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Long Range Planning

38/6 December 2005

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Charles Baden-Fuller Editorial

This issue reports the results of research that has some important managerial implications for all businesses. Danny Miller and Isabelle Le Breton-Miller take a fresh look at ‘‘family businesses’’. They draw insights from comparing successful and less successful large family firms such as Michelin, Ikea and the New York Times. They suggest that some of the core, deeply-held values of family firms that are so often criticised appear to be the very features that make them long-lived and successful. While the data focuses mainly on larger firms, it has some important implications
for all family-held firms.
Bernd Vogel’s piece on collective and energetic behaviour looks at how change management can be driven by informal collective action across companies. His perspectives add fresh insights to those that seek to manage change, by focusing attention away from formal teams to mobilising energy among a much wider group. The article holds special value for change management experts as it gives clues on how informal action can be mobilised and why it is so powerful.
Taieb Hafsi and Zhilong Tian address the very difficult question of change for large complex organisations. The processes of change in the Chinese Electricity industry is spelled out and analysed carefully. Managers in western institutions such as utility companies, hospitals and local governments will find much relevance and value here. The authors explain how and why change needs a long period of time to take hold, and how effective change takes place in waves (cultural-societal norms, regulatory systems and business systems), and by different groups (central government, local government and senior managers) that deal with different agenda.
David Conklin looks at the role of outsourcing in Human Resource Management. Again, the issues are ones related to change management, because HR typically plays a pivotal role in facilitating the introduction of new business processes and new ways of working. He documents the experiences of Canadian Imperial Bank of Commerce to explain in concrete terms the risks and rewards of HR outsourcing.

 

 

Danny Miller and Isabelle Le Breton-Miller Management Insights from Great and Struggling Family Businesses Danny.Miller@hec.ca

Family-controlled businesses (FCBs) have a reputation of being outdated, sluggish and beset by nepotism and cronyism. Yet this reputation does not stand up under the scrutiny of systematic studies which consistently find that family businesses can be more profitable and more apt to survive than their rivals. Names such as Michelin, Ikea and the New York Times are trailblazers in their respective fields, and yet each is a business controlled by a family. This paper sets out to explore the paradox. It examines 46 successful and 24 struggling FCBs to determine how they differ in their strategic, organisational and leadership priorities. The authors identified four key priorities, drawn from a qualitative analysis, which they call ‘‘the 4Cs’’: continuity in strategy; cohesive organisational community; close connections with stakeholders; and independent leadership, or command. The authors note that each of these priorities contain disadvantages. However the successful FCBs exploited each priority to their advantage: in the realm of continuity, they made investments for the long run; they also built a coherent community by communicating and living their strong values; they favoured enduring connections with stakeholders over one-shot transactions; and their leaders could be decisive due to their independence from clamouring shareholders. The authors found that the unsuccessful companies manifested these priorities and practices less frequently and fell victim to their negative aspects. The paper concludes with concrete examples and lessons for managers which could be applied to more publicly-owned companies as well.

 

Bernd Vogel Linking for Change: Network Action as Collective, Focused and Energetic Behaviour bernd.vogel@unisg.ch

Change processes in an organisation can be undertaken by individuals or by collective action. Management research has increasingly pointed to the contribution of one such collective action e networks e to successful change and innovation in organisations. These networks are a set of actors connected by relationships, and they are by their nature informal and only exist and act due to their aim to pursue shared intentions. This paper aims to contribute to the research that suggests how to trigger collective action of networks. If researchers could identify the factors that bring about the interactive and constructive process of collective behaviour, managers could then address these factors to initiate change. The author draws mainly on two empirical studies conducted in companies undergoing major changes: a qualitative study at Lufthansa, the German airline, and a quantitative study at Swisscom, the Swiss telecoms company. Based on the studies the paperoutlines a model of collective network action, which is defined as collective, focused, energeticbehaviour. The proposed model considers specific aspects and behaviour of network participants and suggests that emotions, cognition and volition are factors that reflect the internal processes and interactions of the network. Two ways that managers can trigger collective action are: to take individual action themselves for a collective initiative and drive the action-taking; or to act as an enabler by providing the conditions that stimulate collective activities.

 

Taïeb Hafsi and Zhilong Tian Towards a Theory of Large Scale Institutional Change: The Transformation of the Chinese Electricity Industry taieb.hafsi@hec.ca

Originally intent on gathering data on the performance of the Chinese electricity system over 20 years, the authors became so impressed at the success of its post-Mao transformation, they set out to try to explain it. Their charting of the measured changeover from communist/ideological to market economy/pragmatic gains added sophistication from their understanding of the history of Imperial China, with its technical sophistication and respect for bureaucracy, and of the subtle operation of quanxi in Chinese society. They show how both theoretical and practical changes were made acceptable in a still-socialist country by their reference back to deeply embedded pre-existent elements in the Chinese social psyche. The authors observe three separate and sequential cycles, each with its specialist actors, and each concerned with a particular area of change: central government law-makers initiating fundamental changes in culture and values; provincial authorities codifying industrial norms and regulations and (much retrained) managers handling professional matters at firm level. Their analysis leads them to promote a broad theory of large-scale institutional change, using change and institutional theories to specify their three-cycle framework in proposition format, and to suggest its implications for managers in charge of complex organizations.

 

David W. Conklin Risks and Rewards in HR Business Process Outsourcing dconklin@ivey.uwo.ca

Companies are increasingly outsourcing activities, including their management of human resources (HR). However, managers are divided on whether this is to the long-term benefit of the company, with each side highlighting the risks and rewards of HR outsourcing. This article explains why differences of opinion exist, and provides guidance in decisions concerning outsourcing. With HR business process resourcing (HR-BPO), a vendor assumes responsibilityfor HR activities, as well as for the information technology, software and systems that perform them. It is an area that is changing and offering additional rewards as innovations in HR, particularly in the use of web-based technologies, come online. Furthermore, by outsourcing the business processes, the company’s HR department can assume a role in facilitating strategic change by focusing on strategic responsibilities. However, HR outsourcing involves risks, and this article analyses three themes in risk mitigation: how to choose HR activities as potential candidates for outsourcing; how to analyse these potential candidates; and how to achieve successful inter-company governance. The analysis of HR-BPO emphasises issues such as price, the ability of buyer and vendor to benchmark objectives for each activity and to collaborate on technological change. For HR-BPO, these issues mean that risk and trust play a central role in designing the inter-company governance procedures and in choosing appropriate managers. The paper offers insights and lessons through the analysis of one of the first HR-BPO arrangements, between the Canadian Imperial Bank of Commerce (CIBC) and Electronic Data Systems (EDS). CIBC sought to merge divisions that had different HR procedures. This novel arrangement required the design of a governance structure which included the involvement of senior executives, procedures to build trust and the capacity to add other HR activities to the outsourcing arrangement. The paper concludes with lessons that managers can apply when considering potential processes for outsourcing.

 

 

This issue is available in full on-line at www.sciencedirect.com

 
Long Range Planning - International Journal of Strategic Management