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Aims, Objectives, and Rationale
In the present-day business environment, every organization is tasked to deal with increasing competitiveness, which makes it rather challenging to stay afloat. What motivates companies to perform regular assessments of their practices in order to identify whether the currently implemented techniques are effective in winning a competitive edge. If they are not, the organization is faced with the necessity to choose another course.
There are numerous management techniques that regularly come and go in the business world: T groups, diversification, management by objectives, Theory Y, Theory Z, empowerment, zero-based budgeting, etc. (Rao 2012). The majority of them were once believed to enhance organizational performance. There are plenty of organisations that eagerly embrace the latest trends and drop them as soon as they get disappointed in their effectiveness.
This poses a question whether all these strategies are actually capable of boosting a company’s performance or they owe their popularity to the growing necessity to innovate (even without having any particular innovation plan) (Collins 2013).
Thus, the major purpose of this research is to explore the utilization of fashionable management techniques (“fads”) in order to identify what effect they produce on organisational performance. The objectives will include, among others:
- to investigate the notion of management fashion;
- to find out what characterizes techniques that appeared as a result of popular trends;
- to compose a list of top successful organisations that implement them and to assess what results they obtained thereby;
- to make a generalisation on the connection between management techniques and organisational performance.
The relevance of the research is supported by the absence of agreement among scholars upon the necessity to embrace popular management techniques. There are scholars who think that using such techniques may bring about plenty of benefits, both financial and non-financial. They believe that there is a strong positive link between the chosen technique (at a particular period of time) and organisational achievements (Afonina & Chalupský 2012).
Some scholars take an in-between position, stating that fashionable techniques do introduce some useful ideas that can further be developed into working strategies. However, their effect on performance is far less significant as it is generally believed to be (Cokins 2013). Others are convinced that each company adopting new practices has multiple rationales for doing so besides financial benefits and competitive advantage.
This implies that fads are unavoidable for a particular period of time since they act as a response to the business environment (Daniel, Myers & Dixon, 2012). Finally, there are those who take a radically negative perspective, claiming that no significant financial improvement is found in organisations that have introduced innovative management techniques (Staw & Epstein 2000). Therefore, it becomes evident that deeper investigation is required to identify what features make a management technique a fad and how these features improve or fail to improve organisational performance. This necessity serves as a rationale for the study hereof.
Staw and Epstein (2000) were the first to attempt a comprehensive study on the topic. They came out with a rather surprising conclusion that organisational performance is practically unrelated to the use of popular management techniques. The researchers studied large industrialised companies of the United States to see how their outcomes were affected by the use of empowerment, TQM, and teams in both social and material aspects.
They attempted to answer whether these techniques brought about real economic advantages for these organisations or association with the popular name of each technique was a benefit in itself. Another issue of their interest, closely related to the previous one, was the connection between fads and the company’s reputation in the market. The most intricate question the study posed was whether corporate leaders indeed had to demonstrate boosted performance or got compensated for the bare fact of adopting an innovation. Having analysed the outcomes of the companies, they concluded that the step did not have any economic value whatsoever.
Nevertheless, these organisations were much more respected and admired since they created an attractive image of being progressive and forward-looking as compared to those that adhered to old-fashioned practices. Furthermore, it was found out that their CEOs received higher wages due to being associated with these popular business trends.
A similar position is held by İşeri-Say, Toker, and Kantur (2008), who believe that fads gain profuse popularity, which never lasts for a sufficient period of time to allow them to produce any considerable impact on organisational performance. According to these scholars, management fashion is transitory in its nature: the most popular trends typically reach their peak immediately after appearing, which can be traced by the number of published books and articles devoted to them.
They owe their temporary success to being universally applicable, simple, motivating, prescriptive, and easy to copy and paste. However, the authors of the study found out that they still did not pass unnoticed for organisations if performance outcomes were not limited to the financial aspect.
Afonina and Chalupský (2012) attempted to analyse a broad range of tools and techniques from both financial and non-financial perspectives. However, unlike the previous scholars, they considered the long-lasting effects of the selected techniques on performance. Their multiple regression analysis revealed that there was a strong positive link between utilization of popular techniques and financial and non-financial outcomes.
Cokins (2017), who takes an intermediate position between proponents and opponents of management fads, attempted to explain why some seemingly effective techniques fail to bring profit. He believes that the majority of them begin with brilliant or at least useful ideas, which makes them go viral in the business world. This is one of the reasons their value starts falling rapidly in a short while: the more companies adopt them, the less competitive advantage they gain. The second reason is that it is typical of many organisations to jump from one technique to another to keep pace with the changing business environment. As a result, they not only fail to achieve performance improvement but also cannot build a consistent business strategy.
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Stentoft Arlbjørn and Vagn Freytag (2013) conducted a more narrowly focused study to investigate the effects of the lean technique on production, public, and service sectors. They found out that the level of operationalisation of the concept was very low. It made lean rather vague and doubtful. The majority of literature the researchers studied used a toolbox approach to it, giving no clear evidence of its effectiveness. The positive effect was recorded only by several scholars.
Daniel, Myers, and Dixon (2012) attempted to explain what rationales companies had to adopt new techniques even though they did not seem to be promising. They argue that the appearance of innovation and its early adoption can be associated with psychodynamic and political rationales. This implies that companies are literally forced to embrace new practices, being influenced by industry leaders that are typically at the head of the procession.
Study Design and Methods
In order to achieve the aforementioned objectives, the study will be designed in such a way that it will be possible to compare objective and subjective assessments of popular management techniques. That is why it would combine quantitative and qualitative methods. First, the financial analysis of a number of companies will be conducted. Then, the results are to be compared with those obtained via a questionnaire. The major reason for choosing this approach is that it will allow seeing:
- what effects new techniques have on financial performance;
- whether there is a discrepancy between this data and managers’ view;
- what rationale managers provide for using these techniques if there is no material profit;
- whether the indicated benefits can outweigh financial profit so that the technique can be indeed called effective.
The data collection procedure will, therefore take several steps. First, the foremost, a list of the most widely implemented fads will be created. Second, this list will be complemented by industry leaders that currently utilize these techniques. Their annual financial reports starting from the adoption of the technique will be investigated to see whether the use of a particular practice brought about financial benefits. However, in order to obtain a comprehensive picture, this analysis will not be sufficient. That is why a questionnaire will be composed to offer to top managers of these companies for them to assess the effectiveness of the implemented technique. Finally, two sets of data will be compared.
Afonina, A & Chalupský 2012, ‘The current strategic management tools and techniques: the evidence from Czech Republic’, Economics and Management, vol. 17, no. 4, pp.1535-1544.
Cokins, G 2013, ‘Top 7 trends in management accounting’, Strategic Finance, vol. 95, no. 6, pp. 21-30.
Collins, D 2013, Management fads and buzzwords: critical-practical perspectives, Routledge, London.
Daniel, E, Myers, A & Dixon, K 2012, ‘Adoption rationales of new management practices’, Journal of Business Research, vol. 65, no. 3, pp. 371-380.
İşeri-Say, A, Toker, A & Kantur, D 2008, ‘Do popular management techniques improve performance? Evidence from large businesses in Turkey’, Journal of Management Development, vol. 27, no. 7, pp. 660-677.
Rao, M 2012, Knowledge management tools and techniques, Routledge, London.
Staw, BM & Epstein, LD 2000, ‘What bandwagons bring: effects of popular management techniques on corporate performance, reputation, and CEO pay’, Administrative Science Quarterly, vol. 45, no. 3, pp. 523-556.
Stentoft Arlbjørn, J & Vagn Freytag, P 2013, ‘Evidence of lean: a review of international peer-reviewed journal articles’, European Business Review, vol. 25, no. 2, pp. 174-205.