a semiotic analysis of corporate language- organizational boundaries and joint venturing

A Semiotic Analysis of Corporate Language: Organizational Boundaries and Joint VenturingAuthor(s): C. Marlene FiolSource: Administrative Science Quarterly, Vol. 34, No. 2 (Jun., 1989), pp. 277-303Published by: Sage Publications, Inc. on behalf of the Johnson Graduate School of Management, CornellUniversityStable URL: http://www.jstor.org/stable/2989899 .Accessed: 18/06/2013 16:19

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A Semiotic Analysis of Corporate Language: Organizational Boundaries and Joint Venturing

C. Marlene Fiol New York University

? 1989 by Cornell University. 0001 -8392/89/3402-0277/$1 .00.

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Many people deserve recognition for helping me present the narrative semiotic method used in this study. The credit for achieving the present level of clarity is largely theirs: Stephen Barley, Janice Beyer, Janet Dukerich, Roger Dunbar, Jane Dutton, William Guth, James Hoover, Anne Huff, Marjorie Lyles, Frances Mil- liken, Linda Pike, and the editor and anon- ymous reviewers of Administrative Science Quarterly. This research was partially supported by a grant from the Ten- neco Fund.

In an attempt to explain differences in the propensity of organizations to enter into joint ventures, this study uses a semiotic method of textual analysis to examine CEOs' letters to shareholders as they reflect the existence and strength of boundaries separating internal organizational subunits and boundaries separating the company from external environments. These boundaries are linked to the propensity of ten companies in the chemical industry to engage in joint-venture activity. Weak internal or interdivisional boundaries and strong boundaries separating the company from the external environment were prevalent in firms having no joint ventures; strong interdivisional boundaries and weak external boundaries were prevalent in firms having several joint ventures."

ORGANIZATIONAL BOUNDARIES AND JOINT VENTURES Organizational boundaries are imagined lines drawn to separate the organization from its surrounding environment and to specify how internal roles and functions are related but also separated from one another (Wilden, 1980). Corporate boundaries thus define and delimit corporate relationships, delineating areas of autonomy and self-control as well as areas of interdependence. Theories of group dynamics (Miller and Rice, 1967; Miller, 1979) suggest that perceptions of boundaries and autonomy can be related circularly: as autonomy is threatened, boundaries that separate a unit from its surroundings are strengthened, which leads to increased autonomy and perceptions of greater self-control. Organizational boundary definitions have implications for issues of control, particularly with respect to joint-venture strategies. Joint-venture relationships require shared control of particular activities by two or more companies. Berg, Duncan, and Friedman (1982) argued that many firms do not enter joint ventures because their CEOs fear loss of control. Harrigan (1985) suggested that organizations may fear that sharing control is an admission of weakness. Consistent with earlier research on joint ventures, this study argues that CEOs who prefer autonomy (control) will be less likely to enter into joint ventures. One would expect them to view their firms as separate from the environment and to draw strong external boundaries around their firm. Firms that enter partnerships with others, however, would be expected to tolerate a more open exchange between their organization and the environment and to encourage weak external boundaries. Joint ventures also require tolerance for organizational separateness of internal units, so that the new-venture "child" can be distinguished from the "parents" (Harrigan, 1985). This implies relatively strong internal boundaries that differentiate the joint-venture units from other units within each of the partners, leading to greater internal separateness. Firms without joint ventures would be expected to encourage relatively cohesive internal units, with weak internal boundaries. In contrast, joint-venturing firms would tolerate relatively au- tonomous organizational subunits, drawing strong internal boundaries. Finally, if tendencies to draw or remove strong boundaries between one's own and other organizations are manifesta- 277/Administrative Science Quarterly, 34 (1989): 277-303


tions of a more general disposition, one would expect them to be reflected in the way an organization communicates facts about itself in relation to its environment. Joint-venturing firms would use language conveying external inclusiveness and shared fate and relatively loose control of internal subunits. Firms discouraging joint ventures would speak a language of external separation and disassociation and internal inclusiveness. This study's central proposition is as follows: Proposition: Joint-venturing firms are likely to exhibit weak boundaries separating the company from external environments and strong boundaries among organizational subunits. Conversely, non- joint-venturing firms are likely to exhibit strong boundaries separating the company from external environments and weak boundaries among organizational subunits. While letters to shareholders directly communicate facts about a firm, they also communicate implicit beliefs about the organization and its relationships with the surrounding world. A semiotic method of textual analysis is used in this paper to analyze the narrative structures of letters to shareholders and identify consistent patterns in these implicit beliefs. The method uncovers systematic differences in the way these documents portray the boundaries that define interrelation- ships among units within the company and between the company and external environments. These differences are then shown to distinguish between firms involved in domestic joint ventures and those that are not. THE SEMIOTICS OF ORGANIZATIONAL BOUNDARIES A firm's posture toward joint-venture activities can be seen as part of a more general pattern of beliefs regarding the appropriate way to define internal and external relationships. Pat- terns of beliefs are grounded in underlying meanings attached to self and others (Greimas, 1987). Identifying such patterns requires a methodology that can detect meanings assigned to events and situations and specify the rules that govern meaning in a given context. Semiotics is one such methodology. Semiotics is a formal mode of analysis used to identify the rules that govern how signs convey meanings in a particular social system (Eco, 1979). With roots in the structural linguistic principles of Saussure (1916), it uses linguistic sign systems as a model to identify and make explicit the rules governing other systems of signification, e.g., symbolic behaviors or physical trappings. The signs that combine to convey meaning in natural language systems are words. Grammatical rules govern their meaningful combinations. Se- miotics assumes that a similar set of rules or social conventions governs the choices and constraints that determine expressions of meaning in other social systems. For example, manner of dress is a sign system conveying social meanings. A single sign, such as a woman's hat, may variously denote modesty, religiosity, or style, depending on the conventions of a particular context. Different signs within the same system (other articles of clothing) may denote the same meaning, again based on social conventions. Semiotics assumes that diverse signs or expressions can convey shared meaning because they are grounded in a common set of underlying values. It further assumes that a 278/ASQ, June 1989


Organizational Boundaries

value can be defined only in relation to its logical opposites. A frequently used illustration (Greimas, 1966) is that "love" has no meaning without the opposed concepts of "hate," "non- love," and "non-hate." Thus the rules that regulate meaning are based on underlying oppositions that define the values embedded in the system. Different forms of semiotics have emerged for the study of different kinds of sign systems. Though all forms of the method assume that the meaning of individual signs is grounded in underlying value oppositions, they differ in the manifestation of signs that is the focus of study. Saussurean semiotics (Saussure, 1916; Eco, 1979) examines the links between natural language signs and the meanings they signify. A derivative of Saussure's model has been applied to the analysis of behavioral signs and their meanings. By semiotically analyzing the rules that regulate the meaning of work in a funeral home business, for example, Barley (1983) demon- strated that a recurrent underlying value-the denial of death -permeated the firm's culture and determined how all work decisions and actions took place. Narrative, or Greimassian semiotics (Greimas, 1966), another form of the method, treats a narrative or group of narratives as the sign system. Its aim is to uncover how narrative components combine to convey meanings within texts. Narrative semiotic analyses of myths, folktales, and other stories relating to social life have been used extensively by anthropolo- gists and sociologists in studies of cultures and interpretive systems (Propp, 1958; Levi-Strauss, 1963, 1976; Manning, 1987). Levi-Strauss, for example, found that shared meanings of multiple and variable myths can be uncovered by identifying stable patterns in the way the stories' components are structured. This study uses narrative semiotic techniques to uncover patterns of internal and external boundary definitions in letters to shareholders. The letters are a particularly useful data set for semiotically examining beliefs about boundaries, because (1) they share the common purpose of conveying a positive corporate image to an important constituency, (2) the CEO approves the image that is conveyed, and (3) their production is ruled by a fairly rigid set of conventions governing what must be addressed and in what form. These corporate messages are like folktales in that they tell many stories that can be reordered to extract a set of recurring structures that reflect underlying values.

Narrative Semiotic Method Classic narrative theory, as set forth by Russian Formalists (Propp, 1958), defines a narrative as a set of interlocking signs whose meanings are determined by underlying rules that regulate how different units of texts may be combined. A narrative consists of the following elements: a narrative subject in search of an object, a destinator (an extratextual force, the source of the subject's ideology), and a set of forces that either help or hinder the subject in acquiring the desired object. These elements are not actors in the traditional sense. For example, forces of help may consist of the subject's frame of mind, the activities of the subject, or the actions of others in the story. 279/ASQ, June 1989


I The italicized terms are imperfect transla- tions of Greimas's Pouvoir and Savoir (Greimas, 1966).

The stories told in letters to shareholders narrate the suc- cesses and failures of individuals (e.g., the CEOs), organizational subunits, and the entire company; the narrative subject may be any one of these. The ultimate object of the narrative is in all cases at the firm level and involves the projection of a positive company image to shareholders. The destinator is the corporate and societal environment of the late 1970s, the context within which the subjects of these narratives are operating. The forces of help and hindrance are variably depicted as any of a larger set of potential internal and external narrative forces. The narrative progresses toward a resolution through the relations developed between the subject and other narrative forces. These relations are distinguished on the basis of what is called in semiotics their tonality and modality, narrative components qualifying and characterizing the relations among narrative forces. The tonality of a narrative represents the judgment of the subject on a phenomenon and can be positive or negative. The modality of a narrative distinguishes between the doing and being of the subject and may be pragmatic or cognitive. A pragmatic mode establishes the subject's being-able-to-do, or ability to act. Pragmatic relations between subject and other narrative forces take place within action sequences of the story. A cognitive mode establishes the subject's knowing-how-to-do, or state of mind. Cognitive relations take place outside of action sequences.' Figure 1 depicts the forces and relational elements assumed to exist in a narrative. The modalities are being-able-to-do and knowing-how-to-do. The narrative forces are in boxes. The relationships between them are depicted in the connecting lines. Cognitive relations develop through the subject's in- terior discourse and represent one source of help and hindrance in achieving the object. Pragmatic relations develop through the subject's action and represent the other source of help and hindrance. Positive or negative tone denotes whether the narrative force with which the subject is inter- acting is a help or a hindrance. Ultimately, to uncover the structural patterns of a narrative, one must identify and classify four components of narrative structure (Greimas, 1966). The first two components define what relations exist between the subject and other narrative forces, and the second two define how those relations function in the narrative plot: (1) the degree of association among the forces that can serve as narrative subjects, (2) the spatial association between all internal and external forces involved in the subject's quest, (3) the mode of the subject and spatial associations as either pragmatic or cognitive, and (4) the tone of the subject and spatial associations as either positive or negative. The procedure for identifying these components in the letters to shareholders was a three-phase narrative analysis that proceeded as follows: The aim of Phase 1 was to identify the apparent story line and goals of the letters, the surface structure of the text. The unit of analysis was the letter in the exact sequence and form it was published. Phase 2 involved three steps to derive the narrative structure of the text:

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Organizational Boundaries Figure 1. Narrative forces and relations.

Destinator

Cognitive Help Hindrance Relations

Knowing-How-to-Do

Subject

Positive Negative Relations Relations

Pragmatic Help Hindrance Relations Being-Able-to-Do

Objct

Step 1. Topic blocks (called programs) were identified in the letters. A program is a block of narrative that is classified as having a single narrative goal, e.g., to explain capital expenditures or to explain losses. Programs represented the primary unit of analysis of this phase of the study. Step 2. Each program was characterized on the basis of the four narrative-structure components discussed above. Each of these components was classified within an oppositional framework (e.g., the narrative subject may have been presented as a single actor (CEO) or an aggregated set of actors (the entire industry); the tone may have been negative or positive). Step 3. The interactions of the four components were traced to show how they combined to achieve the program's goal (e.g., negative tone combined with a single-actor subject in describing the company's losses). The combined set of interactions in each program is called the program's oppositional structure. Phase 3 involved further combining the oppositions to derive an oppositional map for an entire letter, or the letter's deep structure. The deep structure consists of a dominant underlying value in the text and the value's logical opposites, e.g., the value of strong external boundaries and its opposites. Narrative rules govern the links between the intermediary narrative component structures found in Phase 2 and the value schema of Phase 3. The consistency with which the rules are applied reflects the extent to which underlying meanings are patterned in these letters. The analysis moves from a focus on the texts as a whole, to their smallest narrative units (the narrative forces), to successive combinations of these forces until the focus is again on the entire texts. This movement represents the core of the process of determining the meaning of a text: deconstruction of meanings as they appear in isolation and subsequent re- construction of those meanings as they relate to others in the narrative system. 281/ASQ, June 1989


An overview of the three analytic phases is provided in Table 1, which outlines the major assumptions, the unit and the aim of analysis, and the procedure for deriving the three levels of textual structure. A fuller description of the method is provided below as it applies to this study's sample of texts.

Table 1

Overview of the Method

Phase and level of Major Unit of Aim of structure assumption analysis analysis Procedures

1. Surface Intended goal Entire letter as Identify intended Read, compare, congruity within series of words. goals of letter. and code and among intended letters. narrative goals of

texts in sample. 2. Narrative Multiple subgoals Step 1: Programs. Identify programs, Break each letter

within a single Step 2: each with a into programs letter. Oppositional subgoal. with narrative

Narrative forces narrative Identify subgoals. combine components oppositional Trace positions of differentially to (subjects, narrative oppositional achieve environments, components for narrative subgoals. mode, tone). each program. components in

Step 3: Combined Identify combined each program. configuration of narrative Cross-classify multiple narrative structure for positions of components. each program. narrative

components to arrive at combined structure.

3. Deep Structural Underlying set of Identify combined Derive combined oppositions oppositions for oppositional structure underlying entire entire letter. structure for through letter traceable entire letter. combinations in through Step 3. configuration of multiple narrative structures.

Before applying a narrative analysis, the researcher must identify an appropriate deep-structure schema using two criteria: (1) The schema must be meaningful in light of the study's purpose, and (2) it must encompass the recurring oppositional structures delineated in Phase 2 of the process. This preliminary deep-structure search is a form of pretest, using texts similar to but not including the actual study sample. The researcher carries out an iterative search, involving all three analytic phases, until an appropriate, suffi- ciently limited, yet encompassing set of oppositions is found. Once a schema has been identified, Phases 1 and 2 are applied to each text in the chosen sample of narratives to determine the position and movements of the narrative structures along the oppositional axes of the deep-structure schema that is assumed for that group of texts. In this study, I used an iterative search process, applying Phases 1 through 3 to a number of texts that were similar to

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the sample of texts eventually used in that they were letters to shareholders of other chemical companies' annual reports. The depiction of internal and external organizational boundaries in those letters signified oppositions that met the two criteria for appropriateness: They were meaningful for the study's purpose of examining boundaries (first criterion), and they could be organized into an oppositional deep-structure schema that encompassed the recurring narrative structures in the texts (second criterion). The semiotic square, depicting this oppositional deep structure, is presented in Figure 2.

Figure 2. Semiotic square of oppositional deep-structure schema. (S) (Si) Weak Weak External Internal Boundaries 3 Boundaries

1 5 2

Strong Strong Internal 4 External Boundaries Boundaries (-Si) (-S)

'Numbers on the axes refer to internal and external boundary combinations: 1 = Weak external/Strong internal boundaries 2 = Weak internal/Strong external boundaries 3 = Weak external/Weak internal boundaries 4 = Strong external/Strong internal boundaries 5 = Strong internal/Weak internal and/or Weak external/Strong ex-

ternal boundaries

The dominant positive value of the system being analyzed is positioned in the upper-left corner of the square. Logical relations of implication, contrariety, and contradiction govern the positions of the other three values. In this case, relations between internal and external are relations of contrariety; relations between weak and strong are relations of contradiction. The negative of a value (its contradiction) is not identical to its contrary. For example, the square in Figure 2 assumes that the text emphasizes weak external boundaries (S) as the primary positive value. Its negation or denial (- S) implies but is not identical to its contrary (Si); similarly, the negation of the negative value (- Si) implies but is not equivalent to the positive value (S). The axes of a semiotic square are characterized by the two values they encompass. Each narrative sequence (program) of the letters to shareholders embraces one of these value combinations and may be located on an axis of the square. Thus, a program's position in the square describes the underlying values in that piece of the text. Moreover, it indicates a set of rules (discussed below) that dictate how the four narrative components may combine in each program to develop the story with that particular set of underlying values. 283/ASQ, June 1989


If external weak boundaries represent the dominant positive value of a text (assumed in the square in Figure 2), programs reflecting Position 1 tell their story through depicting externally weak and the logically implied internally strong boundaries. Position 2 reflects contradictions of both values of Position 1. Position 3 embraces what semiotics calls a complex set of contrary values, since they contradict the internal boundary definition implied by the dominant value in the text. Position 4 embraces what semiotics calls neutral contraries, since they contradict Position 1 only by the inclusion of the external boundary definition implied in the nondominant Posi- tion 2. Position 5 is an inherently contradictory state, indicating structures that destroy themselves. Though a narrative may (and often does) contain contradictory structures, the conflict in the narrative is untenable if the narrative consistently remains in this position (e.g., the narrative conflict for the hero of folktales cannot be established if the entire story simultaneously embraces values of love and non-love or hate and non-hate). The semiotic square may also be used dynamically, in that the logical, atemporal relations of value can generate a temporal sequence (Haidu, 1982). An entire narrative may remain consistent with a single set of values, indicating no change; it may begin with one set and end with another, indicating change; or it may be circular, where transformations lead the final state back to the beginning, indicating the loss of a potential for change (Haidu, 1982). With the internal/external boundary schema as a given deep- structure model for this study's texts, the subsequent analysis involved locating each narrative program on one of the axes of the square. The configuration of these positions in the square illustrates the dynamics of an underlying pattern of boundary definitions in the texts. It then becomes possible to differentiate texts whose structures reflect very different values of internal and external boundaries even while describing the pursuit of similar goals.

SEMIOTIC ANALYSIS OF LETTERS TO SHAREHOLDERS A narrative semiotic analysis was performed on CEOs' letters to shareholders in ten chemical companies' annual reports of 1977-1979. Five companies had two or more domestic joint ventures and five had none. Ten firms were chosen that have similar product lines, markets, and sizes. All were heavily involved in agricultural and industrial markets and were beginning to shift toward high technology and specialty chemical markets. Mann-Whitney U Tests indicate that the joint- venturing and non-joint-venturing firms were not significantly different (at = .10) in terms of level of sales, relative capital expenditures, or relative net income. However, the ten firms were significantly different in terms of relative R&D, joint- venturing firms spending relatively less on internal R&D. This supports economists' (Berg, Duncan, and Friedman, 1982) claims that domestic joint ventures in the chemical industry serve as substitutes for internal R&D. Summary economic profiles of the ten companies are presented in Table 2. Because semiotic coding relies on the researcher's assess- ments in applying the structural framework and coding the

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texts, tests of coding reliability are necessary. For this study, an independent researcher, trained in semiotics by the author but unaware of the study's propositions or the author's results, replicated the entire analysis. Of the 150 programs (3 years, 5 programs in each year's letter, for 10 companies), the semiotic positioning of only three differed from the author's own analysis. In the final compilation of the deep-structure results, no results differed from those presented here.

Table 2

Economic Profile of Companies in Sample*

Sales Capital Company (Millions) R&D/Sales Expenditures/Sales Profit/Sales Two or more domestic

joint ventures A 1489 .015 .092 .039 B 1279 .005 .049 .07 C 4191 .008 .082 .04 D 1781 .02 .089 .053 E 1235 .004 .13 .085

Non-joint- venturing

V 1211 .025 .148 .089 W 613 .008 .034 .024 X 2412 .03 .099 .042 Y 816 .025 .054 .043 z 1158 .037 .095 .055

* Figures are all averages of ten years (1972-1981).

Before beginning Phase 1 of the analysis, interviews were conducted with a senior-level executive in charge of new ventures (with tenure of at least ten years) in each of the firms. The interviews served three purposes: (1) They con- firmed the accuracy of published reports about the joint- venture activity or inactivity of the firms; (2) they verified that no company in the sample had experienced a change in CEO or a major restructuring during a ten-year period preceding 1977, the first year of the study; and (3) they established the environmental context within which the letters were written. There was marked consensus among all informants on the perceived need in the late 1970s to show shareholders that the companies were shifting their focus from the mature industrial chemicals business to high-growth specialty chemicals.

Surface Structure

The surface structure of the letters consists of the words and sentences as these have been written and arranged by the authors. The letters reflect the conscious aim of the authors, as stated in the interviews, to present a positive image of the company to its stockholders. The surface structure of the two letters to be analyzed in detail, Company E (joint-venturing) and Company Z (non-joint-venturing) is presented in its entirety in the Appendix, with the program codings, or topic blocks, that were identified for the semiotic analysis.

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Narrative Structure The researcher carrying out a narrative structural analysis pro- ceeds in three steps (Greimas, 1966): (1) identify a set of topic blocks or programs within the letters; (2) identify the narrative components of each topic block; and (3) delineate the interactions of the narrative components that will point to the underlying structural configurations that are the narrative structures. This procedure was followed in this study. Step 1. The letters were first divided into programs, each one directed toward a single implied narrative subgoal that the subject wishes to attain. The goals of the programs in the texts of these companies over the three years follow a similar pattern. The letters usually begin with a program that serves as an intertextual bridge between the previous year's letter and the current one. Usually this entails outlining the company's strengths and special growth areas (designated as Program 1). Its function in the story is to outline the subject's current knowledge and competence to achieve the final object, a positive company image. Program I is most often followed by a program giving reasons for any weaknesses or poor performance (Program 11). Its function is to establish the conflict of the story by outlining the knowledge or competence that may still be lacking. The third program discusses expenditures on capital assets and R&D (Program 111), and the fourth describes changes in management (Program IV). Their function in the story is to show the development of assets that will resolve the conflicts introduced in Program I1. Finally, the future outlook of Program V functions as the story's de- nouement. The programs of the 1977 letters of illustrative companies E and Z are blocked out in the Appendix. Step 2. In this step, the narrative components were identified that distinguish the programs of any narrative text (subject relations, subject/environment relations, mode, and tone) in a semiotic analysis, and their oppositional positions were located within the narrative. The results of the narrative-structure phase of the analysis are presented in Table 3. Of the ten companies of the sample, companies A-E are joint-venture active, companies V-Z are not joint-venture active. Companies Y and Z are listed twice because the structure of their letters changed between 1977 and 1979. Each company's letters are described in two rows. The "S" row describes relations among possible subjects; the "E" row describes subject/environment relations. The table lists the five programs of each letter and describes the narrative components identified for each program. The following illustration of the coding procedure applies to companies E and Z-77, which are shown in darker type in Table 3. Subject relations. The subjects of these narratives may be depicted in varying degrees of aggregation, ranging from the CEO or any other individual member of the company to the company as a whole. The extent of unity portrayed among various possible subjects indicates the extent of inclusion of multiple levels of aggregated forces into a single narrative subject. Subject relations in these stories were coded on the basis of the use of nouns and pronouns to depict the narrative sub-

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Table 3

Oppositional Narrative Forces

Program Company I 11 Ill IV V Joint-venturing A S D-pNT AD-cNT AD-pNT AD-pP D-pNT

E AD-pP A-cNT A-pP A-pP B S D-pNT D-pNT D-pNT AD-pNT

E A-pP A-pP A-pP AD-pNT C S D-pNT D-pNT D-pNT D-pP D-pNT

E AD-pNT AD-pNT AD-pNT D S D-pNT D-pcNT AD-pNT D-pNT D-pNT

E AD-pP A-pcP AD-pP E S D-pcNT AD-pcP D-pcNT D-cNT

E A-pcP A-pcN Non-joint-venturing Y-79 S D-cNT D-cNT D-pcN D-cNT D-cNT

E A-cP A-pcNT A-cNT Z-79 S D-pNT D-pNT D-pNT D-pNT

E AD-pP AD-pP AD-pP D-pP V S A-pP D-pcNT AD-pNT A-pP AD-pcNT

E D-pNT D-pcN D-pNT D-pcNT W S AD-pP D-cNT A-pcP AD-pNT A-pNT

E D-cNT D-pcNT D-pN X S AD-pP AD-cN AD-pP AD-pP A-pNT

E AD-pNT D-cNT D-pNT Y-77 S A-cP A-cNT A-cNT

E D-cN Z-77 S A-pP A-cP A-pcP AD-pNT AD-cNT

E D-pN D-cN D-pcN

Note: S = Subject relations; E = Subject/environment relations; A = Associated; D = Disassociated; AD = Asso- ciated/disassociated; p = pragmatic mode; c = cognitive mode; pc = pragmatic/cognitive mode; N = Nega- tive tone; P = Positive tone; NT = Neutral tone.

ject. The code assigned to each program is listed in the "S" (subject) row of each company in Table 3. Subjects were coded as either D = disassociated, AD = associated/disassociated, or A = associated. These terms are labels that identify the first of the four narrative components in each program, the degree of unity portrayed among all possible subjects of the letters. The following illustrates how the content from the text is used to render the degree of subject association for the letters of companies E and Z-77. Company E: Program I is about the state of the entire chemical industry. Areas of strength and growth are identified for the industry as a whole, which will be "cutting, fitting and sizing to the realities of the marketplace." Toward the end of the program, the CEO addresses Company E's position more specifically. Though there are some indications of a combined set of company subjects, (". . . our . .. businesses made important contributions . . ."), they are immediately followed by disassociative references to the same parties (.1. . these businesses picked up healthy momentum . . ."). This was

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coded as "D" in the subject row of Company E, Program 1. Program 11, in contrast, is short and company-oriented. Though the CEO at times appears somewhat removed from the company ("increases in costs-everywhere for everything"), there is intermittent identification between CEO and company as subjects ("Company E has been forecasting.... In our early planning"). Program 11 was thus coded "AD." Program Ill surrounds Program I. The section preceding Pro- gram 11 is short and Company E-oriented; the section following Program 11 is another lengthy and removed "voice of the industry." The CEO associates more with the external environment than with the company in both instances ("commitment to major growth program" and "we are seeing the elimination of expansion"), the "we" here seeming to include the entire industry. Subjects in Program Ill were thus coded as "D." Company E's 1977 letter does not discuss management changes, so Program IV is absent. Program V again depicts a distanced CEO who refers to ". . . the people of Company E . . ." and was coded "D" for subjects. Company Z-77: The subject is portrayed as an aggregated unit consisting of the CEO and the entire company in Program I ("our results"), in both parts of Program 11 ("our profit margins . . . our operations in North America" and "we have been unable to offset"), and in both parts of Program Ill ("we made progress" and "our problem"). The subjects in each of these three programs were therefore coded "A." In Programs IV and V, there is some ambivalence, with the CEO identifying with the company in some instances ("we moved towards our goal" and "our market and technological leadership"), yet removed from the company at other times ("the company's operations" and "the company's future prospects"). The subjects in these programs were thus coded "AD." Subject/environment relations. The question in subject/ environment relations is again the degree of association, but this time the aim is to establish the spatial domains of the narrative rather than to determine what combined unit serves as subject. Companies' letters to shareholders usually distinguish between an internal and external environment. With respect to their internal environments, CEOs usually wish letters to be unambiguous in communicating growth, profitability, and strength. External environments (including the chemical industry, the national economy, and the world) are often more ambiguously defined in relation to the company, with varying degrees of company-environment association. The subject/environment relations found in the letters were also coded on the basis of the use of nouns and pronouns, this time in depicting internal and external domains of the story. The relations noted in the letters of all ten companies are listed in the "E" (environment) rows of Table 3. They were also coded as either A = associated, AD = associated/ disassociated, or D = dissociated. The following summarizes how the degree of subject/environment association was determined for the letters of companies E and Z-77. Company E: A broad level of association between the company and the external environment is portrayed throughout the letter. References to company and industry are nearly in-

2881ASQ, June 1989



distinguishable in Programs I and 111, "we" being the voice of the entire industry ("As we start the new year, industry inventories . . . are near normal levels."). Subject/environment relations for Program I and Ill were thus coded "A." The external environment is not presented as a major force in any of the other programs.

Company Z-77: The letter describes relations of the company with the external environment only in terms of undesirable dependence on external events that are perceived to be primarily negative. Programs 1, 11, and Ill discuss results linked directly to "weather-related problems," "economic conditions," "rise in ... costs," and "weaker demand." Subject/ environment relations for these programs were therefore coded "D." The external environment is not present in Pro- grams IV or V.

The first two components identified in each of the narrative programs indicate the existence of distinct internal and external relational differences in these two sets of letters. Se- miotics seeks not only to uncover relational patterns but to make explicit the rules that bind them and determine their function in a narrative. Identification of the final two narrative components, mode and tone, makes this possible. Mode. To qualify and categorize the above relations so as to understand their function in the story, semioticians must determine what Greimas (1966) called the primary mode of each narrative program. Mode is a narrative component that qualifies the relations between narrative forces by distinguishing between those relations depicted within the narrative's action sequences and those outside the action of the plot. An action sequence is any part of the plot in which the subject executes or receives an action. Relations taking place through the plot's action sequences are said to develop the subject's being- able-to-do and are designated as pragmatic; relations that do not evolve through the plot's action are said to develop the subject's knowing-how-to-do and are designated as cognitive. For example, the relations developed in the letter may be stated as part of the action of the plot, as in "division X developed a new product." The mode is pragmatic in that it indicates a relation between narrative forces within an action sequence. The sequence develops the competence or being- able-to-do of the narrative subject in overcoming conflicts within the narrative plot. However, if the primary function of a program is to develop the subject's knowing-how-to-do, the mode of that program is cognitive. These relations are not part of the plot's action sequences. For example, a statement such as "the economy is weak" signifies a state of mind of the narrative subject (not of the author). It does not involve the subject's action but is nonetheless a necessary step toward a resolution of the narrative. Narrative mode is a critical indicator of narrative structure. The patterned use of mode reflects underlying narrative rules that govern how the different sets of relations noted above may be combined to tell these companies' stories. If the narrative subject is presented as a disaggregated group of subjects, the narrative conflict can arise and be resolved through their interactions. Since these take place within action sequences of the story, the primary mode will be pragmatic. On the 289/ASQ, June 1989


other hand, the action sequences in a text portraying a unified set of subjects are not likely to produce narrative conflict. Any conflict in need of narrative resolution will develop outside of the actions of this unified set of forces. The primary mode in this case will be cognitive. Mode characterizations in this study's narratives were coded on the basis of the relative emphasis of each program on action (pragmatic) or state of mind (cognitive). Programs with predominantly cognitive or pragmatic statements were labeled as such (p = pragmatic and c = cognitive). When there was an intermingling of modes, the program was labeled pc = pragmatic/cognitive, as shown in Table 3. The following summarizes how the mode of relations in the letters of companies E and Z-77 was determined. Company E: Programs 1, 11, and III present an intermingling of pragmatic and cognitive modes. A phrase like ". . . lookout is cloudy" would be coded as cognitive, but the ". . . industry will be cutting, fitting . . ." would be coded as pragmatic. The first three programs in Table 3 were thus coded "pc." Pro- gram V is a cognitive ("c") reference to the importance of the company's people (". . . results will depend upon the talents . . Company Z-77: The shortest program, Program 1, is pragmatic ("p") when discussing subject relationships ("Agricultural chemicals made an important contribution . . ."). Program 11 presents cognitive relations in describing reasons for the company's current position ("c"). Program III continues to be mostly cognitive, with the striking exception of the first part of Program 111, a pragmatic textual block outlining the means of actively distancing the company from hindering forces ("pc"). Relations in Program IV are pragmatic ("p") ("we moved ... towards our goal"). The letter ends on a cognitive note ("c") ("proven capabilities . . . should give us all confidence"). Tone. The final narrative component, tone, qualifies the relations noted above among the various textual forces as either negative or positive. The narrative tone signifies the attitudinal orientations of the subjects within the various relationships. A negative tone denotes that the relation is a hindrance to the subject's quest; a positive tone denotes that the relation is a help. Tone is a critical indicator of narrative structure. The patterned use of tone, like mode, signifies the rules by which the various types of relations among textual forces may be combined to create the image that is the object in these letters. If the narrative's primary source of conflict is developed within highly associated internal and external environments, the tone by which both the internal and external relations are depicted will be predominantly positive. Depicting them in negative in- terrelationships would counter the ultimate object of the letters. In the other case, the primary source of narrative conflict is developed between an internal subject set and an external set of hindrances. Here, the relations developed to resolve the conflict in the narrative will be between a posi- tively depicted set of subjects and a negatively depicted set of hindrances. Tone characterizations in this study's narratives were coded by distinguishing between positive and negative descriptions 290/ASQ, June 1989



of both actions (pragmatic) and causal attributions of events (cognitive). Clear indications of a negative (e.g., "bad weather") or a positive (e.g., "tremendous growth") tone were labeled as such, P = positive, N = negative. The lack of a clear positive or negative tone was labeled as NT = neutral. The tone characterizations for the companies in the study are shown in Table 3. The following summarizes how tone was coded for the letters of companies E and Z-77. Company E: When referring to the narrative subjects, the tone of Programs I and III is mixed ("NT"); in Program 11 it is primarily positive ("P") ("enjoy increases in sales . . . good part of benefit from gains . .. cannot be converted into gains in earnings" rather than "losses due to"). When referring to the environment, the tone of Program I is positive ("P") ("U.S. demand ... a pleasant surprise"); the tone of Program III is negative ("N") ("costly regulatory program"). Program V is a neutral ("NT") reference to both the difficulties and the achievements of the previous year. Company Z-77: Program I is positive ("P") when discussing subject relationships ("important contribution"), but environmental relationships in the same program are depicted as negative ("N") ("weather-related problems"). In Program 11 all internal problems are expressed as outcomes of external conditions. Subject relationships were coded as positive ("P") and environment as negative ("N"). Program III is a continua- tion of the same, as the company is portrayed as actively re- moving itself from negative external influences. Subject relationships in Programs IV and V are depicted as neutral ("NT"). The second step of Phase 2 thus served to identify the four components in each program and to classify each component within an oppositional framework. The patterns of oppositional combinations of these components point to narrative rules that determine how the components may be meaning- fully combined in this narrative system. For example, when the subjects are associated in these narratives, the mode is most often cognitive. The following is a summary of the patterns identified above. The two-way arrows indicate the pre- dominant interactions: Associated subjects

Table 4

Interactive Narrative Components*

Programs Components Coding I II III IV V

Joint-venturing firms

Subject Associated 0 0 0 0 0 Disassociated 5 3 3 2 4

Subject/environment Associated 2 3 3 0 1 Disassociated 0 0 0 0 0

Mode Pragmatic 4 2 4 3 4 Cognitive 0 1 0 0 0

Tone External Positive 4 2 2 0 2

Negative 0 0 1 0 0 Internal Positive 0 1 0 2 0

Negative 0 0 0 0 0

Non-joint-venturing firms Subject Associated 3 2 2 2 2

Disassociated 0 2 0 0 0 Subject/environment Associated 0 0 0 0 0

Disassociated 2 5 4 0 2 Mode Pragmatic 4 0 2 4 2

Cognitive 1 4 0 1 1 Tone

External Positive 0 0 0 0 0 Negative 1 3 1 0 1

Internal Positive 5 1 3 2 0 Negative 0 1 0 0 0

* Numbers are the number of companies whose letters reflect the component in each of the two opposing forms. The 1979 letters of companies Y and Z are not included in this table.

closely linked with their environment and relating to that environment in a positive manner within action sequences. Firms with no joint ventures also begin their stories with a discussion of company strength and growth. Theirs, however, is predominantly a narrative pattern depicting an aggregated group of subjects, shown as distinct from their environment, the positive tone relating to the internal subject group. A curious inconsistency with the structural pattern identified earlier for the whole textual system is that the mode of Pro- gram I in this second group of stories is primarily pragmatic. According to the patterns indicated earlier, conflict will not be established within the action of the plot (pragmatic mode) when the subjects involved in that action are presented as a single force. How then is the narrative conflict established in the next program, the program relating to subject failures? The answer lies in the textual transformation that occurs in Program 11 (second column in Table 4). Whereas joint-venturing firms continue the narrative pattern of the previous program, firms with no joint ventures tell the story differently. Subject association and internal positive tone, both used to set the stage for the story (Program 1), are not used in Pro- gram 11. Moreover, the mode switches from pragmatic to cognitive, moving the focal relations outside of the subjects' actions. To explain the transformation occurring in Program 11 in the second group of letters above requires examination of the re-

292/ASQ, June 1989



suits listed in Table 4 in a two-way interaction, across each row (dynamic relations across a text, referred to as syntag- matic relations) as well as down each column (static relations among possible components of a single program, referred to as paradigmatic relations). Figure 3 illustrates the sequential path of each narrative component across the five programs. The horizontal axis shows the sequence of programs; the vertical axis shows the number of firms whose letters reflect the form of narrative component depicted in the graph. The graph illustrates the extent to which the configuration of components in each program conforms to the narrative rules derived earlier. It highlights the consistency of pattern in the first group of letters and the deviations of the second group.

Figure 3. Narrative-component sequential paths.*

Joint-Venturing Firms

5 ------- Pragmatic Mode * s . _ Subject

E 4 Disassociation LL " \, " "External

A 3 Positive Tone -0 ~~~~~~~~'\ .' / ~~~~~~~~~Subject!

E 2 ' \ ~t / _ bEnvironmental 1Z" ,.' ~ _ \ / Association

s \ // I I I s~

I 11 111 IV V Programs

Non-Joint-Venturing Firms Subject

5 - Association / o ~Subject/

E 4 - / - Environmental LL / , , Disassociaion

0 3 -- , , \ ~----- Cognitive Mode -n Ad / s \External E 2 - Negative Tone

I II 111 IV V Programs

'The graphs are based on the data in Table 4. The numbers are taken directly from the table when the set of letters consistently used one form of the narrative component. When both forms of the component were present, the number used on the graph is the difference between the number of firms using one form and its opposite.

Figure 3 illustrates two important aspects of the use of the four narrative components across the five programs of a letter. First, the sequential paths illustrate the paradigmatic links between the numbers in each column of Table 4. The extent to which the four paths follow each other indicates interdependence of the components. For example, the paral- lelism in the componential structure of the first group of letters marks a strong pattern: subject disassociation, subject/environment association, pragmatic mode and externally directed positive tone are used as narrative devices in close and consistent interaction. When a large number of letters in 293/ASQ, June 1989


the first group uses one of these components, a similarly large number of letters uses the others. In the second group of letters, subject/environment disassociation, external negative tone, and cognitive mode tend to follow the same pattern, whereas the subject association line moves in opposition. The four components do not appear to be equally interdependent, the deviating paths being particularly salient in Program 11. Second, the sequential paths of Figure 3 illustrate the syntag- matic links between the numbers in each row of Table 4. The relatively high and low points of the graph indicate the sa- lience of the given configuration of narrative components in different parts of the letters. The highest points for all four components in the first set of letters are at the beginning and end of the narratives, indicating that this particular set of narrative devices was most important at these two points for the successful development of their stories. The graph of the second group of letters shows that both the highest and lowest point is in Program 11, indicating that the set of narrative devices was both most important and most inconsistent at this point. The implications of this narrative configuration are discussed later. Narrative transformations may also occur across letters from the same company from year to year. To allow for such transformations, the present analysis was carried out over a three-year period, 1977-1979. The patterns revealed are stable (and thus were consolidated in the results shown in Table 3) across the three-year period for all but two of the companies, Company Y and the non-joint-venturing company used as an illustration in this paper, Company Z. An interesting shift occurs in the text of these two non-joint-venturing firms. The 1977 text in both cases follows the pattern of the other non-joint-venturing firms. After 1977, the pattern changes to a near turnaround, following the narrative structures of the joint-venturing firms of this sample. Figure 4 con- trasts the 1977 and 1979 letters. It illustrates the consistency of narrative pattern within each year's letter and the shift that occurred over time. In both cases, this shift occurred at the time that a new CEO took over. Though it is impossible to state definitively that the change in leader caused a shift in company posture (along the dimensions examined in this study), it appears to be more than a coincidence that the eight companies with no change in leadership followed the same patterns across the three years and that the two companies whose leaders changed did not follow the same patterns. This observation provides support for the premise that the CEO plays an important role in determining the kind of story that is told in portraying a positive company image. Deep Structure In Phase 2 of the analysis the narrative structures were identified within each program in the two sets of letters. The implications of both the structural regularities and irregularities in the letters are best understood when expressed within the context of a logical oppositional structure underlying the entire set of letters. The schema used to depict these oppositions is the deep-structure schema identified earlier.

294/ASQ, June 1989



Figure 4. Shift of pattern of companies Y and Z. Cognitive Mode

Subject Association

Joint-Venturing Firms Subject/Environmental 1977 Disassociation

External Negative Tone

.I- 2 0

4 1 11111 IV V

Programs

Subject Disassociation-

Pragmatic Mode Non-Joint Venturing Firms

1979 Association

External Positive Tone

tS t S/t < \

.I-

E1

/ ~ ~ ~~~X

I II III IV V Programs

The graphs are based on the data in Table 4. The numbers are taken directly from the table when the set of letters consistently used one form of the narrative component. When both forms of the component were present, the number used on the graph is the difference between the number of firms using one form and its opposite.

The complete deep-structure schema or "semiotic square" (Greimas and Rastier, 1968) of a set of oppositions underlying these letters is presented in Figure 5. Also presented is a summary list of the narrative rules or conventions that dictate how narrative units may combine to generate underlying patterns.

The stories of joint-venturing firms consistently follow the narrative rules that allow a simultaneous presentation of weak external boundaries and the logically implied strong internal boundaries (Position 1). There is no deviation to values on the right side of the square, indicating a rather straightforward application of the narrative rules. What happens in the other set of narratives is somewhat more interesting. The stories begin by depicting subject/ environment disassociation and subject association, narrative components signaling values of strong external and weak internal boundaries. Yet the pragmatic rather than the cognitive mode predominates. The pragmatic mode generally charac- terizes relations developing in a disassociated set of subjects' action sequences, whereas the subjects here are presented as a unified force. The use of the pragmatic mode suggests the beginning of a tension between strong and weak internal 295/ASQ, June 1989


Figure 5. Deep structure of shareholder letters with corresponding narrative rules'

Weak JOINT-VENTURING FIRMS Weak External 1 Internal Boundaries Boundaries (E: A-P) (S: A-c)

3 5 2

Strong \ Strong Internal External Boundaries 4 Boundaries (S: D-p) (E: D-N)

Strong NON-JOINT-VENTURING FIRMS Strong External 3 Internal Boundaries Boundaries (E: D-N) 7 (S: D-p)

1 5 2

Weak Weak Internal External Boundaries 4 Boundaries (S: A-c) (E: A-P)

Numbers on the axes refer to internal and external boundary combinations. S = Subject relations; E = Subject/environment relations; A = Associated; D = Disassociated; p = pragmatic mode; c = cognitive mode; N = Negative tone; P = Positive tone.

boundary definitions. Program I is thus located on the contradictory axis of Position 5. This tension caused by the contradiction is resolved in Pro- gram 11 as the narrative structures more fully take on the subject disassociation characteristic of the underlying value of strong internal boundaries. A tension between complex contraries is developed, since the narrative structures now simultaneously reflect the dominant positive value and its contrary, strong external and internal boundaries (Position 3). This position allows the narrative conflict to be established unambigu- ously as outside of the company's sphere of action, while acknowledging the internal discord that would accompany such conflict by de-emphasizing subject association and internal positive tone. The cognitive mode and intensified subject/environment disassociation in Program 11 prevent the narratives from moving to Position 2 of the square. In subsequent programs, the narratives return toward Position 5, the subject/environment disassociation remaining consistent (ex- cept in Program IV, where the external environment is largely absent from the story) and the other three components causing the story to vacillate between values of weak and strong internal boundaries. 296/ASQ, June 1989



The final underlying deep structure identified in the stories of the joint-venturing firms is consistently that of Position 1 in Figure 5. Moreover, this deep structure is developed through the consistent and patterned application of narrative rules. The stories of the group of firms without joint ventures, however, display underlying consistency only in embracing the dominant value of strong external boundaries. Internal boundaries are variably defined as weak or strong, thereby pointing to a contradictory deep structure identified as Position 5 in the semiotic square (with temporary movement to Position 3 in order to develop the narrative conflict). Though the underlying deep structure of this group of texts is in opposition to that of the joint-venturing group, the opposition is consistently contradictory only in terms of external boundary definitions.

DISCUSSION The analysis moved through successive phases of breaking a set of thirty narratives into component parts, characterizing each part, and then identifying patterns in the way the parts are combined. The final analytic phase offered a map of the texts' underlying structures, their positions in the semiotic square. The results shown in the semiotic squares illustrate both the interplay of oppositional structures within a single set of narratives and the differences in the oppositional structures between the two sets. The interplay of logical structures within the set of letters of joint-venturing firms highlights the patterned simplicity underlying- a group of highly variable stories, much like the recurring patterns previously found in multiple myths and folktales (Propp, 1958; L6vi-Strauss, 1976). The interplay of structures within the letters of non-joint-venturing firms is more complex, with logical inconsistencies underlying the narrative. The results of the analysis of oppositions between the two sets of narratives partially support this study's proposition. The letters of the five joint-venturing firms consistently portray weak external and strong internal boundaries. The letters of the non-joint-venturing firms consistently portray strong external boundaries but do not portray a consistent definition of internal boundaries. There are at least two alternative means of interpreting the inconsistent logic found in the letters of the latter group. One is to maintain that the contexts of these two sets of letters are similar and that the rules governing narrative consistency apply equally to both. From this perspective, the letters of the non-joint-venturing group of firms present an inherently un- stable image of the firms and their internal relations. The contradictory narrative structures relating to the strength of internal boundaries within this group of letters suggest the lack of a coherent set of shared meanings about the extent of unity or separateness of internal company units. The environmental context within which these letters were written lends support for this first interpretation. Each of the firms in the sample was heavily involved in the stagnating industrial chemicals business and felt pressure to retool and move into the more rapidly growing specialty chemicals markets. The specialized requirements of these new businesses suggest the need for increased autonomy and the 297/ASQ, June 1989


separateness of the internal units of a company. The underlying contradictions regarding internal boundaries of one set of letters may thus reflect the transitional instability that might accompany such a change. Future research efforts could usefully extend the comparison between the two groups of firms to determine whether, in fact, the results of this study reflect differing rates of institutionalizing change. Alternatively, the inconsistencies of the letters of non-joint- venturing firms may be interpreted as suggesting that the rules that apply to narratives such as myths and folktales do not govern narratives in all contexts. According-to this perspective, the objective constraints surrounding the development of these corporate messages invalidate the narrative rules of logical consistency. Unlike myths and folktales, letters to shareholders are bound by a set of external imperatives. Even if theirs is a story of a highly unified set of narrative subjects, they are required to communicate a certain number of activities of separate units of the firm. Given this interpretation, the challenge for future research is to examine a broader array of narratives, bound by diverse external constraints, in order to ascertain the extent to which these govern the way the story is told.

CONCLUSIONS The primary contribution of this study lies in its presentation of semiotics as a method for analyzing how signs combine in a patterned way to convey meanings within a particular context. Unlike more traditional forms of content analysis (e.g., Bettman and Weitz, 1983; Staw, McKechnie, and Puffer, 1983; Bowman, 1984; Salancik and Meindl, 1984), semiotics relies on an a priori value schema and interprets each piece of data only in light of this schema. Traditional content analysis focuses on individual statements and actions, assuming that "annual report discussion, line-by-line, is a reasonable surro- gate for real activity" (Bowman, 1984:64). In his study of risky behaviors of firms, for example, Bowman (1984) focused on .the variants of specific activities (extent of acquisition, litiga- tion, and new-venture involvement of the firm), without at- tempting to explain the commonalities that bind these behaviors. In contrast, semiotics emphasizes the underlying values that differentiate the meaning of behaviors. The underlying oppositions defining a belief system related to risky behaviors, for instance, might be "loss," "gain," "non-loss," "non-gain." In such a study, the aim of a semiotic analysis would be to pro- vide the framework that defines the bounds of possible behaviors within a particular context and to identify the rules that account for patterns in that behavior. It would not attempt to explain the multiple variations of the behaviors themselves or their performance implications. Semiotics exposes underlying oppositional values through the identification of structural invariants. As illustrated in this study, the concern is with structures embedded in a system of signs (in this case, a series of stories), rather than structures of the intentions of the sign-sender (author of the letters). The abstract concern with formal oppositions has been criticized for its attention to purely cognitive representa- tions lacking rich descriptions of behaviors and feelings

298/ASQ, June 1989



(Denzin, 1983; Manning, 1987) and for its inattention to the understanding brought to the message by the reader and the sender (Peirce, 1940). These criticisms are useful in defining and delimiting the potential role of semiotics in organizational research. To discover an invariant does not always mean to discover a truth. It does, however, identify problem areas for future research in systematic and differentiable terms. The links that were uncovered in this study between boundary definitions in organizational messages and new- venture structures are exploratory and certainly suggestive. The value of such a study lies not in what it "proves" but in what it exposes for further exploration and questioning. Though researchers have long been intuitively aware of the probable links between organizational beliefs and strategic behavior, it has been difficult to capture the apparent com- plexity of these links with traditional research methods (Broms and Gahmberg, 1983). The semiotics of CEOs' letters calls attention to the simple belief patterns that may underlie the seemingly complex relationships between organizations and their environments.

REFERENCES Barley, Stephen R. 1983 "Semiotics and the study of

occupational and organizational cultures." Administrative Science Quarterly, 28: 393-413.

Berg, Sanford, Jerome Duncan, and Philip Friedman 1982 Joint Venture Strategies and

Corporate Innovation. Cam- bridge, MA: Oelgeschlager, Gunn & Hain.

Bettman, James R., and Barton A. Weitz 1983 "Attributions in the board

room: Causal reasoning in corporate annual reports." Ad- ministrative Science Quarterly, 28: 165-183.

Bowman, Edward H. 1984 "Content analysis of annual

reports for corporate strategy and risk." Interfaces, 14: 61-71.

Broms, Henri, and Henrik Gahmberg 1983 "Communication to self in or-

ganizations and cultures." Ad- ministrative Science Quarterly, 28: 482-495.

Denzin, Norman K. 1983 "Towards an interpretation of

semiotics and history." Paper presented at the Colloquium on Criticism and Interpretive Theory, University of Illinois, Urbana-Champaign.

Eco, Umberto 1979 A Theory of Semiotics. Bloom-

ington, IN: University of In- diana Press.

Greimas, Algirdas J. 1966 Semantique structurale. Paris:

Larousse. 1987 On Meaning: Selected

Writings in Semiotic Theory. Minneapolis: University of Minnesota Press.

Greimas, Algirdas J., and Frangois Rastier 1968 "The interaction of semiotic

constraints." Yale French Studies: Game, Play, Litera- ture. New Haven, CT: Eastern Press.

Haidu, Peter 1982 "Semiotics and history." Se-

miotica, 40 (3/4): 187-228. Harrigan, Kathryn R. 1985 Strategies for Joint Ventures.

Lexington, MA: Lexington Books.

Levi-Strauss, Claude 1963 Structural Anthropology, vol. 1.

New York: Basic Books. 1976 Structural Anthropology, vol. 2.

New York: Basic Books. Manning, Peter K. 1987 Semiotics and Fieldwork.

Newbury Park, CA: Sage.

Miller, James C. 1979 "The psychology of innovation

in an industrial setting." In W. G. Lawrence (ed.), Ex- ploring Individual and Organi- zational Boundaries: 205-216. New York: Wiley.

Miller, Eric J., and Albert K. Rice 1967 Systems of Organization. New

York: Tavistock. Peirce, Charles Sanders 1940 Selected Writings of Charles

Sanders Peirce. London: Har- court, Brace.

Propp, Vladimir 1958 Morphology of the Folktale.

Austin, TX: University of Texas Press.

Salancik, Gerald R., and James R. Meindl 1984 "Corporate attributions as illu-

sions of management control." Administrative Science Quar- terly, 29: 238-254.

Saussure, Ferdinand de 1916 Cours de linguistique g6n6rale.

Paris: Payot. Staw, Barry M., Pamela I. McKechnie, and Sheila M. Puffer 1983 "The justification of organiza-

tional performance." Adminis- trative Science Quarterly, 28: 582-600.

Wilden, Anthony 1980 System and Structure: Essays

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APPENDIX: Samples of Letters to Shareholders, with Program Codings for Surface Structure

Company E (Joint-Venturing Company) 1977 Letter to Shareholders To Our Shareholders:

[Program l: Implied goal: Show areas of strength and growth] [Company E] earned $108.2 million, or $6.09 per primary share in fiscal 1977. These earnings represent a 16.7% return on shareholders' equity and a 12.1% return on invested capital-a respectable showing in a year in which the economic environments in our major markets ranged from surprisingly strong to unexpectedly depressed. Looking back: 1977 trailed 1975 and 1976, two years of extraordinary profitability for the [R] industry. The $6.09 per share was off 38% from 1975 and 21% from 1976. Down is down, but 1977's 16.7% return on shareholders' equity is a good statement of the company's basic earnings power, and it is a fine base upon which to build. The [R] industry is still wrestling with excess capacity, but the growing into new plant is less painful than might have been expected. U.S. demand-a pleasant surprise-totalled 51 million tons, up 3% from 1976, which in turn was up 16% from 1975. The industry's [P] shipments increased an impressive 22%. While some [P] remained in the U.S. distribution system at yearend, product going on the ground increased by approximately 6%. In [H], total shipments increased 10%, with a notable 12% increase in exports. As we start the new year, industry inventories of [H] and [P] are near normal levels and sales possibilities are favorable. With energy, labor, and other variable costs on the rise, [Company E] plans to continue its policy of tight in- ventory control and stringent controls on extension of credit. Quite clearly, prudent money management is the key to good results in the [R] business. The outlook for [A] is cloudy. Excess capacity exists, and the industry still has some new plant under construction. Accordingly, over the next 12 to 18 months the industry will be cutting, fitting, and sizing to the realities of the marketplace. The availability of natural gas is becoming increasingly unpre- dictable. Shortages could markedly reduce output. For [Company E's] part, we control sufficient natural gas for our requirements, our [A] costs are highly competitive, and we are reasonably certain of sales volumes close to capacity. Prices are apt to be unsatisfactory, at least through fiscal 1978. As predicted, our chemical and industrial businesses made important contributions to fiscal 1977 operating earnings-39% of the total. Selling into markets highly influenced by general economic conditions, these businesses picked up healthy momentum in the United States as the year progressed. In Europe, important markets for [Company E] industrial products were depressed, and a change for the better is not in sight. Japanese business moved sidewise last year and is likely to do the same this year. [Program Ill: Implied goal: Justify expenditures] Capital spending totaled $175 million in fiscal 1977, the fourth year of commitment to a major growth program. As of June 30, 1977, something over 50% of the approximately $750 million invested over the past four years was not yet earning the company's objective of a 12% return on invested capital. Most of these new assets will earn up to plan in due course. The pruning of marginal assets continues, and those without potential will be sold or liquidated. [Program II: Implied goal: Show reasons for poor performance] [Company E] has been forecasting earnings at its Annual Meeting each Oc- tober, and the practice will be followed again this year. In our early planning, it is clear that we have a good chance to enjoy increases in sales almost across the board. Less predictably, but almost inexorably, we will experience very large increases in costs-everywhere for everything. Increases in prices seem likely, in the short run, to cover approximately one-quarter of the anticipated increases in costs. It follows, therefore, that a good part of the benefit from gains in volume cannot be converted into gains in earnings per share in fiscal 1978.

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[Program III continued: Implied goal: Justify expenditures] On the matter of increases in costs, it should be noted that [Company E's] environmental protection programs will total approximately $36 million in fiscal 1978. While environmental protection is the most costly of the regulatory programs from our point of view, the array of federal regulations-EPA, ERISA, OSHA, WWO, SEC, et al-is becoming increasingly formidable. Their costs have to flow through to price sooner or later. This is not the proper place to discuss the complex issues involved in gov- ernmental regulation of business activity, but it does seem necessary to voice an appeal for thoughtful consideration of costs vis-6-vis the public benefit derived. Clearly, in some areas the rules seem to be increasing the costs of products to the producers and to the consuming public unnecessarily. Also, we are seeing the elimination of expansions that might have created new activities and new jobs. The company has been seeking a [Product C] producer as a logical extension of our commitment to natural resource businesses. Accordingly, we are pleased to have acquired a [Product C] product in [the south]. This property should give us a good start in the business. We continue to think that, sooner or later, the [P] industry and the Saskatch- ewan government will be able to meet on common ground. The government has moved to correct some past injustices, and these conciliatory gestures, plus some recent meetings with officials, give us hope that 1978 will be a year of progress in this difficult relationship. Following past practice, this Annual Report features one of a variety of re- sponses to corporate social responsibilities. During fiscal 1977, a major effort to improve the company's safety performance was launched. We are pleased to note that lost-time accidents were reduced by 43%. The program is described on page 10. [Program V: Implied goal: Show future outlook] Fiscal 1977 was not an easy year; 1978 starts nicely, but again, it will not be easy. As always, the results will depend upon the talents of all people-in all jobs. On behalf of the Directors and the Executive Office, it is my privilege to thank the people of [Company E] for what they have achieved and for their continuing commitment to the company goals. Company Z (Non-Joint-Venturing Company) 1977 Letter to Shareholders To the Stockholders of Company Z: [Program I: Implied goal: Show areas of strength and growth] Sales from continuing operations in 1977 were $1,123,865,000, an increase of 11 % over 1976. Net earnings were $45,624,000-down 1 % from re- stated results for the prior year. Agricultural chemicals made an important contribution to our results as profitability improved following the weather-related problems of 1976. Profits for industrial chemicals also were up, reflecting the generally better economic conditions. [Program II: Implied goal: Show reasons for poor performance] Profitability of our [XI business declined because of (1) a sharp drop in U.S. paint sales due to extremely cold weather in early 1977, (2) increased manufacturing costs for acrylate monomers in North America caused by the need to operate the older acetylene process during the proving-in period for the large new propylene-based plant, and (3) sharply reduced [XI sales in Latin America due to depressed economic conditions there. The [YM business segment was hurt by overcapacity in the acrylic sheet industry in the U.S., and this situation was aggravated by imports of acrylic sheet. Downward price pressure eroded our profit margins, and this will continue into 1978. These problems in [XI and [YI affected our operations in North America and Latin America, and profits in these two regions were down. Increased earnings were reported by both the Pacific and European regions. [Program Ill: Implied goal: Justify expenditures] Divestiture of [PI and [Q] Products- We made substantial progress in 1977 towards achieving our objectives of reducing debt, strengthening the balance sheet and investing only in those businesses in which we are-or can expect to become-a primary compet- itor. To these ends: We sold our [P1 operations in the U.S. and continued our efforts to dispose of our [P1 business in Brazil. We sold our [01 business in 301/ASQ, June 1989


the U.S. and actively pursued leads to sell our worldwide [Q] business. We decreased our debt to equity ratio from 81 % to a far more satisfactory 61 % at yearend 1977. On December 29 we sold our [PI plant for $55 million, thereby completing the divestiture of our domestic [PI business. We announced in October an increase in our provision for loss on disposal of [PI from $40 million to $57 million. Part of this larger provision was due to the relatively low sale price of the [P1 plant, but the bulk of the additional writedown was related to Brazil where the [PI industry remains depressed. The value now assigned to these assets in Brazil is approximately $30 million. During 1977 we decided to divest our [Q] businesses and to account for these operations as a discontinued business segment. This decision came after an extensive review of our position and of the long and expensive process now required to bring new products to the marketplace. We decided our resources could be used more efficiently in our [RI businesses. We sold [sudsidiary SI in September, and the aftertax profit on this sale-$16,440,000-was recorded as a gain from the disposal of a discontinued operation. At yearend our other [Q] business had not yet been sold. Sale of our Brazilian [P1 assets and our worldwide [Q] business, plus internally generated cash flow, will permit further debt reduction during 1978. We expect to reach our corporate target of 50% debt to equity ratio during the course of the year. Now that we have achieved a strong balance sheet, we are committed to maintaining that strength and to further improvement. [Program IV: Implied goal: Show management changes] Board of Directors- We moved forward in 1977 towards our goal of strengthening the board and closely involving the outside directors in corporate strategy and planning. In April, William L. Mobraaten, president of The Bell Telephone Company of Pennsylvania, was elected to the board. John H. McArthur, associate dean of the Harvard Business School, was elected to the board in July. The newly-formed Finance and Strategic Planning Committee of the board met regularly during the year to review the company's operations and its fi- nancial and strategic plans. [Program II continued: Implied goal: Show reasons for poor performance] Outlook for the Future- Inflation has been a major challenge for a number of years. Since 1973 we have been unable to offset fully the rapid rise in raw materials, energy and other costs. This inability to maintain an adequate relationship between price increases and cost increases has been the principal reason for the decline in our gross profit margin from 33.8% in 1973 to 27.4% in 1977. [Program IlIl continued: Implied goal: Justify expenditures] A major portion of our problem has been the rapid escalation of the cost of natural gas which we use in the U.S. for feedstock and fuel purposes. In 1973, we used about 30 billion cubic feet (bcf) of natural gas annually at a cost of about $6 million. By the beginning of 1977 we had reduced our annual usage to about 20 bcf, but this amount cost almost $40 million. Further economies will reduce natural gas usage to about 12 bcf in 1978. These changes will involve some increases in other costs, but the net savings to the company will be about $12 million annually-starting in 1978. Our new raw material base gives us a more stable cost structure. If our production in the last two years had been based on our 1978 production pro- cesses, our raw material cost increases in North America would have been 1.2% in each year instead of 5%. Although we anticipate increases in 1978 will exceed 1.2%, we expect to achieve a much better balance of price increases to cost increases in the future. In the early 1970s we anticipated that economic growth in the middle and latter part of the decade would be greater than is now likely. We based our construction program on these earlier growth estimates and, as a result, now have excess manufacturing capacity. This excess capacity penalizes current earnings, but it will allow us to expand in the future at lower than normal capital cost. [Program N/: Implied goal: Show future outlook] Our company is better positioned for profitable growth than we have been for some time. The existing line of products, more stable raw material cost structure and efficient installed plant capacity will reinforce our market and technological leadership. Our long-term future is dependent upon our re-

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search effort's maintaining the competitiveness of the current product line and creating new proprietary products. In this report a number of 1977 product introductions are presented. These substantiate again our ability to recognize and match product needs in many diverse markets with product developments in various fields of chemistry. The proven capabilities of [Company Z's] experienced team of scientists, en- gineers and other dedicated employees should give us all confidence in the company's future prospects.


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Issue Table of ContentsAdministrative Science Quarterly, Vol. 34, No. 2 (Jun., 1989), pp. 169-347Front MatterThe Decoupling of CEO Pay and Performance: An Agency Theory Perspective [pp.169-189]The Lid on the Garbage Can: Institutional Constraints on Decision Making in the Technical Core of College-Text Publishers [pp.190-207]Whether and When? Probability and Timing of Incumbents' Entry into Emerging Industrial Subfields [pp.208-230]Power from What? A Reexamination of Its Relationships with Structural Conditions [pp.231-251]Managing to Be Fair: An Exploration of Values, Motives, and Leadership [pp.252-276]A Semiotic Analysis of Corporate Language: Organizational Boundaries and Joint Venturing [pp.277-303]About the Authors [pp.304-305]News and Notes [p.306]Book ReviewsOther Reviews [pp.321-324]Other Reviews [pp.325-326]Other Reviews [pp.327-330]Other Reviews [pp.330-332]Other Reviews [pp.332-335]Other Reviews [pp.335-338]Other Reviews [pp.338-341]Other Reviews [pp.341-342]

4 Reviews on Ethnography, Work, and Organizationuntitled [pp.307-311]untitled [pp.311-315]untitled [pp.315-318]untitled [pp.318-321]

Publications Received [pp.343-345]Back Matter [pp.346-347]

a semiotic analysis of corporate language- organizational boundaries and joint venturing

Documents

corporate boundaries

strong boundaries

strength of boundaries

perceptions of boundaries

weak external boundaries

interdi visional boundaries

joint venturingauthors

jstor terms