Once an organization adopts a management practice, its members begin to learn how to implement the practice in their business units. Prior research has proposed two scenarios: (1) Tight coupling, where the organization successfully implements the form...
Once an organization adopts a management practice, its members begin to learn how to implement the practice in their business units. Prior research has proposed two scenarios: (1) Tight coupling, where the organization successfully implements the formally adopted practice and integrates it with existing business routines, or (2) Decoupling, where the organization adopts but does not effectively implements the practice. A third scenario is also possible, where the management practice is initially implemented and diffused widely among organizational members / subunits, but winds down rapidly soon after a short period of implementation. While anecdotally this third scenario, which I term ‘faddish coupling’, seems to be a likely outcome for many organizations, little attention has been paid to how such a trajectory comes about.
Building on organizational learning theory, this paper argues that biased organizational learning by organizational members and subunits results in faddish coupling of an organizational practice. Organizational subunits can learn from their own experiences and other units’ experiences, but such experiential and vicarious learning may be extremely biased, especially when members / subunits are under pressure to commit to company strategies and newly established organizational goals. When boundedly rational decision makers are faced with such strong pressures but not equipped with related knowledge about novel management practice, they tend to narrow their search scope down to a few salient and easily accessible activities such as the most recent high-performance experiences and examples, thereby carrying out organizational learning on the basis of positively-biased information. Organizational learning from a biased sample often produces positive sentiments and perceptions about the management practice, leading to its organization-wide diffusion. However, such biased learning, together with an elevated aspiration level, is likely to aggravate the quality of decision-making, drive below-aspiration practice performance levels, incur rapidly increasing frustration, and result in the sudden collapse of the adopted practice.
Using data from cross-functional process improvement teams of a leading global financial service organization (under the pseudonym Global Financial) which adopted a total quality management program in the first quarter of 1997 and formally abandoned it in the last quarter of 2000, this paper tests several hypotheses regarding the processes and consequences of biased organizational learning involved in quality team formation in 174 organizational units operating in 77 countries. I evaluated the data against the following hypotheses regarding learning bias under conditions of strong organizational pressure:
Hypothesis 1: A subunit’s team formation rate will be positively affected by the most recent team performance within that subunit.
Hypothesis 2: A subunit’s team formation rate will be positively affected by the most recent team performance of reference units (geographically and operationally similar units).
Hypothesis 3: A subunit’s team formation rate will be positively affected by the most salient team performance of reference units.
But such biased learning may not last long. As the experience with team activities accumulates, organizational units become aware that biased learning brings about relatively poor outcomes, for example, low team performance and reduced conclusion of team activities. In hypothetical terms:
Hypothesis 4: As the experience with team formation accumulates, biased learning from a selected sample will decrease.
Hypothesis 5: Learning from a positively biased sample will decrease team performance.
Hypothesis 6: Learning from a positively biased sample will decrease the probability of successful completion of team activities.