Promoting Convergent Organizational Priorities: Tensions and Complementarities among Integrative Mechanisms

This paper offers and tests theoretical propositions about the compatibilities, tensions and complementarities among different integrative mechanisms. Organization theorists have discussed the existence of the six following integrative or coordination mechanisms that allow individuals' actions to converge towards a common organizational goal: 1) rules (March & Simon, 1958), 2) monetary incentives embedded in contracts (Barnard, 1938; Jensen & Meckling, 1976), 3) socialization into common values (Barnard, 1938; Ouchi, 1980; Schein, 1985), 4) authority (Simon, 1947; Williamson, 1975) or participation (Mitchell, 1973; Vancil & Lorange, 1975), 5) structure (Lawrence & Lorsch, 1967) and 6) cross-training and job rotation (Postrel, 2002). Further, the literature has also addressed the existence of tensions or incompatibilities in the joint use of some of them: for instance, Williamson's transaction cost approach applied to organizational design (Ouchi, 1980) considers the use of monetary incentives (market) and authority (hierarchy) incompatible for the same kind of activity (in terms of measurability and observability). In a similar way, researchers have argued and shown that monetary incentives reduce the intrinsic motivation that participation tries to stimulate (Frey & Osterloh, 2003). In contrast, agency theory considers that monetary incentives have to coexist in an organization along with the use of authority, given the limits of principals' cognitive and monitoring capabilities and agents' self-interested behavior (Jensen & Meckling, 1976). Similarly, Bradach and Eccles (1989) have argued that organizations appropriately combine different modes of governance such as prices (monetary incentives) and hierarchy (authority) within the organization for the same type of activity. However, the literature has not systematically explored and empirically examined the tensions or complementarities among all six integrative mechanisms. This is this paper's goal. We argue that the appropriate choice of integrative strategy depends on both (i) the fit between the integrative devices used and the nature of the organizational task characterized by the level of interdependence and uncertainty and (ii) the internal fit among the integrative devices used. We develop hypotheses about the impact of external and internal fit of the task and the integrative strategy on cognitive integration (i.e. on organizational priorities), integrative behavior and outcome (i.e. the degree of actually perceived organizational integration). We empirically test these hypotheses in a sample of 164 manufacturing plants belonging to three industries and located in five countries. Our results confirm our main thesis about the importance of both external and internal fit.