Bureaucracy versus high performance: Work reorganization in the 1990s

The Journal of Socio-Economics 37 (2008) 1825–1845

Bureaucracy versus high performance:Work reorganization in the 1990s

Song Yang ∗University of Arkansas, Department of Sociology and Criminal Justice,

211 Old Main, Fayetteville, AR 72701, United States

Received 17 August 2006; received in revised form 2 January 2007; accepted 15 March 2007

Abstract

During the time of increased work reorganization, I investigate the components of bureaucratic and highperformance work systems and the sources of variation in an organization’s adoption of bureaucratic andhigh performance practices. Findings from the 1996 National Organizations Survey suggest that the degreeof workplace formalization, level of hierarchy, and number of departmentalization strongly indicate bureau-cratic organizations, but the alleged high performance indicators of teamwork, skill enhancement, job auton-omy, and innovative pay structures do not cohere to identify high performance work systems. Instead, team-work and skill enhancement cluster to indicate one type of high performance work system, whereas job auton-omy and performance-based pay constellate to identify another type. Multivariate analyses reveal that institu-tional mimetic isomorphism is the major factor that compels organizations to implement a certain work sys-tem. Organizations mimic their peers in their strategic adoption of different work systems. In addition, foreignmarket competition increases organizational adoption of teamwork and training programs to enhance skills.© 2007 Elsevier Inc. All rights reserved.

JEL classification: L2; L20; L22

Keywords: Work reorganization; Bureaucracy; High performance; Work system indicators

Across continents corporate reconstruction has been at the top of employers’ agendas. Manybusiness firms have accomplished unprecedented success through structural reorganization. Forexample, Wal-Mart has moved from the humble beginnings of a local five and dime to become aglobal powerhouse holding a lion’s share of the retail market in only a short couple of decades.Chief factors that produce such a success are the adoption of many high performance prac-tices including teamwork, decentralization of decision making, and lean process to maintain low

∗ Tel.: +1 479 575 3206; fax: +1 479 575 7981.E-mail address: [email protected].

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1826 S. Yang / The Journal of Socio-Economics 37 (2008) 1825–1845

overheads (Obloj et al., 1995: 171). Other successful cases in work reorganization involve imple-mentation of various forms of teamwork, such as cross-functional teams in IBM and Honda City,and problem-solving teams in American hospital systems (Obloj et al., 1995: 77).

However, despite decades-long studies on work structure transformation, researchers lack con-sensus on what constitutes transformed organizations, which are often labeled as high performancework systems (Osterman, 1994; Kalleberg and Moody, 1996; Cappelli and Neumark, 2001; Lawleret al., 1995; Godard and Delaney, 2000; Huselid, 1995; Cappelli et al., 1997: Chpt. 3; Appelbaumand Batt, 1994; Doeringer, 1991: Chpt. 9). A study on American workplace human resource prac-tices with the 1991 National Organizations Survey measured high performance work systems withfour indicators: decentralization, job training, performance-based compensation, and firm internallabor market (Kalleberg and Moody, 1996); another study used two waves of surveys of Americanmanufacturing establishments to measure high performance work systems with five categories:self-directed work teams, job rotation, quality control, total quality management, and statistic pro-cess control (Osterman, 1994, 2000). The issue is complicated by subjectivity. Recently, a reviewof the new paradigm of human resource management practices identified several shortcomings ineven identifying such systems: one of the most important is that high performance work systemsare measured based on researchers’ judgment or preference (Godard and Delaney, 2000).

Although scholars discuss the issue that high performance work systems accomplish laborcontrol and coordination in contrast to the methods in bureaucratic work systems (Cappelli etal., 1997: Chpt. 3), few researchers empirically investigate the changing workplace structures inrelation to the traditional bureaucratic work systems. Studies suggest that high performance worksystems contradict bureaucratic work management in human resources practices. Bureaucraticorganizations adopt rigid work structures and task assignments to establish an assembly linemodel and facilitate mass production (Scott, 1998; Appelbaum and Batt, 1994: Chpt. 1). But thenew economy of high performance work systems is characterized by product customerizationand constant innovation (Knoke, 2001; Appelbaum and Batt, 1994: Chpt. 8), which providesfertile ground for production with flattened hierarchy, democratic work structures, and equalparticipation in the decision-making from all levels of workers (Osterman, 1994; Kalleberg andMoody, 1996; Lawler et al., 1995). However, in academia, the two work systems are not treatedas in distinction from each other. For example, in recent empirical research on work systems, a setof essential indicators for bureaucratic work systems, such as personnel selection, performanceevaluation, job design, grievance procedures, and promotion criteria (Marsden et al., 1996), arealso used to measure high performance work systems (Huselid, 1995). Despite the empiricalevidence that bureaucratic and high performance practices may be simultaneously present in onework organization (Yang, 2003), a clarification to demarcate the difference between bureaucracyand high performance work systems and to define the respective components is crucial to advancea scholarly understanding in this vein of work (Godard and Delaney, 2000).

The topic of work restructuring is highly significant for some theoretical reasons – from theperspective of economics, organizations undertaking structural transformation are investing in animportant asset – their organizational capital (Tomer, 1987, 2001) to develop a more cooperativesystem of labor relations that elicits high worker effort and thus higher x-efficiency (internalefficiency) (Altman, 1996). This study investigates the defining characteristics of bureaucraticand high performance work systems and the factors that drive organizations to adopt these twodistinctive work structures. Thus, it should enhance our understanding of the components of thisimportant organizational capital and the antecedent factors leading to organizational investment insuch capital. To this end, this study uses the exploratory factor analyses and multivariate regressionto address the two issues with a national representative sample of U.S. work establishments: (1)

S. Yang / The Journal of Socio-Economics 37 (2008) 1825–1845 1827

the relationship between bureaucratic and high performance work systems and their respectivecomponents; (2) the explanatory factors for the levels of bureaucratization and high performancepractices adopted in American work organizations.

1. Bureaucracy versus high performance work systems: definitions

Witnessing the changing landscape of world economy with increasingly globalized compe-tition (Knoke, 2001), a recent surge of research studies on work organizations focus on howorganizations reconstruct their business practices and human resources management in responseto the new economic challenges (Osterman, 1994, 2000; Cappelli et al., 1997; Doeringer, 1991;Appelbaum and Batt, 1994). In a striking consistency, researchers noted that transformed highperformance work systems contradict bureaucratic organizations in various aspects of humanresources management (see Appelbaum and Batt, 1994: Chpts. 1–3; Cappelli et al., 1997: Chpt.3). However, researchers have disagreed on the conceptual definitions of both bureaucratic andhigh performance work systems. On the one hand, the two work systems are defined with theirrespective modes of production. In this vein, bureaucratic systems are those that widely usemass production and the assembly line model (Scott, 1998; Appelbaum and Batt, 1994: Chpt. 1),whereas high performance work systems are identified by their lean production mode that aimsto reduce waste in the production process (Appelbaum and Batt, 1994: Chpt. 8). The productionmode definition is normally used by researchers who focus on manufacturing firms, as opposedto organizations in other industries such as service or public administration. On the other hand,bureaucratic and high performance work systems are also identified by their distinctive methodsof human resources management (Edwards, 1979, 1984; Kochan et al., 1986; Cappelli et al.,1997; Lawler et al., 1995). For example, bureaucratic work systems embrace highly formalizedlabor control with fine-grained classification according to workers’ specialty and responsibilities(Edwards, 1979, 1984). In contrast, high performance work systems adopt many labor integrationpractices such as teamwork and power relegation (Cappelli et al., 1997: Chpt. 3).

The two distinctive definitions of work systems simply reflect scholarly dissimilitude in theirrespective emphasis. In the actual working environment, organizations with a certain productionmode commonly use a set of human resources management programs that are facilitators to theproduction processes. For example, in bureaucratic work systems, fine-graded labor classificationgoes hand-in-hand with mass production. Likewise, labor integration is common to the highperformance work systems that promote lean production. However, a conceptual clarification ofthe two work systems with their respective definitions is pivotal in advancing our understanding ofthe workplace restructuring. Following the human resources management approach, bureaucraticwork systems can be defined as work organizations that embrace highly formalized labor controlusing lateral classification and vertical differentiations. High performance work systems canbe defined as the work organizations that use various methods including teamwork and powerrelegations to integrate, rather than to categorize, workers from different specialty areas andmanagerial ladders. The human resources distinction of the two work systems indicates thatthey are inherently contradictory to each other. High performance work systems promote laborintegration that organizes workers from different specialty departments and hierarchical ladders,whereas bureaucratic work systems stress labor classification that disaggregates workers into theirexpertise areas and different managerial positions.

Another important distinction should be made between high performance practices and highperformance work systems. In much of the literature about high performance work systems, thesetwo terms – high performance work practices and work systems – are used interchangeably. Indeed,


high performance work system is empirically defined with a set of high performance practicesadopted in the workplace. However, the two concepts are fundamentally different from eachother. Although a set of high performance practices collectively define a high performance worksystem, individually each high performance practice can be just as well used for human resourcesmanagement in bureaucratic work systems. Essentially, at the individual work practice level, highperformance and bureaucratic practices can be simultaneously present in a single work system(Yang, 2003). However at the collective level, a work system can be only identifiable with a set ofdistinguishable practices that collectively define and distinguish it from other types. In other words,although both bureaucratic and high performance work practices can be simultaneously presentin one work system, bureaucratic and high performance work systems are mutually exclusive thatrespectively define and distinguish work organizations. One of the major goals for this researchis to quantify the constituent components that comprise the respective work systems. Sectionsbelow discuss in detail the process of work reorganization and illustrate the contradictory natureof these two work systems.

Central features to the system of bureaucratic management are the use of elaborated rules,policy and regulations to govern worker–employer relations, to classify jobs at hierarchical andlateral levels and to formally define job responsibilities. One study documented how a bureaucraticworkplace used formal rules to create a finely-graded division and stratification among workers, toevaluate job performance, determine promotion and spell out firing or hiring procedures (Edwards,1979: 131–162). The bureaucratic labor control and coordination fits nicely with mass production,which requires an efficient and formalized method to organize a large number of workers (Marsdenet al., 1996). However, since the 1970s, work organizations operating on the mass productionmodel have received increasing challenges in their core product market or service domain fromthose operating on transformed work structures (Appelbaum and Batt, 1994: 1–25). Globally,U.S. employees have become the most expensive labor force so that even with mass productionthat intends to minimize labor costs by maximizing output per worker, wages for workers in manyother countries are only a fraction of those of American workers. Moreover, the proliferation ofmicroprocessor-based technologies has not only increased workers’ productivity worldwide, buthas also facilitated a fast product delivery and a quick response in the product or service designto accommodate customers’ idiosyncratic needs (Appelbaum and Batt, 1994: 1–25). For manyAmerican plants that were benefiting from mass production operations, the necessity to lookfor alternatives to mass production and associated bureaucratic labor control is urgent to theirsurvival.

American employers striving to reform mass production methods and bureaucratic controloften embarked on many different routes. Researchers have documented that the American humanresources model evolved in U.S. organizations since the 1950s to facilitate employer–employeecommunications and employee involvement in corporate business (Kochan et al., 1986). Later, anew labor management style developed called flexible mass production: it aimed at reducingcosts by cutting the full time labor force, making great use of micro-processor technolo-gies, and increasing low-paid, temporary, and part-time workers. However, neither of thesetwo approaches fundamentally changed the bureaucratic management in many mass produc-tion plants, which continue to use the finely-graded hierarchical and lateral labor divisionsand to formalize rules and regulations to manage its labor force (Appelbaum and Batt,1994).

The intensified global market competition has accelerated the restructuring of the Americanworkplace and exposed several failures of the bureaucratic work system in response to newmarket conditions. To improve quality and to respond to customers’ needs more effectively,


frontline workers need more power to make quick decisions. To accomplish this, employers haveeliminated many intermediate managers, which also serves to cut labor cost. To facilitate smoothoperations for the workforce throughout the hierarchy, job definitions need to be flexible, jobdiscretion expanded, job skills constantly upgraded, and the high performance of workers needs tobe rewarded (Cappelli et al., 1997: 90–91). High performance work system emerges to accomplishthose fundamental changes through employee involvement, commitment, and empowerment,instead of employee control. Unfortunately, unlike systematic analyses of bureaucratic worksystems, studies of high performance work system, in particularly those from the perspectivesof organizational economics, have been limited because organizational economics is designedto explain behavior in control-oriented, rather than involvement-oriented organizations (Tomer,2001: 64–67).

High performance work systems encompass many different management practices. For exam-ple, Pfeffer (1998: 64–98) discussed seven essential characteristics of high performance worksystems, such as job security, selective hiring, self-managed team, performance-based com-pensation, extensive training, reduced status distinctions, and extensive information sharing.Other scholars identified a cluster of common characteristics of high performance work systems,including innovative work practices such as teamwork, job rotation, and performance-based com-pensation (Osterman, 1994; Kalleberg and Moody, 1996; Cappelli and Neumark, 2001; Lawleret al., 1995; Appelbaum et al., 2000: 116–128). This research use available indicators to examineempirically the components of bureaucratic and high performance work systems, respectively.The following two testable hypotheses summarize those discussions.

H1. Bureaucratic organizations are indicated by the level of hierarchy, the lateral departmental-ization, and workplace formalization.

H2. High performance work systems are indicated by teamwork, skill upgrading, worker empow-erment programs, and performance based pay structures.

2. Bureaucracy versus high performance: which organizations adopt which systems ofoperation?

With an increasingly globalized economy, unforeseen technological advancements, reducedlabor costs, and incredible turn-around times, business leaders today face many choices. At theheart of the issue is the question of a guiding principle: why do some organizations stick to thetraditional bureaucratic work structures while others adopt innovative high performance workpractices? Tomer (1987, 2001) has been developing a crucial concept of “organizational capital”to shed lights on the incentives for organizations to wage structural transformation. In sum,organizational capital is a kind of human capital in which the productive capacity is not simplyembodied in individuals but is embodied in the organizational relations that have been developedin the organizations. When a business transforms its organization by installing high performancepractices, it is making a significant investment in organizational capital, much like other types ofcapital asset investment (Tomer, 2001: 71).

This research strives to uncover the explanatory factors for organizational restructure—a sig-nificant form of investment in organizational capital, as the restructuring requires substantialresource input and often results in improvement in production and quality (Appelbaum et al.,2000). My literature review suggests two major explanations of workplace reorganization. Themarket model emphasizes the fierce competition that compels organizations to seek alternativemethod to bureaucratic control to outperform their competitors, whereas the institutional expla-


nation stresses the peer pressures that induce organizations to adopt modal structures in theirfields to maintain compatibility with their peers. Here, a point worth-noting is that between highperformance work practices and high performance work systems, prior discussion suggested thatwhether a set of high performance practices can collectively define a high performance work sys-tem remains an empirical question to be addressed. Thus in the following paragraphs, I use “highperformance practices” instead of “high performance work systems” simply because “high per-formance work systems” need to be quantified before it can be used as a collective organizationalentity.

2.1. Market and workplace restructuring

Increased competition in domestic and foreign market drives U.S. organizations to adopthigh performance work practices via several different mechanisms. First, organizations oper-ating under tremendous competition are forced to outperform their competitors by improvingproduct quality and cutting cost. To accomplish these goals, organizations indeed need to adoptinnovative high performance work practices (Osterman, 1994). Second, American companiescompeting with foreign firms are exposed to various innovative work practices adopted by theirinternational competitors. Indeed, a study documented four innovative work systems prevalent inforeign firms: Swedish sociotechnical systems, Japanese lean production, Italian flexible special-ization, and German diversified quality process (Appelbaum and Batt, 1994: Chpts. 3 and 4). Itis highly plausible to speculate that American establishments operating in international marketswill try to emulate their international competitors in adopting those high performance practices.Empirical work supplied compelling evidence that an increase in market competition stimulatesorganizational adoption of high performance practices (Osterman, 1994; Lawler et al., 1995:117–123).

I stress that domestic and international competitions need to be distinguished in theirrespective impact on organization’s adoption of certain work structures. To the extent marketcompetition compels organizations to seek efficient, often alternative programs to their extantstructures; international competition exerts a much stronger impact on organization choice ofwork structures than does domestic competition. International competition exposes Americanorganizations to a set of efficient work structures that are alternative to their current practices,thus presenting a learning opportunity for them to follow. Compared with those engaging ininternational competitions, organizations facing only domestic rivalry are not exposed to thesame kind of stimulations as they lack the opportunity to observe and to learn from interna-tional companies how to implement those efficient work systems that are alternative to their ownpractices.

H3. The higher the domestic market competition, the more likely the organization use of highperformance organizational practices.

H4. The higher the international market competition, the more likely the organization use ofhigh performance organizational practices.

Although very little empirical research is done on how market competition affects organiza-tional bureaucratization, much theoretical discussion suggests that market competition decreasesbureaucratization (Appelbaum and Batt, 1994: Chpt. 2; Cappelli et al., 1997: Chpt. 3; Kallebergand Moody, 1996). Increased market competition requires that organizations swiftly respond tocustomers’ idiosyncratic needs and constantly improve product quality, all of which run counter


to bureaucratic work structures that facilitate the mass production of a large sum of standard-ized goods. International exposure to many innovative work practices vividly illustrate efficientalternatives to bureaucratic work models, thus providing a learning opportunity for U.S. firms tochange bureaucratic systems.

H5. The higher the domestic market competition, the less likely the organizations adopt bureau-cratic structure.

H6. The higher the international market competition, the less likely the organizations adoptbureaucratic structure.

2.2. Institutional isomorphism and organization restructuring

Alternative to the market explanation that organizations adopt of certain structures and practicesin response to market competitions, institutional theorists argue that organizations often espousecertain structures to conform to rules, regulations, and prevailing practices without considerationsof their efficacy (DiMaggio and Powell, 1983). Core to the institutional theory is a process calledinstitutional isomorphism, defined as a constraining force that compels one unit in a populationto resemble other units under the same environmental conditions (Hawley, 1968). In particular,organizations in its operating environment often come to resemble other organizations in theirwork structures and practices as they all subject to the same set of isomorphism conditions (Scottand Meyer, 1994). Although various isomorphism come in different forms, they are commonlysubstantiated as coercive, mimetic, and normative isomorphism (DiMaggio and Powell, 1983).In a coercive isomorphism process, organizations experience structural homogeneity (organiza-tion internal structures and practices become increasingly similar with each other) as a result ofdirect imposition of standard operating procedures and legitimated rules and structures (Meyerand Rowan, 1977). In mimetic isomorphism, organizations imitate each other in adopting cer-tain structures and programs. Organizations facing environmental uncertainties or technologicalambiguities are particularly vulnerable to such mimetic isomorphism. In normative isomorphism,organizations undergo structural homogenization as professional associations continuously pro-mulgate certain procedures and structures and persuade organizations to adopt those practices.Key argument to the institutional theory is that the institutional isomorphism can proceed withoutthe evidence that those work practices increase internal efficiency. By conforming to the stan-dard procedures and structures, organizations facilitate their transactions with other organizations,attract talented minds, and earn legitimacy and reputations. None of this insures that conformistorganizations are performing more efficiently than do their deviant peers (DiMaggio and Powell,1983: 153).

Following the institutional theory, I speculate that organizations may adopt bureaucratic orhigh performance practices in response to their peers adopting the same work structures. Thismimetic process – modeling oneself on others’ practice – is one the most important institutionalisomorphism. One striking illustration of this mimicry happens in Meiji Japan when the Japanesereformers copycatted western powers to modernize their country (Westney, 1987). Now Americancompanies try to emulate their competitors by implementing some innovative work practices fromoversees. Institutional theorists noted that such mimetic process would proceed irrespectively ofthe evidences that the structures being modeled are improving internal efficiency (DiMaggio andPowell, 1983; Scott and Meyer, 1994). However, by adopting the same structures as their peers,organizations do improve their legitimacy that they are conforming to the prevalent practices intheir field.


H7. The higher the percentage of organizations adopting bureaucratic structures in an industry,the more likely the organizations adopt bureaucratic structures in the same industry.

H8. The higher the percentage of other organizations adopting high performance work practicesin an industry, the more likely the organizations adopt high performance work practices in thesame industry.

2.3. Variables under control

To assess the net impacts on organization adoption of bureaucracy and high performancepractices from market competition and institutional isomorphism, several other variables need tobe under control as they may correlate with the independent variables and the dependent variable,thus mediating the relations between the variables in question. Below, I briefly review studies ofthose mediating factors that include performance pressures, organization size, age, independentstatus, and market areas.

Scarce research is done on how performance pressure affects work reorganization. The effectof performance pressure on work restructuring may not be straightforward. On the one hand,organizations encountering performance problems, financial losses, or economic crisis might bedesperate to look for alternatives to overcome those problems. On the other hand, performanceproblems can also cause financial drainage and deprive organizations the sufficient resources tosponsor a fundamental work restructuring. A study succinctly summarizes that the successfulimplementation of high performance practices involves companies that experienced performanceproblems, with sufficient resources to support extensive investment in work reorganization andwith the ability to incur possible short-term financial loss in order to benefit from long term gain(Appelbaum and Batt, 1994: 8). To control for their mediating impacts on the relationship beingstudied, I include those variables that measure the performance problems with issues of the qualityof product or services, with a new product or services, with retaining essential employees, andwith customer satisfaction.

One of the most developed areas in academics is the relation between the workplace size andthe workplace construction. Much early work found that size matters in organizational structuring.Large organizations have great needs to specialize and subdivide work to maximize economiesof scale (Blau, 1970, 1972). A growing number of subdivisions within large organizations alsorequires a corresponding increase in managerial personnel to coordinate and integrate efforts fromeach individual subunit (Lawrence and Lorsch, 1967). Compelling evidence from studies duringthat time suggested that size is the most important predictor for organizational development of alarge number of specialized departments, tall hierarchy, and formalized governing structures withwritten rules and documents (Blau and Schoenherr, 1971; Meyer, 1972; Child, 1973; Mansfield,1973). On the contrary, it is less clear how an organization’s size affects the workplace adoptionof high performance practices. On the one hand, large organizations face a great need to adopthigh performance work practices. Common to large organizations is the problem of employeemotivation, which results from workers’ frustration over impersonal management and insignif-icant work: this occurs because workers in a large organization often cannot see the impactof their work on the customer and on company performance (Lawler et al., 1995: 97–129). Inaddition to the motivational issues of employees, available resources also play a role in workrestructuring. Large organizations commonly have great resources to advocate a structural trans-formation and to sustain short-term financial losses in hope of obtaining long-term benefits, whichis crucial for implementing high performance practices (Lawler et al., 1995: 97–129; Osterman,


1994; Appelbaum and Batt, 1994: 8). On the other hand, large organizations also embrace veryrigid structures that impede the dissemination of successful restructuring throughout. Often,restructuring in large organizations takes place in different divisions without a central coordi-nation overall. The result is that workers ignore or resist efforts for change (Lawler et al., 1995:97–129).

Other mediating factors under control include the organization’s market area, age, and indepen-dent status. In this vein, expanded market zones in the national and international horizon stimulatesorganizations to adopt more high performance practices (Osterman, 1994); aged workplacesdevelop structural inertial that hinders their efforts to undertake work reconstruction (Hannanand Freeman, 1989); independent workplaces are more bureaucratized than are branches or sub-sidiaries as most administrative work is concentrated in corporate headquarters. Branches, on thecontrary, are light on their feet and easy to enact flexible work practices (Osterman, 1994). Includ-ing those control variables eliminates their mediating influences on the observed relationshipsbetween key independent variables and the dependent variables.

3. Data

To test my hypotheses, I analyzed data from a national survey of diverse work establishments,the 1996–1997 National Organizations Study (NOS) (Kalleberg et al., 2001). The NOS was acomputer-assisted telephone interview (CATI) survey conducted in 1996–1997 by interviewersfrom the Minnesota Center for Survey Research (MCSR) at the University of Minnesota. Thesample was drawn from the Dun and Bradstreet (D&B) Market Identifiers list of approximately15 million establishments. D&B stratified the sample into 40 categories of increasingly broaderemployee-size ranges, from 1–4 to 4000–4999 and 5000 or more. Within each stratum, D&Bselected cases for MCSR to interview that were sampled randomly with probability proportionalto size (PPS). This procedure was designed to obtain a final sample whose size distribution wouldreflect the establishments experienced by typical employees. MCSR conducted most of the CATIinterviews with the human resources manager or a functionally equivalent informant from eachestablishment. The survey completion rate was 54.6% of eligible establishments, of which 86%were done by CATI and 14% by mail questionnaire. The final sample contains data from 1002establishments.

This study uses work establishments as its unit of analyses, which are different from firmsor companies. A firm or a company refers to the whole entity of an organization, includingheadquarters and all of the branches and subsidiaries. But a work establishment refers to a specificphysical location where the work takes place. For example, Citi Bank is a financial firm that hasmany different locations, or work establishments. When a firm has only one physical location, firmand work establishment are equivalent in that they both refer to the single workplace. The 1002work establishments in the sample include both independent organizations, either headquartersor single-location firms, and dependent organizations, which are branches and subsidiaries withparental organizations.

4. Measures

4.1. Dependent variables

Organizational bureaucratization consists of three items: (1) formalization, which is indicatedby five questionnaire items such as written job description, written record of job performance,


employment contracts, written documents of personnel evaluation, and documents of hiring/firingprocedures; (2) levels, indicated by responses to the question “How many levels are there betweena first-line supervisor and the top official in your organizations?” (3) Departmentalization, whichis indicated by questions asking whether organizations have separate departments for person-nel and labor relations, health and safety departments, and equal opportunity or affirmativeaction.

A high performance work system consists of four items: (1) teamwork is measured by aquestion “does your organization have established committees made up of workers and man-agers who meet regularly to deal with issues such as new technology, quality improvement,production or service delivery, health and safety, or do workers meet by themselves withoutmanagement to discuss issues related to production or service delivery?” (2) Skill is mea-sured by three questions “Are core workers cross-trained?” “Are core workers involved injob rotation?” “Are core worker involved in statistical process control?” and “How often coreworkers transfer to another job family?” (3) Autonomy is measured by two questions “Howmuch choice do core workers have concerning the best way to accomplish their assignments?”and “Which best describes how closely core workers are supervised as they do their work?”(4) Compensation is measured by two questions “Are core workers paid using group incen-tives such as gain-sharing?” and “Do core workers participate in a profit-sharing or a bonusprogram?”

4.2. Independent variables

Market competition is measured by a single questionnaire item “How much competitionwould you say there is in your main market or service area (none = 1, very little = 2, a moderateamount = 3, a great deal = 4)?” Foreign market competition is indicated by “How much competitionwould you say there is in your main market or service area from foreign organizations (none = 1,very little = 2, a moderate amount = 3, a great deal = 4)?” Industrial isomorphism is measured withthe percentage of organizations that adopted bureaucratic or high performance work systems in agiven industry. This measure presumes that the factor analyses based on the seven work structuralindicators can produce two aggregated factors: bureaucratic and high performance work systems.Thus, dividing those organizations with their factor loadings above the mean of the latent bureau-cratic or high performance factors by the total number of organizations in various industriesproduces the percentages of bureaucratic or high performance work systems in those industries.Based on the 1980 U.S. Census Bureau Industrial Code (http://webapp.icpsr.umich.edu/GSS/rnd1998/appendix/class80a.htm), I identified nine major industries; agriculture, manufac-turer, transportation, wholesale, retail, personal services, professional services, and publicadministration.

To eliminate the possibility of spuriousness between the dependent variables and the key inde-pendent variables under investigation, I included in the multivariate equation controlled variablessuch as the organization’s size, which is measured by taking a natural log of the total numberof full time and part time employees, the organization’s age, the organization’s status (orga-nizations with parents = 0, complete independent organization = 1), organizational market area(regional/national/international = 1, neighborhood/city/state = 0), and various performance prob-lems with the quality of product or services, with new product or service, with retaining essentialworkers, and with customer satisfactions. The appendix list in detail the construction of variablesin the analyses.

http://webapp.icpsr.umich.edu/GSS/rnd1998/appendix/class80a.htm



5. Findings

To empirically exam components of the latent factors of bureaucratic and high performancework systems, I conducted exploratory factor analysis (EFA) with seven structural indicators (formore on EFA, see Stevens, 2002: Chpt. 11 and Hair et al., 1998: Chpt. 3). As EFA can helpresearchers to determine how many factors are present, a crucial aspect of using EFA is the choiceof which criterion to use to determine the number of factors. Here, I use eigenvalue criterion thatretains the factors whose eigenvalues are greater than 1, which indicates that the retained factorsaccount for the variance of at least a single indicator. This eigenvalue criterion is the most widelyused method and also the default choice of SPSS in retaining factors. It is fairly accurate whenthe number of indicators is less than 40 (Stevens, 2002: Chpt. 11).

Fig. 1 shows that the exploratory factor analysis of seven indicators extracts totally three factors:bureaucracy and two types of high performance work systems. The factors loadings are varimaxrotation with Kaiser normalization based on 644 cases, which indicate the explained variancein the indicators by their factor. The factor loadings of formalization (0.76), hierarchy (0.70),and departmentalization (0.79) on the latent factor of “bureaucracy” are fairly high, suggestinga strong indication of bureaucracy from the three indicators, thus lending empirical support toH1. This finding concurs with the widely-held belief about the essential characteristics that definebureaucratic work systems since at least Weber (1947). Organizations respond to their increasingsize with management using lateral specialization, vertical hierarchical orders, and formalizedrules and regulations.

In contrast to H2, the four hypothetical indicators of high performance work systems; e.g. team-work, skill enhancement, performance-based compensation, and job autonomy do not cohere todefine the latent structure of high performance system. Instead, they split into two groups. Team-work and training, which has factor loading of 0.92 and 0.68, respectively, cling to indicate onetype of high performance work system, whereas job autonomy and performance-based compen-sation, with respective factor loading of 0.72 and 0.66, adhere to represent a different type ofhigh performance system. That training goes hand-in-hand with the teamwork implementation

Fig. 1. Exploratory factor analysis of seven organizational structural indicators (principal component analysis; varimaxrotation with Kaiser normalization; N = 644).


echoes previous studies that emphasize training as facilitator to the success of other innovativehigh performance work practices (Whitfield, 2000). Teamwork requires re-orientation of workroles, goals, and job responsibilities and tremendous communication and coordination skills thathave to be furnished through sufficient training (Coleman, 1993).

High performance work systems have been striving to establish an incentive mechanism bytying individual workers’ interests with the organization’s interests through performance-basedpay structures (Kalleberg and Moody, 1996). A positive consequence of this new incentive struc-ture is that workers, without rigid monitoring, can achieve a high level of self-motivation (Levineand D’Andrea Tyson, 1990). The new incentive structures also intend to save organizations ofresources spent on worker supervision. Thus, while performance-based pay structures reflect orga-nization’s new motivation strategy, offering workers great job autonomy is natural consequenceof such strategy.

The correlations between the three work systems show that bureaucracy is weakly and nega-tively correlate with both high performance systems (−0.22 and −0.14), whereas the two highperformance systems are weakly correlated with each other (0.20). This result indicates thedirection of the relations between the three work systems; the greater bureaucratization of theorganization, the fewer the high performance programs adopted by the organization; Organiza-tions adopting teamwork and training are also likely to adopt job autonomy and performance-basedpay programs. However, the correlations are too low to suggest any substantive changes inorganization’s adoption of one type of work system in relation to the other systems.

In sum, the EFA of seven organization structural indicators show that bureaucratization isindicated by a set of distinctively defined indicators such as formalization, vertical hierarchicallayers, and lateral departmentalization, lending support to previous study that bureaucratic worksystems use formal policies and fine-graded classification at lateral and vertical dimensions tomanage its workforce (Edwards, 1979). However, the alleged four high performance indicators ofteamwork, skills enhancement, job autonomy, and performance pay programs diverge: teamworkand training associate to indicate one type of innovative work structure, whereas job autonomyand performance pay programs converge to represent another type of transformed work system.This result echoes previous empirical findings (Osterman, 1994) and theoretical discussions thatAmerican employers are implementing high performance practices on a gradual and piecemealbasis, instead of deploying a lump-sum batch of innovative programs simultaneously (Appelbaumand Batt, 1994).

Table 1 lists descriptive statistics of the variables in the regression equation. The results showthat American work establishments are fairly formalized, indicated by an average score of 3.25 inthe formalization measure. The mean scores for the other two bureaucratic indicators, hierarchyand departmentalization are 2.45 and 1.83, respectively. In the four high performance measures,the average establishments in the NOS sample have approximately three teamwork committees todeal with corporate issues regarding technology, product quality, delivery, health and safety. Theyalso have more than 1 skill enhancement program, provide workers with “more than a moderateamount” of job autonomy, and use no innovative pay programs.

Organizations reported to have “more than a moderate amount of competition” in their operatingmarket, as indicated in the average score of 3.28 in the market competition measure. The levelof international market competition is lower than the main market competition as the NOS workestablishments are facing less than a moderate level (average of 1.77 in the measurement) in foreignmarket competition. The percentages of bureaucratic organizations across the nine industries rangefrom the lowest of 36.2 in retail to the highest of 87.1 of public administration. Table 1 showsthat while professional service organizations are the least likely to adopt teamwork and training,


Table 1Descriptive statistics of variables

Variable names Mean Median S.D. Data type Valid cases

Formalization 3.25 4.00 1.69 Continuous 913Hierarchy 2.45 2.00 2.09 Continuous 907Departmentalization 1.83 2.00 1.12 Continuous 851Teamwork 2.94 4.00 1.75 Continuous 914Skills 1.39 1.00 0.99 Continuous 923Autonomy 3.13 3.00 0.57 Continuous 946Pay 0.53 0.00 0.68 Continuous 948Market competition 3.28 4.00 0.93 Continuous 932Foreign market competition 1.77 1.00 0.99 Continuous 917

Bureaucracy percentages acrossindustries

40.6 (agriculture); 61.4 (manufacturing); 68.2(transportation); 39.1 (wholesale); 36.2 (retail);41 (finance); 40 (personal service); 66.5(professional service); 87.1 (publicadministration)

Dichotomous 644

HPO1 percentages acrossindustries

59.4 (agriculture); 71.1 (manufacturing); 40.9(transportation); 39.1 (wholesale); 57.1 (retail);47 (finance); 53.3 (personal service); 34.1(professional service); 41.9 (publicadministration)

Dichotomous 644

HPO2 percentages acrossindustries

43.8 (agriculture); 50.0 (manufacturing); 50.0(transportation); 69.6 (wholesale); 39 (retail);56.6 (finance); 46.7 (personal service); 56.6(professional service); 49.7 (publicadministration)

Dichotomous 644

Performance on quality 1.69 2.00 0.78 Continuous 912Performance on new product 2.06 2.00 0.89 Continuous 872Retaining essential workers 2.18 2.00 0.90 Continuous 899Performance on satisfaction 1.83 2.00 0.82 Continuous 910Organization age (natural-log) 3.25 3.29 1.02 Continuous 1002Organization size (natural-log) 6.90 4.38 8.07 Continuous 981

Market area atregion/national/international

0.44 Dichotomous 940

Market area atneighborhood/city/state

0.56 Dichotomous 940

Independent organizations 0.32 Dichotomous 1001

manufacturers are most likely to espouse these two programs. Wholesalers are most likely toimplementing job autonomy and performance-based pay program, whereas retailers are leastlikely to do so. Table 1 also contains descriptive statistics of other variables under control.

In light of the findings from the previous round of exploratory factor analysis, the followingexplanatory analyses focus on factors that compel organizations to adopt a work system based onthe trichotomy consisting of bureaucracy and two types of high performance systems, rather thanthe presumed dichotomy of bureaucracy and high performance work system. As the SPSS savesthe three extracted factors (the three work systems) as variables, I dichotomize organizations inthe three systems using their respective means as the cut-off point. Therefore, logistic regres-sions are used to investigate the explanatory variables that induce organizations to adopt differenttypes of work system, e.g. high bureaucracy, high teamwork and training, and high job autonomy


Table 2Unstandardized coefficients from logistic regressions of organization bureaucracy and high performance adoption

Independent variables Bureaucracy HPO1 (teamworkand training)

HPO2 (autonomyand pay)

Constant −1.644 (1.397) −0.157 (1.092) −1.991 (1.079)Market competition 0.106 (0.155) −0.090 (0.120) 0.151 (0.117)Foreign market competition 0.076 (0.129) 0.177* (0.09) 0.074 (0.101)Bureaucracy percentage in the same industry 0.017* (0.008) −0.010 (0.007) 0.008 (0.007)HPO1 percentage in the same industry −0.038*** (0.012) 0.030*** (0.009) 0.002 (0.009)HPO2 percentage in the same industry −0.018 (0.015) −0.011 (0.011) 0.045*** (0.012)

Control variablesPerformance pressure-quality −0.109 (0.195) −0.084 (0.152) 0.107 (0.150)Performance pressure-new product −0.293 (0.152) −0.054 (0.118) −0.141 (0.117)Performance pressure-worker 0.313* (0.153) −0.108 (0.113) −0.150 (0.112)Performance pressure-satisfaction −0.240 (0.187) −0.124 (0.143) −0.189 (0.142)Market area at region/national/international −0.020 (0.261) 0.501* (0.207) 0.309 (0.205)Size 0.802*** (0.083) 0.029 (0.048) −0.087* (0.038)Age 0.141 (0.124) 0.022 (0.098) −0.003 (0.096)Independent 0.510* (0.252) 0.146 (0.200) −0.239 (0.196)Model χ2 (d.f. = 13) 289*** 63*** 45***

Number of establishments 564 564 564

Numbers in parentheses are standard errors.* p ≤ 0.05.

*** p ≤ 0.001.

and performance-based pay. The measures of the industrial isomorphism are the percentages ofbureaucratic organizations, of organizations adopting teamwork and training, and of organizationsadopting performance-based pay and job autonomy programs in the same industry as the focalorganization. These measures are created by crosstabulating the nine industries with the percent-ages of the three systems and then imputing each organization with the industrial percentages ofthe organization.

Table 2 displays unstandardized coefficients from logistic regression of the organizationaladoption of bureaucratic work structures and high performance work systems of teamwork andtraining (HPO1), and of job autonomy and performance-based pay structures (HPO2). In supportof H4, the higher the international market competition, the more likely the organizations adopthigh performance work system; Table 2 shows that each unit of increase in foreign market com-petition increases the odds of adopting teamwork and training by 19% (exp(0.177) − 1 = 0.19).However, the results did not support H3, H5, and H6; domestic and foreign market competi-tions have no impact on organization adoption of bureaucracy; domestic market competitiondoes not affect organization adoption of either type of high performance work structures. Thefact that only one out of four hypotheses from market model receives empirical support sug-gests that market competition has only moderate impact on organization choice of different worksystems.

In contrast, institutional isomorphism, indicated by the percentage of organizations in thesame industry as the focal organization that adopts bureaucracy or high performance worksystems, exert strong impact on organizational choice of different work systems. In supportof H7 and H8, Table 2 shows that across industries, each percentage increase in the numberof bureaucratic organizations increases the odds of adopting bureaucracy for organizations by


1.7% (exp(0.017) − 1 = 0.017). In other words, the higher the percentages of bureaucratic orga-nizations at the industry level, the more likely the organizations adopt bureaucracy within theindustry. Likewise, across industries, each percentage of increase in the number of organiza-tions adopting teamwork and training increases the organization adoption of these two programsby the odds of 3% (exp(0.03) − 1 = 0.03), but it decreases the odds that focal organization adoptbureaucracy by of 3.7% (exp(−0.038) − 1 = −0.037). Meanwhile, across industries, each percent-age of increase of organizations adopting performance-based pay and job autonomy increasesthe odds of focal organization’s adoption of these two high performance practices by 4.6%(exp(0.045) − 1 = 0.046).

Several control variables exert significant impact on organization adoption of different worksystems. Size increases the odds of adopting bureaucracy control but decreases the likelihoods ofimplementing job autonomy and performance-based pay. Compared with the organizations thathave localized market areas such as neighborhood, city, and state, organizations with expandedmarkets such as regional, national, or international markets are more likely to adopt teamworkand training. Both performance pressures to retain essential workers and the organization inde-pendency boost organization’s odds to adopt bureaucratic control work system.

This round of regression analyses attempt to identify the factors that compel organizations toadopt innovative high performances or stick with the traditional bureaucracy. The results stronglyindicate that organizations react more to the institutional pressures than they do to the marketpressures. Such a structural conformity to the mode, expressed as the greater the number oforganizations in an industry adopting certain work system, the more likely the organizations within the same industry to adopt the same work system, reflects that organizations mimic their peers toreduce the uncertainties in implementing certain work system. Uncertainties are the core propelsfor the dissipations of the mimetic isomorphism. One study vividly described how organizationsdealing with many uncertainties mimic the behaviors of other organizations in their environments(Galaskiewicz and Wasserman, 1989). To the extent that adopting different work structures is suchpivotal strategic choice the companies have to make, modeling other successful establishments thathave prior experience in implementing certain work systems becomes crucial in constructing thosesystems. The other organizations can provide much-needed information on how to initiate changes,deal with crisis, and solve problems to facilitate transitions for organizations implementing variouswork managements.

6. Discussions

Using the 1996 National Organizations Survey of diverse work establishments in U.S., thisstudy made considerable contributions to the literature of workplace reorganization. Although the-oretical discussions on workplace transformation from bureaucracy to high performance systemsare abundant, empirical investigation on their respective components and correlation is scarce.One striking finding is that organizations are adopting three distinctive types of work structuresin their workforce control and coordination, with weak correlations between the three structures.This study produces evidence to echo those studies on bureaucracy that the essential compo-nents to define the bureaucracy are formal rules and regulations, departmentalization, and verticalhierarchical ladders.

This study yields novel finding that organizations are implementing two types of high per-formance work systems. Relating to the previous discussion on work restructure and highperformance work systems, this study suggests that despite the wide adoption of high perfor-mance practices, there is no such workplace formation called “high performance work system”


that can be collectively quantified with all of its alleged components. Instead, workplace transfor-mation takes place in segments as employers adopt a part of a set of high performance practicesthat serve as alternatives to bureaucratic controls. Organizations waging structural transformationto install high performance practices are investing in their organizational capital (Tomer, 1999).Such fragmentized adoption of high performance practices may reflect balance assessment ofrisk factors in investment and return. On the cost side, a comprehensive adoption of high perfor-mance practices often requires exorbitant investment, which may deter organizations from fullyimplementing the structural transformation. On the return side, structural transformation maytake long time to produce hard-to-measure results. In addition to such economic calculi, there aresome idiosyncratic, institutional factors that handicap the structural transformation in Americanwork settings. Top managers in American companies work to satisfy the demands of portfolioinvestors who are less likely to endorse a fundamental work reorganization. Operating in the U.S.economic context where little guidance is given regarding a systematic implementation of workreorganizations (Appelbaum and Batt, 1994: 151), top managers also face tremendous uncertain-ties and receive little incentive to change existing programs. Finally, decades of economic success,which relies on mass production and bureaucratic controls, produce structural inertia for manyAmerican companies to stay with bureaucratic management. For example, a rigidly-defined man-agerial prerogative stipulates that power, authority, and decision-making is uncharted territoryfor managers who are not at ease with power delegation to low rank workers. Future studies canimprove our understanding of those detailed processes by comparing American companies to theirinternational counterparts. For example, a comparative study could investigate the structural stim-ulants and impediments for workplace transformation in different nations and assess the extentthose contextual characteristics that are conducive to work restructuring can transcend nationalborders.

This study demonstrates that organizations tend to model themselves on their peers in imple-menting different work structures. Such structural isomorphism through mimetic behaviors islikely to precipitate in an uncertain environment, which is filled with ambiguous goals, equivocalcauses, unclear solution, and ambivalent measures to the outcomes. Uncertainties lie in the heartof the strategic choice of adopting different work systems, which requires that the managementto be aware of the programs entailed in a given work system, the correct ways to implementthese programs, and the measures of their effectiveness and efficiency. These information are notreadily available and are often too formidable and prohibitive to obtain; let along that in variousoccasions they do not even exist, as organizations experimenting new work programs have notcompleted their trial-and-error. In addition, as previously noted, the lack of systematic instruc-tions regarding implementation of innovative work systems adds an idiosyncratic component tothe uncertainties confronting American organizations. Strategic management receives too littleinstructions or incentives to construct a work system on their own or to wage fundamental changesto their extant programs.

Thus, a simple solution to this overwhelming problem is to mimic others, especially thoseoperating in the same industry. Although imitation does not guarantee an ultimately success-ful implementation of a system, it often comes with at least three apparent benefits. First,imitation is cost-efficient. Following what and how others do in implementing certain work sys-tems saves tremendous resources in searching for and learning of those systems. Second, byconforming to the mode in the work structural arrangement within the same industry, organi-zations also facilitate their transactions and reduce anxieties in their dealings with their peers.Third, imitation also carries a great deal of ceremonial significance. By adopting those com-mon practices within the same industry, organizations enhance their legitimacy (DiMaggio and


Powell, 1983: 151) and demonstrate they are improving work conditions as much as are theirpeers.

I acknowledge that the issues being tackled in this study are complex ones. First, with across-sectional data, I cannot conclusively establish the casual links between various variablesunder scrutiny. Second, systematic variations in adopting different high performance practicesmay occur in organizations across different sectors, which may reflect organizational responsesto their distinctive environments. A recent study (Kalleberg et al., 2006) shows that comparedwith for-profit firms, non-profit organizations and governmental agencies are more likely tohave programs that encourage participations in decision making but less likely to use perfor-mance incentives and multiskilling practices. Third, some interaction process may take placebetween variables in their joint impact on the organization structural changes. Several topicslie ahead meriting systematic inquiry. Managerial orientation is crucial to undertaking innova-tive work practices (Appelbaum and Batt, 1994: 151), and so future studies might focus onhow managerial orientation interacts with a company’s size, performance pressure, and mar-ket competition to its work organization. For example, risk-taking managers under tremendousperformance pressure and market competition may set aside sufficient resources to support inno-vative work reforms in hope of obtaining long-run benefits, whereas a risk-aversion managementunder the same level of pressure and competition may cut the budget on work restructuringdue to its high cost and less predictable outcomes. Fourth, more research is needed to shedlight on how an international environment affects work structural innovation. For example, aninternational comparative study suggests that American labor law rigidly defines managementprerogatives to include various decision-making powers, which hinders the transition to highperformance work systems, as opposed to German, Swedish, and Japanese employers, whoare legally required to share business information and involve employees in strategic decision-making (Appelbaum and Batt, 1994). Complementing to this research that primarily focuseson the mimicry institutional pressure, future studies should inquire how other types of insti-tutional influence, such as pertinent legal regulations, can affect organization work structurechoices.

Another cautious note worth-pointing is the temporal limit of this study as it relies on a 10-year old dataset to show organizational structuration and the driven factors behind different workarrangements. Issues being investigated here are highly dynamic and can be changing drasticallybetween 1990s and early 21st century. The task to re-investigate this important topic becomescritical as a similar 2002 National Organizations Survey (NOS) becomes available during thedevelopment of this thesis. Despite the differences between the 1996 NOS and the 2002 NOSin sampling design and sample size (Smith et al., 2002), they ask similar questions on work-place structural arrangement, thus providing excellent opportunity for future study to re-examinethe findings derived from this study. For example, important topics meriting further studiesare whether high performance practices are deployed in a more systematical manner involvingfundamental

changes in training, decision-making, reward system, and job allocation, and whether marketcompetition comes around to become a much potent factor in waging structural transformationfor modern organizations in an increasingly globalized economy.

1842S.Yang

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Appendix A. Variable construction

Variable names Measuring items Coding methods

Bureaucratic organizations Formalization

Agreement to each question in formalizationis coded as 1, results summed up to producea formalization scale from 0 to 5

Do each of the following documents exist at org?Written job descriptionWritten record of job performanceEmployment contractsDocuments about doing personnel evaluationDocuments outlining hiring/firing procedure

Levels Levels are actual number reported byrespondentsHow many levels are there between a first-line supervisor and the top

official in your organizations?

DepartmentalizationAgreement to each item indepartmentalization is coded as 1, resultssummed up to produce a departmentalizationscale from 0 to 3

Is there a separate department for the followings?Personnel and labor relationsHealth and safetyEqual opportunity or affirmative action

High performance organizations Teamwork

Agreement to each item in teamwork iscoded as 1, results summed up to produce ateamwork scale

Does your organization have established committees made up ofworkers and managers who meet regularly to deal with new technology?

Quality improvement?Production or service delivery?Health and safety?Do workers meet by themselves without management to discuss issues

related to production or service delivery?

Skill In skill construction, agreement to the firsttwo items is coded as 1, very often responseto the third item is coded as 1. Resultssummed up to produce a skill scale

Are core workers cross-trained, that is, trained in skills for more thanone job?

Are core workers involved in job rotation?How often core workers transfer to another job family?

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Autonomy In job autonomy construction, I addedsupervision scale with the choice scale, anddivide the results by 2. Thus, the large thenumber, the greater the job autonomy

How much choice do core workers have concerning the best way toaccomplish their assignments (no choice = 1; small amount = 2; a moderateamount = 3; a large amount = 4; complete choice = 5)?

Which best describes how closely core workers are supervised as theydo their work (no supervision = 1; small supervision = 2; moderatesupervision = 3; large supervision = 4; complete supervision = 5)?

Compensation Agreement to each item in compensation iscoded as 1, results summed up to produce acompensation scale

Are core workers paid using group incentives such as gainsharing?Do core workers participate in a profit-sharing or bonus program?

Organization size Total employment is number of full time and part time employees in theestablishment on 1 June 1996. Full time means 35 or more hours per week

I take the natural logarithm of the totalemployees to indicate organization size

Market competition How much competition would you say there is in your main market orservice area. . .none, very little, a moderate amount, or a great deal?

None = 1; very little = 2; a moderateamount = 3; a great deal = 4

Foreign market competition How much competition would you say there is in your main market orservice area from foreign organizations. . .none, very little, a moderateamount, or a great deal?

None = 1; very little = 2; a moderateamount = 3; a great deal = 4

Industries What is the main product/service in this establishment?1980 U.S. Census Industry Code

Agriculture: 10–60; manufacture: 100–392; transportation: 400–472;whole sales: 500–571; retail: 580–691; finance/insurance: 700–760;personal service: 761–791; professional service: 800–899; publicadministration: 900–932

Performance pressure on How would you compare (ORGs) performance on the following measuresover the past 2 years to that of other organizations that do the same kind ofwork?

Much better = 1; somewhat better = 2; aboutthe same = 3; somewhat worse = 4; muchworse = 5(1) Quality (1) Quality of products, services, or programs

(2) New product (2) Development of new products, services, or programs(3) Retain essential workers (3) Ability to attract and retain essential employees(4) Customer satisfaction (4) Satisfaction of customers or clients

Organization Age Years from start of establishment operations until 1997 I take the natural logarithm of the years toindicate organization age

Independent organization Is org in any way part of a larger organization or is it completelyindependent?

1 = independent; 0 = not independent

Market area What would you consider to be org’s main geographic market or servicearea?

0 = neighborhood/city/state;1 = region/U.S./international


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