A Signaling Theory Perspective on Building Supportive Responses to Organizational Change: An Experimental Study

Organizations are frequently unsuccessful in creating employee support for change. Research has asserted that one important reason for change resistance is employee uncertainty. Yet despite wide consensus that leadership and communication are key vehicles to influence employees’ change reactions, employee uncertainty concerning the leader of the change, and how this uncertainty can be addressed have been largely disregarded. Drawing on signaling theory, I propose that leaders who signal their charisma and change commitment when announcing change can alleviate uncertainty by assuring employees about the leader’s characteristics and intentions, and thereby foster supportive responses to change. Specifically, I test the main and interactive influence of leader charisma and change commitment signals in determining employees’ affective and normative commitment to, and behavioral support for, organizational change. In line with the proposition that charismatic signaling is inherently values-based and needs to be morally validated by followers, I investigate its effect on follower change commitment as a function of followers’ openness to change and self-transcendence values. My findings from an experimental vignette study in a sample of 284 US employees reveal that in particular leader charisma signaling, and weakly leader change commitment signaling, have positive main, but non-interactive effects on follower behavioral support for change, which do not operate indirectly through follower affective and normative change commitment. Further, I report that followers’ behavioral support for change elicited by leader charisma and change commitment signaling varies as a function of followers’ openness to change and self-transcendence values. Above and beyond effects concerning behavioral change support, leader charisma signaling is revealed to increase followers’ expression of openness to change, conservation, and self-transcendence values when advocating organizational change. I discuss implications for theory and practice in managing employee responses to organizational change. Keywords: Organizational change; leadership; charisma; signaling; commitment.Organizations are frequently unsuccessful in creating employee support for change. Research has asserted that one important reason for change resistance is employee uncertainty. Yet despite wide consensus that leadership and communication are key vehicles to influence employees’ change reactions, employee uncertainty concerning the leader of the change, and how this uncertainty can be addressed have been largely disregarded. Drawing on signaling theory, I propose that leaders who signal their charisma and change commitment when announcing change can alleviate uncertainty by assuring employees about the leader’s characteristics and intentions, and thereby foster supportive responses to change. Specifically, I test the main and interactive influence of leader charisma and change commitment signals in determining employees’ affective and normative commitment to, and behavioral support for, organizational change. In line with the proposition that charismatic signaling is inherently values-based and needs to be morally validated by followers, I investigate its effect on follower change commitment as a function of followers’ openness to change and self-transcendence values. My findings from an experimental vignette study in a sample of 284 US employees reveal that in particular leader charisma signaling, and weakly leader change commitment signaling, have positive main, but non-interactive effects on follower behavioral support for change, which do not operate indirectly through follower affective and normative change commitment. Further, I report that followers’ behavioral support for change elicited by leader charisma and change commitment signaling varies as a function of followers’ openness to change and self-transcendence values. Above and beyond effects concerning behavioral change support, leader charisma signaling is revealed to increase followers’ expression of openness to change, conservation, and self-transcendence values when advocating organizational change. I discuss implications for theory and practice in managing employee responses to organizational change. Keywords: Organizational change; leadership; charisma; signaling; commitment

Corporate Divestment Decision Factors: A Systematic Review

I study the underlying decision factors of corporate business entity divestments. Specifically, I address four questions. Firstly, what are decision factors concerning the business entity (divestment object) itself that influence divestment? I concludefrom previous research that negative entity performance, insufficient benefits from the interplay between entities (whether between related or unrelated entities) and entity inferiority to marketplace alternatives (whether concerning costs or market opportunities) each considerably increases business entity divestment likelihood. Secondly, what are the psychological factors within decision-makers that influence divestment? I show from previous research that decision-makers’ familiarity with the entity’s business segment may distort a decision-maker’s entity assessment, thus biasing divestment decisions; escalation of commitment may lead to retaining failing projects despite being aware of their poor performance; and the managerial incentive to conceal investment  mistakes may at least postpone divestment as a result of self-interests. Thirdly, what factors in the organizational context influence divestment? I find from previous research that negative firm performance and path dependence of preceding divestments increase general propensity to divest, whereas units that are perceived to be essential to organizational image and identity are more reluctantly exited. Fourthly, which external stakeholders are important influencing factors in divestment? I indicate from previous research that the media, political entities, and blockholders may pressure decision-makers significantly and sway divestment decisions.Keywords: Corporate Divestment, Decision Factors, Psychological Factors, Organizational Factors, External Factor