Identity Maintenance and Adaptation: A Multilevel
I introduce a concept of organizational loss, presenting original research from the American automobile industry and several other brief cases which illustrate that organizations respond to loss in much the same way that individuals do. To explain this similarity, I argue that a common identity imperative drives the process at all social levels through all phases. I explain loss as a chasm between two forms of identity - structural and cognitive - that a viable entity must hold in some reasonable congruence. This thesis provides a logic for KObler-Ross' stage theory of loss, a model that has enjoyed widespread clinical acceptance but has met with scientific skepticism. I show that this framework can reconcile various schools of organization theory by offering a temporal sequence along which each is salient at a particular time. In the process, I explain several important anomalous findings about loss - loss aversion, escalation, and rigidity under threat - based on an economics of identity. In the final section, I illustrate and explain the value of several types of theorizing currently out of favor - stage models, clinical research, and multi-level analysis - and provide a multi-dimensional conceptualization of adaptation and resistance, cognizant of what is lost as well as gained. Loss has long been an important concept in psychology, and clinical therapists worldwide have long found Kibler-Ross' (1969) five-stage model of loss - denial, anger, bargaining, depression, and acceptance - extremely useful in talking about, understanding, and treating those who experience a sharp negative break with their past. The model has also proven clinically robust to a wide variety of loss situations including matters relating to work, injury, and status. In contrast, there is no consensus prescriptively, predictively, or even in words to describe organizations which experience sharp breaks. Organizational scholars see widely divergent patterns, running the gamut from neo-classical economists who see efficient diffusion of adaptive practices (e.g., Holmstrom & Tirole 1991) to organizational ecologists (Hannan & Freeman 1989) who argue that organizations remain inert regardless of environmental change. Summarizing the literature on organizational decline as "static," McKinley (1993:6) concludes that, "there is an urgent need to move toward more dynamic models." In this chapter, I argue that many apparent theoretical discrepancies can be reconciled by clarity in specifying the timing of responses. Specifically, I propose that organizations and other social entities that experience sharp negative breaks with their past pass through a pattern remarkably similar to that proposed by Kiibler-Ross. The argument is complicated by controversy about the validity of Kiibler-Ross' and similar stage models used by clinicians. The academic community is skeptical of both the empirical and theoretical bases for such theories; even the applicability in principle of a stage theory seems ill conceived, at odds with fundamental tenets of free will. So I begin the chapter with an explanation for why we might expect to see Ktibler-Ross' stages in the wide variety of loss situations in which observers have seen them, and hypothesize a logic underlying the stage theory as it generally applies to loss. In Section II, I present cases of organizational loss including original empirical research of the American auto industry in the aftermath of Japanese advances. I conclude in Section III with some general thoughts on loss, stage models, multi-level research, clinical research, and the current state of knowledge.