For economists (and also sociologists or psychologists) – no matter if they are students,
practitioners or researchers – the behavior of individuals, groups or entire organizations (e. g.
companies) under special circumstances like threat, adversity or radical environmental change
is an important issue. For researchers to find underlying principles of behavior under threat
and for practitioners to learn some basic rules for behaving in changing environments.
Imagine a winter in our alps without any snow. There have always been times with less snow.
In such case snow making machines did their job and sprinkled the slope with artificial snow.
The lesser snow the more snow making machines was the easy calculus in past years. So will
there be an even larger number of snow making machines on the slopes if there is absolutely
no snow due to global warming and the upcoming climate crisis? Or will there some
alternatives be developed? According to an recent article in DerStandard (16. december 2006,
p. 2), wintertourism has to change its face, additional offers have to be presented, away form
ski and snowboard toward wellness, mountain biking or hiking. So what will entrepreneurs in
skiing resorts do? Will the rely on well-learned behavior and put another snow making
machine beside the slope, or will they consider alternatives?
There are numerous studies treating behavior under threat or radical change of environmental
conditions. Six papers – among them the basic paper for this work, Staw et al’s1 analysis of
threat-rigidity effects in organizational behavior – will subsequently be examined with regard
to consistencies or contradictions. As already mentioned, Staw et al’s paper will be regarded
as the basis for this seminar paper, as it points out most clearly threat-rigidity effects at
different levels of analysis. Moreover it is 1.) the oldest reviewed article and seems to have
some influence on threat-rigidity research in recent decades and 2.) represents a
comprehensive literature review in contrast to the other – mainly empirical – papers and
therefore presents a fine overview for our topic. Therefore chapter two will start with brief
discussions of the Threat-Rigidity Hypothesis and Threat-Rigidity Effects on the individualleve,
group-level and organizational-level as described in Staw et. al’s paper.
Inhaltsverzeichnis
1 Introduction
2 Threat-Rigidity Hypothesis
2.1 Individual-level effects
2.2 Group-level effects
2.3 Organizational-level effects
3 A multilevel point of view
3.1 Applying systems-theory
3.2 Cross-level effects
4 Conclusion and suggestions for future research
4.1 Two issues open to research emerged from my personal perception of this topic:
References
1 Introduction
For economists (and also sociologists or psychologists) – no matter if they are students, practitioners or researchers – the behavior of individuals, groups or entire organizations (e. g. companies) under special circumstances like threat, adversity or radical environmental change is an important issue. For researchers to find underlying principles of behavior under threat and for practitioners to learn some basic rules for behaving in changing environments. Imagine a winter in our alps without any snow. There have always been times with less snow. In such case snow making machines did their job and sprinkled the slope with artificial snow. The lesser snow the more snow making machines was the easy calculus in past years. So will there be an even larger number of snow making machines on the slopes if there is absolutely no snow due to global warming and the upcoming climate crisis? Or will there some alternatives be developed? According to an recent article in DerStandard (16. december 2006, p. 2), wintertourism has to change its face, additional offers have to be presented, away form ski and snowboard toward wellness, mountain biking or hiking. So what will entrepreneurs in skiing resorts do? Will the rely on well-learned behavior and put another snow making machine beside the slope, or will they consider alternatives?
There are numerous studies treating behavior under threat or radical change of environmental conditions. Six papers – among them the basic paper for this work, Staw et al’s[1] analysis of threat-rigidity effects in organizational behavior – will subsequently be examined with regard to consistencies or contradictions. As already mentioned, Staw et al’s paper will be regarded as the basis for this seminar paper, as it points out most clearly threat-rigidity effects at different levels of analysis. Moreover it is 1.) the oldest reviewed article and seems to have some influence on threat-rigidity research in recent decades and 2.) represents a comprehensive literature review in contrast to the other – mainly empirical – papers and therefore presents a fine overview for our topic. Therefore chapter two will start with brief discussions of the Threat-Rigidity Hypothesis and Threat-Rigidity Effects on the individual-level, group-level and organizational-level as described in Staw et. al’s paper. After that it is time to talk about cross-level effects in chapter three and pay some attention to the advice, that every entity should be regarded as a system. Threat, according to Staw et al, is seen as vague environmental change. What is missing in that basic paper is the consideration of radical institutional change, as described in the other five articles. Consideration of institutional effects will be far to much for the purpose of this seminar paper. So subsequent to the initial depiction of Threat-Rigidity Effects and a comparison of that effects among the six analysed papers – where emphasize is put on organizational level-effects but also cross-level effects – a conclusion emerged form the analysis of the six papers will be presented in chapter four and issues open to research will be posed.
2 Threat-Rigidity Hypothesis
Since the paper of Staw et al is the only out of six explicitly dealing with threat-rigidity hypothesis, the fundamentals of this chapter are based on their work. As mentioned above, the main interest in doing research in this field is to learn more about how entities adapt to adversity or radical environmental change. To be a threat, such a change has to lead to negative or harmful consequences. This is of some importance because many collapses of companies can be lead back to maladaptive behavior as a reaction to a changing environment. That is, because entities tend to rely on well learned behavior, which is often but not always the appropriate response to new challenges. Threat-Rigidity Theory may have its origins in biology. Visualize a mouse in front of a snake. Due to this threat the mouse will grow stiff. This is learned in the course of a long evolution because snakes are not able to perceive rigid but only moving things. Now imagine a new and different threat, a snake which is able to perceive rigid mice too. The well learned behavior of the mouse is unprofitable in this new context. Flexibility of reactions resp. some alternative possibilities of response can be considered as vital for an entity. This simple mechanism can be applied to individuals, groups and entire organizations. Under threat conditions two things may happen within an entity. First, there is an restriction of information processing or a reduction of used information channels, second, there is a constriction in control. That means, power is concentrated at higher levels of hierarchy. To sum up, rigid responses to threat can be appropriate after slight changes but may be ineffectual under radical change.
2.1 Individual-level effects
The effects of stress, anxiety and arousal are main points in investigating individual-level effects. Under stress, an individual may behave rigidly, with all the above mentioned effects (i. e. restriction in information processing and constriction in control). There is evidence, that trained individuals perform better than untrained individuals under stress conditions. So training is a means of narrowing threat-rigidity effects. The same with anxiety. Anxious individuals perform worse and show rigidity effects. Whereas arousal may be responsible for the effects of stress and anxiety. Arousal reduces flexibility and induces rigidity effects (e. g. relying on well-learned behavior). Generally it can be captured that individuals tend to restrictions in information (because of emphasizing internal hypothesis about their environment) and constrictions in control (i. e. relying on well-learned or habituated responses) under threat. It is assumed, that threatened individuals may disregard external warnings, freeze up in their behavior and therefore show poor task performance under changing conditions. If threat however results from familiar problems, the individual is able to deal with it, even fixating in its well-learned behavior. Unfamiliar threats can lead to maladaptive reactions in case no training has taken place before to enhance one individuals flexibility.
Since the other five papers describe studies conducted on higher levels of analysis (i. e. on the organizational or even economic level) there is less evidence in those articles for pure individual-level effects. Holm[2] points out in his study about the transformation processes in Norwegian fisheries, that typical fishermen rely on well-learned behavior under pressure rather than searching for alternatives or organizing with others to meet the threat. Fox-Wolfgramm et al[3] noted in their comparative study of two banks facing a change in legislature, that a new law, which was affecting the banks business activities, was interpreted differentially by each employee. That may be because of each individuals different prior experience, expectations and goals. They also mention the concept of self-monitors. High self-monitors are able to adapt in a better way to a changing environment, low self-monitors are relying on well-learned standard behavior. Newman[4] noticed in her article about organizational transformation, that a high level of stress reduces individual performance, while a moderate level of stress activates power and increases performance. So all these findings accord throughout the examined articles. Too the reflexion of individual-level effects is necessary for understanding rigidity effects at higher levels.
2.2 Group-level effects
Researchers assume, that an external threat has some impact on group cohesiveness – in most cases it will increase. Until there is an actual loss or negative effect, group cohesiveness will increase. After that, it will decrease. So if there are competing groups, the winners will show strengthened cohesiveness while the losers may show dissensions. Another effect of threat is, that ties to other groups will be weakened. As far as leadership is concerned, an external threat strengthens the reliance upon a group leader or a board of leaders. At least as long, as there is no complete failure to meet the threat. Then the leader is replaced by an other influential individual. That is again the constriction in control effect mentioned earlier. A third effect, threat has on groups, is some kind of pressure toward conformity within the group. That arises from the assumption, that uniformity is necessary to appropriate meet the threat. Deviant group members may be excluded from relevant communication and decisions. Related to this is the concept of groupthink. Many ill outcomes in economic and political history are a product of groupthink, because of influencing group members, putting pressure on deviant members, self-censorship of non conforming members, development of consensus etc. So it can be claimed, that groupthink does not always match the saying “the whole thing is more than the sum of its parts”. So as response to external threats, groups again show restriction in information and constriction in control (i. e. increased cohesiveness, support of a leader and some pressure toward uniformity). However the opposite is true in cases of failure or internal causes of threat.
As well as for individual-level effects there is less evidence for pure group-level effects in the additional papers. Holm postulates, that when facing a threat, group coherence is an appropriate means of meeting that threat. To achieve such coherence, similar attributes of group members are of some advantage in terms of collective identification. Also some degree of oppositeness to other groups increases group cohesion. In that way every competing group will show enhanced coherence and effort to gain vantages till the point failure is inevitable. Holm also reflects the output of some kind of groupthink, when he denotes compromise not to be the best outcome achievable. Beside the remark of Fox-Wolfgram et al, that there is evidence of seeking consensus within leading groups of banks, there is lot description of group beliefs and actions taken by groups. How this beliefs and actions evolved is not reported. So it cannot be concluded from their investigation whether or not any above mentioned group-level effects had taken place during the period of changing environmental conditions. According to their analysis of banks, groups tend to keep their behavior as long as success is achieved. In reality, groups often have major influence on entire organizations and beyond. Cp. subsequent chapters to learn more about that.
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[1] Staw, Barry M.; Sandelands, Lance E.; Dutton, Jane E.: Threat-Rigidity Effects in Organizational Behavior: A Multilevel Analysis, in: Administrative Science Quarterly, Vol. 26, 1981, p. 501-524
[2] Holm, Peter: The Dynamics of Institutionalization: Transformation Processes in Norwegian Fisheries, in: Administrative Sciences Quarterly, Vol. 40, 1995, p. 398-422
[3] Fox-Wolfgramm, Susan J.; Boal, Kimberly B.; Hunt, James G.: Organizational Adaption to Institutional Change: A Comparative Study of First-order Change in Prospector and Defender Banks, in: Administrative Science Quarterly, Vol. 43, 1998, p. 87-126
[4] Newman, Karen L.: Organizational Transformation during Institutional Upheaval, in: Academy of Management Review, Vol. 25, 2000, p. 602-619