Stability and Change in High-Tech Enterprises
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Stability and Change in High-Tech Enterprises

Neil Costello

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eBook - ePub

Stability and Change in High-Tech Enterprises

Neil Costello

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About This Book

How do firms live through and experience change? The authors examine four high-technology firms, providing a rich analysis of their routines, and illustrating how people are continually engaged with change. The book develops a broader concept of routine, and identifies the persistence of routine practices at a strategic level.

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Information

Publisher
Routledge
Year
2013
ISBN
9781134736089
Edition
1

1 Introduction

Ā 
How do firms live with change? What makes some firms thrive and others struggle when faced with changing environments? And how important is high technology in driving or facilitating change? These were the questions which motivated this project. Other questions followed. Is change revolutionary or evolutionary? Are firms subject to transformations arising from the new technologies or do they absorb them incrementally? How much is planned or anticipated, how much occurs by stealth?
ā€˜Habits gradually change the face of one's life as time changes one's physical face; and one does not know itā€™ (Woolf 1926). This eloquent expression neatly sets out many of the issues here. The lives in this case are those of four high-technology firms. Their physical faces and organisational practices changed during the period in which they were studied. They lived in changing circumstances with the pressures of rapidly changing technologies. In some respects they appeared to be tossed about in worlds undergoing major shifts but the habits and routines they had adopted gave them a certainty and predictability in their lives so that they changed but did not always know it. The study of the firms presented here examines the manner in which some of those changes took place and searches for causal factors and explanations.
The motivation for the project was to understand how firms, as particular economic institutions, lived through and experienced change. Routine behaviour provides the framework through which the analysis of the firms is undertaken. The idea of routines has become increasingly influential. Here we use that concept exhaustively. Can we observe routines? What do they do? The project pushes the notion of routine very hard. To use an experimental analogy, it is tested to destruction. As the term is used here, a routine is the taken-for-granted way of working which is usually unchallenged. Routines are ā€˜the way we do things around hereā€™. They are the recurrent practices and regularities in company behaviour. They are not fixed but changes in them are slower than changes elsewhere in the organisation. As subsequent chapters go on to show, the concept is valuable in understanding change in organisations.

Objectives

There are three broad objectives. Firstly, the book is attempting to contribute to a richer social ontology through which to understand firms' behaviour. The static analysis of conventional neo-classical economics is unable to deal with processes of change and organisational behaviour. But in alternative approaches to analysing firms, such as those adopted by the institutional schools, routine behaviour is often taken for granted as a low-level activity while frequently being seen as inappropriate at policy-making or strategic levels. In the management literature, conversely, routine behaviour is frequently undifferentiated from organisational culture so that the term ā€˜cultureā€™ becomes a catch-all for everything the firm does. The conceptual framework can be enriched by distinguishing, as we do here, between routines and cultures and by investigating, empirically and theoretically, the nature of routines themselves.
The second objective is to consider the relationship between change and routines. An important consideration is to study the individual practices and structures which enable the firm to identify and engage with change. Routines form part of the practices and are implicated in changes in the structures. As will be shown, routines do not necessarily inhibit change; they can drive people to change and change can be incorporated as part of the routine.
The third objective relates to the implications of technology for organisational change. Electronic technologies have become commonplace and are seen in some interpretations to be the driving force behind change in firms, if not in the whole economy. The determinist view of technology is that it drives change: because of the technology, change will take place. Frequently an unquestioning assumption is made that change is dependent upon technological breakthroughs and that its direction, if not its precise form, is inevitable. This project challenges such claims and investigates directly the ways in which electronic technology is implicated in organisational change.
Additionally, technology has important practical implications for the project. In order to study routine behaviour it is necessary to choose a terrain in which change is taking place. Clearly an analysis of routines and change in a calm, unruffled area of the economy, if such an area exists, would produce quite different opportunities from the study of an area undergoing turbulent change. Unruffled calm does not allow us to differentiate between those things which are unchanging because the world is constant and those things which are unchanging because they are relatively enduring regularities. The firms studied were chosen, therefore, because in different ways they were engaged with advanced technologies. The hypothesis was that firms working in hightechnology areas would be likely to face elements of rapid change in at least some aspects of their work and that this would facilitate the study of organisational routines. Technology was thus a vehicle through which to assure change as well as an object of study in its own right.

Routines, structure, agency and culture

Routine as a concept has been used for many years in the economics and economics-related literature but Nelson and Winter's classic text (Nelson and Winter 1982) developed the idea in a more systematic and theorised way than had been attempted hitherto. It distinguished three classes of routine: shortrun routines reflecting the operating characteristics of the firm; routines which determine decisions about the firm's capital stock; and routines which modify operating characteristics. Routine-guided processes were modelled as ā€˜searchesā€™. Nelson and Winter developed these conceptual categories primarily as modelling tools. They were grounded in empirical work but were not developed as empirical categories.
This project takes those categories and examines the behaviour of four companies empirically. Two levels of routine are identified: operational routines and strategic routines. They cannot be completely separated but broadly operational routines are concerned with the continuing reproduction of the firm. They enable it to continue doing the things it does. Strategic routines are concerned with the place of the firm in its wider environment. The research establishes that the firms did not use some kind of maximising or satisficing rule but responded to change following taken-for-granted patterns of behaviour. Such patterns, defined as routines, were not determining but indicate an evolutionary and path-dependent world. In some cases the routines which evolved enabled the firms to incorporate change into their taken-for- granted patterns of working. Far from inhibiting responses in novel circumstances, the routines themselves have made it possible for the firms to cope better with change.
Subsequent chapters identify the mechanisms through which these routines were sustained and reproduced. To undertake this requires an examination of the relationship between structures (both within the organisation and from the wider economy) and agents. Structures are defined here as the formal and informal rules which govern behaviour and the relationships which depend upon them. They may be written down as procedures or understood on the basis of widely accepted norms based in more general rules. They are reflected in the reporting hierarchies of the companies studied and partly define the position and status of staff and others connected with the company.
Agency is seen as human agency. However, in the process of the research upon which this book is based, it became clear that agency could not be separated entirely from the materiality of the world. The extent to which technology can be conceived as an agent in its own right is addressed here. In some cases information technology is deeply constitutive of the firm and recognition of this was influential in the realist methodological position which is adopted in subsequent analysis.
Culture is used as a category which reflects and acknowledges the ā€˜cultural turnā€™ in the human and social sciences (Hall 1997). This approach emphasises the importance of meaning for the definition of culture. Culture, in this interpretation, is not a set of things, such as paintings or novels, but is to do with the production and exchange of meanings. If a group of people belong to the same culture then they share a set of meanings about the world: they interpret the world in the same way. That sharing is not complete. Within the same culture there will be subtly different interpretations and different ways of representing meanings, and those differences are implicated in the changes in culture and the different practices which represent it. The question of meaning arises in all aspects of the social world. Artefacts have symbolic meaning; for example, in one of the case-study companies, the company's building represents much more than simply a place of work, and meanings are communicated through such things as gesture and dress, as well as importantly through language. Hall describes language as ā€˜one of the privileged ā€œmediaā€ through which meaning is produced and circulatedā€™ (Hall 1997, p. 4).
Routines are practices which are situated in a particular set of meanings. This project uncovers those practices by interpreting the actions of human agents in different structural positions in the four companies studied. The interpretations draw heavily on the participantsā€™ own interpretations of what they were doing and why. The primary research evidence is the language of the participants and the meanings they place upon the events, symbols and relationships they describe.
An interpretative approach is therefore central to the project. Underlying that approach is a recursive explanatory framework. Routines and technology appear as both explanation and explanandum. The explanation involves self-reflection on behalf of the agents observed. They are not seen as automatons. Self-reflection is part of the recursive framework: human agency involves reflection on what has gone before so that behaviour and structures are modified, frequently in a non-deliberate way, in the light of experience. Giddens calls this the double hermeneutic (Jones 1998a). The explanatory framework is therefore also path-dependent. The place from which an individual or company starts is partly affected by where it has come from, and this in turn restricts the directions in which it can go.
The categories which are discussed and developed provide explanations for the behaviour of the four firms studied and provide new building blocks for the understanding of other firms in different circumstances. Specifically, routines are used as an explanatory concept at strategic levels in organisations; they are also used to explain the ways in which firms engage with and incorporate change into their practices. This has not been done before. Subsequent chapters argue that the use of the concept in this way adds significantly to our understanding of the behaviour of the firms studied.
Within this framework the relationship between economic and technological categories is explored. This contributes an understanding of the extent to which technology is constitutive of firms, that is the extent to which it has the power to enact or establish firms. In the case studies reported here, electronic technologies possess some of the characteristics of change agents through sharing information, providing the potential for new forms of control and, through these characteristics, changing the perceptions individuals have about themselves and their roles. Zuboff (1988) would describe these features as informating. Technological products also contribute to the interpretations firms make of their external environments. Technology can be seen to both enable and constrain organisational behaviour but, as will be shown, it cannot be adequately analysed outside the social system of which it is a part.

The research process

The research questions produced a logic in the choice of fieldwork. Analysing change meant that the study should be longitudinal. A number of firms which had clear differences needed to be investigated, so that routine practices had potential contrasts. The firms also had to be concerned with new electronic technologies, but in different ways, so that the implications of technology for change could be better understood.
Four organisations were eventually selected with characteristics which met these criteria. All were in the same local economy, greater Cambridge, in order to minimise distinctions arising from spatial differences and to engage with a region which, by UK standards, was undergoing rapid change. They were all small to medium sized. At the beginning of the research period all employed over fifty but fewer than 100 people. All were involved in working with the new technologies in some way.
Two of the organisations chosen were in the new-technology business. One was the East of England branch of a major, well-established computer manufacturer. It manufactured, serviced and provided consultancy services in computing, and so was directly involved in the development of ideas about technology as well as in producing the artefacts themselves. The second was a supplier of advanced software and internet services. It was at the forefront of what was then conceived by many commentators to be the most dynamic and uncertain part of the economy. It was entirely focused around changes in the new technologies.
Studying only organisations like these, however, would have focused too much upon the experiences of a particular sector. It was important to look also at organisations which use technology, perhaps in a very sophisticated way, but whose business is not entirely concentrated in the technology, in order to see if contrasts exist in their experience and whether routines, change and technology interact in similar ways for firms outside and inside the sector. Two further organisations were approached, therefore, in order to broaden the perspective. The first of these is a publisher which publishes through new technologies. While it is a technologically sophisticated company, its focus of attention and its strong sense of its own image are those of a publisher, not of a high-tech firm.
The last organisation participating in the research was less technologically sophisticated. At the design stage in the research it seemed desirable to study an organisation which was undergoing major technical change but which had not used technologies in a significant way before. The fourth company was a small, successful trust producing distance-learning materials (and therefore with some similarities to the publisher) which had used some computing facilities but was in the process of implementing a major information systems redevelopment. It was therefore possible to study the ways in which the new technologies were perceived and how they fitted into previously acquired routines as the changes associated with the implementation of the new technologies were taking place.
Fieldwork was carried out in all four organisations over a two-and-a-half-year period. It became clear early on that routine behaviour existed in each institution. The research then focused on the features of the organisations upon which routine behaviour was based. Where did routines arise, how were they reproduced and transformed, and what part did the new technologies play in this?
The research process concentrated on recovering agents' meanings but recognised that there is an irreducible materiality to the world. That materiality exists independently of an agent's knowledge and interpretation. Recovering agents' meanings only is therefore insufficient. The meanings must be assessed and examined against other explanations of the world. The approach here is to use grounded theory which searches for patterns in the agents' explanations and descriptions. The patterns identified are based in metaphors and pre-existing explanatory frameworks held by the researcher. They are built by comparing different interpretations in interview or documentary evidence and placing them alongside other plausible explanations. Peirce, one of the founding philosophers of institutional economics, characterised this method as ā€˜abductionā€™ (Mirowski 1987), in which the researcher, in forming an explanatory hypothesis, tries to match new events with explanations already understood. In this process the pre-existing explanations can change.

2 The theoretical framework

The more we can learn about the way in which firms actually behave, the more we will be able to understand the laws of evolutionary development governing larger systems that involve many interacting firms in particular selection environments.
(Nelson and Winter 1982, p. 410)
In order to learn we must impose patterns on phenomena; that is the only way in which we can make sense of them. We may, of course, be making sense of what is not really sensible, especially when the subject of our study is human behaviour. So the assumption that human behaviour is based on reason, although a much weaker version of the standard economic assumption, can reasonably be criticised for assuming too much rationality.
(Loasby 1991, p. viii)
Undoubtedly part of the problem reflects the still primitive state of our ability to work with cultural evolutionary theories. In this particular case I am sure it also stems from an overly broad and vague concept of the variable in question ā€“ institutions ā€“ which is defined so as to cover an extraordinarily diverse set of things. Before we make more headway in understanding how ā€˜institutionsā€™ evolve we may have to unpack and drastically disaggregate the concept.
(Nelson 1995, p. 84)
Where should the analysis go next? ā€¦ First, for instance, it is necessary to examine the particular origins of those habits and rules. Second, the ways in which new rules and habits are created and displace others have to be addressed. Third, the criteria of efficacy have to be considered, including cases where habits or rules are more useful in some contexts rather than others, or may be advantageous for groups but not for individuals, or vice versa. Fourth, the mechanisms by which habits and rules build up to social routines and institutions have to be analysed, as well as the feedback loop by which institutions help in turn to reinforce particular habits and rules.
(Hodgson 1997, p. 681)

Introduction

The four quotations above, drawn from the work of economists who are critical of mainstream ideas, show how little our knowledge of the detailed working practices of firms has increased since Nelson and Winter's classic text of 1982. In 1982 Nelson and Winter argued that we need to learn more about the way firms actually behave. This would be the beginning of a new approach to theorising and a search for ā€˜laws of evolutionary developmentā€™. Loasby argued for imposing patterns on phenomena that recognised earlier m...

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