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Drive out Fear (Unless You Can Drive It in): The Role of Agency and Job Security in Process Improvement

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  • Nelson P. Repenning

    (Department of Operations Management/System Dynamics Group, Sloan School of Management, E53-339, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142)

Abstract

Understanding the wide range of outcomes achieved by firms trying to implement Total Quality Management (TQM) and similar process improvement initiatives presents a challenge to management theory: A few firms reap sustained benefits from their programs, but most efforts fail and are abandoned. In this paper I study one dimension of this phenomenon: the role of impending layoffs in determining employee commitment to process improvement. Currently, the literature provides two opposing theories concerning the effect of job security on the ability of firms to implement change initiatives. The "Drive Out Fear" school argues that firms must commit to job security, while the "Drive In Fear" school emphasizes the positive role that insecurity plays in motivating change. In this study a contract theoretic model is developed to analyze the role of agency in process improvement. The main insight of the study is that there are two types of job security, internal and external, that have opposing impacts on the firm's ability to implement improvement initiatives. The distinction is useful in explaining the results of different case studies and can reconcile the two change theories.

Suggested Citation

  • Nelson P. Repenning, 2000. "Drive out Fear (Unless You Can Drive It in): The Role of Agency and Job Security in Process Improvement," Management Science, INFORMS, vol. 46(11), pages 1385-1396, November.
    • Handle: RePEc:inm:ormnsc:v:46:y:2000:i:11:p:1385-1396
    DOI: 10.1287/mnsc.46.11.1385.12084
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    References listed on IDEAS

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    Cited by:

    1. Florence Lebert & Marieke Voorpostel, 2016. "Turnover as a Strategy to Escape Job Insecurity: The Role of Family Determinants in Dual-Earner Couples," Journal of Family and Economic Issues, Springer, vol. 37(3), pages 407-421, September.
    2. Dan Bernhardt & Steeve Mongrain, 2010. "The Layoff Rat Race," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(1), pages 185-210, March.
    3. Ignacio J. Martinez-Moyano & David P. McCaffrey & Rogelio Oliva, 2014. "Drift and Adjustment in Organizational Rule Compliance: Explaining the “Regulatory Pendulum” in Financial Markets," Organization Science, INFORMS, vol. 25(2), pages 321-338, April.
    4. Loukas Balafoutas & E. Glenn Dutcher & Florian Lindner & Dmitry Ryvkin, 2017. "The Optimal Allocation Of Prizes In Tournaments Of Heterogeneous Agents," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 461-478, January.
    5. Anita L. Tucker, 2016. "The Impact of Workaround Difficulty on Frontline Employees’ Response to Operational Failures: A Laboratory Experiment on Medication Administration," Management Science, INFORMS, vol. 62(4), pages 1124-1144, April.
    6. Florence Lebert, 2016. "Voluntary Turnover: A Means of Reducing Perceived Job Insecurity? A Propensity Score Matching Procedure Applied on Swiss Data," Social Sciences, MDPI, vol. 5(1), pages 1-21, January.

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