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Selective intervention and internal hybrids: Interpreting and learning from the rise and decline of the Oticon spaghetti organization (2003)
| Venue: | Organization Science |
| Citations: | 56 - 15 self |
BibTeX
@ARTICLE{Foss03selectiveintervention,
author = {Nicolai J. Foss},
title = {Selective intervention and internal hybrids: Interpreting and learning from the rise and decline of the Oticon spaghetti organization},
journal = {Organization Science},
year = {2003},
volume = {14},
pages = {331--349}
}
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Abstract
Infusing hierarchies with elements of market control has become a much-used way of simultaneously increasing entrepreneurialism and motivation in firms. However, this paper argues that such “internal hybrids, ” particularly in their radical forms, are inherently hard to successfully design and implement because of a fundamental incentive problem of establishing credible managerial commitments to not intervene in delegated decision making. This theme is developed and illustrated, using the case of the world-leading hearing aids producer, Oticon. In the beginning of the 1990s, Oticon became famous for its radical internal hybrid, the “spaghetti organization. ” Recent work has interpreted the spaghetti organization as a radical attempt to foster dynamic capabilities by organizational means, neglecting, however, that about a decade later the spaghetti organization has given way to a more traditional matrix organization. In contrast, an organizational economics interpretation of Oticon organizational changes is developed. This lens suggests that a strong liability of the spaghetti organization was the above incentive problem: Frequent managerial meddling with delegated rights led to a severe loss of motivation, and arguably caused the change to a more structured organization. Refutable implications are developed, and the discussion is broadened to more general issues of economic organization.
Keyphrases
internal hybrid spaghetti organization selective intervention oticon spaghetti organization fundamental incentive problem dynamic capability world-leading hearing aid producer recent work incentive problem severe loss delegated decision making oticon organizational change economic organization organizational mean much-used way traditional matrix organization organizational economics interpretation structured organization market control radical internal hybrid radical form radical attempt delegated right strong liability credible managerial commitment frequent managerial meddling refutable implication general issue
