Cummings and worley organization development and change pdf

Organization Development & Change

9e

Thomas G. Cummings University of Southern California

Christopher G. Worley University of Southern California

Pepperdine University

Organization Development & Change, 9th Edition

Thomas G. Cummings & Christopher G. Worley

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Dedication

To Chailin and Debbie, the loves of our lives

iv

brief contents

Preface xv

CHAPTER 1 General Introduction to Organization Development 1

PART 1 Overview of Organization Development 22

CHAPTER 2 The Nature of Planned Change 23

CHAPTER 3 The Organization Development Practitioner 46

PART 2 The Process of Organization Development 74

CHAPTER 4 Entering and Contracting 75

CHAPTER 5 Diagnosing Organizations 87

CHAPTER 6 Diagnosing Groups and Jobs 107

CHAPTER 7 Collecting and Analyzing Diagnostic Information 121

CHAPTER 8 Feeding Back Diagnostic Information 139

CHAPTER 9 Designing Interventions 151

CHAPTER 10 Leading and Managing Change 163

CHAPTER 11 Evaluating and Institutionalizing Organization Development Interventions 189

PART 3 Human Process Interventions 252

CHAPTER 12 Interpersonal and Group Process Approaches 253

CHAPTER 13 Organization Process Approaches 276

PART 4 Technostructural Interventions 314

CHAPTER 14 Restructuring Organizations 315

CHAPTER 15 Employee Involvement 350

CHAPTER 16 Work Design 376

PART 5 Human Resource Management Interventions 419

CHAPTER 17 Performance Management 420

CHAPTER 18 Developing Talent 451

CHAPTER 19 Managing Workforce Diversity and Wellness 473

PART 6 Strategic Change Interventions 504

CHAPTER 20 Transformational Change 505

CHAPTER 21 Continuous Change 535

CHAPTER 22 Transorganizational Change 561

PART 7 Special Applications of Organization Development 613

CHAPTER 23 Organization Development in Global Settings 614

CHAPTER 24 Organization Development in Nonindustrial Settings: Health Care, School Systems, the Public Sector, and Family-Owned Businesses 651

CHAPTER 25 Future Directions in Organization Development 693

Glossary 746

Name Index 756

Subject Index 760

v

Preface xv

CHAPTER 1 General Introduction to Organization Development 1

Organization Development Defined 1

The Growth and Relevance of Organization Development 4

A Short History of Organization Development 6 Laboratory Training Background 6 Action Research and Survey Feedback Background 8 Normative Background 9 Productivity and Quality-of-Work-Life Background 11 Strategic Change Background 12

Evolution in Organization Development 12

Overview of The Book 14

Summary 17

Notes 17

PART 1 Overview of OrganizationDevelopment 22

CHAPTER 2 The Nature of Planned Change 23

Theories of Planned Change 23 Lewin’s Change Model 23 Action Research Model 24 The Positive Model 27 Comparisons of Change Models 29

General Model of Planned Change 29 Entering and Contracting 29 Diagnosing 30 Planning and Implementing Change 30 Evaluating and Institutionalizing Change 31

Different Types of Planned Change 31 Magnitude of Change 31

Application 2-1 Planned Change at the San Diego County Regional Airport Authority 32

Degree of Organization 35

Application 2-2 Planned Change in an Underorganized System 37 Domestic vs. International Settings 40

Critique of Planned Change 41 Conceptualization of Planned Change 41 Practice of Planned Change 42

Summary 43

Notes 44

contents

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CHAPTER 3 The Organization Development Practitioner 46

Who is the Organization Development Practitioner? 46

Competencies of an Effective Organization Development Practitioner 48

The Professional Organization Development Practitioner 53 Role of Organization Development Professionals 53

Application 3-1 Personal Views of the Internal and External Consulting Positions 56

Careers of Organization Development Professionals 59

Professional Values 60

Professional Ethics 61 Ethical Guidelines 61 Ethical Dilemmas 62

Application 3-2 Kindred Todd and the Ethics of OD 65

Summary 66

Notes 67

Appendix 70

PART 2 The Process of Organization Development 74

CHAPTER 4 Entering and Contracting 75

Entering into an OD Relationship 76 Clarifying the Organizational Issue 76 Determining the Relevant Client 76 Selecting an OD Practitioner 77

Developing a Contract 79 Mutual Expectations 79

Application 4-1 Entering Alegent Health 80 Time and Resources 81 Ground Rules 81

Interpersonal Process Issues in Entering and Contracting 81

Application 4-2 Contracting with Alegent Health 82

Summary 86

Notes 86

CHAPTER 5 Diagnosing Organizations 87

What is Diagnosis? 87

The Need for Diagnostic Models 88

Open Systems Model 89 Organizations as Open Systems 89 Diagnosing Organizational Systems 92

Organization-Level Diagnosis 94 Organization Environments and Inputs 94 Design Components 96 Outputs 99 Alignment 99 Analysis 99

Application 5-1 Steinway’s Strategic Orientation 100

Summary 105

Notes 105

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CHAPTER 6 Diagnosing Groups and Jobs 107

Group-Level Diagnosis 107 Inputs 107 Design Components 108 Outputs 109 Fits 110 Analysis 110

Application 6-1 Top-Management Team at Ortiv Glass Corporation 111

Individual-Level Diagnosis 113 Inputs 113 Design Components 114 Fits 115 Analysis 115

Application 6-2 Job Design at Pepperdine University 116

Summary 119

Notes 120

CHAPTER 7 Collecting and Analyzing Diagnostic Information 121

The Diagnostic Relationship 121

Methods for Collecting Data 123 Questionnaires 124 Interviews 126 Observations 127 Unobtrusive Measures 128

Sampling 129

Techniques for Analyzing Data 130 Qualitative Tools 130

Application 7-1 Collecting and Analyzing Diagnostic Data at Alegent Health 132 Quantitative Tools 133

Summary 137

Notes 138

CHAPTER 8 Feeding Back Diagnostic Information 139

Determining the Content of the Feedback 139

Characteristics of the Feedback Process 141

Survey Feedback 142 What Are the Steps? 142

Application 8-1 Training OD Practitioners in Data Feedback 143 Survey Feedback and Organizational Dependencies 145

Application 8-2 Operations Review and Survey Feedback at Prudential Real Estate Affiliates 146

Limitations of Survey Feedback 147 Results of Survey Feedback 148

Summary 149

Notes 149

CHAPTER 9 Designing Interventions 151

What are Effective Interventions? 151

How to Design Effective Interventions 152 Contingencies Related to the Change Situation 152 Contingencies Related to the Target of Change 154

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Overview of Interventions 156 Human Process Interventions 156

Summary 161

Notes 162

CHAPTER 10 Leading and Managing Change 163

Overview of Change Activities 163

Motivating Change 165 Creating Readiness for Change 165 Overcoming Resistance to Change 166

Application 10-1 Motivating Change in the Sexual Violence Prevention Unit of Minnesota’s Health Department 168

Creating a Vision 169 Describing the Core Ideology 170 Constructing the Envisioned Future 171

Developing Political Support 171

Application 10-2 Creating a Vision at Premier 172 Assessing Change Agent Power 174 Identifying Key Stakeholders 175 Influencing Stakeholders 175

Managing the Transition 176

Application 10-3 Developing Political Support for the Strategic Planning Project in the Sexual Violence Prevention Unit 177

Activity Planning 178 Commitment Planning 179 Change-Management Structures 179 Learning Processes 179

Sustaining Momentum 180

Application 10-4 Transition Management in the HP–Compaq Acquisition 181 Providing Resources for Change 182 Building a Support System for Change Agents 183 Developing New Competencies and Skills 183 Reinforcing New Behaviors 183 Staying the Course 184

Summary 184

Notes 185

Application 10-5 Sustaining Transformational Change at the Veterans Health Administration 187

CHAPTER 11 Evaluating and Institutionalizing Organization Development Interventions 189

Evaluating Organization Development Interventions 189 Implementation and Evaluation Feedback 189 Measurement 192 Research Design 197

Institutionalizing Organizational Changes 200 Institutionalization Framework 200

Application 11-1 Evaluating Change at Alegent Health 201 Organization Characteristics 203 Intervention Characteristics 204 Institutionalization Processes 205 Indicators of Institutionalization 206

Application 11-2 Institutionalizing Structural Change at Hewlett-Packard 208

Summary 210

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Notes 210

Selected Cases 212 Kenworth Motors 212 Peppercorn Dining 217 Sunflower Incorporated 239 Initiating Change in the Manufacturing and Distribution Division of PolyProd 241 Evaluating the Change Agent Program at Siemens Nixdorf (A) 247

PART 3 Human Process Interventions 252

CHAPTER 12 Interpersonal and Group Process Approaches 253

Process Consultation 253 Group Process 254 Basic Process Interventions 255 Results of Process Consultation 257

Application 12-1 Process Consultation at Action Company 258

Third-Party Interventions 259 An Episodic Model of Conflict 260 Facilitating the Conflict Resolution Process 261

Application 12-2 Conflict Management at Balt Healthcare Corporation 262

Team Building 263 Team-Building Activities 264 Activities Relevant to One or More Individuals 267 Activities Oriented to the Group’s Operation and Behavior 268 Activities Affecting the Group’s Relationship with the Rest of the Organization 268

Application 12-3 Building the Executive Team at Caesars Tahoe 269 The Manager’s Role in Team Building 270 The Results of Team Building 271

Summary 273

Notes 273

CHAPTER 13 Organization Process Approaches 276

Organization Confrontation Meeting 276 Application Stages 276 Results of Confrontation Meetings 277

Application 13-1 A Work-Out Meeting at General Electric Medical Systems Business 278

Intergroup Relations Interventions 279 Microcosm Groups 279 Application Stages 280 Resolving Intergroup Conflict 281

Large-Group Interventions 284

Application 13-2 Improving Intergroup Relationships in Johnson & Johnson’s Drug Evaluation Department 285

Application Stages 287

Application 13-3 Using the Decision Accelerator to Generate Innovative Strategies in Alegent’s Women’s and Children’s Service Line 290

Results of Large-Group Interventions 294

Summary 295

Notes 295

Selected Cases 297 Lincoln Hospital: Third-Party Intervention 297 Ben & Jerry’s (A): Team Development Intervention 304

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PART 4 Technostructural Interventions 314

CHAPTER 14 Restructuring Organizations 315

Structural Design 315 The Functional Structure 316 The Divisional Structure 318 The Matrix Structure 319 The Process Structure 322 The Customer-Centric Structure 324

Application 14-1 Healthways’ Process Structure 325 The Network Structure 328

Downsizing 331

Application 14-2 Amazon.com’s Network Structure 332 Application Stages 334 Results of Downsizing 337

Application 14-3 Strategic Downsizing at Agilent Technologies 338

Reengineering 340 Application Stages 341

Application 14-4 Honeywell IAC’s Totalplant™ Reengineering Process 344 Results from Reengineering 346

Summary 346

Notes 347

CHAPTER 15 Employee Involvement 350

Employee Involvement: What Is It? 350 A Working Definition of Employee Involvement 351 The Diffusion of Employee Involvement Practices 352 How Employee Involvement Affects Productivity 352

Employee Involvement Applications 354 Parallel Structures 354

Application 15-1 Using the AI Summit to Build Union–Management Relations at Roadway Express 356

Total Quality Management 359

Application 15-2 Six-Sigma Success Story at GE Financial 365 High-Involvement Organizations 367

Application 15-3 Building a High-Involvement Organization at Air Products and Chemicals, Inc. 370

Summary 373

Notes 373

CHAPTER 16 Work Design 376

The Engineering Approach 376

The Motivational Approach 377 The Core Dimensions of Jobs 378 Individual Differences 379 Application Stages 380 Barriers to Job Enrichment 382

Application 16-1 Enriching Jobs at the Hartford’s Employee Relations Consulting Services Group 383

Results of Job Enrichment 385

The Sociotechnical Systems Approach 386 Conceptual Background 387 Self-Managed Work Teams 388

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Application Stages 391 Results of Self-Managed Teams 393

Application 16-2 Moving to Self-Managed Teams at ABB 394

Designing Work for Technical and Personal Needs 397 Technical Factors 398 Personal-Need Factors 399 Meeting Both Technical and Personal Needs 400

Summary 401

Notes 402

Selected Cases 405 City of Carlsbad, California: Restructuring the Public Works Department (A) 405 C&S Wholesale Grocers: Self-Managed Teams 408

PART 5 Human Resource Management Interventions 419

CHAPTER 17 Performance Management 420

A Model of Performance Management 421

Goal Setting 422 Characteristics of Goal Setting 422 Establishing Challenging Goals 423 Clarifying Goal Measurement 423 Application Stages 424 Management by Objectives 424 Effects of Goal Setting and MBO 426

Performance Appraisal 426

Application 17-1 The Goal-Setting Process at Siebel Systems 427 The Performance Appraisal Process 428 Application Stages 430 Effects of Performance Appraisal 431

Reward Systems 431

Application 17-2 Adapting the Appraisal Process at Capital One Financial 432

Structural and Motivational Features of Reward Systems 434 Skill- and Knowledge-Based Pay Systems 437 Performance-Based Pay Systems 438 Gain-Sharing Systems 440 Promotion Systems 442 Reward-System Process Issues 443

Application 17-3 Revising the Reward Systemat Lands’ End 444

Summary 447

Notes 447

CHAPTER 18 Developing Talent 451

Coaching and Mentoring 451 What Are the Goals? 452 Application Stages 452 The Results of Coaching and Mentoring 453

Career Planning and Development Interventions 453 What Are the Goals? 454 Application Stages 455 The Results of Career Planning and Development 463

Management And Leadership Development Interventions 463

Application 18-1 PepsiCo’s Career Planning and Development Framework 464 What Are the Goals? 466 Application Stages 466

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Application 18-2 Leading Your Business at Microsoft Corporation 468 The Results of Development Interventions 469

Summary 469

Notes 470

CHAPTER 19 Managing Workforce Diversityand Wellness 473

Workforce Diversity Interventions 473 What Are the Goals? 473 Application Stages 475 The Results for Diversity Interventions 478

Employee Stress and Wellness Interventions 479 What Are the Goals? 479

Application 19-1 Embracing Employee Diversity at Baxter Export 480 Applications Stages 481 The Results of Stress Management and Wellness Interventions 486

Summary 487

Notes 488

Application 19-2 Johnson & Johnson’s Health and Wellness Program 490

Selected Cases 492 Employee Benefits at HealthCo 492 Sharpe BMW 497

PART 6 Strategic Change Interventions 504

CHAPTER 20 Transformational Change 505

Characteristics of Transformational Change 505 Change Is Triggered by Environmental and Internal Disruptions 506 Change Is Aimed at Competitive Advantage 506 Change Is Systemic and Revolutionary 507 Change Demands a New Organizing Paradigm 508 Change Is Driven by Senior Executives and Line Management 508 Change Involves Significant Learning 509

Integrated Strategic Change 509

Organization Design 512

Application 20-1 Managing Strategic Change at Microsoft Canada 513 Conceptual Framework 515

Culture Change 518

Application 20-2 Organization Design at Deere & Company 519 Concept of Organization Culture 520 Organization Culture and Organization Effectiveness 521 Diagnosing Organization Culture 523 The Behavioral Approach 523 The Competing Values Approach 524 The Deep Assumptions Approach 525

Summary 528

Notes 529

Application 20-3 Culture Change at IBM 533

CHAPTER 21 Continuous Change 535

Self-Designing Organizations 535 The Demands of Adaptive Change 536 Application Stages 536

Learning Organizations 538 Conceptual Framework 538

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Application 21-1 Self-Design at American Healthways Corporation 539 Organization Learning Interventions 542 Knowledge Management Interventions 547 Outcomes of OL and KM 550

Application 21-2 Implementing a Knowledge Management System at Motorola Penang 551

Built-To-Change Organizations 553 Design Guidelines 553 Application Stages 554

Summary 556

Notes 556

Application 21-3 Creating a Built-to-Change Organizationat Capital One Financial 559

CHAPTER 22 Transorganizational Change 561

Transorganizational Rationale 562 Mergers and Acquisitions 563 Application Stages 564

Strategic Alliance Interventions 568 Application Stages 568

Application 22-1 The Sprint and Nextel Merger: The First Two Years 569

Network Interventions 571

Application 22-2 Building Alliance Relationships 572 Creating the Network 574 Managing Network Change 577

Application 22-3 Fragile and Robust—Network Change in Toyota Motor Corporation 580

Summary 582

Notes 583

Selected Cases 586 Fourwinds Marina 586 Leading Strategic Change at DaVita: The Integration of the Gambro Acquisition 597

PART 7 Special Applications of Organization Development 613

CHAPTER 23 Organization Development in Global Settings 614

Organization Development Outside the United States 615 Cultural Context 616 Economic Development 618 How Cultural Context and Economic Development Affect OD Practice 619

Application 23-1 Modernizing China’s Human Resource Development and Training Functions 623

Worldwide Organization Development 625 Worldwide Strategic Orientations 626 The International Strategic Orientation 627 The Global Strategic Orientation 629 The Multinational Strategic Orientation 631

Application 23-2 Implementing the Global Strategy: Changing the Culture of Work in Western China 632

The Transnational Strategic Orientation 636

Global Social Change 639 Global Social Change Organizations 640 Application Stages 641 Change Agent Roles and Skills 644

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Application 23-3 Social and Environmental Change at Floresta 645

Summary 647

Notes 647

CHAPTER 24 Organization Developmentin Nonindustrial Settings: Health Care, School Systems, the Public Sector, and Family-Owned Businesses 651

Organization Development in Health Care 651 Trends in Health Care 652 Opportunities for Organization Development Practice 655 Success Principles for OD in Health Care 657 Conclusions 658

Organization Development in School Systems 659 Education: Industrial-Age Roots 659 Changing Conditions Cause Stress 659 Disappointing Reform Efforts 660 A New Metaphor for Schools 662 Future Opportunities for OD Practice 664 Technology’s Unique Role in School OD 665 Conclusions 667

Organization Developmentin the Public Sector 667 Comparing Public- and Private-Sector Organizations 669 Recent Research and Innovations in Public-Sector Organizational Development 674 Conclusions 675

Organization Development in Family-Owned Businesses 675 The Family Business System 676 Family Business Developmental Stages 679 A Parallel Planning Process 680 Values 680 Critical Issues in Family Business 681 OD Interventions in Family Business System 684

Summary 688

Notes 689

CHAPTER 25 Future Directions in Organization Development 693

Trends within Organization Development 693 Traditional 693 Pragmatic 694 Scholarly 695 Implications for OD’s Future 695

Trends in the Context of Organization Development 697 The Economy 697 The Workforce 700 Organizations 701 Implications for OD’s Future 702

Summary 708

Notes 709

Integrative Cases 712 B. R. Richardson Timber Products Corporation 712 Building the Cuyahoga River Valley Organization* 728 Black & Decker International: Globalization of the Architectural Hardware Line 738

Glossary 746

Name Index 756

Subject Index 760

xv

In preparing this new edition, we were struck by how the cliché of “living in changing times” is becoming almost ironic. The events of each day remind us that things are mov- ing far more quickly and unpredictably than we could ever have imagined. Consider the U.S. economic turmoil brought on by the mortgage- lending crisis and the record price of crude oil, which seemingly rises independent of consumption. Or think about the run- up to the 2008 U.S. presidential election. It strikes us as just a bit surreal to see the word CHANGE plastered on the speaker’s podium and waved by supporters every time Barack Obama comes out to speak. Not to be outdone, Hillary Clinton’s key selling point is her emphasis that she has the ability to lead change. By the time the next edition of this book comes out, a new president will be well into her or his first term and we will no doubt have experienced a lot of change.

Nor is change confined to the United States. As we write this, the new prime min- ister of France is shaking up that country’s work rules, organizations, and policies. Beijing is preparing to host the Olympic Games and show the world a whole new China. Countries in Africa are dealing with drought, AIDS, military dictatorships, and the emergence of democracy. The war in Iraq remains a point of contention among many, and the Middle East remains embroiled in controversy and seemingly intrac- table problems.

Nor is change restricted to governments and organizations. Our personal lives are embedded in change and the dilemmas it poses. Individuals and families are finding that the pace of change exceeds their physical and mental capacity to cope with it. As people experience change accelerating, they tend to feel overwhelmed and alienated. They experience what sociologists call “anomie,” a state of being characterized by the lack of social norms or anchors of stable and shared values. Many Americans, for example, want more time with their families but feel compelled to work longer hours, make more money, and satisfy escalating needs; they espouse diversity but push other cultures to do it “the American way”; they argue that technology will find an answer to the global warming problem and so justify acquiring a Hummer.

Nor is change limited to social systems and their environments. Organization Development—the field of planned change itself—is changing. In a time of unprec- edented change, our views of how and when planned change occurs, who leads and controls it, and what contributes to its success are all changing. Since the last edition of this text, three OD handbooks have been published, a special issue of the Journal of Applied Behavioral Science has been devoted to “reinvigorate OD” and another special issue on international OD is on its way, and volumes on change management and organization transformation have continued to flood the bookstores. Conversations among OD practitioners and scholars about where the field is and should be headed have become more vigorous. The drive to understand and do something about change continues unabated.

In times like these, books on OD and change have never been more relevant and necessary. For our part, this is the ninth edition of the market-leading text in the field. OD is an applied field of change that uses behavioral science knowledge to increase

preface

xvi

the capacity for change, and to improve the functioning and performance of organiza- tions. OD is more than change management, however, and the field would do well to differentiate itself from the mechanistic, programmatic assumptions that organization change can simply be scripted by various methods of “involving” people and “enroll- ing” them in the change. OD is not concerned about change for change’s sake, a way to implement the latest fad, or a pawn for doing management’s bidding. It is about learning and improving in ways that make individuals, groups, organizations, and ultimately the world better off and more capable of managing change in the future. Moreover, OD is more than a set of values. It is not a front for the promulgation of humanistic and spiritual beliefs nor a set of interventions that boil down to “holding hands and singing Kumbaya.” It is a set of testable ideas and practices about how social and technical systems can coexist to produce individual satisfaction and sustainable organizational results. Finally, OD is more than a set of tools and techniques. It is not a bunch of “interventions” looking to be applied in whatever organization that comes along. It is an integrated theory and practice aimed at increasing the effectiveness of organizations.

In today’s reality, OD is often misunderstood and its relevance questioned. As men- tioned above, OD is often used synonymously with change management; it is often defined and overly constrained by its association with a set of “touchy-feely” values; and it is often described as a hammer looking for a nail. As a result, it is open to discus- sion whether OD is up to the task of facilitating the changes that organizations need to exist and thrive in the world today. This is OD’s challenge in the decade and century ahead. Can it implement change and teach the system to change itself at the same time? Will it cling to its humanistic traditions and focus on functioning or increase its relevance by integrating more performance-related values? How will OD incorporate values related to globalization, cultural integration, the concentration of wealth, and environmental sustainability? Can it afford not to address the issues that threaten an organization’s survival? These are heady questions for a field barely 55 years old.

The original edition of this text, authored by OD pioneer Edgar Huse in 1975, became a market leader because it faced the relevance issue. It took an objective, research perspective and placed OD practice on stronger theoretical footing. Ed showed that, in some cases, OD did produce meaningful results but that additional work was still needed. Sadly, Ed passed away following the publication of the second edition. His wife, Mary Huse, asked Tom Cummings to revise the book for subsequent editions. With the fifth edition, Tom asked Chris Worley to work with him in writing the text.

The most recent editions have had an important influence on the perception of OD. While maintaining the book’s strengths of even treatment and unbiased report- ing, the newer editions made even larger strides in placing OD on a strong theoretical foundation. They broadened the scope and increased the relevance of OD by includ- ing interventions that had a content component, including work design, employee involvement, and organization structure. They took another step toward relevance and suggested that OD had begun to incorporate a strategic perspective. This strategic orientation proposed that OD could be as concerned with performance issues as it was with human potential. Effective OD, from this newer perspective, relied as much on knowledge about organization theory and econo mics as it did on the behavioral sci- ences. It is our greatest hope that the current edition continues this tradition of rigor and relevance.

REVISIONS TO THE NINTH EDITION

Our goal in the ninth edition is to update the field once again. Although we have retained several features of the prior editions, we have made some important changes.