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Influence Costs, Structural Inertia, and Organizational Change

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  • Scott Schaefer
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    Abstract

    This paper builds an economic model of the relationship between influence activity and resistance to change in organizations. I show that influence activity can create harmful barriers to change and that the influence costs of change are positively related to the firm's prospects. The model rationalizes the widely held view that firms often must endure a survival-threatening crisis before meaningful change can be achieved. I show that employees' choices of whether to engage in influence activity can depend on their beliefs as to whether the firm will choose to change its organizational form. If employees expect change, their best response is to try to affect the form of the change in their favor. Copyright (c) 1998 Massachusetts Institute of Technology.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

    Volume (Year): 7 (1998)
    Issue (Month): 2 (06)
    Pages: 237-263

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    Handle: RePEc:bla:jemstr:v:7:y:1998:i:2:p:237-263

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    Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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    Web: http://www.blackwellpublishing.com/journal.asp?ref=1058-6407&site=1

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    Cited by:
    1. Phillip Leslie & Paul Oyer, 2008. "Managerial Incentives and Value Creation: Evidence from Private Equity," NBER Working Papers 14331, National Bureau of Economic Research, Inc.
    2. Repenning, Nelson P. (Nelson Peter), 1998. "Drive out fear (unless you can drive it in) : the role of agency and job security in process improvement," Working papers WP 4041-98., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    3. Kräkel, Matthias, 2006. "Firm Size, Economic Situation and Influence Activities," IZA Discussion Papers 2391, Institute for the Study of Labor (IZA).
    4. Hendrikse, G.W.J., 2000. "Organizational Change and Vested Interests," ERIM Report Series Research in Management ERS-2000-17-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
    5. Fosfuri, Andrea & Rønde, Thomas, 2009. "Leveraging resistance to change and the skunk works model of innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 274-289, October.
    6. Meeus, Marius T. H. & Oerlemans, Leon A. G., 2000. "Firm behaviour and innovative performance: An empirical exploration of the selection-adaptation debate," Research Policy, Elsevier, vol. 29(1), pages 41-58, January.
    7. Delmastro, Marco, 2002. "The determinants of the management hierarchy: evidence from Italian plants," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 119-137, January.

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