THINKING GLOBALLY BUT (RE)ACTING LOCALLY: POLYMORPHISM

AS COEVOLUTIONARY ORGANIZATIONAL INDIGENIZATION

JOHN USHER and ROSSITSA YALAMOVA

Faculty of Management, University of Lethbridge, 4401 University Drive, Lethbridge, AB

T1K 3M4, Canada (email: john.usher@uleth.ca)

What is polymorphism? In biological terms, polymorphism (literally, many forms) is a

niche-width fitness strategy that exists when a single species is distributed over an environment

with individual sub-species adaptively specialized to different states of a complex environment.

Thus, a particular species of bird may develop sub-species with slightly different beak

morphologies due to local food sources. Individual polymorphs may thus differ in certain aspects

critical to local survival but otherwise they share many other successful species characteristics.

Differing beaks aside, all members of the species maintain the same powerful wing structures

and plumage that have evolved to evade predators and attract mates.

Polymorphism as a niche-width fitness strategy in an organizational context has been

proposed as the attempt of multiunit organizations to balance system-level (species) advantages

such as economies of scale in purchasing and advertising, learning and knowledge transfer,

cross-sectional reliability and reputation capital with establishment-level (local) advantages

arising from adaptation to variations in consumer needs and desires, site conditions, political /

legal structures and social norms (Usher 1999). The following quote from the website of Best

Western International captures this approach: “While each individual Best Western hotel reflects

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the charm and appeal of its local culture, every property has the advantage of the brand’s strong

global presence and consumer recognition. © 2002-2004 Best Western International, Inc.”

In the global management literature, the idea that global and local can be mutually

reinforcing rather than conflicting has been termed ‘glocalization’ (Robertson, 1995; Wellman &

Hampton, 1999) and the supporting organizational form has been termed ‘coordinated

federation’ (Bartlett, Ghoshal & Beamish, 2008: 339). Essentially, in the coordinated federation

the key strategic capability is the world-wide transfer of home-country innovations; the

configuration of assets and capabilities is that sources of core competencies are centralized and

others decentralized; the role of overseas operations is adapting and leveraging parent-company

competencies and the development and diffusion of knowledge operates such that knowledge is

developed at the centre and transferred to overseas units. Bartlett et al (2008) disparage the

coordinated federation as an ineffective way of organizing on their way to extolling the virtues of

the transnational form with which they are most often associated, however we would argue that

the polymorph / coordinated federation remains the best approach to organize spatially

distributed service industry outlets as opposed to the globalized manufacturing and product

delivery firms (Unilever, P&G, Nestlé, etc.) for which the transnational form was developed. To

grow and succeed, the polymorph needs only to be able to sustain a network of largely

autonomous units based on a relatively small set of service delivery configurations that adapt

globally through a combination of central and peripheral derived but centrally vetted insights and

locally through idiosyncratic modifications that are not usefully transferred to other units.

Consider the example of a multiunit organization like McDonalds. In general, business

format franchising provides a fairly strong example of the trade-off between local adaptation and

system-wide performance reliability. Certainly, the "McDonald's experience" in Seattle should

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be identical to the "McDonald's experience" in Bangor on any given day. Similarly, that

experience should not change markedly from day to day at any particular location. The guarantor

of cross-sectional and temporal reliability is a thick manual of detailed procedures. But while the

McDonald's experience is intended to be the same across locations, all outlets are by no means

identical. There are several different outlet configurations to accommodate differing local

conditions, such as customer volumes or demographic profiles. There are regional menu

variations (McLobster is available in Maine), differences in seating capacity, outlets with drive-

throughs, outlets with playgrounds, etc. Additionally, over broader passages of time, system-

wide adaptations take place, such as the addition of breakfast, and local adaptations (with

headquarters’ approval) become global product offerings. For example, the fish sandwich at

McDonald’s was originally an adaptation to a local area of Cincinnati with a large Catholic

population. In this way, the polymorph enjoys the additional advantage of organizational

learning across levels (Usher and Evans, 1996; Ingram and Baum, 1997).

It is the mechanism through which idiosyncratic local modifications enter the polymorph

that is the central issue of this paper, however, since while many do ‘reflect the charm and appeal

of local culture’ as noted by Best Western, others are clearly the outcome of the contested terrain

of globalization. Returning to McDonald’s, for example, a popular business school case study in

the area of stakeholder management (Karakowsky, Carroll & Buchhlotz, 2005) explores the

turmoil triggered by an attempt by McDonald’s to locate an outlet on Krakow’s market square, a

UNESCO World Cultural Heritage site. This concern with the impacts of globalization on

culture means that we are also very interested in exploring the three dominant theses in this area,

namely, homogenization, polarization and hybridization (Holton, 2000).

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From a paradigmatic perspective, organizational ecology should be well equipped to take

advantage of the insight into complex adaptation that polymorphism presents, but despite its bio-

ecological roots, extant research on niche width theory in organizational ecology has largely

focused upon specialism / generalism tradeoffs and failed to adequately incorporate the fitness

strategy of polymorphism (Baum, 1996; Aldrich & Ruef, 2006). This oversight is unfortunate

given the growing global presence of polymorphism as a mode of organization among multi-unit

organizations such as chains, franchises and multi-national enterprises (Baum, Li & Usher,

2000).

Fortunately, parallel developments in the understanding of evolutionary and

coevolutionary dynamics and their application to organizations have provided fertile ground to

explore the balancing act of polymorphism (Kauffman, 1993; Campbell, 1994; Baum, 1999;

McKelvey, 1999, 2002). This body of theory allows us to position polymorphism both in terms

of the whole-part coevolutionary tensions this form encourages internally and with respect to the

mutually causal, deviation-amplifying relationship it encourages with respect to its environment.

In concert with received theory, we explore polymorphism in general as a purposive

fitness strategy, but also strive to develop a more ‘ecological’ competing view by reframing

polymorphism as an organizational form based on the emergent outcomes of a coevolutionary

process of indigenization. We do this by drawing upon the tensions among voices that warn of an

emerging global monoculture; those that see an emerging polarization and inevitable conflict

between the McWorld and jihad (Barber, 1995); and those that argue for a hybridization or

syncretization position where a “receiving culture brings its own cultural resources to bear, in

dialectical fashion, upon cultural imports” (Tomlinson, 1999: 84; Holton, 2000). From this third

standpoint, we argue that many polymorphic adaptations (like locally sensitive architecture for a

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franchised restaurant, for example) are better seen as pluralistic outcomes arising from

stakeholder negotiation rather than as exclusively representative of corporate strategic intent.

The paper concludes with a discussion of how polymorphic adaptation as the

indigenization of spatially distributed ‘packets’ of corporate routines is consistent with the

‘ecological style’ and an autopoietic view of multi-unit organization and the global environment.

Coevolutionary Tensions: Parts vs. Wholes and Fitness Landscapes

At its most basic, adaptation of parts versus wholes is the problem of differentiation and

integration (Lawrence and Lorsch, 1967): the uneasy tension between the efforts of

organizational subunits to adapt to their relevant sub-environments and the imposition of

coordination and control by the larger organization to avoid sub-optimization by individual units.

It is at the level of multiunit organization that this issue is most relevant here, however.

Barnett and Burgelman (1996:11) frame this problem as a tradeoff between

establishment-level advantages of local adaptation and system-wide advantages of reliability in

situations where an organization operates in more than one market. There are two issues here:

The first is the extent to which the competitive context rewards either local adaptation or system-

wide advantages. Advantages to local adaptation might include any factors underpinning

heterogeneous resource environments such as differences in consumer needs and desires,

industry conditions, political and legal structures, and social norms (Bartlett and Ghoshal, 1989).

System-wide advantages might include such common items as the presence or absence of

economies of scale in purchasing and manufacturing (Chandler, 1977) as well as less obvious

benefits such as system-wide learning (Ingram and Baum, 1997), cross-sectional reliability

(Hannan and Freeman, 1984) and reputation (Ingram, 1996).

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The second issue is the extent to which both competitive strategy and organizational form

are aligned to take maximum benefit from such advantages. Among the factors here is the

interpenetration of the organization and its environment, i.e. the extent to which organizational

sub-units are either insulated from environmental selection pressures (Barnett, 1997) or exposed

to them (Ingram and Baum, 1997). In the former case, Barnett’s argument is essentially that a

multiunit parent organization may suffer the same fate as a country that shields its industries with

tariffs: the competitiveness of the larger entity is diminished (Porter, 1990). In the latter case, the

author’s argument is similar to that evoked for franchising; that “franchisers can allow markets to

discipline their franchise network,” (Aldrich and Auster, 1986) i.e. weak units fail and thereby

raise the inclusive fitness of the larger organization.

Extending this argument, we would identify the polymorph as a synergistic

coevolutionary configuration (Baum, 1999) in which the fitness outcomes of individual units are

most often positively linked to the fitness of the overall organization. In general, franchises and

chains allocate spatially defined market areas to minimize inter-competitive cannibalization due

to niche overlap. This means that the chief benefits accruing to the polymorph from its individual

units are the inflow of royalty-based revenues and periodic ideas to tune the product/service

delivery model that arise from local adaptability pressures or opportunities. Given that selection

pressures at the unit level both discipline the system by removing weak units and allow the

polymorph to learn from unit successes and failures, it is therefore clearly in the polymorph’s

interest to open up the boundaries of its individual units to enhance the adaptation of the larger

organization to the broader environment. As Levinthal (2001) notes, Kauffman’s (1993) NK[C]

model provides a canonical representation of the problem of spatial-temporal adaptation and

interdependencies across strategic choices. If we consider the above actions of the polymorph in

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terms of the NK[C] model, they amount to increasing C, i.e. the number of outside agents

contacted, which acts as a corrective for the very high level of trait interconnectedness (K)

within internal agents (units) due to the formalization / standardization protocols of the

polymorph (McKelvey, 2002).

This is also seen in Baum’s (1999:124) application of Kauffman’s NK[C] model in which

Baum identifies “strategies that tune the structure of whole-part coevolution to render it more

globally effective by raising access to high-fitness local maxima, and either speeding the pace of

evolution at the organization level or slowing its pace at individual and face-to-face group

levels.” Here, balancing K and C by matching strategy and structure acts to increase internal

cooperation when there is value in the transfer of knowledge and skills among otherwise

independent units.

To determine if environmental heterogeneity is fateful to a given organization, it is

important to understand how the elements of the environment are distributed and the nature of

the relevant organization-environment transaction. As developed and operationalized by Hannan

and Freeman (1977), variability of environments is defined primarily in temporal terms, i.e. the

adaptive fitness of specialist and generalist strategies is dependent upon the ability of each form

to tolerate changes in the niche over time. However there is substantial dormant potential in

niche width theory to address multiunit organization as a response to spatial variability in

environments. Niche width theory as originally developed in organizational ecology and strategic

management exhibits three weaknesses: First, it examines only the relative fitness of specialists

and generalists as competitive strategies for differing environmental conditions and rarely

mentions polymorphs. This exclusive focus on specialism and generalism in empirical work to

date has slowed theory development and contributed to mixed and weak empirical support in

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studies of competitive strategy in organizational ecology. Second, no distinction is made

between single-unit and multi-unit expressions of the strategies of specialism and generalism.

This reflects the lack of such approaches in the biological domain but is a critical weakness in a

world of franchises and chains. Third, as developed and operationalized by Hannan and Freeman

(1977), heterogeneity of environments is defined almost exclusively in temporal terms, i.e. it is

based on changes in the niche over time. Thus the amount and patterning of changes (changes in

grain) across physical space (geographic or spatial heterogeneity) is not considered here or

developed in later work (e.g. Freeman & Hannan, 1983).

In terms of theory development, it is perhaps this last problem which is most limiting,

since it is at the root of the failure to incorporate the multiunit forms of specialism and

generalism and the polymorphic form. Beyond temporal variability such as seasonality, variation

in environmental resources may also clearly involve the amount and patterning of changes in

different locations. Given such an interpretation of grain, it becomes feasible to differentiate

between firms which are able to discriminate among the available resources, i.e. set out to attract

a particular customer segment and those which are not able or do not choose to discriminate

among the available resources (Usher, 1999). Conceptualizing grain in such terms also helps to

highlight an important point: Grain is not a characteristic of a given environment, but is defined

by an individual organization's interaction with that environment. Thus, it is realistic to assume

that a small, local firm may have a much better experience or understanding of the local market

than a larger, national firm has of the same market. Being aware of differences in resource

utilization permits market segmentation which effectively reduces industry rivalry (Porter 1980).

Being unaware of utilization patterns does not permit firms to differentiate among types of

customers, so organizations are fully inter-competitive within spatial limits or across cross-

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sectionally defined markets or industries. Grain can thus be seen as describing the ability to

recognize and respond to patterns of change in the environment, whether over time or from place

to place.

This has substantial implications for the fitness of the polymorphic form. It has similar

advantages and disadvantages to multi-unit specialists in that it can confer the common strengths

and economies of greater numbers on its multiple subunits, but it cannot achieve the depth of

exploitation available to the single unit specialist in a single location. Its differential advantage is

the ability to discriminate among multiple resource environments through scanning and

evaluation, then selectively adapt various subunits to those environments in different ways. This

ability is achieved at some cost to the organization. Investments are made to develop formula

facilities that minimize start-up cost and risk. On-going tightly managed decentralization solves

the need for intense coordination, local management orientation, high personal service and close

control typical of fragmented industries (Porter, 1980). Coupled with this is a finely tuned system

that encourages limited adaptive changes to local conditions which are constantly vetted for both

their potential to enhance or damage the overall success of the polymorph. These abilities do not

come cheap but the additional cost sustains an important benefit: the ability to maintain the

fidelity of the firm’s competencies and its reputational capital, while at the same time

maximizing adaptation to local conditions. This is the essence of the polymorphic organization’s

balancing act. Too much variation either from place to place or from time to time and the

distinctive competencies and/or brand image of the firm which give it its competitive strength

may be so little in evidence in some outlets that they do not survive. Too little variation either

temporally or spatially and the essential competitive strategy becomes a generalist response

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which tries to strike an "average" across those factors which vary across locations and across

time such as customer demographics or traffic volume.

Returning to Kauffman, the notion of fitness landscapes and how they vary in their

ruggedness (Kauffman (1993: 33-34) is an important insight with respect to how organizations

such as chains and franchises (polymorphs) coevolve with their environments. As explained by

Levinthal (2001, p.333):

The variable N refers to the number of distinct attributes in an overall policy choice. For instance, in the choice of a firm’s business strategy, a number of decisions must be made, including decisions about how the product or service is to be marketed, such as brand name and distribution channels, and how it is to be produced, such as the degree to which activities will be done within the firm versus outsourced. The variable K refers to the extent to which the payoff associated with one policy choice depends on other policy choices.

The degree of interrelationship among policy choices has a somewhat counter-intuitive implication for the topography of a fitness landscape. The fitness landscape is the mapping from the N policy choices to a payoff value. When the value of K is low and there is little interaction among policy choices, then the fitness landscape is smooth or highly correlated. With a low value of K, a change in one policy has little impact on the fitness contribution of other choices. As a result, incremental changes in the vector of N policy variables have a relatively modest impact on overall performance. In contrast, with a high K value, a change in one policy, such as distribution strategy, has implications for the payoff contribution of a large number (K) of other policy choices. In such a setting, even an incremental change in the vector of N policy variables may substantially change the overall payoff level. As a result, the fitness landscapes become less correlated, or equivalently, more rugged, with a high K value.

As noted above, it is clear that the finely-tuned nature of chains and franchises argues for

a high value of K for the polymorph, only slightly less than the identical units of multiunit

specialists (e.g. automotive service/repair franchises) or multi-unit generalists (e.g. full-menu

franchised restaurants). And since the nature of the polymorph is such that individual units are

largely self-contained, i.e. each embodies nearly all of the important ‘policy choices’ necessary

to the success of the larger organization’s approach to the market, this implies that even small

changes in how a unit operates will have potentially large implications for success. In general,

therefore, franchise and chain organizations with finely-tuned service/product delivery packages

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of routines should face rugged fitness landscapes wherein they can easily become trapped on low

local peaks from which the long-jump to another peak can be perilous indeed. It is for this reason

that the population learning (Rivkin, 2000; Levinthal, 2001) approach of the polymorph becomes

particularly salient. By combining Darwinian selection at the individual unit level and

Lamarckian adaptation at the polymorph level (Usher & Evans, 1996), the polymorph can test

out potential jumps without risking the whole company.

Globalization and Indigenization

As noted in the paper’s introduction, we have explored polymorphism in general as a

purposive fitness strategy, but hope now to develop a more ‘ecological’ competing view by

reframing polymorphism as an organizational form based on the emergent outcomes of a

coevolutionary process of indigenization. To accomplish this, we expand our lens to view the full

scope of globalization and review three theses concerning where our world is going: global

monoculture, polarization and conflict, and hybridization (Holton, 2000).

Most readers will be familiar with the monoculture or homogenization thesis in which

Hollywood, Starbucks, MTV, Amazon.com and McDonald’s (to name a few) are seen as

combining to drive out local cultures around the world and replace them with Westernized (some

would say Americanized) culture. The polarization thesis builds upon this by positing an

emerging cultural dichotomy between Western and non-Western ways of life which may lead to

a civilizational conflict between the West and an emergent Islamic-Confucian axis (Huntington,

1996). Holton (2000: 146) characterizes this conflict using Barber’s (1995) polarization of

McWorld and jihad as follows: “McWorld promises to tie us together through the soulless

consumption of commodified cultural production, while jihad promises moral liberation from

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mammon through communitarian political mobilization in pursuit of justice.” The polarization

thesis is thus founded in resurgent ethnonationalism as a highly confrontational but necessary

corrective to the spreading evil of Westernization. It does not countenance hybridization.

It is not difficult to see that many of the shock troops of globalization as seen by anti-

globalists are those very organizations that we have been describing here as polymorphs.

Similarly, Naomi Klein (2000) speaks of Starbucks and McDonald’s as the façade behind which

the real machinery of globalization (WTO, the World Bank, IMF) lurks. As Holton (2000: 144)

points out, however, there is substantial evidence of a third thesis – hybridization – some of

which can be attributed to glocalization (Robertson, 1995): “The term ‘glocal’ applies, as the

Swedish telecommunications firm Ericsson (1998) puts it, where “the market, customers, and

products” are “global in many contexts, but local in design and content.”” It is from this third

perspective that we begin to see that polymorphic adaptations can also be pluralistic outcomes

arising from local pressures rather than as exclusively representative of corporate strategic intent.

This process, often referred to as indigenization or creolization (Osland, 2003), has long-standing

historical significance that relates to natural human tendencies. As Holton (2000: 151) suggests:

“Cultural actors may not recognize, or want to recognize, the significance of exogenous elements

in their cultural repertoire, since it is reassuring to indigenize that which has been borrowed.”

Encouraging openness to limited adaptation to local circumstances by a unit of a polymorph may

thus provide an opportunity to indigenization that works to integrate an outlet into its cultural

context as well as surfacing potentially useful insights available to system-wide learning.

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Conclusion

This paper has attempted to forge common understandings among three sets of ideas:

organizational ecology’s niche width theory, complexity theory’s NK[C] model, and

globalization’s dominant theses. The common thread has been a demonstration of how

polymorphic adaptation as the indigenization of spatially distributed ‘packets’ of corporate

routines might be seen as consistent with the ‘ecological style’ and an autopoietic view of multi-

unit organization and the global environment. As globalization drives the world economy and its

manifold cultures toward increasing interconnection, the ability, indeed the competitive

advantage, of polymorphic organization to use limited culturally sensitive local adaptation as a

means of counteracting the damping effect of complexification (McKelvey, 2002) stands as an

exemplar for the hybridization thesis.

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Brief Biographical Notes:

JOHN M. USHER is a professor of strategy and organisation theory at the University of Lethbridge in Alberta, Canada. He holds a Ph.D. in organisational behaviour from the University of Toronto. His research has been published in Administrative Science Quarterly, Academy of Management Journal, Academy of Management Review and Journal of Management Inquiry. He is interested in organizational ecology - specifically niche-width theory, strategic alliance formation, complex adaptive systems, institutionalization theory, multi-unit organization strategy (franchises, chains) and industrial strategy in emerging economies.

ROSSITSA M. YALAMOVA is an assistant professor of finance at the University of Lethbridge in Alberta, Canada. She holds a Ph.D. in finance from Kent State University. Her research has been published in Investment Management and Financial Innovations, International Research Journal of Finance and Economics, and the Asian Academy of Management Journal of Accounting & Finance. She is interested in risk measurement, multifractal models, wavelet analysis of market crashes, phase transition and chaos. She was a participant in the 2007 Santa Fe Institute Complex Systems Summer School held at the Beijing Institute of Theoretical Physics.

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