Analogical foundation of the scope of organizational change

Abstract

PurposeThe purpose of this study is to attempt to analyze how the distance of analogies used during the strategy formulation process is a critical driver used to explain the different scopes of implemented changes.Design/methodology/approachThis study was based on field research using primary data gathered from 70 firms by means of an 83‐item survey. The questions were carefully constructed and answered by top managers according to a four‐point scale. The three hypotheses were analyzed using multiple linear and quadratic regression analysis.FindingsThe study defines a new concept of analogy's distance. Firms implement incremental changes when top managers use either short‐ or long‐distance analogies within the strategic formulation process, whereas radical changes are implemented when top managers apply medium‐distance analogies.Research limitations/implicationsEven though the response rate was higher than recommended by specialists (21.5 percent), the sample was small, and also, more valid and reliable measures of different analogical distances and scopes of change are needed. The findings of this study allow us to make theoretical extensions to the cognitive theory of the strategy formulation process, strategic renewal theory, knowledge‐based view of the firm, storytelling theory of organizations, and the upper echelon theory.Practical implicationsScholars from various disciplines and practitioners agree that analogies are a useful tool for many organizational matters (i.e. design strategy, renewal strategy, conflict management, understanding complex environments, facilitating communications, creating the need for change, and so on). If the firm's upper managers are familiar with external business models, they may use those as analogies in order to obtain strategic recommendations and advice which can be used to design an effective strategy, understand complex management issues, create the need for change, exploit new opportunities to achieve competitive advantages, and so on. Thus, managers have an advantage when they have accumulated a wealth of knowledge about other business models along with life experiences that may come from their past job experiences, participation in development programs with case‐oriented methodology, and being part of business workshops and congress. This information could be used as analogies for undertaking organizational changes to meet daily challenges faced by the firm.Originality/valueThe current literature does not address the different distances of analogies and how they are related to the magnitude of organizational changes. This study emphasizes the importance of the type of analogy being used as a tool to build the firm's business model. The concept of analogical distance has not been discussed in management literature.