Abstract
In this paper we examine the management of internal complexity in federations as a means of shedding new light on how the challenges inherent in governing these forms of inter-organizational networks are managed. Our analysis reveals that these networked organizations differed as a function of their approach to four complexity management activities: perspective shifting, shaping interactions, managing standards and constructing commitment. Based on the use of these four activities we identify three approaches to complexity management in this study – leveraging complexity, suppressing complexity and disengaging from complexity. Each of these approaches differed in their focus on differentiation or integration in the implementation of complexity management activities. We found that only leveraging complexity went beyond separate management activities aimed at differentiation or integration and employed policies and activities that possessed the capacity to optimize both simultaneously. In doing so, our study highlights new possibilities for complexity management by revealing the ways in which management activities can be designed to optimize both integration and differentiation.
Recently a great deal of literature has focused on issues of complexity in organizational domains (Ethiraj & Levinthal, 2009; Greenwood, Raynard, Kodeih, Micelotta, & Lounsbury, 2011; Xiangyang & Chandra, 2007). Studies on institutional and environmental complexity have proposed that one method for managing institutional complexity is the adoption of particular organizational designs. Specifically it has been proposed that the use of networked forms of organizations, such as federations, is one way to manage institutional complexity, since federations ‘translate’ institutional and environmental complexity ‘into workable forms of organizational complexity’ (Ahrne & Brunsson, 2008; Greenwood et al., 2011; Raynard & Greenwood, 2014). Environmental complexity refers to multiple general pressures in the external environment, and institutional complexity, more specifically, refers to pressures derived from ‘incompatible prescriptions from multiple institutional logics’ (Greenwood et al., 2011, p. 317). Organizational complexity, however, has been characterized as being constituted by ‘divergent interests and preferences’ (Ethiraj & Levinthal, 2009, p. 4) that are sourced by the members of the organization, be they individuals (intra-organizational complexity) or organizations (inter-organizational complexity). Organizational complexity, thus, is the different ‘perspectives on what constitutes appropriate action’ within each organization (Helms, Oliver, & Webb, 2012).
The complexity of federations, specifically, is reflected in both the differences among the range of affiliate organizations that are members of the federation (horizontal tensions) and the differences between the affiliate organizations and the core of the federation that oversees federation administration (vertical tensions). Federations’ complexity, thus, constituted by significantly differing perspectives on what is considered appropriate action across affiliates (and between the affiliates and the core), leads to vertical and horizontal tensions that are demanding to manage.
Despite repeated recommendations to adopt federated forms as a solution to external or institutional complexity, little research has focused on how these types of networked organizations actually handle the resultant organizational complexity they internalize from their complex contexts. This is surprising given the rapid growth in this form of organization over the last ten years (Ahrne & Brunsson, 2008). Examples include well-known organizations like the United Way, Save the Children and the YMCA. Federations are particularly widespread in the non-profit (Rasche, 2012; Young, 1991; Young, Koenig, Najam, & Fisher, 1999) and health care industries (D’Aunno & Zuckerman, 1987; Trogen & Yavis, 2002), and, thus, are linked to the provision of important services within society, making their optimal effectiveness crucially important. Furthermore, how networked forms of organizations like federations manage their internal complexity is also important since they are designed to reduce complexity from the institutional environment but at the same time avoid homogenization among affiliate organizations and retain the distinctions among their typically diverse organizational regionality (Ahrne & Brunsson, 2005, 2008). In this regard they are structured and designed in a manner that requires them to preserve their internal complexity, rather than resolve it, making complexity management particularly challenging yet essential to their success. Consequently, extending our understanding of complexity management to this form of organizing is both theoretically and practically important. In this paper we examine internal complexity (hereafter ‘complexity’) as an internalization response to external or institutional complexity as a means of shedding new light on complexity management. As such, we ask: what are the key management practices adopted by federations to manage their internal complexity?
To investigate this we conducted a qualitative multi-case study of four non-profit federations. In doing so we uncovered four management activities and three approaches that were used to manage the complex dynamics that resulted from the internalization of complexity. Existing research on managing complexity has tended to suggest that complexity management involves choices between differentiation and integration (Battilana & Lee, 2014; Lawrence & Lorsch, 1967). However, contrary to these assumptions, we made the counterintuitive discovery that a single management activity could solve both integration and differentiation challenges simultaneously as a means of effectively managing internal complexity. In this way our results challenge received wisdom on complexity management and uncovered practices that were especially relevant to complexity management in federations.
Federations: Organizational Networks Designed to Manage Complexity
Federations are a distinct type of network that serves the needs of complexity by bringing together diverse affiliates who work together to fulfil core mandates (D’Aunno & Zuckerman, 1987). As Provan has outlined,
In a federation… affiliated organizations agree to relinquish control over certain activities to the federation’s management. In return, affiliated organizations expect the federation’s management to minimize the complexity of the linkage network and reduce environmental uncertainty. (Provan, 1983, p. 79)
Federations are structured as a centre (‘core’) and satellite (‘affiliate’) configuration (Kerwood, 1995), where members of federations ‘keep most of their autonomy and identity as independent organizations’ but are connected by a central body (Ahrne & Brunsson, 2008, p. 2). Due to their design, federations are distinct from other organizational forms in that ‘they involve more than two organizations, increasing their complexity and distinguishing them from joint ventures’; they differ from other coalitions or loose partnerships in that ‘federated activities are guided by a management group’ to which they ‘relinquish some control’ (D’Aunno & Zuckerman, 1987, p. 535). They are also unlike MNCs and their subsidiaries because in MNCs autonomy is hierarchically determined and subsidiaries are accountable through employment contracts to the central office. Federation membership, however, is voluntary and local autonomy is preserved with independent boards operating for each member organization.
Scholars have noted that federations as an inter-organizational form are typically adopted to respond to high levels of complexity in the surrounding environment and, commonly, the geographic dispersion of work (Ahrne & Brunsson, 2005; Gulati, Puranam, & Tushman, 2012; Raynard & Greenwood, 2014; Raynard, 2016). As Provan explained, federations ‘represent a unique way in which interdependent organizations attempt to reduce both environmental uncertainty and complexity’ (1983, p. 87). However, despite being espoused as a solution to the problem of complexity in the institutional environment, little work has actually examined the management of the resultant complexity internalized within federations.
Managing Complexity Through Integration and Differentiation
In 1967, Lawrence and Lorsch proposed that complexity would be managed by organizations through the use of either differentiation or integration strategies. Differentiation has been defined as a complexity absorbing approach where disaggregation of the overall mission and practices is proactively sustained with consideration for the requirements posed by differing relevant external environments (Lawrence & Lorsch, 1967). Differentiation as an organizational response to complexity retains an organization’s differing forms of practice, culture and relationships. Integration, in contrast, is defined as a complexity reducing approach, whereby distinctions and variance are aggregated to achieve uniformity and greater homogeneity within the organization. Integration breeds fusion among the multiple elements that constitute complexity (Battilana & Lee, 2014). The distinction between differentiation and integration as two categories of response to managing complexity has remained consistent throughout the literature to date (Battilana & Lee, 2014; Gulati et al., 2012; Provan & Milward, 1995). Responses have contrasted integrative strategies like finding common ground, developing collective and shared identities (Battilana & Dorado, 2010; Bechky, 2003; DiBenigno & Kellogg, 2014), with differentiated responses like compartmentalizing activities and departments, and decentralizing goals (Cyert & March, 1963; Jarzabkowski, Matthiesen, & Van de Ven, 2009). However, there has been a call for research to attend to the fact that not all organizations are ‘necessarily either integrated or differentiated across all dimensions (Bovais, 2012)…’ (Battilana & Lee, 2014, p. 423). In regard to federations and other complex organizational and inter-organizational forms, Gulati and colleagues recently proposed that there were costs and benefits of integrative versus differentiated responses and theorized that both may be possible within complex inter-organizational networks, observing that ‘a careful mapping of these to particular contexts remains an important research endeavor’ (Gulati et al., 2012, p. 580). Similarly, while a few studies of complex organizations have suggested that organizations may be able to adopt distinct management practices within one organization to promote differentiation and integration separately (Dougherty, 2001; O’Mahony & Bechky, 2008), few have investigated or extended this possibility and none within the context of complex networked forms of organization.
In fact, the limited research on complexity management in organizational networks such as federations has tended to portray effectiveness as dependent solely on integration (Brilliant & Young, 2004; Provan & Milward, 1995). This is concerning, as integrative mechanisms alone can potentially undermine the capacity of federations to retain the diversity necessary for optimal responsiveness and aggravate tensions over autonomy, leading to dysfunctional conflict (Ahrne & Brunsson, 2008; Luke, Begun, & Pointer, 1989). Integrative mechanisms that resolve complexity may thus threaten the ability of federations to fulfil the mandates of their design by reducing their ability to meet localized needs and preserve the distinctions important for serving local purposes. Accordingly, we explore the complexity management activities of four non-profit federations to shed new light on complexity management and the related integration/differentiation conundrum.
Method
Study context: Non-profit federations
While there are federations that are non-profit, governmental or corporate, we focused on a selective sample of non-profit federations comprised of non-profit organizations linked to a central body, where each member organization had its own governing board, each of which was expected to work towards overarching organizational goals (Young, 1991). Using a multi-case research design (Brown & Eisenhardt, 1997; Eisenhardt, 1989; Yin, 1994), these four non-profit federations were similarly constituted by important social missions and objectives to increase the well-being and social outcomes of their selected communities, ensuring our cases were comparable federations that all possessed a clear guiding social purpose to serve their members and communities. All our cases were characterized by a similar belief that being a part of a federation would increase their overall social impact and effectiveness. While we selected comparable non-profit federations in order to contribute to theory on federations more generally, we also sought diversity within our cases (differing social missions, founding history and size, for example). This was done to enrich the data, and allow us to move beyond the single case focus. All of these federations had multiple layers of operation, each with governance boards within these nested operating layers. The operating components of the federation were accountable to their local boards, while still remaining part of the entire organization, and the central core of the federation also possessed a board. Affiliate members of the federations were geographically dispersed. Descriptions and data regarding the four cases are given in Table 1: the Women’s Federation (WF), the Social Justice Federation (SJF), the Healthcare Federation (HF) and the Environmental Federation (EF)
Non-Profit Federations Under Study.
Data sources
Our sources of data comprised interviews, participant observation and a broad range of archival documents from each federation. Table 1 summarizes the data for each of the four federations. The interviews were our primary source of data, with direct observation and archival documents complementing and triangulating the information obtained during interviews. Since our research question focused on the management of complexity derived from the internalization of complexity within the federations, our interviews were targeted toward executive directors (CEOs) and board chairs at all levels of the four federations who were in key positions to contribute to decision making and management of their internal complexity. Our selective sample therefore reflected our more targeted purpose of understanding how federations were actively and purposefully managed at the managerial and governance level. We used a semi-structured interview protocol throughout all the interviews, which we modified as themes began to emerge from the data. While these modifications were made, our protocol remained structured around questions of governance, board functioning and organizational design to allow for comparisons across interviews and federations. In each federation we interviewed executive directors and board members at the central and local level. In total, we interviewed 38 individuals: 7 from the Environmental Federation, 9 from the Health Care Federation, 10 from the Social Justice Federation and 12 from the Women’s Federation. 1 The interviews lasted from 60 to 120 minutes on average; they were recorded and then transcribed.
Participant observation as a second source of data occurred through direct observation of multiple board meetings, participation in annual meetings and governance workshops, and through invited consultation opportunities. The observations allowed us to observe federation management in action, and to confirm and triangulate our findings in the interviews throughout the data collection period. We conducted 77 hours of participant observation. In addition we collected organizational documents that detailed the federations’ established bylaws, standards and strategic plans; these documents allowed us to probe more deeply into differences in the priorities, planning, rules and policies that were used to address management issues within the different federations.
Analysis
Employing qualitative methods, this research engaged in inductive in-depth exploration as is appropriate for relatively unexplored phenomena and theory building (Gephart, 2004; Locke, 2001; Miles & Huberman, 1994). We engaged in an iterative process of coding themes as they emerged from the data, and then re-coded and/or integrated them into broader theoretical categories resulting in a recursive analytical process between data and emergent theoretical categories (Creswell, 2007; Miles & Huberman, 1994; Pratt, Rockman, & Kaufman, 2006). Prior to engaging in our inductive analysis of complexity management within the federations, we developed case histories for each federation employing interviews, organizational documents and observation notes.
First level: Complexity management activities
For the first-level coding, we used the process of open coding (Locke, 2001) to document the various ways each organization managed the inherent vertical and horizontal tensions constituting complexity within federations. The collection of these open codes revealed commonalities despite the differences across federations and resulted in the formation of first-level codes. As these codes emerged we returned to the data and observed what fit and did not fit within them, developing provisional categories. Through an iterative process, we then checked the case-specific activities for convergences and divergences, as we aggregated categories across cases. We highlighted the differences and similarities within these categories by maintaining the within-case coding to ensure that within-case distinctions were preserved. The key result of this stage of the coding process was an inductively derived list of four organizational activities most predominantly employed across all four federations to manage their internal complexity: perspective shifting, shaping interactions, managing standards and constructing commitment.
Second level: Approaches to complexity management
We then began to investigate ‘how the different categories fit together in a coherent picture’ (Pratt et al., 2006, p. 240). Based on the types of organizational activities employed to manage the tensions associated with their internal complexity we then identified different ways each federation employed these activities. Iterating between the literature and our findings, we observed that federations differed in their response based on whether they approached these management activities with practices designed to integrate complexity, differentiate complexity, or optimize both simultaneously. Differentiation is an organizational state in which heterogeneity of goals and perspectives is proactively sustained and absorbed as part of the organization’s form. Integration refers to combining and reducing complexity to create greater alignment among affiliates and between affiliates and the core federation. We then reviewed the distinctions across cases, looking within cases for convergences and divergences, and finally identified three unique management approaches across the four federations – leveraging, suppressing and disengaging from complexity – based on the concurrent emphasis on both integration and differentiation, an emphasis on integration, or an emphasis on differentiation, respectively. During the entire process we cross-referenced all findings with those elaborated in the organizational documents and from our participant observations. We conducted all coding in Atlas.ti.
Findings
Complexity management activities
Through our analysis we discovered four key complexity management activities that were central to all the federations as they sought to manage the internal complexities with which they were confronted. We identify these activities as: perspective shifting, shaping interactions, managing standards and constructing commitment. In what follows we provide a general overview of these activities, and follow this with a more in-depth elaboration of how they were employed distinctively by the federations, allowing us to further identify three broad management approaches with implications for our understanding of managing complexity.
Perspective shifting
The federations in this study constantly struggled with the internal complexity inherent to their form, and possessing staff who were adept at handling the associated tensions was seen as crucial. Perspective shifting was a category of management activities that focused on selecting, promoting or giving preference to staff with the capacity to hold multiple perspectives within the federation.
For some perspective shifting involved seeking staff who could ‘wear two hats’. Wearing multiple hats was stated as important since it allowed the staff to understand the differences across the federation. Those who understood multiple perspectives across the federation adeptly negotiated federation tensions, acting as boundary spanners when positioned in intermediary roles mediating between different perspectives. These actors were considered especially important in translating affiliate differences to the core, and vice versa, helping to reduce vertical tensions within the federations. As the CEO of the social justice federation [SJF] outlined:
We have to manage that tension, which means that the affiliates also have to have people… who are willing and able to wear an SJF international hat and affiliate hat, and cope with the tensions that brings.
This sometimes involved making differences between the perspectives more transparent and then repositioning the discussion from there. It also could involve something our interviewees described as ‘adapting the message’ so it could be understood in particular contexts. As this CEO explained of the capability: they ‘can sort of slide between the high level and the [local level]’ (EF centre).
However, perspective shifting could also involve promoting staff who could ‘leave behind’ their regional perspectives and shift to a central view. As this executive director explained: ‘Yeah, he’s an advocate for the division, although when they go to the national board they are expected to wear a national hat versus any distinct geographical region…’ (HF affiliate board chair). These individuals’ unique ability to shift perspectives was believed to assist the federation in dealing with complexity; for example, they did not get bogged down in diverse affiliate narratives when at central board meetings, which they believed helped promote the federation’s overall mission.
In both types of perspective shifting, the greatest challenge for all the federations was in finding these people, as this CEO of the SJF explained: ‘The big challenge … is the one I just described, which is having enough people with experience to do it well. Without being sort of clunky, you need a kind of job description … you know, make those kinds of personal qualities and skills as part of the process.’
Shaping interactions
In addition to perspective shifting, we observed the use of communication systems or protocols to facilitate or limit the interactions between affiliates and the national or international offices. Federations sought to shape interactions across the federation in three ways: by actively promoting and facilitating interactions, limiting and constraining interactions, or avoiding involvement in interactions. Despite the different use of this activity, all discussed this as central to the ways in which they managed the complexity inherent to the federated form.
The WF and the SJF sought to facilitate interactions by adopting communications systems, creating spaces for dialogue, and setting up formal meetings. In some cases participation in these communications systems was mandated within the federation’s bylaws, and in others it was not mandated but overseen or directed by the CEOs, executive directors and board chairs at the different levels of the federation. The CEO of the SJF provided an example of a facilitating approach to communication when he orchestrated an event to create a space for dialogue between affiliates experiencing conflict, something he claimed was done frequently within the federation. Some affiliates also actively brought other affiliates to their offices to present and share what they were doing in their local contexts to engender an understanding of the different ways in which other affiliates operated and to show how they were connected as affiliates.
We need to find a way for the Chairs of the international boards to interact with each other. Only then will they be able to see that they’re representing part of a bigger [picture], a complex organization, [and] unless they understand that, then oftentimes it’s hard for them to see why we’re doing things. (SJF affiliate board chair)
However, not all of the federations actively fostered interactions; rather, some sought to control and constrain interaction. In the case of the HF, communications were formally established by the national level, and they either occurred at the yearly meetings, or were transmitted vertically from the regional affiliates to the national level. HF affiliates were actually discouraged from communicating directly with each other; as this board chair of an affiliate explained: ‘There’s a tendency to not want to communicate out to the affiliates, in case there is, I guess, confusion that results, so they typically go through the division.’
In the EF they did not set up formal opportunities for interaction beyond annual meetings as they sought to avoid overloading or interfering with affiliates. This was believed to benefit the affiliates since it ensured they did not receive any information that was not relevant to their particular context. As this CEO of the EF explained:
I think we’ve got a really good handle on who’s who and we’ve managed to kind of segment them… you know, the little naturalists’ clubs… they don’t have a lot of capacity, so sending them, you know, alerts about policy issues and stuff (relevant to other groups) is just going to stress them out and get them cranky with us…
If EF affiliates sought to meet each other they could, but this was not overseen or encouraged: ‘the truth is, we don’t know what they do’ (EF centre board chair). However, despite the apparent differences in the ways in which the federations sought to shape interactions, all federations did so to manage complexity.
Managing standards
In addition to perspective shifting and shaping interactions, managing standards was a category of complexity management activities that involved adopting standards and norms that clearly bounded acceptable criteria of practice within the federation.
In this way, federations managed complexity by establishing limiting frameworks within which affiliates could operate. This did not mean preventing the expression of regional-based differences, but rather establishing the overarching central features that brought the federation together, and either encouraging or limiting what was possible within the federation.
We want to ensure that we continue to have different approaches in the specifics, but that there is a threshold or a standard that we all are comfortable [with] … that you are working in my name. And so I have confidence that you are managing that risk appropriately, and being respectful of and in compliance with the agreements we’ve arrived at mutually. (SJF affiliate CEO)
However, the ways in which these standards were managed differed significantly within the federations. Some federations sought to normatively encourage affiliates to adopt standards of practice. As this CEO elaborated, ‘You have to work on normative behaviour. People don’t want to be accused of poor governance …’ (SJF centre CEO). Other federations took a different approach and enforced standards with regulations that were used to expel or remove powers from affiliates and prevent activities that did not adhere to existing standards. If affiliates attempted to adopt practices or activities outside the scope of the established standards, the core took coercive and dramatic action to get affiliates in line or revoke their status within the federation, as this board chair of the HF explained: ‘We drop a nuclear bomb on them… which meant that they revoked the charge of the chapter; they in essence fired all the boards, and things were ugly.’ Finally, for the EF, they felt that encouraging or enforcing standards was too directive and in these cases standards, if outlined, were not actively managed or regulated with any encouragement or coercion.
Constructing commitment
Constructing commitment encompassed rhetorical activities adopted to develop genuine commitment to the federation as an entity. In our study, some of the federations adopted activities that built commitment by putting ‘values’ first, as they deployed value-based language with which they could speak to each other despite differences among affiliates and between the affiliates and the core. For example, the SJF and WF federations explained that by keeping the language and values of the mission central in communications, they could find ways to move forward despite complexity within the federation.
My own view is that we maintain coherent [sic] in a very decentralized network and in a confederation not simply with rules, procedures, and policies, but through common values… Really to make sure that we have a common set of values and purposes that are motivating all of the federation. (SJF affiliate board chair)
These activities were adopted in efforts to reinforce the common mission and build commitment to the federation as a whole, while permitting local affiliate commitment to the values by including affiliates’ perspectives regarding core purpose and values within the federation. The EF too had common values around environmentalism but did not use language around this value to build collective commitment as the SJF and WF did.
In contrast, the HF constructed commitment around changes that were taking place by sharing and disseminating rational language about the change. This had the potential to integrate members around a common theme, but was hierarchically driven rather than in consultation with affiliates. ‘There’s been a movement if you wish, to consolidate, to create and drive efficiencies’ (HF centre CEO). Thus, language in the HF was intentionally homogenized around a common metaphor or purpose to justify construction of commitment despite the differences within the affiliates. Overall across the four federations, whether it was through value- or rational based rhetoric, we observed that this use of rhetoric enabled them to construct commitment as a means to manage complexity.
In summary, our analysis revealed the federations employing four complexity management activities: perspective shifting, shaping interactions, managing standards and constructing commitment. The employment of these management activities demonstrated the federations’ engagement in finding ways to manage the internal complexity inherent in their design. However, despite the critical significance of these activities in particular, there were clear differences in the ways in which the federations approached these activities. These differences led to our identification of three approaches to complexity management that varied in their use of differentiation and integration within these activities.
Leveraging, Suppressing or Disengaging from Complexity
Our analysis revealed three approaches to complexity management: leveraging, suppressing and disengaging from complexity. Each of these complexity management approaches were applied by the federations with the objective to integrate (reduce) complexity, differentiate (absorb) complexity, or optimize both simultaneously. Strikingly, and in contrast to more traditional hierarchical methods of management that seek differing techniques for ensuring differentiation versus integration as core design principles (Dougherty, 2001; Lawrence & Lorsch, 1967), leveraging complexity employed a set of activities where each individual management activity simultaneously optimized differentiation and integration. This led to the management of both the vertical and horizontal tensions inherent to complex organizing in federations. The leveraging approach was in stark contrast to suppressing complexity or disengaging from complexity. These results provide novel insights into the ‘black box’ of managing internal complexity within federations, and extend our understanding of the possibilities for complexity management more broadly. Table 2 summarizes the three approaches to complexity management.
Approaches to Complexity Management Activities.
Leveraging complexity: The Women’s (WF) and Social Justice (SJF) Federations
Leveraging complexity was distinguished by its capacity to proactively encourage the expression of distinctiveness and incompatibilities across the federation, while simultaneously implementing integrative mechanisms that relied on normative rather than coercive encouragement of management activities. The simultaneous optimization of differentiation and non-hierarchical integration within these federations enabled the successful management of the vertical and horizontal tensions inherent to their internal complexity.
Perspective shifting
Executives of the WF and SJF stated that they intentionally sought, selected and promoted staff who were cognizant of, and able to handle, diversity. As several interviewees observed, it was essential to have organizational members who were able to understand and draw on the regional distinctions and disparities encompassed within the federation while managing the horizontal and vertical tensions that this complexity engendered.
The capability to ‘wear multiple hats’ and shift to different perspectives as issues arose allowed personnel to bring disagreements to the table without resulting in dysfunctional conflict and breakdown. This ensured that individuals representing affiliates were able to understand and relate to the principles and rationale for action associated with the central body, allowing for integration while preserving affiliate differentiation. In the WF the CEO of a provincial affiliate spoke about the importance of seeing beyond regional-based preferences and the need for board members who could relate more to the federation beyond their local region. When this was not present, the CEO explained, it resulted in a disconnect between affiliates and national directives. These perspective shifting individuals, hired or promoted to embrace multiple perspectives, ameliorated complexity by reducing horizontal and vertical tensions. They acted as cognitive boundary spanners as they translated the value of the different approaches implemented throughout the federation to different affiliates and between affiliates and the core. In doing so they optimized differentiation at the same time that they improved coordination and unity (integration) among differing perspectives and actions. Differentiation was optimized through encouragement to express different perspectives which came to be seen as useful and important to the federation as a whole. Integration through non-hierarchical and non-coercive means brought affiliates together and increased collective understanding through these translations of various perspectives.
As an example, the SJF shared how it found it necessary to resolve differences over a legal issue where American and Japanese views differed based on different priorities related to legal standards. Engaging a staff member who could translate the reason and respect for the differences between the affiliates was central to sidestepping conflict and increasing shared understandings. As this board chair explained of his role: ‘I’m not representing my affiliate region but I’m trying to hold the fort between affiliates so you know, it was a legal cultural issue in that case… in the end it worked out fine, but those points had to be made’ (SJF affiliate board chair). Prior to the aforementioned staff member’s perspective translation, the American board chair we spoke with expressed frustration and confided to us that his board would not approve signing that type of legal deal. We also spoke with other international affiliates who seemed angry at the American affiliate for this stance. The horizontal tensions across affiliates were thus very apparent and had the potential to produce conflict that could have led to the American affiliate leaving the federation (something the board chair shared with us). Yet through perspective shifting, the purposefully selected staff member reduced this horizontal tension. This approach also allowed them to avoid vertical tensions as the core did not have to make a binding or centralized decision to resolve the legal issue. The translation of perspectives by staff allowed a decision to emerge organically that allowed the affiliates to feel as though the resolution came from them rather than the core. Thus, overall, these federations took a differentiated approach to perspective shifting, allowing the affiliates to express their differences, while also achieving integration through mutually respectful translation of differences among affiliates that generated common understanding without imposing it coercively.
Shaping interactions
Like perspective shifting, shaping interactions in the federations that leveraged complexity were also unique as management activities that could improve both integration and differentiation simultaneously. Shaping interactions were documented as activities centred on the structuring, planning or observation of interaction and dialogue across affiliates and between affiliates and the core. The shaping interactions in the SJF and WF were about creating ‘safe spaces’ in which differing perspectives could be expressed and explored without fear of reprisal. These ‘safety zones’ involved integration by reducing conflict and increasing cooperation at the same time that it involved differentiation by allowing unique differences among affiliates to surface and gain acceptance in a respectful forum. In the federations this involved the creation of technologies to support safe interaction and communication across the federation. One example was what the WF called the peer support system, an internet-based facilitative system where affiliates were encouraged to articulate the unique ways in which they problem-solved on targeted issues without fear of reprisal or judgement. Affiliates could also pose questions to the group of organizational members to obtain feedback on proposed ideas or planning that might differ from their current practices and help them to improve.
These people need to talk together. Issues in different regions, if there are issues in [some provinces] that are different from the issues in [other provinces], whatever, and they need to talk, they need to organize around it, consult, whatever… So it was the idea of maintaining this connect, this relationship exchange of services. (WF federation past CEO)
Another organizational member observed that leveraging each other’s ideas was useful ‘because a lot of them are so local and only think local, so we want to broaden that thought’ (WF federation CEO). By generating a forum in which different local interpretations of appropriate action could be safely voiced, attention to their differences enabled them to leverage their complexity and broaden their portfolio of novel solutions to problems at the same time that it increased cohesion or integration, greatly enhancing their capacity to capitalize on the accumulated knowledge base across the federation. As one affiliate manager stated:
There is [an] incredible amount of learning that can take place as a result of that [the peer support system]. So as a local organization, your best practices can be improved continually because you always have other viewpoints and other methods that are being brought to the forefront. (WF affiliate CEO)
Creating safety zones where differing perspectives could be articulated occurred through specially designed online technology. Another approach was the creation of physical space for affiliate members to come together and discuss alternative perspectives on an issue. These safe places dramatically reduced the potential for conflict from their complexity derived from both horizontal and vertical tensions. The CEO of the SJF, for example, orchestrated cross-affiliate events to create a space for dialogue and education among affiliates experiencing conflict over an interpretation of what were legitimate practices, something he claimed was done frequently within the federation.
We had a discussion last year on GMOs [genetically modified organisms], and the way we approached that was to bring people [together physically], because there is an obvious tension with Europe and the US on that issue, and we brought in people… So again, try to create the space and the stimulus for the right conversation… which helps you a long way with the cultural differences. (SJF centre CEO)
These organizational activities allowed the distinctions between affiliates to surface and perpetuate, preserving complexity, but also reinforced the importance of integrative relationships as one large entity as they realized their connectedness and similarities and were overseen by the federation (in contrast to the purely differentiated approach to shaping interactions documented in the EF, which is detailed in the disengaging approach to complexity management, below). Technology-mediated and safe communication spaces that affiliates were encouraged to use for the transparent sharing of differences across the federation were simultaneously integrative as the safe places brought affiliates together to share experiences that connected them to each other and the federation’s collective purpose.
Managing standards
WF and SJF managed standards by establishing clear performance standards and norms that were encouraged rather than enforced. The standards and bylaws created to manage boundaries were integrative in that they were designed to create some degree of network uniformity and highlight preferred standards of practices and behaviour for the collective, yet these practices were simultaneously differentiated as they also allowed all affiliates to participate in the formation of these standards and did not impose or enforce them coercively. In the WF and SJF this allowed for local adaptation among affiliates in ways that reduced vertical tensions between affiliates and the core while providing clear guidance on criteria of acceptable practice based on participative input.
For example, the SJF, unlike many federations, implemented rules mandating an equal voice among affiliates and they created mandated board structures that included all affiliates.
Every member should have one vote and have an equal say… in this federation it was very clear from the beginning it’s one affiliate one vote and that’s meant that the smallest affiliate has an equal say in governance as the largest affiliate. (SJF affiliate CEO)
Where an equal vote for each region was not practical for federations with a very large number of affiliates, like WF, they separated affiliates into smaller regional groups with representatives of the distinctions within the community and then mandated board membership among these regions. Accordingly, this action brought attention to the complexity of the federation at the highest level of the organization and its governing board, generating respect for the range of affiliate differences and optimizing the adaptive advantages of local differentiation. At the same time this activity optimized integration through the application of egalitarian inclusion as part of high-quality standard-setting. ‘I think it is important you know the value SJF puts on participation… I think particularly many of the smaller affiliates feel very strongly that there’s a governance model in which they feel that their voice can be heard quite strongly’ (SJF affiliate board chair).
The federation used bylaws and standards that allowed for differentiation despite being integrative in nature. For example, common approaches to branding, policy and public relations were developed through consultation. These standards were non-hierarchical, in that they were not regulated and affiliates could choose to adopt them or not. They were created in consultation with affiliates, and their voluntary use was normatively encouraged within the federation. As elaborated by the executive directors from the WF and CEO of the SJF:
There are no sanctions for not complying. But people will speak out about it and I think having a national board reaching out to local member associations will be one way of helping. (WF affiliate CEO)
These standards, while fundamentally integrative, were designed in ways that enabled local adaptation. As this board chair from an affiliate illustrated:
Full perfect compliance when you have autonomous members’ associations functioning in different communities, with different contexts, is really difficult to achieve and I think considering the real differences and diverse communities that we’re working in, there’s I think quite strong compliance across the board, when you consider how really different we could be. (WF affiliate board chair)
So normatively endorsed common standards integrated action across the federation which reduced brand dilution and regional variation (reducing potential horizontal tensions), while simultaneously avoiding coercive means of managing standards that gave affiliates the discretion to adapt to local circumstances.
Constructing commitment
The WF and SJF federations employed value-based language that promoted both integration and differentiation to construct commitment among the different affiliates. These federations expressed shared values through selected words or language so they could speak inclusively to each other despite their differences and build a more shared vocabulary and set of understandings across the affiliates and central body. The WF explained how they intentionally used the word ‘movements’, as this was an essential component of their history and mission: ‘Our roots are movement based, and so we continue to use that language’ (WF centre CEO). Values-based language that was integrative but not directive was used to highlight a common vision, improving overall integration, without compromising the significant distinctions among affiliates or imposing a hierarchically constraining mechanism of integration. ‘So you build basically the feeling of a team, which helps you a long way with the cultural differences’ (SJF federation CEO). The value-driven use of language generated a culture that reduced conflict associated with horizontal and vertical tensions. As explained by this affiliate CEO:
I was not witness to any big conflicts… there is now a kind of culture in the organization that we go very much by consensus… and that we have all the support to help to resolve any conflict. (SJF affiliate CEO)
The SJF and WF had the lowest levels of conflict surrounding the vertical and horizontal tensions inherent to their complexity. As one board chair explained of the constructing commitment approach: ‘it’s time consuming and it’s painful because it raises… different points of view, but it’s well worth it in the end’ (WF affiliate board chair). ‘We almost never vote on anything. So even though we have got quite well-worked-up voting rules, we rarely use them because we basically work on consensus’ (SJF centrr CEO). And as this affiliate CEO explained:
We do a really good job of, I think, at trying to maintain a cohesive movement and one that fosters really helping each other, and so at times when there have been affiliates on the brink of what could be real problems… and we had board member representatives as well as a number of staff, actually go to this particular affiliate and really lent help, to lend a hand… we’re always connected to each other. (WF affiliate board chair)
As a result this allowed the federation to maintain and benefit from their diversity through local adaptation and learning from others.
We have learned a lot from other affiliates in terms of technique and strategy… and they have pushed us some way to improve… So for us, sharing knowledge is one of the positive aspects of belonging to that family. (SJF affiliate CEO)
To summarize, leveraging complexity as an approach to management was unique in its capacity to employ specific management activities that enabled the use of differentiation and integration which concurrently reduced tensions inherent to their complexity and fostered the diversity within their inter-organizational designs.
Suppressing complexity: The Healthcare Federation (HF)
In contrast to emphasizing both differentiation and integration simultaneously, suppressing complexity focused on homogenizing affiliate differences through an exclusively integrative approach.
Perspective shifting
Our analysis revealed that the HF sought staff who were oriented toward minimizing rather than promoting the distinctiveness between affiliates. Instead of looking for staff who could understand and wear multiple ‘hats’, representing multiple perspectives, the HF purposefully sought out individuals with the capacity to take a central and collectively uniform view of federation issues. Despite the same degree of localized distinctiveness, the HF deployed activities that emphasized homogeneity among regions and rigorous integration with the core. For example, in the election of board members to the international board, individuals believed to be highly influenced by local affiliate perspectives or who sought to bring regional differences to the table were intentionally overlooked or voted out in the recruitment process. As one CEO of an affiliate in the HF stated, ‘I don’t want any outside groups coming in and trying to hijack my board.’ This practice exacerbated vertical tensions between core and affiliates, leading to resentment and resistance. As one manager reflected, ‘[they] aren’t feeling like the federation is doing what they think it should be, and are forming separate groups and it kind of fractures that community’ (HF affiliate board chair). This version of shifting perspectives impeded local adaptation. For example, one affiliate CEO pointed out that while his board chair disagreed with a stance the centre had taken on a policy and its influence on their organization, when he sat on the national board he had to support it even though it negatively impacted his region.
We thought it was flawed and that it didn’t reflect the reality of what it was like to run this operation here in our city so, at the time, my board chair was sitting on the federation’s board as vice chair. He doesn’t like this policy but, now, he’s got to support it and drive it to the rest of the division. (HF affiliate CEO)
In sum, perspective shifting in the HF involved shifting to a central perspective and ignoring particular affiliate views when working in the context of the core. Members sitting on the international board quickly realized when attending meetings that they were not to represent regional views within the meetings. Members who focused on affiliate-level issues were told to run as members of the local affiliate boards only, where affiliate-centric views, rather than national ones, were welcome. The emphasis on hierarchically imposed integration and minimization of differentiation increased latent conflict due to vertical tensions between the affiliates and the core, and compromised the capacity of the federation to adapt to unique local requirements.
Shaping interactions
The HF was involved in shaping interactions by working to control communication to the greatest extent possible. Instead of allowing communication to be differentiated and disseminated by both affiliates and the centre, the HF employed a hierarchical integrative approach by directing communication vertically and making selective decisions about what information would go to whom. The HF constructed no communication system to enable affiliates to connect and work together. As a CEO of an affiliate illustrated when he voiced his surprise that a different affiliate had attempted to contact another affiliate directly rather than going through ‘appropriate’ formal core channels:
The chair of a chapter [affiliate] called me and he said he was looking for some help… he wanted to know if I would help him. I said I don’t know why you’re calling me because the position in your province, called the vice president role, is supposed to help you. He said well, if you want I’ll call them. I said no, it’s not that I won’t help you; it’s just that I’m surprised that you got to call me instead of going there. (HF affiliate CEO)
The intent of these activities was to increase efficiency and control through directive vertical communication, minimizing differences in goal interpretation among affiliates and thus horizontal tensions inherent to complexity. As one affiliate observed: ‘We’re really at the mercy of what the national office does’ (HF affiliate board chair). This highly integrative approach reduced inherent horizontal tensions by limiting interaction but aggravated vertical tensions with the core that resulted in conflict and in serious constraints on local adaptation.
Managing standards
Managing standards in the HF focused on imposed uniform standards across affiliate members to discourage customization of practices to meet local needs. Diversity and differentiation were pointedly suppressed. Standards and rule enforcement involved the non-egalitarian practice of expelling, punishing, or removing powers from affiliates who did not adhere to existing standards.
The national body has the power to create those divisions, but also to revoke their semi-autonomous governing powers, and these powers have been exercised. So recently, the board of one of our western divisions was suspended… And the same powers of creation and revocation are available to the provincial division … and that happens quite, I mean, I say quite often. (HF centre CEO)
The ‘revocation’ mechanism was considered ‘crude’, but guaranteed that affiliates did not allow differentiated regional-based interpretations of appropriate action to influence central activities or variation in local activities. When affiliates attempted to exercise autonomy, these affiliates were called ‘rogue’, threatened, and then, if necessary, eliminated.
At the time this was documented, the CEO banned affiliates from fundraising and using the HF brand until they complied with federation standards. One affiliate CEO explained how an affiliate that had wanted to fund a particular type of research in demand within their region was sent a letter and told to desist from doing so or lose their status. The federation thus managed boundaries by using hierarchical enforcement of their standards and bylaws as a way to constrain and coerce member affiliates to confine their expressed differences to the unifying framework outlined by the standards. This reduced horizontal tensions because affiliates were all forced to comply, however it aggravated vertical tensions as affiliates lost autonomy and local adaptiveness, leading to frustration and anger at the core of the federation.
Constructing commitment
In the suppression approach to complexity management, constructing commitment involved using rational terms and language to justify affiliate uniformity and homogeneity. For example, in the process of limiting the autonomy of affiliates by attempting to centralize more features of the federation an elaborate metaphor was diffused throughout the federation to reinforce the authority of the centre and to trivialize affiliate differences. This metaphor was detailed by the CEO:
It’s a bit like the metaphor of the banking world that I use all the time. I bank with a branch of the Royal Bank, but I actually use all kinds of other assets of the bank, like their online banking and their ATM network, which is geographically dispersed. So at the end of the day, the chapter [affiliate] is no longer a monopoly… And the reality is that the ATM in the branch is not owned by the branch manager, the ATM is located in the branch, but the decisions about what the ATM looks like, what it does, what it can’t do, are actually not theirs. (HF CEO, central)
During the interviews this ‘banking’ metaphor was employed throughout the federation, when any questions arose regarding change, despite very real differences across affiliates. Other language surrounding change emphasized ‘efficiency’ and ‘alignment’ and how it integrated the goals of the federation. ‘We’re going to institute, I guess, I can refer to them as standards of performance within what’s called a chapter alignment framework. So the key right now is ensuring that everything that we do within the organization is very well aligned between chapter, division and national’ (HF affiliate CEO). Alignment language also became reflected in policies and procedures: ‘So what we’re going to do is get rid of the division and chapter bylaws… So there is one component, the total centralization and unification of the bylaws right down to the local level; right down to the affiliate level’ (HF affiliate board chair). Rational arguments and language supporting integration, homogeneity and efficiency justified the force-fit of a uniform perspective and the minimization of affiliate participation in decision making. This approach compromised local adaptation as it worked to resolve complexity through standardization, integration and hierarchical control, features associated with a traditional hierarchical design.
As a result, the HF had the highest level of conflict and discontent among the affiliates as vertical tensions escalated because affiliates felt angry and misrepresented by the federation. In the HF, we observed a massive uprising during the period of the study, where local affiliate members were enraged with the federation as a whole, and began to exhibit public displays of outrage. For example, some wrote to the government saying the federation no longer represented the members’ best interests: ‘We don’t have the opportunity to have a lot of discussion about things… It seems to be mostly just to approve what is brought forward’ (HF affiliate board chair). The heightened conflict led to the revocation and disbanding of some of the affiliates themselves as a result of not following standards, or their electing to leave the federation because their needs as affiliates were not being met. As one local board chair stated, ‘our province had a couple of chapters, and they’ve actually had formations of [alternative] groups which have the potential to completely fracture the federation’ (HF affiliate board chair). The HF imposed coercive hierarchical means of integration on the federation at the expense of differentiation and opportunities for adaptation.
Disengaging from complexity: The Environmental Federation (EF)
Disengaging from complexity was the third and final approach to complexity management. Adopting a distinctly laissez faire attitude in this federation, affiliates operated with minimal intervention. In contrast to a suppressing approach to management which optimized integration at the expense of differentiation, this approach enabled high levels of differentiation at the expense of integration.
Perspective shifting
Unconstrained regional differentiation and affiliate autonomy resulted from disengagement and lack of purposeful effort to attract staff capable of wearing multiple hats. This led to conflict as horizontal logic tensions were left unmanaged, as this example from the board chair illustrates:
One board meeting where I stepped out for some reason and all hell broke loose while I was not in this meeting and when I came back, everybody was crying… I thought, ‘My God! What happened?’… It was a punch-up, basically the Nature League versus the people who are Canadian Wilderness and people from another natural conservation affiliate. We didn’t have that same perspective. (EF centre board chair)
With limited staff able to translate different perspectives, horizontal tensions were left running high. While in interviews they expressed desire for people who could understand multiple perspectives, it was believed targeting such people was beyond the scope of what the core of the federation could do, unless they happened upon a staff member through serendipity who could assist in these tensions.
Shaping interactions
The shaping of interactions in the EF was considerably less structured and organized than the WF, SJF and HF. They had no activities enabling or impeding communication, nor safety zones within which affiliates could debate and resolve differences. Instead, sharing was relinquished to the idiosyncratic preferences of each individual affiliate. Apart from formal communication and interaction at annual and board meetings, informal communication between affiliates was sporadic and undocumented. Meetings to connect affiliates tended to lack any direction or specific purpose.
We have a meeting twice a year… A lot of clubs have an environment federation rep. and then a president, but sometimes it’s not those people; it could be just two people that are interested and attend the meeting. And there certainly are no directions for the meeting… It’s more of an information exchange of ideas. (EF affiliate CEO)
This differentiated approach to sharing activities allowed local adaptation (reducing vertical tensions), but aggravated horizontal tensions because few initiatives were formally orchestrated or even documented for future application, leading to service overlaps and a lack of connection between affiliates or between the affiliates and the core. Regarding the affiliates, the chair of the central board stated: ‘They can do whatever the hell they want and we don’t even know what their boards do, unless it’s something that emanates up to us’ (EF board chair centre). Disengaging from complexity meant the unfettered pursuit of differentiated local goals at the expense of integration; this allowed the reduction of vertical tensions but aggravated horizontal tensions inherent to their complexity and thus the affiliates’ functioning within the EF.
Managing standards
Managing standards in this federation involved a desire for acceptable standards and norms but the federation lacked the enforcement or normative encouragement of such standards. For example, there was not even a shared use of a name or logo associated with the EF, a phenomenon that, by contrast, was standard practice in the other federations.
So, using our name would be great. Actually, including our logo on their websites would be great. I don’t think that there’s a lot of deliberate intent not to refer to us or refer to us appropriately. I don’t think we’ve actually really done a focused effort. (EF centre CEO)
There were also no bylaws for enforcement or clarity around democratic principles and standards. While the CEO acknowledged the benefits of basic standards, they were perceived as potentially constraining or irritating.
If we get too bureaucratic or what would be perceived as being bureaucratic in terms of brand management as far as our clubs go, I mean it’s—it’s either going to be over their heads or it’s going to tick them off. (EF centre CEO)
As a result, we observed that lack of integration led to enhanced horizontal tensions resulting in brand confusion and service overlaps resulting from their complexity.
Constructing commitment
The EF acknowledged the common theme of ‘environmentalism’ as a commitment builder and source of integration but common language around this was not promoted or diffused within the federation to connect affiliates vertically to the core’s mission. Federation management defaulted to the position that differences between affiliates were too great to attempt integration, suggesting that it was more expedient to simply resign themselves to affiliate heterogeneity without engaging in efforts to leverage this distinctiveness for overall improvements.
I don’t think that the environmental federation [can] deal with all the requirements of all of the different clubs [affiliates] that are members. They like the idea of having the federation there as an umbrella organization but if they had to deal with all of the little things that the clubs think would be good, they couldn’t be effective on anything… (EF affiliate CEO)
Management purposefully disengaged from horizontal tensions, assuming out of hand that affiliate diversity was unmanageable, so that affiliates, in turn, perceived the federation as tangentially related to their activities and social purpose, reinforcing the affiliates’ perception of unfettered autonomy and a lack of significant and useful relations to the core.
I didn’t really see them as representing me… we had nothing to do with them… [As a federation] I guess there’s more of an emphasis on the broad, the environmental issue as opposed to dealing with specific club environmental issues. (EF affiliate CEO)
This led to both conflict among affiliates (enhanced horizontal tensions) and apathy toward the core.
There have been I think conflicts of various scales in the past related to that tension between the board of the organization, an organization that has its centre in [large city], and groups elsewhere thinking other things or priorities, and not necessarily being content with that model of what their role is in the organization. (EF affiliate board chair)
Affiliates worked against each other on issues such as windfarms and high growth animal populations. In addition, the lack of proactive management at the core led the local affiliates to question the purpose of being connected as a federation. As a board chair stated, ‘The only reason they will join us is because they can get a break on their insurance’ (EF centre board chair). Disengagement led in turn to a lack of participation and learning at collective events: ‘Some clubs don’t know who their representative is because they don’t even go to the regional meetings’ (EF centre board chair).
To summarize, disengaging from complexity generated a high degree of differentiation at the expense of integration, seriously compromising the federation’s ability to manage resultant horizontal tensions and to learn or benefit from complexity. Suppressing federation complexity in contrast optimized integration at the cost of sufficient differentiation to ensure adaptiveness to localized needs, leading to compromised success in managing vertical tensions. Finally, leveraging complexity optimized both differentiation and integration concurrently, leading to the management of both the horizontal and vertical tensions inherent to their internal complexity.
Discussion and Conclusions
Our research started from the fundamental premise that while networked forms such as federations are promoted as an appropriate response to complexity in the external and institutional environment, how they manage the resultant complexity that they internalize has received sparse attention. Federations as networked organizational forms are confronted with unique challenges relative to traditional organizations because they possess higher degrees of internal complexity that stem not only from the inability to depend on formal authoritative employment contracts and incentives but from the need to handle both significant vertical tensions (the core versus affiliate organizations) and horizontal tensions (differences among affiliates regarding their localized needs and environments) (Gulati et al., 2012). Thus we have argued that the internal complexity inherent in a federated type of inter-organizational network represents challenges to management that have tended to escape attention in the literature to date, despite the ubiquity and importance of this form. The study of contrasting federations was thus a mechanism for shedding new light on the means of managing internal complexity in what many view as one of organizations’ major challenges.
Implications for the study of complexity management
Through our examination of complexity management in federations we revealed findings that challenge the established dichotomy between differentiation and integration in the literature. Since the seminal work of Lawrence and Lorsch (1967), differentiation has been viewed as the primary means of promoting the diversity needed in organizations to meet complex environmental demands, and integration has been treated as a necessary design imperative with an entirely separate portfolio of management techniques (chain of command, team structures) for achieving effectiveness. Differentiation and integration are approaches to complexity that are distinct in that one seeks to manage complexity by sustaining its distinctiveness for adaptive purposes and the other seeks to resolve complexity by minimizing its challenges through uniformity and cohesion. Recent literature examining the management of various forms of complexity (including inter- and intra-organizational complexity) has continued to focus on integration and differentiation as the fundamental elements in characterizing complex organizations (Battilana & Lee, 2014). It is assumed that the choice one makes between these two categories of complexity management require differing practices that lead necessarily to trade-offs between them (Gulati et al., 2012). Our findings reveal, in contrast, that managing complexity in federations can involve the same technique that concurrently optimizes both the absorption and reduction of complexity without incurring trade-offs. For example, staff who wear ‘multiple hats’ increase the potential for diversity at the same time that they increase the potential for integration by better understanding the roots of conflict and ways to translate difference. The creation of safety zones promotes respect for diversity at the same time that it fosters integration by deepening understanding of alternate perspectives and others’ approaches. Standards can be designed inclusively that avoid homogenizing coercive enforcement at the same time that they enable local expression and differentiation. This suggests that the demarcation of differentiation and integration as opposing responses, or even as opposing types of organizational design, may be slightly oversimplified. Thus, our findings more broadly answer the long-standing but perhaps forgotten question of how an organization might achieve both. As Lawrence and Lorsch once asked:
[how could an organization] achieve both high differentiation and high integration when these are basically antagonistic states? … the question arises as to how organizations… maximized both states simultaneously. (Lawrence & Lorsch, 1967, p. 30)
We show that techniques that leverage complexity need not set up differentiating and integrating management approaches as necessarily antagonistic. While our study is specific to the management of internal complexity in federations, our findings suggest the possibility that these approaches might extend beyond this particular type of inter-organizational complexity.
For example, a study by Dougherty emphasized this in an intra-organizational context as she demonstrated that both integration and differentiation mechanisms were possible within one organization but that each required separate and distinct activities or practices (Dougherty, 2001). This was also alluded to by Battilana and Lee in their suggestion for hybrid organizations that each dimension of organizing may vary on differentiation or integration. These scholars provide evidence that the dichotomy between differentiation and integration could be broken down in different complex settings. Our findings go beyond the notion of distinct activities within one organization, however, to show that concurrent optimization is achievable with the same appropriately designed management activities within and across organizations.
Our findings lead us to suggest that it is the micro-level choices around the types of integration and differentiation activities or practices that matter. In highlighting this we reveal a possible means to overcome the perceived exclusivity of these two cornerstone management approaches, through management choices that serve both integration and differentiation simultaneously. Overall, our findings support those scholars who acknowledge the capacity for sustained complexity (i.e., Raynard, 2016; Reay & Hinings, 2009) and add new insights to this literature by demonstrating why the use of activities that simultaneously optimize differentiation and integration may, at times, be the most suitable means of managing complexity. While this was very appropriate for non-profit federations, it is important to note that leveraging complexity may not be appropriate in all situations with which complex organizations are confronted. Where diversification is less appropriate than uniform adherence to a goal (launching a space shuttle, for example) the balance of diversity and uniformity may be a less applicable context for the results found here. Future research can more closely examine this possibility.
Implications for complexity management within federations
Our study is among the first to examine complexity management in non-profit federations as unique inter-organizational networks. This examination led us to findings that run contrary to received wisdom in the literature to date on federations as inter-organizational networks. Existing studies on the management of federations have advocated highly integrative approaches, like highly formalized decision-making processes, building a unified culture, knowledge integration, or reaching uniform consensus as the key to federation management (Hearld, Alexander, Bodenschatz, Louis, & O’Hora, 2013; Trogen & Yavis, 2002; Xiangyang & Chandra, 2007). Provan and Milward’s (1995) seminal qualitative study of federations similarly suggested that federation effectiveness hinged on integration mechanisms. They found that highly differentiated federations were less effective and that federations with the highest degrees of centralization and integration were most effective. In their concluding findings they suggested that federated inter-organizational networks ‘will be effective under structural conditions of centralized integration and direct, non-fragmented external control’ (Provan & Milward, 1995, p. 23). Our more recent findings suggest otherwise. We show that when compared to integration-based practices alone, practices that optimized integration and differentiation concurrently appeared better able to manage internal complexity than purely centralized integration. Given the twenty years since Provan and Milward’s (1995) interesting study of federations, this form of organization has proliferated, but research has failed to keep pace.
Our findings suggest that managing internal complexity may require seeking non-hierarchical integration mechanisms that foster rather than jeopardize the higher degrees of differentiation that typify complex organizations. In other words, our findings imply that hierarchical modes of integration (e.g. inflexible standardization of services and processes, centralization, tightly coupled coordination, collective identity) may not always be the most appropriate means of handling the internal complexity facing networked forms like federations. Instead, we found that complexity management revolved around four key activities – perspective shifting, shaping interactions, managing standards and constructing commitment – activities that were designed to normatively and non-hierarchically encourage integration while allowing for differentiation. These approaches are predicted to be beneficial for various types of organizations seeking to preserve their complexity, but, of course, are particularly appropriate for federations where it is crucial to preserve differentiation to meet localized requirements and sensitivity to context. Our study challenges the existing literature’s suggested reliance on integration in federation management and in doing so documents specific activities for complexity management (e.g. shaping interactions by setting up peer support systems) that maximize integration and differentiation for this important form.
These findings for managing complexity in networked organizational forms suggest several lines of future inquiry, including the role of language as a unifying or integrative network mechanism, the creation of safe spaces within which to discuss novel or provocative ideas for goal achievement, and how to normatively encourage rather than regulate standards. Future scholars might also examine managing standards as a source of adaptive learning and effectiveness by framing it not as a contradiction between differentiation and integration but as a structure of reciprocity in which the core contributes the high standards and overall vision within which the organizations of the network are empowered to contribute novel and differentiated solutions. We hope that future research will build on the findings revealed here to determine the relative importance of different forms of integration and differentiation as core underlying processes of organizing to maximize the potential of federation designs and the management of complexity more generally.
Footnotes
Acknowledgements
The author thanks Trish Reay and the three anonymous reviewers for their insightful comments and suggestions through the revision process. We are also indebted to Eileen Fischer, Mike Lounsbury, Sean Buchanan, and attendees of EGOS Stockholm and Rotterdam for valuable comments on earlier drafts, and to Laura Davis and Sonali Chakraborti for their help with data collection.
Funding
This research was funded by the Social Sciences and Humanities Council of Canada.