Organisational restructuring an exploratory study of Indian organizations

Abstract

Globally organizations look at restructuring to increase competitiveness and enhance performance under uncertain business environment. The western economics witnessed a spurt of restructuring in the 1980s as a response to globalization; deregulation of industries like airlines, utilities and banks; and technological/product innovation by companies. Indian organizations started restructuring in response to the new economic policies introduced in the early 1990s. Surveys in mid and late 1990s found that many Indian organized has restructured or were planning to do so. The thesis is an empirical attempt to document and conceptualize the experience of restructuring of Indian organizations and provide choices to managers for restructuring. The study tried to identify the patterns of change in organizational characteristics during restructuring and patterns of combination of restructuring processes. A grounded triangulation design was adopted with case studies followed by a questionnaire survey. Two case studies were conducted with in depth interviews of members of restructuring team and managers across function, besides studying internal reports and news reports of organization involved. The questionnaire survey was conducted in fifty organizations by collecting data using two questionnaires. One designed specifically for top management and the other for senior management. Cluster analysis of the changes in organizational characteristics (OC) variables identified four restructuring configurations that were named as restructuring configuration 1 (RC1) (N=13) and restructuring configuration 2 (RC2) (N=24), Restructuring Configuration 3 (RC3) (N=13) and Restructuring Configuration 4 (RC4) (N=3). RC1, RC2, RC3 showed internal consistency in terms of the range of change in OC variables. RC4 was found to be unique with a very high range of change in OC variables. Improved use of IT, increased product differentiation, cost leadership and focus strategies; and aligning structural mechanism for differentiation and integration were found to be critical during restructuring. Change in HRM practices was also identified as critical in differentiating restructuring that leads to improvement in organizational effectiveness. Cluster analysis of the restructuring processes variables identified three modes of restructuring (Mode-1, Mode-2 and Mode-3). The use of restructuring processes was found to be low in Mode-1, moderate in Mode-2 and comparatively high in Mode-3. There was low commonality in processes across the three modes except for low importance of process of co-opting stakeholders. These three modes indicate choices available to the management while restructuring. From the findings of the study, it can be suggested that managers have choices in terms of the processes used during restructuring; the extent of change OC variables and use of restructuring processes depend on the environmental uncertainty and past organizational effectiveness; and effective restructuring in harmonious alignment of changes in organizational characteristics. The study supports the strategic choice theory and extends the contingency/configuration theory of restructuring configurations.