0.03	“0.12	0.10	0.07	0.00
   Promotional instruments	0.21**	0.28**	0.27**	0.04	0.08	0.00	0.24**	0.01	0.10	0.11
   Pride in firm	“0.01	0.01	“0.07	0.12	“0.14~	0.22**	0.21*	“0.06	0.00
   Privatization	0.12	0.04	0.31***	0.13~	“0.01	0.24**	0.18~	0.16*	“0.16*	“0.06
   Leadership	0.04	0.21**	“0.02	0.05	0.08	0.17*	0.32**	0.01	“0.04	0.17*
   Size 1990	0.26**	0.19**	0.46***	0.16*	0.15*	“0.09	“0.04 variations	“0.05 threat	“0.12 capital	0.02 Identification
   Size 1998	0.24**	0.21*	0.40***	0.26**	0.16*	“0.05	0.02	“0.10	“0.12	0.00
   Financial situation	“0.07	0.05	0.00	0.00	0.00	0.23**	0.15	“0.32***	0.06	0.23**
   Structure		0.46*	0.30***	“0.05	0.24**	“0.25**	0.07	0.19**	0.03	0.03
   Strategies			0.26**	0.00	0.17**	“0.12*	0.17~	0.30***	“0.02	0.01
   Firm s age				0.06	0.34***	“0.34***	“0.25**	0.00	0.10	0.00
   Exports					0.04	0.06	“0.08	“0.05	“0.10	0.08
   Management length of service						“0.30***	“0.04	“0.08	0.09	“0.13~
   Ownership form							0.10	“0.13~	“0.20**	0.19**
   Identity variations								0.13	“0.08	0.06
   Identity threat									0.12	0.03
   Foreign capital										0.04

Notes : ~ p < .09; * p < .05; ** p < .01; *** p < 0.001.

Notes

1. This chapter is based on a study entitled ˜Organizational Identity of Polish Enterprises. Consequences of Privatization , supported by the Research Support Scheme of the Open Society Support Foundation, grant no. 1143/1998.

2. Qualitative studies are particularly useful in identifying these characteristics. A case study of a Japanese company showed that the company s uniqueness as a feature of its identity commonly experienced by employees is based on three factors: (1) general feeling of uniqueness (a common cultural assumption developed, for example, during the employees training; (2) organization of work (activities at the shop-floor level were not overly controlled by managers, which permitted a degree of autonomy, aided communication and promoted the development of good relations between employees); and (3) forms of address (non-hierarchical forms of address and language, which helped to create a good organizational climate). On the other hand the organizational structure (autonomous subsidiaries) and promotion system was not commonly felt to be an element of organizational identity. Rank and file employees , unlike managers, did not perceive that these characteristics were specific to the company and argued that in this respect their company was no different from other Japanese firms. However, the absence of trade unions in the company and their inability to exert an influence on wage levels, were perceived as part of the company s unique identity (Konecki, 1994, p. 145 “59).

3. According to organization sociologists, organizational identity can be maintained through the practice of ˜self-referential closure . The marketing or public relations department, through its marketing research, image analysis and advertising, creates a ˜mirror in which the organization can look at itself to assess, confirm and recognize itself as a culturally distinct entity that is simultaneously interested in needs of the market (Christensen, 1995, pp. 666 “7). ˜Numerical statements compiled by the organization and graphs concerning market trends, competitive position, sales forecasts, accessibility of raw materials, and so on, are, in fact, projections of interests and concerns of the organization itself. They reflect the way in which the organization understands itself. It is by means of this process of referring to themselves that the organization s members can intervene in their own functioning and, thus, participate in building and preserving their own identity (Morgan, 1997, pp. 281). Thereby, the marketing function helps the organization to protect and confirm its identity of a customer and market oriented organization. Marketing also relies on proactive activities (for example products innovations and relaunches), which try to anticipate future customers needs. Thus, the organization could get ahead of the market dynamics, thereby preventing that an unexpected change in customers needs could bring about a crisis for its identity.

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