Plan for a study of trust in knowledge-intensive economic sectors

University Degree Business and Administrative studies

Plan for a study of trust

in knowledge-intensive economic sectors

Charles Heckscher & Saul Rubinstein

February 26, 2003

The subject of trust has drawn increasing interest in academic literature in the last few years, closely connected to the growing literature on “social capital.” The basic themes of these lines of research are, first, that trust is increasingly important in highly complex societies, essential to the facilitation of innovation and flexibility; but also, paradoxically, that it appears to be less and less trust available in these same societies as traditional communities and institutions break down.

Similar concerns have been developing in the literature on organization design in complex knowledge industries. On the one hand there are many reasons to believe that these organizations require higher levels of trust than industrial systems: the difficulty of close supervision, the complexity of task coordination, and the pace of technological and market change make it essential to allow considerable autonomy and to encourage innovation among employees, rather than relying on rule-bound bureaucratic control. On the other hand, the traditional bases of trust have been undermined by the growing pace of layoffs, which has violated expectations of loyalty that were an important motivational glue in almost all large firms until the 1980s.

Given this paradox, a number of writers have begun exploring the possibility of creating new forms of trust based not in traditional or lifetime communities but in deliberately-dormulated processes. They have just begun to sketch a theory for the institutional framework within which trust could be constructed quickly among people working on focused projects. This understanding is vital to business and organizational success in a world which no longer supports bureaucratic stability, and may well be applicable to wider social domains as well.

Our goal is to bring together some of the best theorists in this area, most of whom have not worked together, with some consultant / practitioners who have a deep understanding of the dynamics of business organizations, in order to advance this theoretical exploration.

Work to date

We have been engaged in research on this area for over a decade and have built networks of colleagues around a number of these topics. These networks have been coordinated through the Center for Workplace Transformation at Rutgers; Heckscher serves a Director of the Center and Rubinstein as Associate Director.

On the business organization front:

The 1994 book The Post-Bureaucratic Organization, edited by Heckscher and Anne Donnellon, was the product of a group of researchers mainly at the Harvard Business School working closely together for over two years, including Lynda Applegate, Nitin Nohria, John ...

This is a preview of the whole essay

Work to date

On the business organization front:

The 1994 book The Post-Bureaucratic Organization, edited by Heckscher and Anne Donnellon, was the product of a group of researchers mainly at the Harvard Business School working closely together for over two years, including Lynda Applegate, Nitin Nohria, John Sviokla, David Krackhardt, and Russ Eisenstat.
Between 1998 and 2002 a group supported by McKinsey and Company studied emerging forms of organizing around solutions, pulling together “multiple dimensions” of functioning: they included Nathaniel Foote (of McKinsey), Heckscher, Russ Eisenstat, Jay Galbraith, and Danny Miller.
Since 1998 Heckscher has organized at Rutgers a series of meetings of leaders who are trying to lead their organizations in the direction of greater teamwork and collaboration, including Shell, ABB, Citibank, the World Bank, Canadian-Pacific, Benjamin-Moore, and others.
Since 1998 Rubinstein and Eaton have been conducting a longitudinal study of the impact of highly participative work systems on organizational communication and coordination networks at Bristol-Myers Squibb.
Rubinstein and Jodie Hoffer Gittell are currently conducting a study of cross-functional coordination in the airline industry

On the stakeholder front:

Since 1998 Rubinstein, along with Heckscher, Tom Kochan and Adrienne Eaton, have periodically brought together a network of union leaders who are trying to enhance partnership and develop new approaches to the changing business environment, from about a dozen international unions representing employees in a wide variety of companies. The learnings from this network have been published in a series of refereed journal articles.
Rubinstein and Kochan have also published a book (based on research funded by the Sloan Foundation) on the impact of the Saturn partnership on firm and local union performance.
Heckscher has worked for five years with colleagues in the US and Europe on a study of attempts of unions and management to move together from stable monopoly environments to highly competitive contexts in telecommunications, power, and transportation. Oxford University Press will publish Agents of Change: crossing the post-industrial divide in March.

These various studies have shown both some of the potential of collaboration and many unresolved difficulties. At this point, contrary to the claims of many enthusiasts, efforts to build flexible and collaborative business organizations are in their infancy, and the ability to build successful partnerships in highly dynamic situations is limited. Among other major problems, reliable methods of accountability in networked environments have yet to be developed; career expectations are in disarray; training has fallen victim to increased mobility at the same time that need for advanced knowledge has increased. Yet even with these remaining obstacles, enormous progress has been made on both the social and technical fronts in encouraging cross-boundary collaborations and alliances, and these have clearly paid off for many companies and, often, for their employees.

Plans

The core question we would pose is: What institutions are needed for the creation and maintenance of trust in knowledge-intensive companies and economic sectors? The initial hypotheses to be tested are first, that the traditional institutions of loyalty grounded in large firms are inadequate to knowledge-intensive sectors; second, that other institutions currently being developed – including post-bureaucratic organizational forms, studied trust, and quasi-professional communities – can generate sufficient trust for the effective functioning of those sectors.

We would approach this in two major steps. The first is to look within the economic sphere, at firms and alliance networks focused on economic value. The second would broaden the focus to include other social values and stakeholders, asking what sorts of institutionalized relations can create a balance among economic production, solidarity, equity, diversity, and other social values.

Work plan

The project will aim at the production of one or more books integrating empirical and theoretical work on collaboration for a broad audience including academics, business and labor leaders, and policy makers.

The first step will be to bring together our network of researchers to develop a conception of trust appropriate to knowledge-intensive economic institutions. At that meeting the goal will be to build a coherent project, with commitments for particular pieces of writing. During the summer we will manage the writing process, and we will convene a second meeting in late Fall to bring the first book effort near conclusion.

So far we have agreement from the following people to participate in such a meeting:

Jay Galbraith, Professor Emeritus at the International Institute for Management Development (IMD) in Lausanne, Switzerland and Senior Research Scientist at the Center for Effective Organizations at the University of Southern California; author of Organizing for the Future (Jossey-Bass, 1993) and Designing Organizations (Jossey-Bass, 2001).
Danny Miller, Professor of Strategy, Ecole des Hautes Etudes Commerciales, Montreal, and Chair in Family Enterprise and Strategy, University of Alberta. Author of Organizations: A Quantum View (Prentice-Hall, 1984) and The Icarus Paradox (HarperBusiness, 1990).
Charles Sabel, Professor of Law and Social Science, Columbia Law School; author of Learning by Monitoring (Harvard University Press, forthcoming) and The Second Industrial Divide (Basic Books, 1984).
Nathaniel Foote, Managing Director of the Center for Organizational Fitness; formerly a leader of the organization practice at McKinsey and Company.
Woody Powell, Professor of Education and affiliated Professor of Organizational Behavior and Sociology at Stanford University, and an external faculty member at the Santa Fe Institute, author of “"Neither Market Nor Hierarchy: Network Forms of Organization" and coauthor of The New Institutionalism in Organizational Analysis.
Michael Maccoby, President of the Maccoby Group, author of The Gamesman (Simon and Schuster, 1976), and The Productive Narcissist (Broadway Books, forthcoming).
Lynda Applegate, Henry R. Byers Professor of Business Administration at Harvard Business School; author of Corporate Information Strategy and Management: The Challenge of Doing Business in a Network Economy (McGraw-Hill, 2002).
Paul DiMaggio, Professor of Sociology, Princeton University; coauthor of The New Institutionalism in Organizational Analysis. (University of Chicago Press, 1991) and “The New Institutionalisms: Avenues of Cooperation” (Journal of Institutional and Theoretical Economics, 1998).
Larry Prusak, former Managing Principal with IBM Consulting Group; author of Managing Information Strategically (John Wiley & Sons, 1994) and Information Ecology (Oxford University Press, 1997).
Russ Eisenstat, President of the Center for Organizational Fitness; author of The Critical Path to Corporate Renewal (Harvard Business School Press, 1990).
John Paul MacDuffie, Associate Professor of Management, Wharton Business School; author of “Pragmatic Collaborations: Advancing Knowledge While Controlling Opportunism.” Industrial and Corporate Change (2000); and "Creating Lean Suppliers: Diffusing Lean Production Through the Supply Chain." California Management Review (1997).

And ourselves:

Charles Heckscher, Professor at the School of Management and Labor Relations, Rutgers University; editor / author of The Post-Bureaucratic Organization (Sage, 1994) and Agents of Change (Oxford University Press, forthcoming).
Saul Rubinstein, Associate Professor at the School of Management and Labor Relations, Rutgers University; author of Learning from Saturn (Cornell, 2001).