Freedom Related Practices and Corporate Effectiveness: An Exploratory Study

Abstract

This study explores the relationship between the practices embedded in the notion of freedom within the corporate context and corporate effectiveness. It hypothesizes that those corporate organizations that grant greater freedom to their managers are more effective than those corporate organizations that grant lesser freedom. Further, such organizations are not only ethically, politically and socially desirable, but also economically effective. Insomuch as the theorists of democracy conceived freedom as central to the revitalization of democracy, this research seeks to promote the democratization of corporate life by extending the logic of freedom into the corporate organizations. For the purpose of this study, freedom is defined as that quality and that condition in which self-mastery by an individual was possible within the parameters of similar opportunities and conditions for others, Within the corporate context, freedom is conceptualized as being built upon a constellation of freedom related practices that are expressly granted and/or explicitly implicitly permitted. Based upon the unraveling of those management practices which are freedom related in nature, case studies, and the theory of freedom in political and social philosophy, a list of civil, justice related and participation related freedom related practices have been generated. The amount of freedom in an organization has been conceptualized as the extent to which this freedom related practices are present in that organization. Given the above, this research explores the following questions: 1. Under what conditions does the amount of freedom vary in organizations? 2. What is the relationship between freedom and corporate effectiveness? 3. How does this relationship vary across different dimensions of freedom and corporate effectiveness? The research has conceptualized three antecedents of freedom related practices: management style, collective bargaining orientation of the managers, and organizational slack. However, this relationship between the antecedent and the freedom related practices has been hypothesized to be moderated by (1) hierarchical level; (2) the quality of managerial, social relations; and (3) function performed by the department. The research has adopted a stakeholder perspective for the definition of corporate, effectiveness and the identification of its indicators. It has hypothesized that freedom in corporate organizations tends to be positively related to perceived corporate effectiveness. In order to facilitate greater familiarity with the phenomena and a more precise identification of freedom related practices in different corporate context, three focussed case studies were performed through 67 partly structured and partly open-ended interviews. The understanding of the phenomena was furthered by insights obtained from interviews of 7 army officers who represented a context where freedom related practices are worked out in the considerable detail in a system known for its centralized command and control structure. Based on the insights gained from these case studies and the reading of prior research, the instrument was developed to measure the extent of freedom in the organization and the constructs that were hypothesized to be its antecedents, moderators, and the consequences. The instrument was then put through two stages of refinement—the test for face validity involving the theorists and practitioners of management, and a pilot test on 49 managerial employees belong to all the levels and functions of a large organization in the private sector. The questionnaire-based survey elicited fully completed and valid responses from 50 organizations and involved in all 962 managerial employees across hierarchical job levels, functions, and work units. Tests were conducted to check for the psychometric properties of the scales. Subsequently, the data were analyzed, and the hypotheses were tested by applying appropriate statistical techniques such as correlation analysis, tests of equality of means, IVANOVA, and standard, stepwise and mediated regression analysis. The major findings of the study are as follows:_ l. The organic, professional, altruistic, participative, bureaucratic and entrepreneurial styles of top management and the collective bargaining orientation of the managers are positively and significantly associated with the extent of freedom related practices in the corporate organizations. 2. The participative style of the top management and the collective bargaining orientation of the managers are positively and significantly associated with the extent to which the appeal mechanism relating to the violation of freedom is institutionalized in the corporate organizations 3. Amongst the factors hypothesized as antecedents of freedom related practices, the organic, professional and altruistic styles of top management and the collective bargaining orientation of the managers are the significant predictors of the extent of the freedom related practices in corporate organizations. The collective bargaining orientation of the managers and organizational slack are the significant predictors of the extent to which these freedom related practices are secured from violations. 4. Hierarchical level moderates the relationships between the professional, altruistic and bureaucratic management styles and the freedom related practices. 5. The function performed by the department moderates the relationships between the professional and bureaucratic styles of top management with the extent of freedom related practices and the relationships of the participative style of management with the extent of institutionalization of the appeal mechanism relating to violation of freedom. 6. The quality of social relationship moderates the relationships of the entrepreneurial, professional and bureaucratic management styles with the extent of justice related and . participation related freedom in the organizations. 7. The aggregate freedom is a significant predictor of the composite corporate effectiveness and in particular of the innovative excellence of the corporate organizations. However, freedom related practices have no significant effect on the dimensions of business excellence and ethical excellence. Besides, the extent to which the freedom related practices are secured from violations has _no significant positive effect on corporate effectiveness. 8. Civil, justice related and participation related freedom and aggregated freedom mediates the relationships between the top management styles and collective bargaining orientation amongst the managers and the dimensions of corporate effectiveness. Aggregated freedom, participation related and justice related freedom mediates the relationships of the entrepreneurial, professional, participative and bureaucratic top management styles and collective bargaining orientation amongst the managers with innovative excellence. Civil freedom, however, mediates the relationships of the organic and altruistic styles of management with ethical excellence. The study has robust implications for the theory and practice of management. It enhances the understanding of the effect of freedom related practices on different dimensions of corporate effectiveness under various styles of management. It can help the top management develop more effective practices for bringing about corporate change and corporate turnaround. It can contribute to organization design for facilitating organizational citizenship behavior. Finally, it can facilitate the top management in developing effective practices for enhancing organizational learning, knowledge, and innovativeness.