Organizational inertia in a strategic public sector merger : case Aalto University

Aalto University, P.O. Box 11000, FI-00076 Aalto www.aalto. fi Author Markus Heimonen Name of the publication Organizational Inertia in a Strategic Public Sector Merger: Case Aalto University Publisher School of Science Unit Department of Industrial Engineering and Management Series Aalto University publication series CROSSOVER 5/2011 Field of research Organizational science Abstract Aalto University is a new Finnish private university that was created 1.1. 2010 through the merger of three nationally leading universities of their own fields. The merger incorporated a strategic change effort in all significant activities of the organization, including management system, organizational structure, personnel, and culture in a short timeframe dictated by external political and economic forces. The overall rate of reforms that have been actually implemented during a relatively short transformation period challenges the picture of universities as extremely static organizations. This study focuses on explaining the organizational phenomena observed during the transformation effort by creating a grounded framework of organizational inertia. The study clearly illustrates the importance of organizational inertia as a concept, and its power to explain and classify complex organizational phenomena as a framework. The developed theory manages to provide an explanation for most of the relevant phenomena encountered during the study, with an apparent focus in institutional, political, legitimacy, and information issues in the public sector case. The study illustrates the significance of cultural, institutional, and decision-making issues, making a university organization a mess of politics, rivalry, problematic leadership, and complex social networks. The results suggest that it may be very hard to lead the people in a university, but the management can certainly make an effort to lead the image of a university by creating a compelling transformation story as well as positive examples and role models, which may be powerful drivers of change. Furthermore, organizational inertia emerged not only as a force making the change more difficult, but the inertial themes observed in the pre-merger organization formed the rationale for the change itself, suggesting that certain forces can act simultaneously to initiate and inhibit strategic change by increasing the need while decreasing the ability to change.Aalto University is a new Finnish private university that was created 1.1. 2010 through the merger of three nationally leading universities of their own fields. The merger incorporated a strategic change effort in all significant activities of the organization, including management system, organizational structure, personnel, and culture in a short timeframe dictated by external political and economic forces. The overall rate of reforms that have been actually implemented during a relatively short transformation period challenges the picture of universities as extremely static organizations. This study focuses on explaining the organizational phenomena observed during the transformation effort by creating a grounded framework of organizational inertia. The study clearly illustrates the importance of organizational inertia as a concept, and its power to explain and classify complex organizational phenomena as a framework. The developed theory manages to provide an explanation for most of the relevant phenomena encountered during the study, with an apparent focus in institutional, political, legitimacy, and information issues in the public sector case. The study illustrates the significance of cultural, institutional, and decision-making issues, making a university organization a mess of politics, rivalry, problematic leadership, and complex social networks. The results suggest that it may be very hard to lead the people in a university, but the management can certainly make an effort to lead the image of a university by creating a compelling transformation story as well as positive examples and role models, which may be powerful drivers of change. Furthermore, organizational inertia emerged not only as a force making the change more difficult, but the inertial themes observed in the pre-merger organization formed the rationale for the change itself, suggesting that certain forces can act simultaneously to initiate and inhibit strategic change by increasing the need while decreasing the ability to change.