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Volumn 47, Issue 1, 2005, Pages

Using commitments to manage across units

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EID: 28744432264     PISSN: 7653697     EISSN: 1782155X     Source Type: Journal    
DOI: None     Document Type: Review
Times cited : (8)

References (27)
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  • 4
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    • Theory of the firm: Managerial behavior, agency costs and ownership structure
    • We use the words "promise" and "commitment" interchangeably. Our core argument extends to a range of promises including those made to individuals outside a firm's boundaries and budget commitments made inside a firm, among others; but we focus on horizontal commitments across organizational subunits in this article. A commit ment resembles an implicit contract, which plays a central role in several streams of theory, including agency theory: see M.C. Jensen and W. Meckling, "Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure," Journal of Financial Economics 3 (1976): 305-360;
    • (1976) Journal of Financial Economics , vol.3 , pp. 305-360
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  • 6
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    • Thousand Oaks, California: Sage
    • see D. Rousseau, "Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements" (Thousand Oaks, California: Sage, 1995). We share with these literature streams a focus on agreements between parties -whether they are called "implicit contracts," "psychological contracts" or "commitments" -as an important alternative to processes for coordinating activity within organizations and across their boundaries. These research streams have, by and large, focused on a specific dyadic relationship as the focus of analysis, for example, between an external supplier and customer in transactioncost economics, between principal and agent in agency theory and between senior executives (as representatives of the firm) and employees in psychological-contract theory. We differ from this literature first in using commitment as a general construct that can be used to analyze a broad range of promises. More importantly, our focus is the ongoing discussion required to make effective commitments rather than the specific content of the agreement.
    • (1995) Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements
    • Rousseau, D.1
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  • 8
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    • note
    • Activities are nonroutine to the extent that individuals cannot fully specify in advance the desired outcome or most effective process to achieve that outcome. Difficulty in specification stems from three sources: complexity arising out of a large number of variables and interactions among them, tacit knowledge required to articulate the desired outcome or optimal approach, and emergent knowledge that arises during the process. Nonroutine activities also include initiatives that can be specified but are not customary in a specific context.
  • 9
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    • Coordination, organizational boundaries and fads in business practices
    • Recent scholarship has distinguished between problems of cooperation (agents know the optimal action but lack incentives to pursue that action) and problems of coordination (agents have incentives to cooperate but don't know what to do). See C. Camerer and M. Knez, "Coordination, Organizational Boundaries and Fads in Business Practices," Industrial and Corporate Change 5, no. 1 (1996): 89-112;
    • (1996) Industrial and Corporate Change , vol.5 , Issue.1 , pp. 89-112
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  • 10
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    • Coordination in organizations: A game theoretic perspective
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    • C. Camerer and M. Knez, "Coordination in Organizations: A Game Theoretic Perspective," in "Organizational Decision Making," ed. Z. Shapira (Cambridge, U.K.: Cambridge University Press, 1997). Joint action across specialized subunits often poses both cooperation and coordination challenges.
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  • 11
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    • Social dilemmas: The anatomy of cooperation
    • Collaboration across organizational subunits can be viewed as a public good or a resource that all parties benefit from regardless of whether they have contributed to its creation or maintenance. Public goods create a temptation for employees to obtain a free ride and benefit from the fruits of collaboration without helping to create or maintain them. In multiunit organizations, the free-rider problem is aggravated when multiple parties are involved. Employees can free-ride with greater anonymity and spread the cost of their free-riding across many people as the number of individuals involved increases. See P. Kollock, "Social Dilemmas: The Anatomy of Cooperation," Annual Review of Sociology 24 (1998): 183-214.
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    • Commitment and the control of organizational behavior and belief
    • eds. B.M. Staw and G.R. Salancik (Chicago: St. Clair)
    • Gerald Salancik argued that commitments in general are binding to the extent that they are explicit, public, voluntary and irrevocable. See G.R. Salancik, "Commitment and the Control of Organizational Behavior and Belief," in "New Directions in Organizational Behavior," eds. B.M. Staw and G.R. Salancik (Chicago: St. Clair, 1977): 1-54. We agree with Salancik (and a large body of empirical evidence from social psychology) that individuals consider their promises more binding to the extent that they are public, explicit and voluntary. Revocability applies to a set of actions - Salancik uses the examples of shooting a friend or having a vasectomy - that are not generally relevant for speech acts, which are rarely irrevocable. We add the characteristics active and motivated because they apply to promises (a subset of all commitments) for reasons we elaborate on in the text.
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    • How to derive 'ought' from 'is'
    • For discussion of the ethical obligations arising from promises, see J.R. Searle, "How to Derive 'Ought' From 'Is,'" The Philosophical Review 73 (1964): 43-58.
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    • Boston: Allyn & Bacon
    • Psychologists have found that individuals feel more obligated by their commitments to the extent that they actively discuss them prior to making a promise. The investment in effort required to clarify the conditions may also contribute to the strength of perceived obligation. For a recent review, see R.B. Cialdini, "Influence: Science and Practice" (Boston: Allyn & Bacon, 2000), 52-97.
    • (2000) Influence: Science and Practice , pp. 52-97
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    • Research on intrafirm strategy-making processes has found that distributing resource allocation decisions throughout levels within large, complex organizations allows them to better harness specific knowledge dispersed throughout the firm. See J.L. Bower, "Managing the Resource Allocation Process" (Boston: Division of Research, Harvard Business School, 1970)
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    • Reading, Massachusetts: Addison-Wesley
    • C. Larman, "Agile and Iterative Development: A Manager's Guide" (Reading, Massachusetts: Addison-Wesley, 2003). Commitment-based management shares many features with agile project management, particularly the emphasis on satisfying the customer and the importance of frequent, face-to-face conversations.
    • (2003) Agile and Iterative Development: A Manager's Guide
    • Larman, C.1
  • 22
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    • note
    • One can think of commitments as a mechanism for converting the interunit coordination problem from a multiplayer game to a two-person game, which simplifies both the incentive and information challenges required for effective collaboration.
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    • See D. Rigby, "Management Tools Survey 2003," Strategy & Leadership 31 (2003): 4-11.
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