A Perception-Based View of the Employee: A Study of Employees’ Reactions to Change DISSERTATION of the University of St. Gallen, Graduate School of Business Administration, Economics, Law and Social Sciences (HSG) to obtain the title of Doctor of Business Administration submitted by Chaiporn Vithessonthi from Thailand Approved on the application of Prof. Dr. Markus Schwaninger and Prof. Dr. Günter Müller-Stewens Dissertation no. 3040 D-Druck-Spescha, St. Gallen 2005 The University of St Gallen, Graduate School of Business Administration, Economics, Law and Social Sciences (HSG) hereby consents to the printing of the present dissertation, without hereby expressing any opinion on the views herein expressed. St Gallen, January 20, 2005 The President: Prof. Dr. Peter Gomez i Abstract Drawing on several theoretical perspectives (e.g., individual motivation, behavioral decision-making, social exchange theories, organizational justice theories, social cognition, institutional theories and neoclassical economics theories) from different disciplines (e.g., organizational psychology, strategic management, and economics), this dissertation developed a perception-based approach to examine a possibility that employees’ perceptions and/or attitudes will be associated with their decisions in an organizational setting. Specifically, this dissertation examined the effects of employees’ perceptions and/or attitudes on their reactions to organizational change. This dissertation addressed two major research questions relevant to organizational change management, organizational behavior and applied psychology. First, it addressed a question of what perceptions and/or attitudes influence employees’ resistance to change. Second, it addressed a question of what perceptions and/or attitudes influence employees’ support for change? This was done by drawing on several theoretical perspectives and examining relationships between perception and/or attitude variables and resistance to change and support for change. Based on data obtained from two samples of respondents from two different settings (i.e., a downsizing in Study 1 and a privatization in Study 2), this dissertation found significant relationships between perceptions and/or attitudes and resistance to change and/or support for change. The findings provide some empirical support for the perception- based view of the employee. Using multinomial ordered probit modeling, some perceptions and/or attitudes were found to be significantly predictive of employees’ reactions to change. The potential practical value of using perceptions and/or attitudes as predictors of employees’ reactions to change is discussed, as are implications and suggestions for future research. ii Acknowledgements This dissertation began with a conversation with Professor Dr. Markus Schwaninger, a professor of management at the University of St. Gallen, in the summer of 2003, when I was about to finalize my master’s degree in international management at the same university. During this conversation we discussed organizational change, and since I had thought that it might make an interesting piece of research, I asked him about the possibility to write the dissertation that lies before you today. As I expected, his response was clear, insightful, interesting, and encouraging. He enthusiastically agreed to supervise my dissertation and told me to proceed with my ideas. So it began. I am reminded as I finalize these notes of my good fortune in being able to do something I enjoy, and to complete my research. It is the rarest of privileges for me, with my limited ability, to do that in a relatively short span of time; this seems tremendously precious to me. But this work could not have been completed without support from many people. I owe a debt of gratitude to the 315 respondents who took time out of their busy schedules to complete and return the questionnaire. I am extremely grateful to Prof. Dr. Markus Schwaninger, who has been not only the referee for this dissertation but also my mentor throughout the past years, for offering his invaluable help, comments, perspectives, and suggestions, and for showing great interest in my research. Undoubtedly, he has pointed me in the direction of a fascinating landscape, not for the first time and, I hope, not for the last. I also want to express my sincere gratitude to Professor Dr. Günter Müller-Stewens, who has magnanimously taken time out of his busy schedule to become the co-referee, for offering his valuable insights and perspectives on the theoretical, methodological and empirical aspects of my dissertation. I am very grateful to Dr. Klaus Edel as well, not only for offering his valuable suggestions and solutions to statistical issues with enthusiasm, but also for allowing me to use his computer and statistical applications. I am also grateful to Silke Bucher, Bernd Beuthel, and Jasmina Hasanbegovic for their thoughtful and constructive feedback on earlier versions of this dissertation. And, of course, I thank Linda Roberts, my editor and proofreader, at Western Illinois University, who shouldered the editorial and proofreading work on my unpolished lines of English. Last but not least, I would like to thank my parents for their love, incredibly great confidence, and unbounded support throughout the course of this journey and beyond. Basel, January 2005 Chaiporn Vithessonthi iii Table of Contents Abstract i Acknowledgements ii List of Tables vi List of Diagrams and Figures viii List of Abbreviations x 1. Introduction 1 1.1. Research Issues 1 1.2. Research Questions 3 1.3. The Importance of the Research Questions 6 1.4. The Scope of the Dissertation 8 1.5. The Intended Contributions of this Dissertation 10 2. Core Concepts and Relevant Literature 12 2.1. Theories of Change 12 2.2. Perceptions 16 2.3. Attitude 19 2.4. Emotion 21 2.5. Individual Decision-Making 23 2.6. Reactions to Change 27 3. Theoretical Development and Research Model 31 3.1. Perception-Based View of the Employee 32 3.2. Research Model and Hypotheses 35 3.2.1. Perceived Organizational Support 38 3.2.2. Perceived Procedural Justice 40 3.2.3. Perceived Participation in Decision-making 42 3.2.4. Perceived Need for Change 45 3.2.5. Attitude towards Organizational Change 48 3.2.6. Fear of Known Consequences of a Change 50 3.2.7. Fear of Unknown Consequences of a Change 52 3.2.8. Perceived Change in Power 54 3.2.9. Perceived Change in Status 56 3.2.10. Perceived Change in Pride 58 3.2.11. Job Satisfaction 60 3.2.12. Job Security 62 iv 3.2.13. Job Motivation 64 3.2.14. Perceived Employability 66 3.2.15. Self-Confidence for Career-Relevant Learning 69 3.2.16. Affective Commitment 71 3.2.17. Trust in Management 73 3.2.18. Colleagues’ Reactions to Change 75 4. Research Methodology 77 4.1. Context, Sample and Procedure 78 4.1.1. Study 1 – Context, Sample and Procedure 78 4.1.2. Study 2 – Context, Sample and Procedure 79 4.2. Alternative Methods of Data Analysis 80 4.3. The Multinomial Ordered Probit Model 81 4.4. Measures of Theoretical Constructs 83 4.4.1. Dependent Variables 83 4.4.2. Independent Variables 84 4.4.3. Control Variables 87 4.5. Data Analysis Procedures 87 5. Results and Discussion 89 5.1. Study 1 – Results and Discussion 89 5.1.1. Analyses of Correlations among Dependent Variables 89 5.1.2. Analyses of Correlations among Independent Variables 90 5.1.3. Results for Hypotheses – The Multinomial Ordered Probit Models 94 5.1.4. Discussion of Study 1 106 5.2. Study 2 – Results and Discussion 108 5.2.1. Analyses of Correlations among Dependent Variables 109 5.2.2. Analyses of Correlations among Independent Variables 110 5.2.3. Results for Hypotheses – The Multinomial Ordered Probit Models 114 5.2.4. Discussion of Study 2 127 5.3. General Discussion 131 5.3.1. Key Contributions of the Dissertation 131 5.3.2. Limitations to this Dissertation 136 5.3.3. Implications and Directions for Future Research 138 5.3.4. Implications and Directions for Practice 139 6. Conclusions 140 References 142 Appendices 165 v Appendix A: Questionnaire Survey Items for Studies 1 and 2 165 Appendix B: Study 1 – Diagrams and Correlations 171 Appendix C: Study 2 – Diagrams and Correlations 195 Appendix D: Additional Regression Analyses for Study 2 219 Curriculum Vitae 236 vi List of Tables Table 1: Characteristics of Alternative Regression Models 81 Table 2: Study 1 – Correlations for All Final Variables 93 Table 3: Study 1 – Regression Results of Active Resistance to Change 95 Table 4: Study 1 – Regression Results of Passive Resistance to Change 96 Table 5: Study 1 – Regression Results of Active Support for Change 97 Table 6: Study 1 – Regression Results of Passive Support for Change 98 Table 7: Study 2 – Correlations for All Final Variables 113 Table 8: Study 2 – Regression Results of Active Resistance to Change 115 Table 9: Study 2 – Regression Results of Passive Resistance to Change 116 Table 10: Study 2 – Regression Results of Active Support for Change 117 Table 11: Study 2 – Regression Results of Passive Support for Change 118 Table 12: Summary of Results for Hypotheses in Study 1 and Study 2 132 Table 13: Study 1 – Correlations for All Dependent Variables 182 Table 14: Study 1 – Correlations for Active Resistance 183 Table 15: Study 1 – Correlations for Active Resistance (cont.) 184 Table 16: Study 1 – Correlations for Active Resistance (cont.) 185 Table 17: Study 1 – Correlations for Passive Resistance 186 Table 18: Study 1 – Correlations for Passive Resistance (cont.) 187 Table 19: Study 1 – Correlations for Passive Resistance (cont.) 188 Table 20: Study 1 – Correlations for Active Support 189 Table 21: Study 1 – Correlations for Active Support (cont.) 190 Table 22: Study 1 – Correlations for Active Support (cont.) 191 Table 23: Study 1 – Correlations for Passive Support 192 Table 24: Study 1 – Correlations for Passive Support (cont.) 193 Table 25: Study 1 – Correlations for Passive Support (cont.) 194 Table 26: Study 2 – Correlations for Dependent Variables 206 Table 27: Study 2 – Correlations for Active Resistance 207 Table 28: Study 2 – Correlations for Active Resistance (cont.) 208 Table 29: Study 2 – Correlations for Active Resistance (cont.) 209 Table 30: Study 2 – Correlations for Passive Resistance (cont.) 210 Table 31: Study 2 – Correlations for Passive Resistance (cont.) 211 Table 32: Study 2 – Correlations for Passive Resistance (cont.) 212 Table 33: Study 2 – Correlations for Active Support 213 vii Table 34: Study 2 – Correlations for Active Support (cont.) 214 Table 35: Study 2 – Correlations for Active Support (cont.) 215 Table 36: Study 2 – Correlations for Passive Support 216 Table 37: Study 2 – Correlations for Passive Support (cont.) 217 Table 38: Study 2 – Correlations for Passive Support (cont.) 218 Table 39: Summary of Regression Results of Indicators for Resistance to Change 223 Table 40: Summary of Regression Results of Indicators for Support for Change 224 Table 41: Regression Results of Active Resistance to Change 1 225 Table 42: Regression Results of Active Resistance to Change 2 225 Table 43: Regression Results of Active Resistance to Change 3 226 Table 44: Regression Results of Passive Resistance to Change 1 227 Table 45: Regression Results of Passive Resistance to Change 2 228 Table 46: Regression Results of Passive Resistance to Change 3 229 Table 47: Regression Results of Active Support for Change 1 230 Table 48: Regression Results of Active Support for Change 2 231 Table 49: Regression Results of Active Support for Change 3 232 Table 50: Regression Results of Passive Support for Change 1 233 Table 51: Regression Results of Passive Support for Change 2 234 Table 52: Regression Results of Passive Support for Change 3 235 viii List of Diagrams and Figures Figure 1: Dimensions for Categorization of Reactions to Change 29 Figure 2: A Categorization of Reactions to Change 30 Figure 3: Alternative Models Relating Perceptions and Reactions to Change 31 Figure 4: Conceptual Diagram of the ‘Direct Effects’ Model 37 Figure 5: Five Stages of Organizational Decline 46 Figure 6: Summary of Measures of Reactions to Change 84 Figure 7: Summary of the Sequence of Data Analysis 88 Figure 8: Study 1 - Indicators for Active Resistance to Change 171 Figure 9: Study 1 - Indicators for Passive Resistance to Change 171 Figure 10: Study 1 - Indicators for Active Support for Change 172 Figure 11: Study 1 - Indicators for Passive Support for Change 172 Figure 12: Study 1 - Indicators for Perceived Organizational Support 173 Figure 13: Study 1 - Indicators for Perceived Procedural Justice 173 Figure 14: Study 1 - Indicators for Perceived Participation in Decision-Making 174 Figure 15: Study 1 - Indicators for Perceived Need for Change 174 Figure 16: Study 1 - Indicators for Attitude towards Organizational Change 175 Figure 17: Study 1 - Indicators for Fear of Known Consequences of a Change 175 Figure 18: Study 1 - Indicators for Fear of Unknown Consequences of a Change 176 Figure 19: Study 1 - Indicators for Perceived Change in Power 176 Figure 20: Study 1 - Indicators for Perceived Change in Status 177 Figure 21: Study 1 - Indicators for Perceived Change in Pride 177 Figure 22: Study 1 - Indicators for Job Satisfaction 178 Figure 23: Study 1 - Indicators for Job Security 178 Figure 24: Study 1 - Indicators for Job Motivation 179 Figure 25: Study 1 - Indicators for Perceived Employability 179 Figure 26: Study 1 - Indicators for Self-Confidence for Learning 180 Figure 27: Study 1 - Indicators for Affective Commitment 180 Figure 28: Study 1 - Indicators for Trust in Management 181 Figure 29: Study 1 - Indicators for Perceptions of Colleagues’ Resistance to Change 181 Figure 30: Study 2 - Indicators for Active Resistance to Change 195 Figure 31: Study 2 - Indicators for Passive Resistance to Change 195 Figure 32: Study 2 - Active Support for Change Indicators 196 Figure 33: Study 2 - Indicators for Passive Support for Change 196 [...]... it My answer is that they cannot, due to the fact that from a legal perspective, an organization is a non-human entity; therefore, we can argue that it is not the organization that changes itself but rather the people in the organization that change themselves and thereby change the organization But this leads to the question of whether an organization’s capability to adapt is conditioned by its employees’. .. that 6 employees’ resistance to or support for change which are arguably predictive of their performance at the time of the organizational change, can be seen as an indicator predicting the probability of success of the change (Kotter, 1995; Kotter and Cohen, 2002) Thus, the optimization of resistance to change and support for change may enhance the probability of success of organizational change, thereby... resistance to change, so that they achieve the goals of their organizational change efforts? It is not surprising that, over the years, resistance to change has attracted increasing attention from researchers, practitioners, and the general public A great deal of research has focused on understanding the sources and determinants of resistance to change The media and the general public are generally... information with regard to relevant environments, and legal and other barriers to entry or exit from the market may also restrict the nature and degree of organizational change or adaptation in organizations (Hannan and Freeman, 1984) Research on organizational change has led to various views and perspectives However, there are at least three most prominent views on organizational change The first view, ... predictor of employees’ reactions to change Further, examination at the decision level of analysis—that is to say, resistance to change and support for change diminishes at least two concerns First by relating perceptions and attitudes rather than decision-making process to reactions to change, casual ambiguity is not an issue since (1) the relationships between perceptions and reactions to change are... change are related to employees’ resistance to and/or support for change rates (i.e., a percentage of the total number of employees who support or resist a change to the total number of employees) at the organizational level, it would be a fallacy to then assume that such practices are similarly and/or directly related to employees’ resistance to and/or support for change decisions at the individual... disposition to the development of attitudes (Salancik and Pfeffer, 1978) A more recent theory, developed in the late 1970s, can be seen as a breakaway from the traditional view on how attitudes are formed is based on the assumption that attitudes are situational in nature According to this approach, attitudes are viewed as reactions to social situations that change when social context changes (Salancik and... this same resistance does not create a negative implication for the firm at another moment and in another similar circumstance, one may not legitimately and precisely conclude that resistance to change is always undesirable and negative On the other hand, it is probable that resistance to change may at times have a positive effect on the outcome of organizational change, and that it may be strategically... - Indicators for Perceptions of Colleagues’ Resistance to Change .205 ix List of Abbreviations AR AR1 AR2 AR3 AS AS1 AS2 AS3 e.g etc i.e IIA IPO OLS PBV POS PR PR1 PR2 PR3 PS PS1 PS2 PS3 S.E Active resistance to change Indicator 1 for active resistance to change Indicator 2 for active resistance to change Indicator 3 for active resistance to change Active support for change Indicator 1 for active support... resistance to change and support for change, in three ways 10 First, this dissertation examines a variety of actions that employees may choose in response to a change in the organization Drawing upon prior research, it identifies two primary types of employees’ reactions to change: resistance to change and support for change These are further divided into: active and passive resistance, and active and passive . of Abbreviations AR Active resistance to change AR1 Indicator 1 for active resistance to change AR2 Indicator 2 for active resistance to change AR3. empirical research in organizational change and employees’ reactions to 3 Organizational change can be considered as a class of organization theory.