Multilevel Organizational Adaptation (FULL TEXT)

Brice Dattée, emlyon business school, France

James Barlow, Imperial College Business School, UK

To cite this article, please consult and refer to the published version available at: http://dx.doi.org/10.1287/orsc.2017.1113

(Below is my author’s manuscript.)

We use the case of a “whole-system” change program in a national healthcare system to empirically examine the multilevel dynamics underlying organizational adaptation. Our analysis demonstrates how the cognitive distance between agents’ causal representations affects opportunities to cooperate in hierarchical systems. Using complexity theory, we identify a scale-invariant causal pathway which can be applied recursively across many organizational levels. At each level, three coupled feedback loops determine how local agents modify their cognitive representations to include uncovered interdependencies and synchronize their adaptive search across organizational boundaries: a “boundary work” loop, a “small wins” loop, and a “parochialism” loop. Our results also point to the scale-dependency of the strength of dissipative processes across levels. These novel results further develop the theory of organizational change and have practical implications for large multilevel organizations, especially regarding the sustainability of improvements.

KEYWORDS

Multilevel, organizational adaptation, cognitive representations, coupled learning, collaboration, complexity, scale-invariance, healthcare.

Organizational adaptation results from coupled processes nested across multiple levels (Klein and Kozlowski 2000; Klein et al. 1999). There has been a strong call for a quasi-natural organization science that accounts for the effects of coupled processes across different levels (Lewin and Volberda 1999; McKelvey 1997). Yet, most work on organizational adaption has been conducted implicitly at a single or dual level of analysis. To remedy this, detailed empirical cases with more than two levels of analysis are required to address the interactions between organizational context and the intra-organizational dynamics (Greenwood and Hinings 1996; Tracey et al. 2011) .

We explore how the classical problem of limited cognitive representation influences the way agents coordinate their search efforts across organizational boundaries and across multiple levels. We combine two established perspectives and apply them recursively across multiple levels: the cognitive and experiential search efforts of unitary agents in complex settings (Gavetti and Levinthal 2000; Levinthal 1997; Levinthal and Warglien 1999; Rivkin and Siggelkow 2007), and the phenomenology of coordinated search situated in hierarchical organizations (Gavetti 2005; Knudsen and Srikanth 2014; Siggelkow and Rivkin 2005). Specifically, we explain how complex cooperation in hierarchical systems can emerge and subsequently unravel. We show how cognitive limitations can hide opportunities for collaboration and mutual improvement. We demonstrate the multilevel dynamics induced when agents at various levels broaden their cognitive representations to include higher-order epistatic interactions – i.e. interdependencies between components which affect system performance – and synchronize their adaptive search across organizational boundaries. Our demonstration is based on a longitudinal case of a large change programme in a national healthcare system, where there was a powerful rhetoric on the need for “whole system change”.