organizational response to environmental regulation: punctuated change or autogenesis?

Business Strategy and the EnvironmentBus. Strat. Env. 9, 224–238 (2000)

ORGANIZATIONAL RESPONSETO ENVIRONMENTALREGULATION: PUNCTUATEDCHANGE OR AUTOGENESIS?

Andrew King*

Stern School of Business, New York University, USA

Theory predicts that when faced withthreatening new conditions, managersoften attempt to preserve the status quoby creating a buffer between theorganization and the outside world. Thispaper presents evidence that in responseto new water pollution regulation,managers indeed created buffers oftechnology and personnel, but in someorganizations this very equipment andpersonnel initiated a process ofincremental change that led to betterenvironmental protection, more efficientproduction, and in a few cases, entirelynew product and production strategies.

For public policy, this researchsuggests that environmental regulatorsshould allow companies time andflexibility to learn and experiment. Fororganizational theory, this researchsuggests a link betweenpunctuated-equilibrium models oforganizational dynamics (Tushman andRomanelli, 1985) and theories ofself-organizing systems (Drazin andSandelands, 1992). That is, managementmay respond to external changes byattempting to preserve the status quo, but

in so doing influence internal deepstructures that then cause organizationsto gradually evolve to differentbehaviours and shapes. Copyright© 2000 John Wiley & Sons, Ltd. andERP Environment.

Received 8 July 1998Revised 26 August 1999Accepted 8 September 1999

INTRODUCTION

Central to many debates regarding envi-ronmental policy are questions of howand to what extent organizations re-

spond to pressure to protect the natural envi-ronment. Many policy analysts and organ-izational theorists predict that when facedwith threatening new conditions, managersand organizations attempt to preserve thestatus quo (Staw et al., 1981; Ashford, 1993;OTA, 1994). Managers seek to confine respon-sibility for new conditions to the organiza-tion’s boundary, and workers seek tomaintain existing routines, structures and re-lations (Galbraith, 1977). Thus, companieschange their interface to society, and insulatetheir internal processes, strategies or struc-tures (Thompson, 1967). This pessimism re-garding the potential for organizationaladaptation suggests that government shoulddesign policies that directly mandate internalchange.

* Correspondence to: Dr Andrew King, Department of Manage-ment and Operative Management, Stern School of Business,New York University, 40 West 4th Street, Suite 707, New York,NY 10012-1118, USA.

Copyright © 2000 John Wiley & Sons, Ltd and ERP Environment.

ORGANIZATIONAL RESPONSE TO ENVIRONMENTAL REGULATION

Debates about environmental policy matchscholarly debates on organizational adapta-tion and change. One synthesis of the litera-ture suggests that organizations (and perhapsother social systems) change through a pro-cess of punctuated equilibrium (Tushman andRomanelli, 1985). In this view, organizationschange only occasionally and only in briefbursts, during which fundamental elements ofthe organization are disassembled (Gersick,1991), reoriented, or recreated (Tushman andRomanelli, 1985), and after which the organi-zation converges to behaviours consistentwith the new arrangement of these funda-mental elements.

That fundamental change might occur in-frequently fits with many accepted notions oforganizational behaviour, and Tushman andRomanelli (1985) support their model in partby enumerating at length organizational resis-tance to change. This resistance to changeincreases as organizations age and grow(Hannan and Freeman, 1977), routines de-velop (Langer and Weinman, 1981; Gersickand Hackman, 1990) and technological andorganizational structures ossify (Abernathyand Utterback, 1978). As a result, organiza-tions can change only in brief moments whenresistant interlocking elements are broken andbefore new structures crystallize.

Punctuated change occurs in organizationsbecause forces sporadically break these inter-locking elements. Some general theoriessuggest that temporal modes can causepunctuated change (Gersick, 1991), but mostorganizational models suggest that punctu-ated change results from external events suchas environmental regulation or by executiveaction. Sometimes, research suggests, execu-tives cause punctuated change by attemptingto reorient the organization in a burst (Tush-man and Romanelli, 1985; Keck and Tushman,1993). More often, executives choose to bufferthe organization from changing conditions.For example, in response to regulation, execu-tives may choose to acquire end-of-pipe filtra-tion equipment to transform process wasteinto a form acceptable to regulators. This in-sulation reduces incentives to engage in pollu-tion prevention and other system-widechanges.

Central to notions of punctuated equi-librium is the assumption that basic rules orstructures in the organization cannot changeincrementally. Gersick (1991) vividly illus-trates the point by drawing an analogy to agame of basketball. Play continues until asudden event precludes it (e.g. removal of thebackstop and basket), after which the playersdevelop new rules and begin to play a differ-ent sport (e.g. soccer). Thus, ‘systems do notshift from one kind of game to anotherthrough incremental steps: such transforma-tions require wholesale upheaval’ (Gersick,1991, p 19).

In its rejection of gradualism, punctuatedequilibrium models most strongly differ fromautogenetic models of organizations. In both,deep structures govern the action of people inthe organization, but in autogenetics, throughrepeated iterations people create new deepstructures and even change the observableorganization. Autogenetics claims that themanifest organization (the organization onecan see in organization charts) results fromthe interaction of deep structure (tacit rulesthat govern actions), elemental structure(states of actors and interactions among ac-tors) and observed structure (organizationalfacts) (Drazin and Sandelands, 1992). A bio-logical analogy best explains the model: deepstructure is the genotype – the genes of theorganization; elemental structure is the ma-chinery that determines the iteration of thesegenes and observed structure is the pheno-type – the shape and characteristics of theorganism. Of course, as in biological systems,environmental conditions may shape develop-ment, but they do so through their effect onthese internal codes. By providing for theopportunity for more fluid and undirectedchange, autogenesis allows the possibility thatstructural changes (even if they appear sud-denly) result from incremental low levelchanges. For example, returning to the biolog-ical analogy, gene mutations can go unnoticedfor generations until several incrementalchanges combine to cause the emergence of anew phenotype. Although deep structurechange is occurring, on the surface the speciesappears unchanged. After a while, however,these changes in deep structure bring about anew form.

Copyright © 2000 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 9, 224–238 (2000)

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Organizational response to environmentalregulation

As presented above, the two theories repre-sent alternative models of organizational re-sponse (see Table 1). In this strong form, theymatch two perspectives in current debate re-garding environmental policy. Nicholas Ash-ford, for example, has repeatedly argued thatfirms resist change and thus draconian envi-ronmental regulation should be enacted toshock firms into fundamental change (Ash-ford, 1993). This message has been echoed byother business scholars (Porter and van derLinde, 1995).

Others argue that firms may seem to re-main unchanged but actually gradually de-velop fundamentally new mindsets, strategiesand information systems as a result of itera-tive incremental change (Mylonadis, 1993). Asimilar process of gradual change in mindsetsalso can occur at the industry level, scholarsargue, and this may cause entire industries toprogress through stages of response (Hoff-man, 1997). This slow development may becaused in part by human resistance to newideas (Roome, 1998).

In support of both theories, scholars haveobserved that companies respond to environ-mental pressure in stages. Hart (1995), forexample, argues that firms must start with PCand end with sustainable development. Asnoted above, Hoffman (1997) suggests that theentire chemical industry progress throughseveral stages. Consultants such as Arthur D.Little, and government analysts such as theOffice of Technology Assessment also havesuggested that firms progress through stagesof response to environmental regulation(OTA, 1986).

How firms progress through these stagesremains an area of active debate. Most schol-ars suggest that ‘top management’ directionand support is needed, but a few other schol-ars suggest that ideas may bubble up frombelow and provide an internal impetus forchange. Lenox et al. (in press) argue that indesign for environment, low level changeagents often act as advocates and en-trepreneurs for new environmental manage-ment strategies. In a study of two Finnishpaper companies, Halme (1996) found that inone facility change was directed from above,while in another it was championed by amid-level manager.

In summary, the organizational and environ-mental management literatures both containtwo broad perspectives on how firms respondto environmental regulation.

One perspective suggests that top managersdetermine the response to changing condi-tions and when possible attempt to preservethe status quo (Tushman and Romanelli, 1985,p 178). The formation of a buffer, such as awaste treatment system, is often chosen as atactic of this preservation (Thompson, 1967;Starbuck et al., 1977; Staw et al., 1981; OTA,1994). The technological buffer reduces theneed for change, and the agents in charge ofthe buffer seek to remain valuable to theorganization by reinforcing their insulatingrole (Cebon, 1992). As a result, executive di-rection is usually needed to change to theorganization’s strategy, structure, technology,controls or values (Tushman and Romanelli,1985). ‘Direct intervention is required pre-cisely because internal forces operate to main-tain the status quo, often in spite of cleardysfunctional consequences’ (Tushman andRomanelli, 1985, p 1980).

Table 1. Comparison of models

AutogenesisPunctuated equilibrium

Impetus for change External shock or prolonged poor Inconsistency in rules, structure andactions exposed through interactionperformance

Top management Distributed. External shock may increaseInternal agent of changeinternal inconsistencies

Timing of change OngoingSudden following shock or at temporalmodesRapid change and then slowSpeed of change Iterativesolidification of new form


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Another perspective suggests that change oc-curs in a more undirected manner throughthe repeated iteration of elements within theorganization. Change need not be directedfrom above, nor need it occur soon after anenvironmental disturbance, nor need it occurin a sudden manner. A disturbance in busi-ness conditions such as environmental regula-tion may alter deep structures in theorganization or change elemental structures –the rules that govern the interactions of thesedeep structures. Over time, these new deepstructures and interactions will alter the mani-fest organization. In more practical language,actors in the organization (and their skills,values etc) change and are changed by organi-zational rules, technology and routines.Through this reciprocal process a new organi-zational form can emerge.

This research uses these two perspectives toguide an investigation of the response to envi-ronmental regulation in one industry. It ex-plores the extent to which either predictionmatches observed behaviour and seeks to un-derstand how and when the two theories canbe reconciled. In the remainder of the paper,we first present our research method. Thenwe describe (i) how firms initially respondedto regulation, (ii) the nature of change follow-ing regulation, (iii) the process of this changeand (iv) some examples of relative constancy.We use our empirical data to suggest how thetwo theories might be merged and reconciled.Finally, we discuss the implications of such amerging for environmental policy.

RESEARCH METHOD

Comparing the two theories requires studyingboth high- and low-level change over time. Asa result, we used the triangulation methodsdescribed by Miles and Huberman (1984):semistructured interviews, structured inter-views, archival data and survey data (Milesand Huberman, 1984). To use these multipleresearch methods, we sought a sample oforganizations from one industry that (i) hadexperienced a relatively recent clear distur-bance in its environment, (ii) contained com-

parable firms and (iii) allowed researchaccess.

Selection of the printed circuit industry

The printed circuit board fabrication industryhas many characteristics that make itamenable to our study. First, in the 1980s,environmental regulation changed businessconditions in the industry. According to sev-eral industry CEOs, this regulation repre-sented the most important new demand onprocess performance in the 1980s. Second, theindustry has numerous similar firms, andthus allows better comparison of response toenvironmental regulation. Finally, regulatorskeep records on important changes in facili-ties, and these are open to the public.

Standardizing the sample to allowcomparative analysisMany facilities in the industry use similarprocesses and organizational structures andproduce similar products. The core of everyorganization is the electroplating and chemi-cal etching process, which creates a pattern ofconductive metal on a laminate substrate. Inall of the firms in our study a process engi-neering manager governed this operation andreported directly to the head of the facility.

We identified 14 facilities that (i) producedrigid multilayer printed circuit boards, (ii)used similar production technology, (iii) wereregulated under the same statute and (iv)were within driving distance. Eight of thesefacilities agreed to participate and allowedextensive access to managers and workers1.Sewer authority archives proved invaluable inunderstanding case histories. Most sewer au-thorities keep correspondence with each oftheir customers, and keep records of modi-fications to process technology and waste-treatment systems.

Research approach

Qualitative researchers generally use two ap-proaches to data analysis: an analysis of datato uncover key themes, and more detailed1 We told managers we were investigating innovation andinteraction between departments in manufacturing.


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analysis to measure and validate these themes(Glaser and Strauss, 1967; Miles and Huber-man, 1984). We used interviews to under-stand the history of each case and an archivalanalysis or a structured survey to measureimportant variables.

Initial response to regulationTo understand how managers and the organi-zation responded to the regulation, we inter-viewed a member of process-engineering,pollution-control and executive staff. Weasked (i) the history of the pollution control(PC) department, (ii) how technology hadbeen acquired, (iii) who made the decisionsand (iv) how changes were understood andimplemented. After these interviews, we con-ducted an archival study of sewer-authorityrecords to check these recollections.

Change following regulationTo study how the organization behaved in theyears following new environmental regula-tion, we interviewed company executives andthe managers of three departments – quality,PC and process engineering. We interviewedeach manager about the history of the plant,the response to regulation and major techni-cal, organizational and strategic changes.

To obtain another perspective on changesand to check the memory of respondents, wereviewed the archives of correspondence be-tween the facilities and the sewer authority togather longitudinal data on the facility’s pro-cess technology, treatment systems and waterand waste emissions. Each sewer authoritymust inspect the plant (up to eight times ayear) and describe the process technology andproducts of each plant. If a significant processchange is made, companies must send a letterwith plans to these regulators. We copiedrelevant correspondence and created files foreach case study. In the two facilities thatreported dramatic process improvements andreductions in emissions, we verified the re-ports by tracking the weekly emissions asrecorded by the sewer authority.

Current organizational behaviourAs we will show below, all of the organiza-tions created pollution-control (PC) depart-

ments. Our interviews revealed that (i)innovation and (ii) information flow was acritical differentiating aspect of these depart-ments. To understand how these departmentsinfluenced the organizational core in 1991–1992, we investigated the degree to which PCpersonnel communicated with, informed anddirectly changed the core of the organization.

We used a modification of Allen’s methodto measure information flows (Allen, 1977).We administered a survey to the managers ofprocess-engineering (PE) and PC personnel.We asked both managers to report the timespent communicating with personnel fromother departments (quality, PC, production,maintenance, laboratory etc.). We also askedthe PE managers to report the frequency withwhich personnel from other departments pro-vided helpful information.

To measure the extent to which PC person-nel initiated changes to the production pro-cess, we used a modification of Allen’smethod for measuring innovation (Allen,1977). We asked the PE managers to reportthe five most important process changes thatoccurred in the last year. They were alsoasked to rate the members of each of the threegroups in terms of their role in (i) ‘identifyingthe opportunity or need that became the im-petus for the change’ and (ii) ‘designing thechange’. The managers were then asked toindicate the effects of these process changeson product, production capabilities, produc-tion costs and PC. Because measures based ondiscrete changes can be noisy, we also askedPE managers to judge the degree to whichpersonnel from various departments madeprocess changes (five-point Likert scale).

FINDINGS

Response to regulation: managers protect coreprocess

Regulatory requirements for water-borneemissions increased sharply and dramaticallyin the early 1980s and then stabilized forthe remainder of the decade. As late as 1980,most printed circuit companies faced few


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environmental regulations. Most sent theirwaste-water to sewer authorities, and theseregulated only the acidity of emissions intothe sewer system so as to protect municipalpiping! Between 1980 and 1983, in anticipationof new Clean Water Act regulations, mostsewer authorities switched to tough newemissions regulations. The level of these regu-lations was standardized on 15 June 1983when the federal government promulgatedstandards for the industry.

Executives and top managers directresponseIn response to new environmental regulation,a senior member of the technical staff and atop executive in every facility selected certainwaste-treatment technology and formed anew department so as to allow the rest of theorganization to continue unchanged (seeTable 2 for actors involved in each facility).All executives interviewed remember the de-cision as a necessary step to reduce risk ofregulatory trouble. As the president of onecompany expressed it: ‘Make my industrystable and I’ll look to making my industrybetter.’ Or as another said, ‘It’s easier to paysomeone to operate a waste-treatment plantthan put up with meddling in manu-facturing’.

Technological choice suggests attempt tobuffer core processIn general, managers chose to acquire wastetreatment technology that maximized the de-gree to which PC could be independent fromproduction. In the early 1980s, two main treat-ment technologies existed for treating wastefrom printed circuit facilities: clarification orion exchange. Firms that chose to purchase aclarifier could then choose from several chem-ical systems – ferrous sulphate, DTC, TMT-55and borohydrate. Ion exchange is less costlyto operate, but requires the separation ofsome waste types and is relatively sensitive tochanges in the production process. Employingthis technology thus requires coordination be-tween PC and production. At the other ex-treme, ferrous sulphate is costly to operateand produces large amounts of sludge, but isvery insensitive to production changes. In-

deed, ferrous sulphate clarification is some-times sarcastically called the ‘Americansystem’, because waste-treatment operatorscan independently (but inefficiently) solvemost problems simply by adding more fer-rous sulphate. Between the two extremes,DTC and borohydrate are reputed to be moresensitive to process change. As shown inTable 2, executives in all but two facilitieschose to acquire ferrous sulphate clarifiers toremove metal contaminants from waste water.One facility initially installed an ion-exchangesystem and then installed a ferrous sulphateclarifier2. One facility that began later chose touse DTC.

The extent to which managers sought toinsulate the organization from any potentialregulation also can be gauged by the technol-ogy sizing decisions. In all cases, managerssized waste-treatment equipment for expectedgrowth plus an enormous reserve (see Table2).

The records show no evidence that man-agers expected that facility changes wouldreduce the need for waste treatment. Con-sider, for example, the decision of the presi-dent of facility D (in a letter from theconsulting engineer on the project explainingthe decision to the sewer authority):

Presently [facility D] discharges approxi-mately 20 000 gallons/day . . . or 40 gal-lons/minute. Average production has beendetermined to be 643 sq. ft/day. Allowingfor at least 50% increase in productionand, consequently, water usage over thenext 3–4 years, the treatment systemwould have to be sized to handle a maxi-mum flow rate of 60 gallons/minute.However the [president] has required thatthe system be designed to handle a maxi-mum flow of 100 gallons/minute.

More than ten years after this decision, facilityD produced three times as many printed cir-cuit boards and (due to an increase in multi-layer production) more than five times amuch surface area. Using their original calcu-lation they should have used between 60 0002 More details on this story are presented later.


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Table 3. By 1991, some PC departments were active innovators, process changers and important sources ofinformation

PC gives helpful Communication hoursPC procedureInnovationFacilityratea information to PEchange activity per week (PC–PE)b

Every dayActive 267A50 Very active Several a month 3B

5Every dayActive30CSeveral a month 4D 46 InactiveOnce a month 4E ? Active

Very inactive Several a monthF 18 2Very inactive Once a week 1.2511G

8 Somewhat inactive Less than monthly 0.5H

a Percentage of innovations reported by PE manager attributed to PC personnel.b Average of PC and PE reports.

and 100 000 gallons/day. Instead, they used25 000 gallons/day or about half the capacity oftheir ten year old waste treatment system.Although over the next ten years most of theeight facilities grew by more than 300% insales and production (square feet of boards),not one of the treatment systems reachedcapacity.

Pollution-control department formed to beorganizational bufferPurchasing and installing the treatment sys-tems represented a substantial cost (total capi-tal cost could be 5% of one year of sales), andoften took more than a year. During this time,executives changed the organization to in-clude a new department to manage the newtechnology and communicate with regulatoryauthorities. In five of the eight companies,managers hired a new employee to head thisdepartment. In three companies, the PC de-partments and the role of the ‘PC manager’developed more slowly from existing struc-tures and personnel (usually the FacilitiesDepartment).

Managers at all of the plants agreed that inthe early 1980s the job of PC was to ‘treatwhat production sent them’ (facility C)3 andthat PC should ‘try not to do anything tocause production people problems’ (facilityE). PC personnel reported that they had little

communication with process engineers, be-cause as one said, ‘we were just sludge pup-pies’ (facility G). In facility D, a consultantreported that the ‘environmental engineer [re-sisted] change every step of the way . . .[liked] to work only with the environmental

equipment and [didn’t] like to think about theprocess’. In facility H, a PC manager said hisjob had been to ‘fill out forms’. As a managerin facility A said, ‘Ten years ago everythingwas end-of-pipe, and only five years ago werealized that source reduction was important’.

Change following regulation: some buffersbecome change agents

By 1991, some PC departments no longer op-erated as organizational buffers (see Table 3).Some were active in changing the productionprocess, and indeed had become importantagents in improving process performance andquality. In facilities A, B and C, the processengineering reported that PC personnel wereactive in changing the production process.They also reported receiving information thathelped to improve the production processfrom PC personnel more than ‘several times aweek’. Finally, PC and PE managers reportedtalking with each other between 2 and 5 hoursa week – more often in each case then theycommunicated with quality staff.

Tracking the source of major processchanges also revealed the importance of somePC departments. Of 33 process innovationslisted on the survey, 13 were attributed to PC

3 This manager was referring more to his previous experienceat another company than to his experience at facility D. FacilityD started in 1986 and seems to have incorporated learning fromprevious companies.


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personnel. In two facilities (A and B), theProcess Engineering Manager rated PC per-sonnel as more important on average than hisown staff in initiating change to the productionprocess. In two other facilities (C and D), PCpersonnel were the second most importantsource of process changes. Moreover, PCdriven process changes appear to be real in-novations, not simply attempts to reduce ef-fluent. Of all the process changes attributed toPC personnel (13), all but one resulted in areduction of process costs, 61% resulted inquality improvement and 38% in extension ofproduction capabilities. (In contrast, of all theinnovations attributed to quality personnel40% resulted only in quality improvement.)

Our data suggest, however, that in facilitiesF, G and H PC personnel continued to act asorganizational buffers. They interacted infre-quently with core personnel and infrequentlyinfluenced the core process. Facilities D and Erepresent intermediate or perhaps transitionalcases. In facility D, the PE manager attributedseveral process changes to PC personnel, butthen rated the PC department as ‘inactive’ inprocess change. In facility E, the PE managerreported that PC personnel were active inchanging the production process, but not inproviding useful information. We discussthese two facilities in more detail later in thispaper.

The process of change: iterative evolution of rolesand technology

We interviewed personnel and conductedarchival analysis in eight plants to understandhow and why the behaviour of some PCdepartments changed in the years followingregulation. We found that PC technology andpersonnel brought a new agent into theseorganizations and a new source of informa-tion. PC personnel have an incentive to re-duce process waste and anomalies. Reducingsuch anomalies allows PC to use more effi-cient (but also more sensitive) control technol-ogy, and reducing anomalies improves theperformance of the production process. Asone PC manager said, ‘almost anything that Ican do to help the production process helpsme [to treat waste]’.

In our interviews, PC personnel explainedthat they could be effective in changing theproduction process because their role in treat-ing the waste allowed them to acquire uniqueand useful information. To illustrate this, sev-eral told us that if the water in the treatmentprocess turned blue it generally meant thatchelated copper was leaking under particularsqueegee rollers. Since PC personnel treatproduction waste from numerous stages andlocations, they have access to informationabout the entire system. Thus, like a doctordiagnosing a disease, they can infer informa-tion about the production process from thenature of the process waste. PC engineers alsosaid that they had unusual access to informa-tion from outside the company, because regu-lations cause them to gather and storedetailed technical information. As a result,members of the organizational core soughtout PC personnel to acquire information. Of-ten, during an interview of the PC manager,someone from production or PE would inter-rupt to ask for some information. Sometimes,the questions related to issues of PC, but justas often, PC managers received requests forinformation not directly relevant to PC.

Why were PC personnel still able to acquirenew and valuable information ten years afterthe regulatory shock? We found evidence thatthis information was part of an iterative, self-sustaining process of change. Usually the pro-cess began when changes in treatmenttechnology increased the sensitivity of PC tochanges in production. This sensitivity pro-vided information to PC personnel and moti-vated them to understand and improve theproduction process itself. As PC personnelimproved the production process, their rela-tions with the rest of the organization andtheir roles changed to allow greater interac-tion between PC personnel and personnel inPE (see Figure 1). Improvements in the pro-duction process and changes in roles thenallowed them to change their treatment tech-nology, and the process began the next itera-tion (see Figure 2 for an example from facilityA). In three facilities (A, B and C), this processled to iterative changes in treatment technol-ogy, organizational relations and eventuallyorganizational structure. In both of the


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Figure 1. Iterative change of technology, process androles.

manager vigorously disagreed. We believethis seeming inconsistency to be a reflection ofthe facility’s history. During the 1980s, thiscompany was cited for compliance problemsand the owner saw these as a personal attack.Although the PC Manager’s de facto roleseems to have changed, the owner’s personalopinions and feelings may have impeded thePC manager acquiring an officially larger role.

PC departments cause broad changesOne might expect that changes initiated by PCpersonnel would be limited and narrow, butin some organizations, the iterative changes intechnology and behaviour brought on by PCworkers were broadly influential. In fact, infacilities A and B changes initiated by PC ledto substantive changes relative to all of thecriteria that Tushman and Romanelli (1985)suggest are needed for a fundamental changein the organization (or, in their words a reori-entation; see Table 4). PC activities helpedchange the firm’s strategy, power relations,structures, controls and perhaps even thefirm’s core values5.

In these and other facilities PC initiatedboard changes through several means. First,as PC personnel became more involved withthe production process they directly influ-enced organizational behaviour by acting as‘big QC guy(s)’, or by teaching classes inTQM methods (facility C). One PC manager(C) called the research team after completingthe survey to ask about how to reduce prob-lems with worker ‘mind [expletive]s’ (i.e.mindless mistakes). He had tried teaching aTQM class and organizing improvementteams, but he still was not satisfied.

Second, PC began to act as intermediariesand facilitators of innovation. As one PC man-ager said: ‘The guys [production workers]often talk to me first, and I tell them to go talkto [the PE manager]. Sometimes I go directlyto [the PE manager] but usually I tell them,‘hey, he’ll be interested’ and then tell themwhat to say . . . how to talk to him’ (facilityE).

companies, the process led to an officialchange of the title and responsibilities of thePC manager4.

Two other facilities reported a similar pro-cess of incremental technical and organiza-tional change. In facility C (started in 1985),the process seems to have started at a moreadvanced stage. In facility D, physical barriersto interaction between PE and PC seem tohave decreased the rate of iterative change.

In facility E, we found conflicting and al-most schizophrenic impressions of the role ofPC personnel. Our survey showed that the PCmanager was ‘very active’ in making processchanges, and for this reason, we were told, hewas given the responsibility of managing thefacility’s laboratory. When we first visited thesite we were told by the owner that the PCmanager was ‘the only one who really knowswhat is going on around here’. Twice duringone interview with the PC manager, processpersonnel interrupted to ask for help withproduction problems (squeegee roller buck-ling and gold plating line miscalibration). Onthe other hand, the PC manager felt that hismain role was still to ‘protect the plant from[the regulating authority]’. On this, the ownerof the organization concurred, but the process

5 In facilities C and D, we found evidence that controls andvalues changed, while in facility G, structure and controlschanged. The other three facilities exhibit less change as a resultof PC activity.

4 Appendices with more details on these companies were re-moved to save space. They are available from the author onrequest.


233

A. KING

Figure 2. Iterative process leads to progressive change.

Third, PC technology caused more thought-ful responses to errors. Workers could nolonger wash spilled or spoiled chemicals downthe drain, and instead had to learn to takemore considered action.

Finally, the skills and procedures that work-ers adopted in response to PC facilitated theacquisition of other skills. For example, PCcaused improvements in production work thatthen allowed the firm to more easily shift tosmaller production lots. One manager (E) toldus that his company was gradually ‘evolving’in response to PC as workers became more‘cognizant of spills . . . and all kinds of things’.These more thoughtful workers had helpedmake the process more ‘transparent to work-ers’ and thereby facilitated the movement tosmall lot production.

Relative constancy: some PC departments remainbuffers

Three facilities (E–G) reported behaviour thatmore closely matched the initial buffering role.Why did the iterative process of change fail tobegin or to progress as far in these organiza-tions? One possibility is that conditions neces-sary for initiating the iterative process neverexisted. In each of these facilities, PC personnelwere (and are) located a great distance fromthe engineer and process personnel. It may bethat this distance prevented inference betweenwaste and process performance or impededthe development of closer interactions betweenPC personnel and the rest of the organization.In these organizations, PC personnel remainedan autonomous filter between the productionprocess and regulating authorities.


234



235

Tab

le4.

Incr

emen

tal

chan

gele

dto

chan

geeq

uiva

lent

toan

orga

niza

tion

alre

orie

ntat

ion

Cri

teri

afo

rE

xam

ple

from

faci

lity

BE

xam

ple

from

faci

lity

Are

orie

ntat

ion

Stra

tegy

The

plan

tsw

itch

edfr

omco

mpe

ting

onpr

oduc

tre

liabi

lity

toO

wne

rre

port

sth

aten

viro

nmen

tal

chan

ges

caus

edth

eco

mpa

nyto

shif

tfr

omse

lling

‘Che

vys’

tose

lling

‘BM

Ws’

.co

mpe

ting

onpr

oduc

tan

dpr

oces

sre

liabi

lity.

To

dem

onst

rate

Thu

sth

eco

mpa

nybe

gan

prov

idin

gm

ore

soph

isti

cate

dth

eir

com

mit

men

tto

proc

ess

relia

bilit

y,th

eco

mpa

nypl

aced

aph

oto

ofth

ew

aste

-tre

atm

ent

syst

emon

the

cove

rof

thei

rpr

oduc

tson

aqu

ick-

turn

basi

s.In

add

itio

n,th

eco

mpa

nym

arke

ting

broc

hure

and

add

ed‘e

nvir

onm

enta

lqu

alit

y’as

one

ofad

ded

PCco

nsul

ting

toit

spr

oduc

ts.

thei

rfo

urst

rate

gic

thru

sts.

Pow

erIn

the

earl

y19

80s,

the

proc

ess

engi

neer

sre

ject

edev

ensi

mpl

eC

ompa

nyor

igin

ally

hire

da

cons

ulta

ntto

mak

ea

trea

tmen

tsu

gges

tion

sfr

omPC

wor

kers

.B

y19

92,

PCpe

rson

nel

wer

esy

stem

and

expe

cted

him

tobe

gone

in90

day

s.O

ver

9ye

ars,

repo

rted

tobe

‘sec

ond

ary

proc

ess

engi

neer

s’.

PCpe

rson

nel

wer

ehe

was

hire

din

toth

eco

mpa

ny,

prom

oted

toPE

man

ager

and

even

tual

lybe

cam

ea

part

-ow

ner.

mov

edto

head

the

labo

rato

ryan

dw

et-p

roce

ssen

gine

erin

g.St

ruct

ure

Inre

spon

seto

the

succ

ess

ofpl

ant

leve

lPC

,co

rpor

ate

exec

utiv

esPC

dep

artm

ent

beca

me

one

ofth

eth

ree

mai

nd

ivis

ions

inth

eor

gani

zati

on(w

ith

oper

atio

nsan

dm

arke

ting

/sch

edul

ing)

and

crea

ted

aco

rpor

ate-

leve

lPC

offi

cean

dst

aff.

Faci

lity

staf

fw

ere

then

beca

me

Ad

vanc

edE

ngin

eeri

ng.

prom

oted

toth

isjo

b.C

ontr

olPC

pers

onne

lin

stru

men

ted

ane

wco

mpu

ter

syst

emfo

rtr

acki

ngC

ompa

nyad

opte

da

new

tech

nica

lan

dpr

oced

ural

syst

emfo

rco

ntro

lling

imag

ed

evel

opm

ent.

prod

ucti

on,

ane

wco

mpu

ter

syst

emfo

rtr

acki

ngch

emic

alch

ange

san

da

new

proc

edur

efo

rm

onit

orin

gan

dd

ispo

sing

ofch

emic

alba

ths.

PCpe

rson

nel

gain

edco

ntro

lof

proc

ess

bath

s.Pr

oces

sen

gine

erin

gm

anag

er:

‘Doi

ngw

aste

-tre

atm

ent

Val

ues

Pollu

tion

cont

rol

chan

ges

from

garb

age

men

to‘s

econ

dpa

irof

eyes

and

ears

’.co

rrec

tly,

[you

]ex

pose

alo

tof

prob

lem

s..

.T

hey

[the

regu

lato

rs]

gave

usa

coup

leas

piri

nan

dw

efe

lta

lot

bett

er’.

A. KING

The history of facility F suggests the impor-tance of iterative change in preparing theground for new technology and processes. Infacility F, management chose to respond toregulation by purchasing an extremely sensi-tive treatment technology (ion exchange).Sewer archives show that the Manager ofPlant Engineering chose this technology be-cause he wished to avoid sludge disposalcosts and to reduce water consumption. Un-fortunately, sewer records suggest that PCpersonnel did not have the skills to managethis technology, nor was the production pro-cess ready to receive it. In June 1984, the localsewer authority (responding to complaintsfrom residents) found the plant to be out ofcompliance for copper emissions, and processengineers discovered that the treatment sys-tem had been severely damaged. As a result,the Manager of Plant Engineering took overresponsibility for PC, added a robust treat-ment technology to their system (ferrous sul-phate clarifier) and ceased to use the othersystem.

This story suggests that the production per-sonnel and process were not ready for theintroduction of this sensitive system. Accord-ing to industry experts, the problem withfacility F’s treatment system occurs when leadwaste is discharged into a copper wastestream. It is likely, they suggest, that produc-tion personnel accidentally discharged leadwaste into the copper stream and damagedthe PC equipment. Revealingly, following thedifficulty, the facility also ‘renewed employeeawareness sessions on the matter of PC . . . ’.

The record also suggests that PC personnelhad not yet learned to interpret signals fromthe waste-treatment system. PC personnel notonly failed to diagnose the cause of the dam-age to the treatment system, they did not evenrecognize that the waste-treatment systemwas damaged, and only discovered the prob-lem after green foam began to escape from nearbymanhole covers alarming local residents.

Interestingly, after a hiatus of 8 years, thefacility’s organizational practices may haveimproved to allow the implementation of ahighly sensitive treatment system. In 1987, PCmoderately increased the sensitivity of thewaste-treatment system. In 1992, their new PC

manager told us he was working hard to leteveryone in the plant know that ‘the blackbox on the end of the pipe [waste-treatment]is not omnipotent’. He was trying to changethe old attitude that ‘as soon as I’ve done withit [production waste] I’m opening the valve[sending it to waste-treatment] and washingmy hands of it’. This attitude, he said, wascommon among production workers and pro-cessing engineering ‘was a party to it’. In1993, they purchased a more sensitive treat-ment system. Thus, by the early 1990s theiterative process of change may have beenadvancing in facility F.

CONCLUSION

In this article, we show that managers di-rected the initial response to a change in envi-ronmental regulation. As predicted by punc-tuated equilibrium theories, managers at-tempted to preserve the status quo by acquir-ing technology and personnel to protect theorganization from regulators. In other organi-zations, this technology and personnel inde-pendently acted as an effective buffer to newregulations and allowed the core organizationto remain unchanged. In some organizations,however, these very elements set in motion aprocess of incremental but eventually funda-mental change. They did so by iterativelychanging their interaction with the rest of theorganization and their own attributes. As theybecame more sensitive to the core organiza-tion, they also became more interconnected,useful and influential. In some cases, theyhelped reorient the organization.

Thus, this research suggests a link betweenpunctuated equilibrium models of organiza-tional dynamics (Tushman and Romanelli,1985) and theories of autogenetic systems(Drazin and Sandelands, 1992). As suggestedby punctuated equilibrium, executives directthe response to external changes – at leastinitially – and tend to attempt to preserve thestatus quo. However, in so doing managersinfluenced internal deep structures that thencause organizations to gradually evolve todifferent structures and behaviours.


236


This research also links divergent theoriesof environmental management. It supportstheories that managers will tend to bufferthemselves from regulation rather than ini-tiate broader organizational and operationalchange. It shows, however, that this very at-tempt at buffering may then cause changes inmindsets, organizational structures and oper-ational practices that allow the firm to engagein profitable pollution prevention. It showshow repeated interaction within an organiza-tion can expose the potential for mutual gainsand thereby change mindsets and percep-tions. As these mutual gains accumulate, par-ticipants begin to change their roles, theirperceptions and their expectations of thevalue of future actions.

This research shows how and why compa-nies evolve through a series of stages – eachof which is useful in advancing to the next.Thus, it helps clarify the theories of Hart(1995) and Russo and Fouts (1997) who sug-gest that environmental management shouldbe perceived as the progressive developmentof capabilities within the firm. Hart, Russoand Fouts also argue that environmental ca-pabilities can be protectable because their na-ture and functioning is often hard to observe.This research provides an example of suchinscrutable capabilities. As our data indicate,none of the managers recognized the potentialvalue of PC personnel until regulation forcedthem to hire them. Thus it seems reasonablethat such advantages might be very hard forother firms to discern and thus might providea sustainable advantage.

For practitioners, this research suggests anew perspective on the role and value of PCpersonnel. Managers, it suggests, should seethem not as a cost centre but as a potentialsource of valuable new information and inno-vative ideas. As a result, managers shouldlocate PC personnel near to other line person-nel (both organizationally and physically) andprovide opportunities for interaction.

For policy makers, this research suggestthat a defensive, end-of-pipe response doesnot preclude a more integrated and completeresponse. Thus, its appearance does not signalthe need for tougher regulation. Change mayindeed be occurring below the visible surfaceof the firm.

Future research should consider the extentto which PC departments are unique in theirability to initiate and sustain iterative change.As discussed above, PC departments mustprocess mistakes and waste from other de-partments, and thus internalize costs that areexternal to other tasks in the organization.They use sensitive technology and perform asophisticated process that allows them (andperhaps even requires them) to interpret andunderstand the core process. Thus, our re-search suggests that the following combina-tion of deep and elemental structures may beimportant: (i) incentives to improve the coreprocess and (ii) interconnections that allowaccess to universally valuable information.Other organizational entities also possessthese attributes to greater or lesser degrees.Quality departments, for example, internalizequality costs and diagnose production prob-lems by inspecting off-spec products. Futureresearch may find other organizational enti-ties that may belong to this class of meddle-some boundary-spanners.

ACKNOWLEDGEMENTS

I am grateful to the late Stephan Schrader for help in theformulation of these ideas and for assistance in the datacollection. I also wish to thank the three anonymousreviewers for their suggestions and comments.

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BIOGRAPHY

Dr Andrew King is Assistant Professor ofManagement at the Stern School of Business,New York University, 40 West 4th Street Suite707, New York, NY 10012-1118, USA.Tel.: +1 212 998 0288Fax:+1 212 995 4227E-mail: aking @stern.nyu.edu


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organizational response to environmental regulation: punctuated change or autogenesis?

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