Playing cards from the French Republic (1793-94), revolutionary images replace Kings and Queens
Ideas for Leaders #514

The Role of Identity When an Organization's Purpose Changes

This is one of our free-to-access content pieces. To gain access to all Ideas for Leaders content please Log In Here or if you are not already a Subscriber then Subscribe Here.

Key Concept

How do organizations respond to multiple business logics with conflicting sets of rules and norms? New research based on a study of four French business schools reveals that institutional and organizational identities will guide an organization’s response.

Idea Summary

Many organizations must deal with multiple ‘logics’ that come with different and often conflicting or competing rules of the game. For example, organizations in the medical field must balance the logics of science and care. Companies in the micro-finance industry balance commercial and development logics: they are bankers who are also involved in advancing developing countries.

What happens when a new set of rules suddenly take over your industry? The answer, according to a research team from French and Canadian business schools, lies in understanding your institutional and organizational identities.

The research is based on case studies of four French business schools dealing with two somewhat conflicting logics. The business schools are known as French Grandes Écoles de Commerce (FGEC). Until the mid-1990s, the rules of operation for FGECs were clearly laid out. For example, the credibility and cachet of a FGEC was the extremely competitive entrance exams, which made acceptance into a Grande École a high honour.

In the mid-1990s, however, major business schools became more and more internationalized. No longer did leading schools in different countries compete with their national counterparts. Instead, the competition extended to schools around the world.

The FGECs recognized that they could not continue to live in their insular world if they were going to attract the best and the brightest students from France and abroad and be relevant in the world of business academia. They had to adapt to the new International Business School (IBS) logics: for example, credibility now came from placement after graduation not stringent entrance examples; research was more valued than teaching; and international faculty with international PhDs were prized.

The institutional identity of each of the four French business schools in the study was crystal clear: all four were considered Grandes Écoles. However, at the organizational identity level — which refers to how organizations see themselves in comparison to other organizations in their category — there were some significant differences in terms of status and prestige. Two of the schools — ESSEC and ESCP Europe — were considered elite, stable schools among the Grandes Écoles, boasting strong GE programs. Grenoble EM was not as elite, but still had a ‘respectable’ Grande École program, while Euromed’s GE program was considered poor.

The researchers expected that the four schools — and especially the two lower-tiered schools who were struggling to be considered a Grande École — would move away from the Grandes Écoles identity and adopt a clear International Business School identity. However, important stakeholders of the schools in France, including alumni associations, employers, the media, chambers of commerce and the Ministry of Education, wanted the schools to continue to sustain and nurture the tradition of the Grandes Ecoles.

At the same time, the schools had to react to the global dominance of the International Business School logic. For ESSEC and ESCP Europe, integrating an IBS identity would extend the elite status they enjoyed to the international level. Thus they made some changes to their GE program: ESSEC repositioned it as an MBA, while ESCP Europe added a European component. ESSEC, the only research-oriented school among the four, also continued its focus on research; ESCP maintained its emphasis on teaching but also recruited international faculty and research-oriented French professors. For Grenoble EM and Euromed, the IBS logic was a great opportunity to enhance and reconfigure their failing positions as major business schools. Both schools worked on becoming more research-oriented, including enhancing the capabilities of existing faculty and also recruiting international academics. Grenoble EM’s chose a compartmentalization strategy, creating an international school within the school. Euromed, whose Grande École status was the most precarious, started from scratch, overhauling the school and eventually merging with the Bordeaux École de Management; it is known today as the Kedge Business School. 

Business Application

The case studies of the French business schools have clear lessons for organizations or companies who are faced with institutional complexity as a result of multiple business logics:

  • It is not an either-or situation. Traditionally, significant changes in organizational business logics are framed as an out-with-the-old and in-with-the-new situation. It is more effective to try to integrate elements of the new logic while keeping the strong elements of the old logic that made your reputation.
  • Stakeholders in the field will tell you what to keep. You cannot ignore your institutional identity. You must pay attention to customers, partners, regulatory agencies and other stakeholders who will define which elements of the old logic are important and need to be maintained.
  • Organizational identity aspirations will play a significant role in your response. For all of these business schools, including the elite schools, the intrusion of the IBS logic was seen as an opportunity, not a threat. Responding to new business logics should be guided not by what you are, but by what you aspire to be.
  • Status helps guide the details of the response. The scale and format of the changes will depend on your organizational status. ESSEC was already a research-oriented institution; in addition, its Grande École program was so strong that it was able to reposition it as an international MBA. Euromed required a major start-from-scratch overhaul.
Contact Us

Authors

Institutions

Source

Idea conceived

  • January 2014

Idea posted

  • May 2015

DOI number

10.13007/514

Subject

Real Time Analytics