13.2 Organizational identity

Sociologists, psychologists and researchers on organization and management started to investigate organizational identity at the start of the 1990s. Their inspiration was the rapid acceleration of changes in the strategies, structures and operations of organizations in the West. Likewise the magnitude of the changes experienced by postcommunist economies has inspired studies in disciplines as diverse as economics, management science, political science, sociology and psychology. The study described below and the conclusions ensuing from it represent a continuation of this trend.

Postcommunist economies have always had a problem with their identity, and the same problem is faced by enterprises and formal organizations operating in these economies. However the need for these organizations to adapt their identity to the new market conditions and the opening of the economy to Western competition, and the problems ensuing from this, have received the attention of only a few researchers (Kostera, 1996; Obloj, 1998). The application of knowledge derived from social psychology, anthropology and sociology can create a new perspective on the transformation process in postcommunist economies that will allow us to investigate whether organizational phenomena of a psychosocial character are dependent on economic variables (profit, demand and so on). It will also allow us to examine the dynamics between different organizational variables , one of which is organizational identity.

Organizational identityencompasses not only the organization s basic values and other elements of its culture but also its production methods and programmes (Stuart and Whetten, 1985; Duton and Dukerich, 1991). For the organization s members , its identity becomes manifest in a cognitive scheme and their perceptions of the distinguishing characteristics of the organization, including its status in comparison with other organizations. ² Consequently external events that put into question the distinguishing characteristics of an organization can threaten the perception of organizational identity held by the members of the organization (Duton and Dukerich, 1991; Elsbach and Kramer, 1996). ^[2]

A crisis or turning point in the enterprise s history can induce major changes in the enterprise s internal and external relations. Such changes have both an objective dimension (changes in the management system or organizational structure) and a subjective one (the perception of these changes by management and employees ) (Konecki and Fraczak-Konecka, 1998). It appears that turning points similar to those in individuals lives can spark identity changes in organizations. They can be triggered by an economic crisis, privatization , an ecological disaster caused by the enterprise, criticism by the public and the mass media, tough competition, merger, the emergence of a strong leader and so on. Changes in identity can also take place in a planned and regulated manner, such as when organizational experts and consultants , assisted by the top management, restructure the enterprise methodically and by means of appropriate procedures (Ozynski, 1998).

Duton et al . (1994) suggest that a distinction should be made between two perceptions of organizational identity or two types of image of the organization:

• The perceived identity is based on organizational characteristics, which are considered by its members to be important, distinguishing and stable.

• The construed external image is based on organizational characteristics considered to be important, distinguishing and stable from an external viewpoint, that is from the perspectives of the organization s state-holders or the general public. This outsider s image of the organization reflects back onto the organization s members perceptions. Similar to the individual ˜I , the organizational self also depends on outsiders perceptions. Using Cooley s term , this identity type could be called the organization s ˜looking-glass self .

The concept of construed external identity should be distinguished clearly from the concept of corporate identity, which is created for the purpose of a uniform perception of the organization s identity by its environment. In order to achieve an external standardized picture of the organization stress is laid on:

• Visual information about the organization, including its architecture, product design, packaging and so on.

• The style, principles and culture of the firm s activities and the values existing within the organization (Wojcik, 1997, pp. 87 “8).

Corporate identity does of course influence organizational identity, because that which is presented outside the organization (public relations) also influences the way in which employees perceive their firm. ^{3 [3]}

^[2] Qualitative studies are particularly useful in identifying these characteristics. A case study of a Japanese company showed that the company s uniqueness as a feature of its identity commonly experienced by employees is based on three factors: (1) general feeling of uniqueness (a common cultural assumption developed, for example, during the employees training; (2) organization of work (activities at the shop-floor level were not overly controlled by managers, which permitted a degree of autonomy, aided communication and promoted the development of good relations between employees); and (3) forms of address (non-hierarchical forms of address and language, which helped to create a good organizational climate). On the other hand the organizational structure (autonomous subsidiaries) and promotion system was not commonly felt to be an element of organizational identity. Rank and file employees, unlike managers, did not perceive that these characteristics were specific to the company and argued that in this respect their company was no different from other Japanese firms. However, the absence of trade unions in the company and their inability to exert an influence on wage levels, were perceived as part of the company s unique identity (Konecki, 1994, p. 145 “59).

^[3] According to organization sociologists, organizational identity can be maintained through the practice of ˜self-referential closure . The marketing or public relations department, through its marketing research, image analysis and advertising, creates a ˜mirror in which the organization can look at itself to assess, confirm and recognize itself as a culturally distinct entity that is simultaneously interested in needs of the market (Christensen, 1995, pp. 666 “7). ˜Numerical statements compiled by the organization and graphs concerning market trends, competitive position, sales forecasts, accessibility of raw materials, and so on, are, in fact, projections of interests and concerns of the organization itself. They reflect the way in which the organization understands itself. It is by means of this process of referring to themselves that the organization s members can intervene in their own functioning and, thus, participate in building and preserving their own identity (Morgan, 1997, pp. 281). Thereby, the marketing function helps the organization to protect and confirm its identity of a customer and market oriented organization. Marketing also relies on proactive activities (for example products innovations and relaunches), which try to anticipate future customers needs. Thus, the organization could get ahead of the market dynamics, thereby preventing that an unexpected change in customers needs could bring about a crisis for its identity.