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Espoused Values of Organisations

by Boris Kabanoff † Joseph Daly §

Abstract: We review a series of studies whose focus is the measurement and comparison of values espoused by organisations in their public documents, in particular their annual reports. We begin by considering the construct of organizational values and the advantages and assumptions involved in using content-analysis of organizational documents to measure espoused values. Three interrelated studies of espoused organisational values are then described. The first of these investigates the value profiles of a sample of large Australian companies in order to test the validity of a previously developed typology of organisational values derived from distributive and procedural justice theory (Kabanoff, 1991). Changes in organisational values over time for the same group of companies are then considered. This study illustrates that how one studies value change, either in a univariate way by comparing single values over time or by comparing the incidence of different organisational ‘types’, that is organisational with different types of value profiles, significantly influences the results and interpretations of changes over time. The final study is a cross-national comparison involving Australian and US organisations that reveals several meaningful differences between the countries in the incidence of organisations with different value profiles. We conclude with a brief discussion of future planned research using the same methodology and focusing on the role of espoused values in organisational mergers and acquisitions.

Keywords: ORGANISATIONAL VALUES; CROSS-NATIONAL COMPARISON; ESPOUSED VALUES; CONTENT ANALYSIS; VALUES TYPOLOGY; CHANGE.

† School of Management, Queensland University of Technology, Brisbane, QLD 4000. Email: [email protected]

§ Walker College of Business, Appalachian State University, Boone, NC 28608–2089. Email: [email protected]

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1. ve le

Kaba O

Introduction r the last 20 years or so, interest in values has expanded beyond the individual vel of analysis to include the collective, organisational level (cf Maierhofer,

noff & Griffin, in press). As Rokeach (1979), one of the fathers of values research noted, a powerful aspect of the values concept is that it can be equally usefully applied to study individuals, groups, organisations, institutions, countries and societies. Each of these entities can be thought of as possessing ‘generalised, enduring beliefs about the desirability of certain models of conducts or end states of existence’, that is, values. We report here on an ongoing program of research that has focussed on the broad questions of whether there are a relatively small number of value patterns or value structures that characterise most organisations. The research program we describe draws upon a new theory of organisational values and a novel methodology—the content analysis of organisational documents in order to identify ‘traces’ of values espoused in such documents.

2. Defining Organisation Values There are some conceptual ‘loose ends’ that we need to consider when our subject is organisational values. Some might suggest that to imbue organisations with values is to anthropomorphise them, for surely no matter what entity we study, be it individuals’ or countries’ values, ultimately it is the value ‘expressions’ of people that we rely upon to study values. Nevertheless it is possible and meaningful to distinguish between the values people personally hold and those that they express or espouse on behalf of a collective such as an organisation. We use the term espoused values here to clarify the distinction between what we have studied and what some others define as organisational values (e.g. Rousseau 1990), namely values that are shared by all or a large proportion of an organisation’s members, or values as a proxy for organisational practices (Trice & Beyer 1993). Argyris and Schon (1978) draw the distinction between espoused and enacted values and it will become clear as we proceed that our concern is with values that are more towards the espoused end of their dimension. However, to call them espoused values does not imply we view them as ephemeral or unimportant. Values that organisations espouse, or more accurately are espoused on their behalf by senior managers can, in some cases at least, reflect organisational practices, and in most or all cases, they reflect what senior managers actually believe their organisations to be like, what they would like or prefer their organisations to be like, or what they would like significant stakeholders to believe the organisation is like. We hope that by measuring and exploring espoused values we can come to a better understanding of the different roles and functions of such espoused values.

3. A Content Analysis Approach to Describing Espoused Values Given that values are important how can we describe them and measure them if we wish to make quantitative comparisons? Broadly speaking, studies of organisational values have taken one of two forms—qualitative case studies involving one or a few organisations (e.g. Schein 1985) and quantitative, survey-based studies involving, in a few cases, relatively large numbers of organisations (e.g. Chatman & Jehn 1994).

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When confronted with the problem of trying to characterise the values of relatively large numbers of organisations, the intensive case-study does not seem well suited, and the survey, while more suited, is extremely resource intensive and in a number of ways quite limited. For example, to arrive at an organisation’s values do we simply average what all of an organisation’s members say, or are people with more senior positions more likely to provide a useful description? To overcome some of the limitations of both traditional qualitative and quantitative methods, we have used an infrequently utilised methodology—content or text analysis (see Kabanoff 1996 for a more detailed description of the methodology).

Language, it has been argued, mirrors mental processes and reflects people’s differing cognitions and realities (e.g. Huff 1990). Content or text analysis (CA) depends on this key assumption. It has been defined as ‘any technique for making inferences by objectively and systematically identifying specified characteristics of messages’ (Stone, Dunphy, Smith & Ogilvie 1966). In practice, CA usually involves quantifying the presence of some ‘target’ words or themes in written text. Based upon the frequency with which particular words or themes are present in the text, the researcher tries to draw some inferences about either the message’s sender, its audience, or its intended consequences.

Content analysis can be used to study differences between organisations in the kinds of values they express in organisational documents such as annual reports. The focus is upon values espoused by organisations rather than by individuals (e.g. England 1975). Differences in organisations’ values are then used to classify organisations according to their value profile.

Advantages of this method include that it has the capability to describe systematically, based upon objective criteria, and unobtrusively, values that organisations are concerned with without using intrusive means such as surveys or interviews. CA is considered a ‘trace’ methodology that tracks values through the verbal behaviours they produce. Another advantage is that we can describe concerns/values in organisations over time by using documents that are often available over quite long time periods. Finally, CA allows us to take qualitative material (written text) and convert it to a form that can be analysed statistically helping us to evaluate our ideas more rigorously.

To summarise, in order to describe the values of organisations it is possible to analyse the value content of documents that they produce. By counting the frequency with which organisations refer to particular ends and means (i.e. values) in their documents we gain insight into the values they are most and least concerned with.

4. A Typology of Organisational Values As value researchers have observed, it is not whether people, organisations or nations have or don’t have a particular value that makes them different, rather it is the relative importance or prominence attached to different values that makes them different from one another. Rokeach studied values by asking people to arrange them in a hierarchy from most to least important. On the other hand, Schwartz (1992) defined a number of different value structures. He defined a value structure as the overall pattern of relations among a set of values, containing elements of both compatibility and conflict among them. Somewhat in keeping with Schwartz’s approach, we have described (Kabanoff 1991) four different types of value structures

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that organisations can have; in other words, organisations in general are held to resemble just one of four, ‘ideal’ types in terms of their value structure. The term ‘ideal’ is used in the Weberian sense of each type being representative of a theoretical model or ‘archetype’.

The four theoretical types arise from how different organisations resolve the two core tension of any social system-allocating resources efficiently, in the economic sense, to maximise outputs while also allocating them equally enough to maintain social cohesion among the members of the group. This reflects a fundamental tension long recognised by students of distributive justice (Deutsch 1985) and economists alike. Figure 1 shows a two dimensional typological model in which both of the dimensions (structure and process) have efficiency (or relative inequality) at one end, and equality at the other. Organisations’ structures (specifically, their power structures or relative degree of power centralisation versus decentralisation) and their processes (that is, their policies and practices) interact to give rise to the four theoretical types.

The more unequal or centralised the power structure is in an organisation, the more efficiency values (or an efficiency ethic) predominate, and the more resources and rewards will tend to be unequally allocated. In organisations with decentralised, democratic power structures, an egalitarian orientation and more equal allocations will tend to occur. Although organisations’ power structures underlie their orientation toward distributive equality or efficiency, organisational processes can either reinforce or counterbalance this orientation. Thus, an organisation with an egalitarian orientation might reinforce this structural tendency through processes such as a pay policy that compresses salary differentials, or counterbalance the egalitarian orientation through processes that increase differentiation, such as a policy of linking pay to performance appraisal. In effect, organisations can ignore the distributive tensions inherent in their equal or unequal structures and use their processes to reinforce this dominant orientation, or they can recognise these inherent tensions and seek to balance them.

For example, the value structure we have termed elite represents a ‘pure’ unequal type in that unequal power values are combined with other inequality- oriented values. The elite value structure emphasises unequal power relations (authority), deemphasises egalitarian power values (participation, normative), and deemphasises cohesion values (affiliation, teamwork, commitment, leadership), while emphasising performance and reward. In contrast, the leadership type represents a mixed, compensatory pattern that retains the elite type’s unequal power orientation but superimposes on it a set of cohesion values that are nevertheless consistent with unequal power relations, namely, leadership, teamwork, commitment, and affiliation. In a similar way, the meritocratic type combines efficiency and equality concerns by superimposing a set of efficiency-oriented values on a ‘pure’, egalitarian type—the collegial type. In a sense the leadership and meritocratic types are ‘hybrids’ of the two ‘pure’ types that combine features of the other type. This typology has some interesting similarities with those described by a number of other authors (e.g. Frederick 1995; Hood 2000; Quinn & Kimberly 1984) but perhaps most interesting of all are the parallels with the four elementary types of sociality that Fiske (1992) identified. This poses some intriguing questions about how we can account for these similarities across writers working with quite diverse

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literatures and approaches but unfortunately such speculation is beyond the scope of this paper.

Figure 1 A Typology Describing Four Organisational Types and their

Associated Value Structures (based on Kabanoff 1991)

P roce s s C om p e n s a te s for S tru ctu re

P roce ss R e in force s S tru ctu re

E q u ita b le

P R O C E S S

E ga lita ria n

S T R U C T U R E U n e q u a l P ow e r

E q u a l P ow e r

E lite M e rito c ra tic

C o lle g ia lL e a d e rsh ip

+ V alu e s – V alu e s A u thority T ea m w ork P erform a nce L ea dership R ew a rd P a rticipa tion

C om m itm ent N orm a tive A ffilia tion

+ V alu e s – V alu e s T ea m w ork A u thority P a rticipa tion L ea dership C om m itm ent P erform a nce R ew a rd N orm a tive A ffilia tion

+ V alu e s – V alu e s A u thority P a rticipa tion L ea dership N orm a tive T ea m w ork C om m itm ent P erform a nce R ew a rd A ffilia tion

+ V alu e s – V alu e s T ea m w ork A u thority P a rticipa tion L ea dership C om m itm ent P erform a nce N orm a tive R ew a rd A ffilia tion

Note: + indicates that a value is strongly espoused by organisations with this type of value structure; and – indicates that a value is weakly or infrequently espoused.

5. Can We Find These Value Structures Among Actual Organisations? Kabanoff (1993) sought to provide some empirical evidence for the ‘simple’ question: Is there any evidence that such value structures occur among a fairly diverse sample of Australian organisations? Annual reports and other documents were collected for the five years 1986–1990 and we used a computer to count the frequency with which the nine values shown in figure 1 occurred in these documents. Annual reports were obtained either directly from companies or from publicly available sources such as libraries. From these documents we extracted for analysis all sections that referred to organisations’ goals, values, and philosophies, and their

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general approach to ‘people management’ issues; this included the CEO’s and/or Chairman’s report, any corporate mission, vision, or values statement, and any other section that contained a description of ‘people-management’ policies and practices. Entire sections (i.e. one or more paragraphs) containing such information were extracted for analysis, not individual sentences. Sections that were primarily financial or technical in nature were not analysed. This was the approach used in all the studies we describe.

Table 1 defines each of the nine values and also gives examples of the kinds of words that were treated as referring to each of the nine values.

Table 1 The Computer-Based Text Analysis Dictionary

Category Definition and Examples

Authority Concern with authority figures and relations, e.g. executive, manager, director. Leadership Concern with leadership, e.g. leader, leadership. Team Concerned with teams and teamwork e.g. team, teamwork, co-operation. Participation Concerned with participation by non-managerial levels, e.g. participation, consultation

co-occurs with reference to employees. Commitment Concerned with organisational commitment and loyalty, e.g. commitment, loyalty,

dedication. Performance Concerned with performance, e.g. achievement, performance, service, efficiency.

Reward Concerned with organisational reward system, especially remuneration, e.g. bonus, compensation, reward, salary.

Affiliationa All words with connotation of affiliation or supportiveness e.g. share, enthusiasm, appreciate, join together.

Normativea (Rectitude ethics)—All rectitude values invoking in the final analysis the social order and its demands as the justification e.g. responsibilities, fair, rights.

Note: a Affiliation comes from the Harvard IV dictionary and Normative is the Rectitude (Ethics) category from the Lasswell dictionary.

Then we employed cluster analysis to select organisations that approximately matched the theoretical profiles identified in figure 1. Cluster analysis is a ‘profile matching’ process in which cases (i.e. organisations) that have similar scores on a number of different dimensions are assigned to the same group while cases that have different profiles are allocated to another group. In this case the empirical matching process was done by comparing the similarity between organisations’ actual value scores (based upon the relative frequency with which they referred to each value) and the theoretical value profiles (or templates). For example, an elite value profile consisted of having three ‘strong’ values—authority, performance and reward (that is, these values should be referred to more frequently in annual reports by elite types than by the average organisation) and six ‘weak’ values (teamwork, leadership, participation, commitment, normative and affiliation) (values that were mentioned less frequently than by the average organisation).

Figure 2, a, b, c and d represent the average value profiles of organisations that were selected into one of the four theoretically specified groups compared to the

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theoretically specified profiles for each type. While the actual, average profiles do not exactly replicate the theoretical profiles, nevertheless, overall the value profiles of the organisations assigned to each theory-based cluster are a reasonable approximation to the four theoretical profiles.

Figure 2 Value Profiles of Four Organisational Types Based on Values

Espoused in Organisational Documents

(a) Elite

-0.47

0.42

-0.20

-0.10

-0.41

-0.53

0.26

-0.50

-0.42 Normative Affiliation

Authority Commitment

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V A

L U

E S Leadership

Participate

Performance

Reward

Teamwork -1.5 -2 -1 -0.5 0 0.5 1 1.5 2

Z SCORE

(b) Meritocratic

0.79

0.16

1.11

0.42

-0.17

0.33

-0.26

0.59

0.64Normative

Affiliation

Authority Commitment

V A

L U

E S Leadership

Participate

Performance Reward

Teamwork -2 -1.5 -1 -0.5 0 0.5 1 1.5 2

Z SCORE

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Figure 2 cont. Value Profiles of Four Organisational Types Based on Values

Espoused in Organisational Documents

(c) Leadership

0.01

0.28

0.28

0.17

-0.39

0.96

0.95

0.33

0.19

Normative Affiliation

Authority Commitment

V A

L U

E S

Leadership Participate

Performance Reward

Teamwork -2 1.5 2 -1.5 -1 -0.5 0 0.5 1

Z SCORE

(d) Collegial

0.10

-0.59

-0.24

0.59

-0.06

-0.06

-0.21

0.56

0.63

2 1.5 10.50-0.5-1-1.5-2

Normative

Affiliation

Authority

Commitment

V A

L U

E S

Leadership Participate

Performance

Reward Teamwork

Z SCORE

This initial study found some encouraging prima facie evidence that organisations with value profiles resembling the four ideal types posed by the theory could be empirically identified among actual organisations. In the next study, drawing upon

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the same data set, Kabanoff, Waldersee and Cohen (1995) investigated how organisations with these different value profiles discussed and portrayed issues related to organisational change. 6. Espoused Values and Organisational Change Themes Kabanoff, Waldersee and Cohen (1995) assumed that organisations with different patterns of espoused values would also tend to discuss and portray change in different ways. They noted that there had been few studies of how change agents in different value contexts seek to portray change. Evidence that the four types of organisations that we identified viewed change differently would also support that they were indeed different types of organisations. Content analysis was again the main methodology.

Text from the various organisations was analysed in terms of the frequency of occurrence of 21 different word categories including a Change category that counted all words with a change connotation (e.g. change, transition, modify, vary, process). The other twenty categories captured a number of themes that we assumed could be related to how change was discussed: themes such as Activity, Communication, Goals, Means, Needs, Failure, Pleasure and so on.

Having counted the frequencies of different word categories, we correlated, within each of the four types, the occurrence of change words with the other twenty word categories. Content analysis generally assumes that words that occur together also tend to have a psychological connection or relatedness thus if change words tend to correlate with different types of words in different organisations this would suggest, we argued, that change is seen and thought about differently.

The correlational evidence suggested that change was portrayed differently in the four types of organisations. For example in Elite organisations change was correlated significantly with just two themes—Negative and Strong while in Collegial organisations it was correlated with 10 themes. In order to gain a fuller and richer understanding of these findings, we identified all of the passages that contained both a change reference and a reference with which change was correlated. For example among elite organisations all passages containing a Change word and a Negative or Strong word were identified and a hard copy printed off. We then read and summarised these passages in order to provide an overall ‘word picture’ of how different types of organisations discussed change. We provide examples from just two of the organisational types here.

Elite organisations tended to portray change as being necessitated by negative circumstances, such as declining profitability and tough competition; an example: ‘Declining profitability was contained with a management restructure’. Furthermore, change tended to be portrayed as a negative or potentially negative experience: ‘would have left deep scars upon the company’. Elite organisations also associated change with strength offering reassurance, and giving a sense of scale, size, and importance to change.

Collegial organisations, on the other hand were the only ones that associated change with positive rather than negative terms: ‘We can make some changes in institutional structures which can lead to a more flexible, responsive, and effective organisation’. In addition active words were frequently used when discussing change (e.g. ‘action’, ‘implementation’, ‘enhanced efficiency’, ‘take advantage’, ‘breathing new life’).

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Change was also portrayed as approached enthusiastically, and there was a basic confidence in the capabilities and role of the organisation: ‘I am however confident that [the organisation] is well placed to take advantage of these changes’. Change was described in soft ways that implied consideration, concern, and creating opportunities: ‘It is a process which helps everyone’. Collegial organisations also related change more strongly to means: ‘The accident reporting system was changed to ensure that senior management are rapidly involved in the notification and investigation of all lost time accidents’.

7. Changes in Espoused Values Over Time Kabanoff and Holt (1996) investigated values and change from a different perspective. They examined how the values Australian organisations espoused changed during the period 1986–1990. The study compared two different approaches for studying value changes. In the first, labelled a univariate approach, we compared the relative frequencies of values espoused by companies in their annual reports at the earlier period (1986–1988) with those in the later period (1989–1990). We averaged value scores over several adjacent years in order to provide more reliable counts. The second approach, a more holistic approach, involved comparing not the frequency with which single values occurred in the two time periods but the relative frequency of the four types of organisations in these two time periods. That is, we sought to compare the relative population density of these four organisational ‘sub- species’ over time.

Our findings were interesting. The univariate comparisons found that only one value changed significantly over time (references to commitment increased), suggesting very little change. However, a comparison of the frequencies of the four types in each period revealed that the number of elite organisations declined significantly from time one to time two, while the number of collegial organisations increased significantly primarily because a proportion of elite organisations in time one espoused more collegial values in time two.

Overall there was also a degree of stability in organisations’ espoused values over time. On average value scores (i.e. frequencies) in time one correlated r = 0.44 with value scores in time two, and the majority of organisations were classified as being of the same organisational type in both periods. If espoused values as measured by our studies had showed no consistency over even this relatively short time period it would be difficult to maintain that they represented ‘relatively enduring beliefs’ as we assumed.

Kabanoff and Holt (1996) showed that it was possible to study change in organisational values in a holistic way that might be more meaningful than the more usual univariate way. Second, we found evidence both of relative stability in value measures as well as change in the overall incidence of different organisation types.

8. A Cross Cultural Comparison Espoused values play another role for organisations which makes them highly salient for comparing values across countries—they are used to enhance organisations’ reputations or images (Sutton & Callahan 1987) that is, their external legitimacy (Siehl & Martin 1990). It can reasonably be assumed that organisations enhance their

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legitimacy by espousing values that are congruent with their cultural milieu. We therefore next applied our method to a cross-cultural setting by comparing the values espoused by Australian and US organisations.

The choice of Australia and the US as the two countries to be compared involved convenience, however since US organisations are often used as the benchmark against which Australian organisations are compared, usually unfavourably, we thought it was valuable to investigate whether and how Australian organisations actually differ from their US counterparts in terms of the values they espouse.

It has been said that the two core values of American society are equality and achievement where equality implies a respect for others simply on the basis of their common humanity, and equality of opportunity (Lipset 1963; Trice & Beyer 1993, pp. 53–63). Equality of opportunity however, does not imply equality of outcomes. Equality of opportunity but not of outcome is a value set that fits the Meritocratic pattern described earlier; we therefore expected to find that the US ‘landscape’ would exhibit a relatively high incidence of Meritocratic organisations.

In Australia, while equality and individual achievement are also valued, the emphasis on equality extends beyond equality of opportunity to demand a ‘fair and reasonable’ standard of living for everyone and less tolerance of inequality in wealth (Encel 1970). Thus while a paradoxical outcome of the US form of equality is considerable economic inequality, Encel (1970, pp. 57) identified the following paradox of Australian egalitarianism: ‘Constitutional liberalism, which thinks in terms of uniform general laws, would create a set of bureaucratic rules to enforce equal treatment… [T]he search for equality of the redistributive kind breeds bureaucracy; bureaucracy breeds authority; and authority undermines the equality which bred it.’

We therefore reasoned that, paradoxically, there should be both relatively more Elite and more Collegial type organisations in Australia than in the US. Thus our hypotheses were: H1: a relatively higher proportion of US organisations will have a Meritocratic

value pattern; H2: a relatively higher proportion of Australian organisations will have Elite or

Collegial value patterns.

The sample comprised 77 Australian and 55 US organisations, all of them publicly listed. Given the sample size it was not possible to achieve exact comparability between countries but sample selection was guided by three main principles: the companies chosen had to be relatively large and well known; the two samples needed to be roughly comparable by industry; however, they should also reflect some of the industry differences between the two countries, such as the stronger presence of the mining sector in Australia, and manufacturing in the US. The Australian sample was selected first utilising a standard industrial classification with the aim of selecting large and significant organisations within all industry sectors. The US sample was then selected to match the Australian sample approximately in terms of industry and size (total assets, number of full-time employees). We decided it was not appropriate to select US organisations that exactly matched the Australian sample in size because of the differences in scale of the two economies, but in order to provide a partial control for size we decided not to include the largest US organisations when there

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was another US company in the same industry that was somewhat smaller but still well known. Nevertheless the two samples were overall roughly proportional by industry.

Values provided a highly significant degree of discrimination between countries when used in a discriminant analysis with a canonical correlation of 0.58 (p < 0.000), and a Wilks’ Lambda of 0.66 (p < 0.000); another indicator of their discriminating power was that values correctly assigned 78.79% (104/132) of organisations to their country of origin.

When we compared the relative frequencies of the four organisational types across the two countries (after clustering organisations in both countries as explained earlier), the results offered some support for our hypotheses (table 2).

Table 2 Organisational Type Cross-Tabulated by Country

Country

Type Australia US Row Total

Elite 30a 11 41 23.9b 17.1

2.3*c –2.3*

Leadership 9 10 19 11.1 7.9 –1.0 1.0

Meritocratic 12 19 31 18.1 12.9 –2.5* 2.5* Collegial 16 12 28 16.3 11.7 –0.1 0.1

Not Classified 10 3 13 7.6 5.4 1.4 –1.4

Column total 77 55 132

Note: a Observed frequency b Expected frequency c Adjusted residual of observed minus expected frequencies and its associated significance

level * p < 0.05

The chi-square for table 2 was significant (χ2(4) 11.42, p = 0.02) and it can be seen that a significantly greater proportion of the Meritocratic cluster comprised US organisations while Australian organisations were over-represented in the Elite cluster –70% of the Elite group being of Australian origin. There were no significant

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country differences for either the Leadership or Collegial clusters although more Australian than US organisations were classified as Collegial, and there was a tendency for more Australian organisations to be part of the ‘non-classifiable’ group. This latter result may well be attributable, in part at least to the higher proportion of companies from the mining and petroleum/energy sectors in the Australian sample, which in turn reflects differences in industry structures between the two countries. Of the 15 Australian members of these ‘extractive’ industries, nine were assigned to the ‘non-classifiable’ group. Though any interpretation of this result is speculative it is notable that these sectors are capital intensive, commodity-based, engineering- oriented, and traditionally masculine. In passing, we observe an interesting exception to this trend—Woodside, Australia’s largest petroleum/gas company, which was classified in our study as a member of the Collegial group and featured in a recent article in Business Review Weekly in which it was described as seeking to develop a ‘new culture of compassion and care’ (Treadgold 2002). This suggests a continuity in Woodside’s espoused values over more than a decade. Overall, these findings supported Hypothesis 1 and partly supported Hypothesis 2. Our study provided evidence of theoretically meaningful differences in organisations’ espoused values between the two countries.

These studies showed that text-analysis was a feasible and arguably quite powerful method of measuring espoused organisational values, relating these to organisations’ ‘change schemata’, studying changes in espoused values over time, and comparing values between countries. Yet there remains (at least) one, big unanswered question from this research—do espoused values have significant consequences for organisations? An alternative and not easily dismissed possibility is that we are measuring interesting examples of impression management on the part of managers and organisations that tell us relatively little about the ‘real’ nature of these organisations and thus have few if any substantive consequences. In the next, yet to be completed study in our program we try to answer the question—do espoused values really matter for outcomes such as organisations’ financial performance?

9. Espoused Values and Their Effects Following a Merger or Acquisition

A dominant theme in this research has been change. The newest study in the stream examines the role of espoused values in a particular change context, that of related mergers and acquisitions (M&As).

Mergers and acquisitions are extremely popular among managers as a means of achieving corporate growth and enhancing shareholder value—over 11,655 deals were recorded worldwide in 1998 alone (Grossman 1999). Unfortunately, many transactions—by some estimates, the majority of transactions—result in reduced shareholder wealth (Carper 1990). An oft-cited reason for those failures lies with differences in organisational cultures between M&A ‘partners’ and their attendant value differences. However very little empirical research has investigated the role of differences in values in the success or failure of M&As. A large part of the explanation for the paucity of studies is the difficulty of measuring organisational values across large samples of firms prior to the occurrence of M&As. As a consequence, the principal theory of acculturation in M&As, that of Nahavandi and Malekzadeh (1988), is largely untested. The obstacles to using survey methods to

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measure values in this context are formidable—a researcher would need to survey large samples of respondents, both within and between organisations, over a significant number of M&As (since these rather than individuals are the unit of analysis) and, this should occur prior to any M&A announcement that could affect members’ responses—a very tall order!

We are currently applying the text analysis method to the problem of identifying values and value differences at the organisational level in the M&As context (Daly, Kabanoff & Pouder 2001). Our use of the method promises to overcome all of the above-named methodological problems that have hamstrung research in this area. There are two principal questions we are addressing: 1. What effects do differences in organisational values have on the financial

success or failure of M&As? 2. What patterns of changes in values can be observed in an acquiring

organisation following a merger or acquisition?

Our measure of differences in organisational values comes from Kabanoff’s (1991) theory as it has been applied in previous studies. There have been studies that have found effects for the existence of value differences on financial performance following M&As. However, our framework allows us to go beyond simply noting the differences, toward identifying which combinations of value types generally blend together smoothly and which do not. The question is of potentially enormous practical significance; if we are successful, then acquiring firms can use our method as an unobtrusive ‘values test’, to determine whether a prospective target firm would be a good match on values criteria.

The second objective of the study addresses which values structures tend to emerge from specific combinations of firms given their pre-existing value types. Of importance here will be the kind of acculturation methods used by the acquirer. Will the target firm be permitted to retain some of its identity or will the acquirer impose its values on the target? These are key questions raised in related M&As by Nahavandi & Malekzadeh’s (1988) theory of acculturation, which, as mentioned, have hitherto never been tested. Our journey of discovery into espoused organisational values has had both highs and lows, and we are eager to see what this next step reveals.

(Date of receipt of final transcript: November, 2001. Accepted by Sharon Parker and Robert Wood, Special Issue Editors.)

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