EFFECTS OF GOAL INTERDEPENDENCE AND SOCIAL IDENTITY ON DEPARTMENTS AND THEIR RELATIONSHIPS IN CHINA

Effects of Goal Interdependence and Social Identity on Departments and Their Relationship in China by WANG Liyan Doctor of Philosophy Synergy among departments is increasingly considered vital for organizations to use their full resources to deal with threats and explore opportunities in the rapidly changing marketplace. Although valuable, developing synergy among departments is a difficult management challenge. Departments within organizations often have their own business goals, yet the coordination of these goals is a precondition for overall organizational effectiveness. The need for goal coordination makes departments interdependent (Thompson, 1967), but this interdependence may become particularly problematic when the different departmental goals are incompatible (St. John & Hall, 1991). Because of the value of cooperative goals for coordination, managers want to understand the conditions that lead people to believe their interests are basically positively associated in an organizational setting. In this study, we explore what factors increase the likelihood of having broad role identities, in which employees not only care for the goals characteristic of their own department, but also for goals of other departments. This gives rise to the question of not whether, but under what circumstances, departments develop organizational cohesion. That is the key question that must be approached by theories of intergroup relations in order to successfully understand the dynamics of interdepartmental coordination, cooperation, and conjunction. In this study, we propose that the degree to which people have concern for the organizational goals is partly rooted in interdepartmental goal interdependence. This study assumes that high departmental and interdepartmental effectiveness will be promoted by constructive cooperation between departments within organizations. In doing so, we connect the theory of cooperation and competition and social identity theory to test what interdepartmental structures will improve organizational effectiveness. Accordingly, we consider a congregation of structures by which coordination between departments can be managed. The study suggests that interdepartmental relationships are influenced or determined by contextual structures, especially task interdependence, shared rewards, and interdepartmental groups, operating first upon goal interdependence and social identity, with the effects on the interdepartmental coordination as subsequent outcomes. In practice, if each group were producing its own product or service, there might be little need for significant intergroup coordination. In most cases, however, identifiable groups in organizations are producing only a segment of the organization’s product or service. Coordination between such groups is a necessity. As professional firms that provide multiple services are well suited to exploring interdepartmental relationships (Tomasic, 1991; Eccles and Crane, 1988), this study collected the questionnaires from financial companies in mainland China. As a result, we found that three factors promoted effective interdepartmental coordination and thus high organizational performance. First, coordination will be more effective if there are compatible or cooperative goals between departments. Second, coordination will be more effective if the departments are addressed and rewarded on over-all performance measures embracing the activities of the several departments. Third, interdepartmental coordination will be more effectively achieved and over-all organizational performance will be higher to the extent that departments have salient organizational identities rather than departmental identities. This research has both theoretical and practical contributions. Theoretically, this study provides a test of whether interdepartmental structures promote synergy in financial companies in China. This study adds to research on cooperation and competition by identifying the interdepartmental structures as important antecedents to goal interdependence. This study adds to research on social identities by identifying the interdepartmental structures such as motivational and affective antecedents to organizational identities. This study also adds to research on intergroup relationships by developing the model to enhance the coordination relations among formal departments in organizations. Practically, this study has implications for developing interdepartmental relationships in the company, especially in those financial companies in mainland China; this study also provides empirical evidence of the utility of the interdepartmental structures and suggests that cooperative goals and organizational identity mediate their effects on organizational effectiveness. I declare that this is an original work based primarily my own research, and I warrant that all citations of previous research, published or unpublished, have been duly acknowledged.