Cutting the Cord: Mutual Respect, Organizational Autonomy, and Independence in Organizational Separation Processes

Abstract

Based on a longitudinal, qualitative analysis of developments in the English National Health Service, we develop a process model of how organizations divest or spin off units with the aim of establishing two or more autonomous organizational entities while simultaneously managing their continued interdependencies. We find that effective organizational separation depends on generating two types of respect-appraisal and recognition respect-between the divesting and divested units. Appraisal respect involves showing appreciation for competence or the effort to achieve it, while recognition respect requires considering what someone cares about-such as values or concerns-and acknowledging that they matter. The process model we develop shows that open communication is crucial to the development of both. We also find that certain attempts to gain organizational independence and respect may unintentionally undermine the development of autonomy. Counterintuitively, we find that increasing or maintaining interorganizational links via communication may facilitate organizational separation, while attempts by units to distance themselves from one another may unintentionally inhibit it. By linking organizational separation, autonomy, independence, and respect, this paper develops theory on organizational separation processes and more generally enhances our understanding of organizational autonomy and its relations with mutual respect.

Family firms and the stock market performance of acquisitions and divestitures

“…This suggests that shareholders may expect family firms to more carefully select whether and when to undertake divestitures, as well as which businesses to divest and at what price to sell them. Shareholders may also expect family firms to implement their divestiture processes more judiciously, for example, by avoiding disruptions to existing routines and to tacit interdependencies within the remaining organization (Feldman, ; Natividad & Rawley, ) and by carefully overseeing the complex separation processes that divestitures inherently necessitate (Alaix, ; Moschieri, ; Wiedner & Mantere, ).…”

The costs of refocusing: Evidence from hedge fund closures during the financial crisis

“…In addition to destroying economies of scale and scope, the process of recalibration and reconfiguration following the removal of a business unit can, itself, be taxing to managers (Alaix, ). For example, in the context of spinoffs, managers must unwind and restructure a parent firm's and spun‐off subsidiaries' operations, including incentive compensation contracts (Feldman, ; Moschieri, ; Seward & Walsh, ), exchange relationships (Miles & Woolridge, ; Semadeni & Cannella, ), capital allocation processes (Feldman, ; Gertner, Powers, & Scharfstein, ), and corporate identities and reputations (Corley & Gioia, ; Tripsas, ; Wiedner & Mantere, ). By forcing managers to devote attention to closing down divisions and updating their existing routines in response to the changed conditions in their companies, the refocusing process itself would appear to impose costs on firms as well.…”

“…However, refocusing can also reduce economies of scale and scope, and will often impose direct operational costs associated with the refocusing event itself. Although recent research has acknowledged that refocusing may impose costs on firms (Alaix, ; Feldman, ; Wiedner & Mantere, ), there are major conceptual and empirical gaps in our knowledge about refocusing costs.…”

What if Marie Kondo Wrote an Organizational Change Book? Making Space for Subtractive Change

“…Interdependent parties expect to have their interests acknowledged when decisions are made affecting their interests (Wiedner & Mantere, 2019). A key issue in virtuous subtraction is uncovering the stakeholders that a target for subtraction (practice, idea, or activity) might have and getting their inputs and concerns.…”

“…Reflexive thinking is self-aware, improving, and empowered, as reflecting on strategies provides a basis for adapting them. Organizations higher on reflexivity tend to critically revise their working processes, thus implementing better task-related strategies (West, 2000). A familiar approach to subtraction is the heuristic 80/20 rule, identifying key goals and activities to emphasize core features and peel off the ancillary.…”