Multidimensional Conflict and Organizational Performance

Abstract

Conflict is part of every organization. Scholars have studied the effects of conflict on organization dynamics and their outputs. Literature suggests that not all conflict is detrimental for organizations—some conflict actually helps bolster and refresh organizations. One concern for organizations is the vertical strategic alignment of management strategies. Vertical cohesion or conflict impacts an organization’s ability to reach optimal performance. In the setting of English local governments, this study uses vertical strategic differences among two levels of management as the measure of conflict in organizations to examine, one, how it impacts organization performance, and two, if conflict has a nonlinear relationship with performance. Results indicate that conflict on single strategies has no bearing on organization performance. Total strategy or multidimensional conflict, however, negatively impacts performance. There is little support for a nonlinear relationship between conflict and performance. Further analyses indicate that the negative impact of conflict is amplified for smaller organizations.

Keywords

management strategies conflict organizational performance

Conflict is an inevitable part of organizations. It is inherent in every organization since members are competing for limited resources. As such, scholars have studied the types, origins, and consequences of conflict in organizations. While many dimensions of conflict have been identified—task versus relational, subjective versus objective, horizontal versus vertical, just to name a few—there are still many questions to be asked about how various conflicts influence organization performance. This issue becomes especially important with today’s emphasis on results-oriented management. Literature has recognized that not all conflict is detrimental to organizations—some conflict is necessary for organizations to reach their full potential. This idea is incorporated into the empirical models of this study.

A growing literature on vertical strategic alignment has addressed one facet of conflict in organizations. This literature has focused on management strategies as a source of cohesion among levels of management with benefits for the organization. These ideas are rooted in the strategic management literature. This study examines management strategies among different levels of managers as a foundation of conflict in multilevel public organizations. Management strategies provide an overall direction to an organization; hence, strategy conflicts can trickle down and create other types of conflicts for the organization. As an innovation to this literature, this study measures conflict not only on a single strategy but also on multiple strategies. The literature’s consideration and empirical tests of only one strategy at a time is a weakness of prior works (Boyne & Walker, 2004). Among other problems, it has created false conflicts among strategies and incorrectly tried to place organizations into mutually exclusive boxes based on strategy type (Boyne & Walker, 2004). In reality, organizations employ a mix of management strategies, based on the current demands within and external to the organization. Each strategy type can be used beneficially for the organization under certain conditions. This study examines how the spread of management strategies among two levels of management, here a measure of conflict, impacts organizational performance. Results indicate that single strategy conflicts do not relate to organization performance. However, total strategy conflict, known as multidimensional conflict, is associated with lower performance. This relationship is stronger in small organizations. Last, there is little support for a nonlinear relationship between conflict and performance; the impact of strategy conflict is consistently negative.

Conflict in Management

Conflict manifests in organizations in many different forms. It exists between people, within or between groups, and even within an individual (Rainey, 2003). Scholars have created various categorization systems of types of conflicts. In one classification scheme, conflicts are of two types: relationship and task (Wish, Dautsch, & Kaplan, 1976). Relationship conflict is composed of things like tension, friction, and personal issues among team members (Jehn & Mannix, 2001). Task conflict is the differing viewpoints among members about tasks to accomplish. It encompasses implementation and delegation concerns among organization members.

Another classification scheme divides conflicts into four types based on the rules and norms surrounding the conflict: unstructured, partially structured, fully structured, and revolutionary conflicts (Lan, 1997). Unstructured conflicts occur when parties are not bound by rules. On the other side of the spectrum, fully structured conflicts are completely bound by rules, norms, and ethical standards. Partially structured conflicts lie between the two extremes—parties are partly bound by rules and partly able to make free choices. Revolutionary conflict is large scale conflict, unbounded by “rules, timelines, culture, myth, or shared conceptual paradigms” (Lan, 1997).

Conflict resolution literature divides conflict into two categories: subjective and objective (Lan, 1997). Subjective conflict is not real but perceived by the parties involved in the conflict. Explanations and communications alleviate these problems. Objective conflict is conflict that actually exists, though it may or may not be recognized. Conflict resolution strategies may not be enough to mitigate these problems. Objective conflict can be broken into three categories based on the potential for benefits of each party: pure cooperation, pure competition, and mixed motives (Lan, 1997). Pure cooperation allows for solutions in which all parties benefit. Pure competition results in winning and losing parties. Mixed motive conflicts involve elements of competition and cooperation.

Whichever the type, conflict is typically thought of as a nuisance and something that must be eradicated from organizations. Conflict is deemed as something that can only be detrimental to performance. However, a reworked view of conflict has acknowledged its ability to stimulate and improve organization performance. This outcome does not come easily—it is dependent upon good management and institutional mechanisms for handling the conflict.

In general, research indicates that managers in public and private organizations dislike and aim to avoid conflict (Rainey, 2003). Avoidance of conflict, though, can do more harm than good for the organization. Simply ignoring problems leads to less effective decision making because managers are unaware of their employees’ work environment and how that affects their ability to perform tasks (Schwenk, 1990). Good managers aim to understand and recognize the conflict and then use that information to develop the organization. In fact, properly managed conflict increases an organization’s performance more than having no fights at all (Rainey, 2003; Schwenk, 1990). They turn the conflict into an advantage in that it allows disagreements to be aired, and hopefully fixed, before they become bigger problems. Allowing disagreements to be voiced can sharpen ideas for organizations and expose its weaknesses. The best ideas can be implemented by other members in the organization, in turn, enhancing the organization. Improvements to the organization’s day-to-day operations, customer services, relationships between employees, efficiency, production of products, final quality of products, and overall performance are likely outcomes of these discussions. At its best, well-managed conflict can foster a free exchange of ideas through rules, structures, formal written documents, and one-on-one exchanges among members of the organization (Graber, 2003). If disagreements are voiced and there is no mechanism for dealing with the conflicts, the problems can multiply, resulting in escalating volume and intensity of conflict. This is dangerous for organizations because it induces stress, high turnover, discontent, and even low performance among employees (Rainey, 2003).

Vertical Conflict

Conflict occurs horizontally (within levels of an organization) or vertically (between different levels of an organization). Each type of conflict will have different consequences for the organization. In the present study, vertical conflict is examined. Public agencies typically are multilevel and coordinate on a variety of tasks. They depend on a hierarchical system to direct each level of management; thus, vertical conflict is encountered every day (Rainey, 2003). For the organization to fully benefit from open discussions, all levels of management must participate and all levels must be able to communicate with one another (Downs, 1967). If well-managed conflict through an exchange of ideas does not occur from level to level of an organization, conflict is likely to hurt the organization.

The hierarchical structure introduces a series of principal–agent problems that exacerbate vertical conflict. The relationship between a principal and agent is vexed by information asymmetry and goal conflict. In information asymmetry, the upper levels of management have the advantage to access more information about the organization at large. They have a broader perspective than lower levels of management. Lower- or service-level managers have an advantage of knowing the organization’s clients through direct customer contact. These two viewpoints of the organization can be vastly different. In turn, the way each level of management approaches their work will be dissimilar and lead to divergent results. The information asymmetry must be overcome with accurate communication between the principal and the agent to reduce the potential conflicts. It is through these communication networks of hierarchical organizations that vertical conflict is introduced into these public organizations (Downs, 1967). As information is passed through the levels of hierarchy, the message gets condensed and sometimes distorted (Downs, 1967). For example, information passed upwards tends to be reshaped to please the top-level manager (Downs, 1967).

Goal conflict, another hindrance to the principal–agent relationship, occurs when two levels of management have different ideas about what the organization should accomplish. Goal inconsistencies between levels of an organization make the day-to-day coordination of operations more difficult; members are working toward different end products. In contrast, when there is goal consensus, the overall coordination of the organization is better (Downs, 1967).

In sum, conflict occurs for an infinite number of reasons. An organization’s values, structure, goals, tasks, environment, program development, policy implementation, customer concerns, management strategies, leadership, personnel, and many other factors can all cause disagreements (Rainey, 2003). At any point in time, conflict occurs on multiple dimensions in an organization. If the aggregate amount of conflict is too high, the organization is most likely dysfunctional—too many resources are being diverted to the conflict instead of normal operations of the organization. If the aggregate amount of conflict in an organization is too low, the organization is apt to become stale. Many times, conflict is the catalyst for new developments in an organization. Taking these ideas into account, conflict relates to performance in an inverted “U” shape as illustrated in Figure 1. This nonlinear effect of conflict on organization performance will be incorporated into the empirical models in this study.

Figure 1.

The nonlinear relationship between conflict and performance.

As the above sections outlined, conflict can have varying effects on performance. However, that effect is not likely to be equal across all organizations. A simple differentiation of organizations is by their size. For many organizations, their goal is to expand the number of clientele they serve. Organizational growth is one key to cultivating a successful organization. A change in size, though, does not come without consequences for the organization. For example, larger organizations produce higher levels of vertical and horizontal structural complexity and experience a greater division of labor (Beyer & Trice, 1979; Kalleberg, Knoke, Marsden, & Spaeth, 1996; Pugh, Hickson, & Hinings, 1969). These differences create unique challenges for large and small organizations. For conflict, organization size should have repercussions for how conflict impacts organization performance.

Theoretically, it is expected that large and small organizations will differ in their ability to cope with conflict. To illustrate, consider an organization with only three members. If these members are in conflict, how does work get done? Now think of an organization with 300,000 members. While the same intensity of conflict can exist in this larger organization, there are members who can get work done while others are fighting. Smaller organizations are more likely to be dysfunctional with conflict because there are no other members to pick up the slack. In contrast, larger organizations are better able to mitigate conflict by having more members who can continue the day-to-day operations. The same considerations can happen for organizations with smaller numbers of clientele. With a smaller population being served, it should be easier for managers to identify their clientele’s needs and the strategy appropriate for providing quality goods and services. Conflict among management personnel results in inefficient service delivery. This in turn, becomes more troublesome for small organizations that have very specific needs. All of these issues in regards to size will have consequences for organizations.

Management Strategies as a Source of Conflict

For this article, management strategies among top and middle managers are examined as the source of conflict in an organization. Each level of management has specific roles/tasks to carry out (Frazier & Swiss, 2008). Specifically, middle managers or service-level personnel are charged with carrying out directions from above, and top managers, on the other hand, must give directions to the lower-level workers as well as consider the bigger perspective for the organization. These interactions between levels of management yield vertical conflict.

All organizations must make decisions about how they will maintain everyday operations and cope with changing environments. This is in essence an organization’s strategy: how they approach their everyday work. The use of management strategies has become increasingly important with today’s interconnectedness between the public and private sectors. In many communitywide tasks, no one organization, institution, or level of government is completely in charge—many entities have a hand at play or are partially responsible for the outcomes (Bryson & Crosby, 1992; Bryson & Einsweiler, 1991). As a result, organizations must think, plan, and act in more “strategic” ways (Bryson, 1995).

Strategic planning is defined as “a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it” (Bryson, 1995). It consists of concepts, procedures, and tools to promote strategic action in organizations. Given the current context of management strategies, strategic planning assists organizations in their development and implementation of such strategies (Bryson, 1995). Strengthening our understanding of how management controls organizations through these strategic actions will lead to better predictions of how organizations adapt to a changing environment.

Utilizing strategic planning is likely to add many benefits for organizations (Barry, 1986; Berry & Wechsler, 1995; Koteen, 1989; Mercer, 1991; Nutt & Backoff, 1992; Steiner, 1979). Some of these benefits include improved strategic thought and action, better decision making, enhanced organization responsiveness, better performance, and direct benefit for organization’s employees and members. However, more generally, with a strong and consistent strategy, organizations are better able to function in their environments (Miles & Snow, 1978). If all members of an organization are working in the same manner for the same goals, performance for the organization is apt to improve (assuming the organization aligns on the correct strategy). This scenario, though, is not likely to occur. Following the logic of Cyert and March (1992), creating organization wide goals or directives is near impossible since each individual has their own personal goals. As such, misalignment of strategies is most likely to occur in and create consequences for organizations. Faltering decisions with regards to an organization’s strategy creates turbulence, making it harder to achieve success (Miles & Snow, 1978). Progress is slowed or deterred by the inconsistent works of members. It takes skills, commitment, and resources to implement the plans (Bryson, 1995). If proper implementation of a strategic plan is unlikely, then it should not be initiated.

An organization’s strategy transcends all other conflicts in an organization (Miles & Snow, 1978). Conflict on this dimension—strategy—influences many other potential disagreements in an organization. Differing strategies can affect an organization’s values, program development, policy implementation, customer interactions, and many other factors of an organization. Strategies are the base philosophy of how these organizations approach all of their work. In general, the assumption is strategic alignment benefits the organization, while strategic misalignment harms the organization. In their extensive research of four industries, Miles and Snow identify organizational types or strategies—defender, prospector, and reactor—used by the companies in these industries.

Of all the strategy types, defenders are the most conservative in their product development. They focus on being a prominent player in the production and delivery of a very specific market. Defenders compete on price and quality rather than on new and innovative products. They grow cautiously and incrementally, usually by penetrating deeper into their own market. Their primary concern is to improve the efficiency of their existing products. Defenders plan carefully before acting, have centralized control, and highly specialized work roles. Their goal is to achieve stability by taking actions to lessen the organization’s vulnerability and uncertainty to outside events within their own market. However, because of their internal and narrow focus on their own market, defenders are susceptible to miss the trends and events in other organizations that could affect their own work. Generally, defenders strive to achieve vertical integration. This allows the organization to control the materials through the production process and accurately figure the costs of production. Both of these factors help to achieve efficiency. Organizations who are conflicted on the defender strategy will have a tough time achieving vertical integration because its success relies on each member accomplishing their task consistently and efficiently. If one piece of the organization is not working properly, the whole system collapses.

In many respects, prospectors are the opposite of defenders. The prospector strategy is characterized by innovative, risk-taking, and proactive management. These organizations are always searching for new market opportunities and develop a wide range of products. Prospectors employ many workers to scan the market continuously to observe current environmental trends, since they desire to find the newest product for society.

Prospectors grow by expanding to new markets and developing new products. Because of its wide variety of products, prospectors are likely to overextend themselves and sacrifice efficiency, something prized by defenders. To achieve flexibility and the freedom to adapt, prospectors try to develop products that do not involve long-term commitments in their production and keep a low degree of formalized structure and division of labor.

The last strategy, reactor, determines the extent to which management awaits instructions on how to respond to environmental changes. They only change when the environment forces them to do so. Reactors do not exhibit a consistent strategy. At times, reactors behave as defenders. Other times, they behave as prospectors. This inconsistency negatively affects the performance of organizations (Miles & Snow, 1978).

Miles and Snow (1978) contend that management strategies matter in both the private and public sectors. However, most of the literature and theories have developed with regards to private firms. This study, though, focuses on the public sector, which presents unique experiences from private firms (Boyne & Walker, 2004). For one, public organizations are more likely to have strategies imposed on them than private firms who are more free to direct their own course of action (Boschken, 1988; Bozeman & Straussman, 1990; Nutt & Backoff, 1993; Ring & Perry, 1985). In addition, political sponsors are likely to direct greater control over public agencies for which they provide funding (Hood, Scott, Oliver, & Travers, 1999). This creates an extra constraint on their actions in that they must please the sponsors. Nonetheless, a variety of studies have applied the private firm management strategies from Miles and Snow to examine their effect on performance in public organizations (Andrews, Boyne, Meier, O’Toole, & Walker, 2005, 2012; Boyne & Walker, 2004; Meier, O’Toole, Boyne, & Walker, 2007; Meier, O’Toole, Boyne, Walker, & Andrews, 2010). Miles and Snow among others (Conant, Mokwa, & Varadarajan, 1990; Hawes & Crittenden, 1984; Shortell & Zajac, 1990; Woodside, Sullivan, & Trappey, 1999) have found that prospectors and defenders perform better than reactors. Furthermore, other studies demonstrate that prospector strategies are most beneficial for an organization’s performance (Evans & Green, 2000; Goerdel, 2006; Hambrick, 1983; Zajac & Shortell, 1989). However, Miles and Snow contend that each of their strategy types will benefit organizations, given the right set of conditions. Defending is the best strategy for centralized organizations with highly planned operations in a calm environment (Meier et al., 2010). Allowing top-level officials to control operations promotes efficiency to accomplish their core tasks. Prospecting strategies work best in decentralized organizations with incremental processes in a changing environment (Meier et al., 2010). In this decentralized form, middle managers hold the power. This enables prospectors to reach out to new markets quickly by not having to make changes from the top down, similar to what occurs in the defenders centralized structure. A reactive strategy, contrary to much of the literature, does not always hurt performance—employing this type of strategy can be a conscious strategic effort for numerous reasons (Miles & Snow, 1978; Rainey, 2003). For example, when the environment of the organization is turbulent and unpredictable, reacting may be the only option. Both the defending and prospecting strategies require some level of predictability of the environment to execute their strategies. This dedication to their strategy type constrains their actions. Reactors have the advantage of adaptability in turbulent environments because they can engage in defending or prospecting strategies, whatever the current demands of the environment warrant. This ability to change the organization is especially useful for organizations in the public sector that must adjust to the demands of external stakeholders (Rainey, 2003).

It has been generally accepted throughout the organizational and management literatures that conflict exists in many different forms for an organization at any given time (Rainey, 2003). In a similar vein, managers engage in each of the three management strategies to some extent (Boyne & Walker, 2004). While one strategy may be used more often than others, management may still find itself using other strategies simultaneously. For example, unforeseen shocks may enter the environment causing an organization to use the reactor strategy. Or a dying and out-of-date organization may have no choice but to use the prospecting strategy if they are to stay in business. Literature on management strategies has only considered strategies one at a time—no measure has incorporated multiple strategies in a single measure. By using a measure that incorporates total strategy conflict, a better understanding of vertical conflict’s impact on performance can be achieved.

The empirical tests in this article address the consequences of vertical conflict measured as single strategies and total strategy conflict on organization performance. The hypotheses not only follow the line of thought that conflict harms the organization but also test for the nonlinear effects of conflict, in addition to parsing out the effect by organization size. The hypotheses are as follows:

Hypothesis 1: The greater the vertical conflict among individual management strategies (prospector, defender, reactor), the lower the organization performance.

Hypothesis 2: The greater the total multidimensional conflict, the lower the organization performance.

Hypothesis 3: There exists a nonlinear, inverted U relationship between conflict and performance.

And last, for organization size,

Hypothesis 4: Smaller organizations are more negatively affected by conflict than larger organizations.

The Data Set

The data set used for this study was constructed from email surveys of managers in English local governments. These governments are composed of elected councils and professional career staff, including appointed chief executives and service directors. They serve their local populations on a wide range of activities: education, social care, land-use planning, waste management, public housing, leisure and culture, and welfare benefits. England has 386 local governments of five types: 32 London boroughs, 36 metropolitan boroughs, 46 unitary authorities, 34 county councils who provide education and social services, and 238 district councils that offer welfare and regulatory services. However, this study does not include district councils because they cover different services and not all of their performance data are available annually.

Electronic questionnaires sent as attached Excel files were emailed each summer from 2001 to 2004. Participants were given 8 weeks to return the survey via email. Questionnaires were sent to at least three corporate offices that were part of the senior management team and four middle managers who were service officers in each participating local government organization. In 2001, the total sample was 121 organizations. In 2002 and 2003, the total sample was 77 organizations for each year. In 2004, there were a total of 136 organizations.

The questionnaires inquired about their organization’s management, performance, and operation. The advantage of using this data set is that respondents included two different levels of management—corporate and service-level officials. This is a crucial part of this study—tapping into the priorities of different levels of management. Among other things, the survey assessed the degree to which each tier of management exhibited three distinct management strategies: prospector, defender, and reactor. Each strategy was measured on a 7-point scale—the higher the number, the more management exhibited the characteristics of the relevant strategy. It is important to note that these managing strategies are measured individually and not on a continuum. For example, a manager could theoretically be both a prospector and defender to a high degree—these measures do not imply a manager employs one kind of strategy over another kind. The values are aggregated for the organization since managerial strategy is an organization level concept. The prospector question asked respondents to gauge the degree to which they agreed with the statement: “The authority/service is at the forefront of innovative approaches.” Defending was measured by agreement with the statement, “Focusing on key business areas is a major part of our approach to service delivery.” Last, reacting was measured by “Pressures from auditors and inspectors are important in driving performance improvement.” Since these management strategies were assessed from single questions in the survey, reliability and validity issues become a concern. However, these measures have demonstrated high levels of reliability and external validity in other studies of English local governments (Andrews et al., 2005, 2011, 2012; Andrews, Boyne, & Walker, 2006; Enticott & Walker, 2008; Walker, Andrews, Boyne, O’Toole, & Meier, 2010) and Texas school districts (Meier et al., 2007, 2010).

Methods

Dependent Variable

The dependent variable for this study is organizational performance. It will be measured by the local government’s Core Service Performance score, which was part of the Comprehensive Performance Assessment.¹ This is a performance assessment given to all English local governments by the United Kingdom central government Audit Commission. The evaluation focuses on six areas—education, social care, environment, housing, libraries and leisure, benefits—along with the government’s “management of resources.” Each service area receives a score from 1 (lowest) to 4 (highest), based on performance indicators, inspections, service plans, and service standards. The Audit Commission then takes these scores and weights them to their relative importance and budget of the service area. The weighted scores are summed to produce the overall service performance judgment. Scores range from 15 to 60 for all local government types except county councils whose scores range from 12 to 48. To make organizational performance comparable across all government types, each government’s score is considered as a percentage of its maximum possible score.

Explanatory Variables

The explanatory variables used in the analyses were constructed from six variables in the data set: corporate prospector, service prospector, corporate defender, service defender, corporate reactor, and service reactor. To examine vertical strategic conflict, each of the three management strategies is analyzed for degree of conflict between the two levels of management. Eight explanatory variables are constructed. For each of the three strategies, the absolute value of the corporate-level score minus the service-level score is figured to create the conflict variable π. To test for the nonlinear impact of conflict, that variable is squared (π²) and then included in the model.

To address theoretical concerns about management strategies, conflict is also measured as a multidimensional concept. As mentioned before, a shortcoming of the literature has been the consideration of single strategy types, one at a time. Organizations engage in each of these strategy types to some degree. A measure to encompass all strategies will give a more accurate picture of how strategies influence organizational performance. A multidimensional measure of total conflict among all three strategies in the organization is calculated as a Euclidean distance² between the top (corporate level) and the next level of management (service). This figure is also squared to create the conflict squared variable (π²). Thus, the eight explanatory variables created are prospector conflict, prospector conflict squared, defender conflict, defender conflict squared, reactor conflict, reactor conflict squared, total conflict, and total conflict squared.

Control Variables

Additional variables that are known to affect government performance were used as controls. For one, the amount of deprivation—a measure of the level of service needs—of local residences was included. As the level of needs rise, performance tends to decrease because the government has to provide more services to its citizens. In turn, offering more services increases the difficulty of high-quality performance since employee efforts are spent on a more diffuse set of tasks. This control variable is the standard population-weighted measure of deprivation used by the U.K. central government. Second, measures of diversity—age, social class, and ethnicity—were incorporated into the analysis since serving diverse populations spreads resources thin in an effort to fill multiple needs. A control variable was added that accounted for social spending per capita. More money should equate to better performance. The last two controls are population size and population density. The size and dispersion of the population being served influences what services can be offered and how efficiently they can be administered. Generally, a widespread population makes administering services more difficult; thus performance falls.

Since the purpose of this article is to test the impact of conflict on performance, the model used for analysis isolates the conflict variable π. The model analyzed is

O_{t} = β_{1} + β_{2} π + β_{3} π^{2} + e_{t}

In this form, results with a positive π and negative π² yield the inverted U shape between conflict and performance. Generalized least squares (GLS) regression with random effects³ was used for every analysis. Dummy variables for the first 3 years were added to each regression in addition to the seven control variables. Each strategy type was considered individually to capture conflict on a single dimension. For example, prospector conflict and prospector conflict squared were used for one regression (along with control variables and year dummies). Multidimensional conflict was examined by analyzing total conflict and total conflict squared in the same manner.

Results

Overall, conflict along a single strategy does not support Hypothesis 1 or Hypothesis 3—single strategy conflict does not hinder performance, and the relationship is not characterized by an inverted U shape. Table 1 shows the results of conflict on the prospecting strategy on the Core Service Performance. Hypothesis 1 would have been supported if the prospector conflict variable was statistically significant and negative. Results that supported Hypotheses 3 would have a statistically significant positive coefficient on the prospector conflict variable and a statistically significant negative coefficient for prospector conflict squared. This, however, is not the case—prospector conflict and prospector conflict squared are largely insignificant. This suggests that disagreements between levels of management on the degree to which they exhibit a prospecting strategy have no effect on an organization’s performance. This same pattern holds true for defender and reactor strategies. Table 2 displays the results for the defender strategy. Again, the two explanatory variables of interest (defender conflict and defender conflict squared) have no bearing on performance. The reactor strategy conflict is shown on Table 3. In short, reactor conflict does not influence performance. These findings indicate that conflict along one dimension—a single management strategy—does not affect an organization’s ability to perform. For English local governments, corporate- and service-level officials can provide a high level of services without a perfect match on individual management strategies. In one sense, this should provide relief to organizations—they do not need perfect vertical strategic alignment on every dimension to provide quality services. This gives managers some flexibility in implementing their own strategies.

Table 1.

The Impact of Prospector Strategy Conflict on Core Service Performance.

Variables	Coefficient	SE	p Value
Prospector conflict	0.171	2.084	0.94
Prospector conflict squared	−0.848	0.885	0.34
Deprivation	−0.176	0.089	0.05
Age diversity	−0.035	0.013	0.01
Ethnic diversity	−0.003	0.001	0.00
Social class diversity	0.010	0.014	0.49
Population	0.0000	0.0000	0.29
Population density	0.001	0.001	0.01
Spending per capita	−0.001	0.003	0.68
Year dummy 2001	−2.558	1.461	0.08
Year dummy 2002	−5.098	1.308	0.00
Year dummy 2003	−3.896	1.066	0.00
Constant	300.032	133.427	0.03

Note: n = 187; local authorities, n = 88; R² = .32.

Table 2.

The Impact of Defender Strategy Conflict on Core Service Performance.

Variables	Coefficient	SE	p Value
Defender conflict	−0.993	1.556	0.52
Defender conflict squared	0.237	0.571	0.68
Deprivation	−0.182	0.093	0.05
Age diversity	−0.036	0.014	0.01
Ethnic diversity	−0.003	0.001	0.00
Social class diversity	0.014	0.015	0.37
Population	0.0000	0.0000	0.25
Population density	0.001	0.001	0.01
Spending per capita	−0.001	0.003	0.70
Year dummy 2001	−2.228	1.446	0.12
Year dummy 2002	−4.868	1.298	0.00
Year dummy 2003	−3.692	1.057	0.00
Constant	275.658	140.780	0.05

Note: n = 187; local authorities, n = 88; R² = .32.

Table 3.

The Impact of Reactor Strategy Conflict on Core Service Performance.

Variables	Coefficient	SE	p Value
Reactor conflict	0.982	1.794	0.58
Reactor conflict squared	−0.618	0.685	0.37
Deprivation	−0.190	0.093	0.04
Age diversity	−0.035	0.014	0.01
Ethnic diversity	−0.003	0.001	0.00
Social class diversity	0.012	0.015	0.44
Population	0.0000	0.0000	0.29
Population density	0.002	0.001	0.01
Spending per capita	−0.001	0.003	0.71
Year dummy 2001	−2.265	1.472	0.12
Year dummy 2002	−4.932	1.298	0.00
Year dummy 2003	−3.687	1.056	0.00
Constant	285.696	139.376	0.04

Note: n = 187; local authorities, n = 88; R² = .33.

Table 4 displays the impact of total conflict on Core Service Performance. The multidimensional conflict variable is statistically significant, unlike any of the measures of conflict along single strategy dimensions. This supports the hypothesis that conflict negatively affects performance not through single disagreements, but through all conflicts in aggregate (Hypothesis 2). However, the findings do not yield support for Hypothesis 3. Results indicate that total conflict negatively impacts an organization’s performance while the total conflict squared variable is statistically insignificant. These results suggest a constant, negative relationship between total multidimensional conflict and performance: the more conflict on all management strategies, the worse the organization’s performance.

Table 4.

The Impact of Total Conflict on Core Service Performance.

Variables	Coefficient	SE	p Value
Total conflict	−3.726	2.136	0.08
Total conflict squared	0.595	0.523	0.26
Deprivation	−0.207	0.091	0.02
Age diversity	−0.033	0.013	0.02
Ethnic diversity	−0.002	0.001	0.00
Social class diversity	0.010	0.015	0.50
Population	0.0000	0.0000	0.32
Population density	0.002	0.001	0.01
Spending per capita	−0.001	0.003	0.66
Year dummy 2001	−1.915	1.424	0.18
Year dummy 2002	−5.119	1.274	0.00
Year dummy 2003	−3.763	1.035	0.00
Constant	282.721	137.209	0.04

Note: n = 187; local authorities, n = 88; R² = .35.

In general, these four analyses illustrate that managers must be mindful of the amount of strategy conflict present in their organization not just on a single dimension but the total amount of conflict in multiple dimensions. It is the total conflict in multiple dimensions that hurts performance. Furthermore, these analyses do not indicate that there exists a nonlinear relationship between conflict and performance. The results show that total conflict has a purely negative effect on performance. This supports ideas from the strategic management literature that indicate strategies should not be undertaken unless they can be successfully and carefully implemented (Bryson, 1995). In organizations with high strategy conflict, this indicates there is not a clear vision for how the organization will approach their everyday work. A tightening of strategies through communication in the organization should improve organization outputs.

The Case of Organizational Size

To test the size hypothesis, the same type of analysis (GLS with random effects) was performed as before, but the data were split into two groups: small and large organizations. In literature, size of an organization has been measured by the number of clients, workers employed, net assets, and so on (Kimberly, 1976). For this study, size is measured through the population size served by the English local government. A small organization is defined as an English local government with a population below the mean population value of all local governments. A large organization is defined as an English local government with a population above the mean value.

Empirical results support the hypothesis: For smaller populations, conflict has a strong negative effect on performance. In contrast, larger populations showed no statistical relationship between conflict and performance. Table 5 displays the results of multidimensional conflict within smaller organizations. Total conflict is still negative but holds a much stronger significance level than among all sizes of organizations. In addition, total conflict squared is almost statistically significant at a .13 p value. For smaller populations, conflict among management is more detrimental to quality services. Thus, English local governments that serve smaller populations must exert extra effort to ensure their management strategies are more closely aligned in order to reach top performance.

Table 5.

The Impact of Total Conflict on Core Service Performance for Small Populations.

Variables	Coefficient	SE	p Value
Total conflict	−5.037	2.376	0.03
Total conflict squared	0.874	0.574	0.13
Deprivation	−0.254	0.101	0.01
Age diversity	−0. 029	0.015	0.05
Ethnic diversity	−0.003	0.001	0.00
Social class diversity	0. 017	0.017	0.32
Small population	0.0000	0.0000	0.72
Population density	0.002	0.001	0.00
Spending per capita	−0.002	0.003	0.54
Year dummy 2001	−1.745	1.574	0.27
Year dummy 2002	−5.772	1.425	0.00
Year dummy 2003	−3.792	1.159	0.00
Constant	190.207	148.103	0.20

Note: n = 131; local authorities, n = 62; R² = .41.

To further investigate the influence of organization size, another analysis was performed on the interaction between total conflict and small populations.⁴ This will show how conflict affects the smallest to medium-size organizations. Table 6 shows these results. Total multidimensional conflict times a low population is negative and statistically significant. Total multidimensional conflict squared times a low population is positive and statistically significant. However, interaction terms are not directly interpretable—they must be considered through their marginal effects (Brambor, Clark, & Golder, 2006). Figure 2 and Figure 3 show these marginal effects graphs of the interactions from Table 6.

Table 6.

The Impact of the Interaction Between Total Conflict and Small Populations on Core Service Performance.

Variables	Coefficient	SE	p Value
Total conflict	409.760	130.830	0.00
Total conflict squared	−101.863	31.204	0.00
Total Conflict x Small Population Logged	−33.985	10.705	0.00
Total Conflict Squared x Small Population Logged	8.427	2.558	0.00
Deprivation	−0.260	0.099	0.01
Age diversity	−0.023	0.015	0.11
Ethnic diversity	−0.003	0.001	0.00
Social class diversity	0.012	0.017	0.47
Small population logged	29.674	10.532	0.01
Population density	0.002	0.001	0.00
Spending per capita	−0.002	0.003	0.51
Year dummy 2001	−2.341	1.504	0.12
Year dummy 2002	−6.770	1.383	0.00
Year dummy 2003	−4.430	1.118	0.00
Constant	−178.254	195.365	0.36

Note: n = 131; local authorities, n = 62; R² = .42.

Figure 2.

Marginal effect of total conflict on core service performance as population size changes.

Figure 3.

Marginal effect of total conflict squared on performance as population size changes.

Figure 2 displays the marginal impact of multidimensional conflict on small populations. The statistically significant values occur when the confidence interval is entirely above or below the zero line. It illustrates that as the population increases from a small to a medium-sized organization the marginal impact of total conflict on performance becomes increasingly negative. When the population is very small, total conflict has a statistically significant declining positive effect on organization performance. Once the population size reaches a large enough threshold, total conflict has a statistically significant negative impact on organization performance.

Figure 3 displays the marginal impact of total conflict squared on small populations. The graph illustrates that a threshold exists such that as the population increases to a medium-size organization, the marginal effect of total conflict squared runs from a negative to a positive impact on performance. For the smallest populations, the marginal effect of conflict squared is negative. This means conflict relates to performance in the hypothesized inverted U shape—some conflict is necessary to optimize performance. Functionally, this makes sense. Small organizations with few members could benefit from different points of view or forms of healthy conflict.

Once a population becomes large enough, the marginal effect of conflict squared becomes positive. Thus, conflict squared relates to performance in a U shape. The U shape indicates that low amounts of conflict and high amounts of conflict yield better performance. Considering the measurement of conflict comes from management strategies, this extreme amount of conflict increasing performance is theoretically plausible. Organizations could benefit from different members enacting each of the strategies at the same time. While some workers are “defending” or focusing on core duties, other workers are “prospecting” or expanding their market, while another group of workers are “reacting” to current organization problems. With this strategies design, the organization is able to address diverse aspects of its needs. Hence, organizational performance improves.

In conjunction, these marginal effects graphs reveal that the hypothesis of an inverted U relationship between conflict and performance is supported for the smallest of organizations. These organizations have a boundary to how much they can engage in multiple management strategies before performance suffers. The medium-sized organizations, however, are driving the U-shaped relationship between conflict and performance. For these organizations, conflict among management strategies must not exist, or exist in excessive amounts to achieve optimal performance. If an organization is going to use multiple strategies, they must execute them flawlessly or else organizational performance will suffer.

In the comparison of small to large organizations, these analyses expose a benefit of expanding an organization—the dampening negative impact of conflict on performance. Smaller organizations simply do not cope with conflict as well as larger organizations. These organizations would perform better by keeping their strategy conflicts to a minimum. Larger organizations can survive with large amounts of conflict and engage in multiple management strategies simultaneously. This, however, is not a recommendation for every organization to grow in size simply to dampen the impact of vertical strategic conflict—many other factors should be considered before growth occurs.

Conclusion

This study examines how conflict impacts organization performance. As a setting for conflict, organizations’ strategic management efforts are considered. Conflict (π) is measured through the difference of management strategies (prospector, defender, and reactor) between the corporate and service levels of management in English local governments. A management’s strategy transcends other potential organizational conflicts (Miles & Snow, 1978); thus, it is one way in which to capture the degree of conflict within the entire organization. Given today’s push for results-oriented management, the dependent variable was organizational performance measured by the local government’s score on the Core Service Performance administered by the United Kingdom central government.

Results indicate that vertical strategic conflict yields mixed results for organization performance. Conflict along one strategy type does not influence an organization’s ability to perform. This finding should be comforting to managers; they do not need to work seamlessly on every aspect of the organization to have top performance. However, conflict occurs in various forms in organizations all at the same time. As a methodological contribution, a new measure is used to capture conflict as a multidimensional concept. This total multidimensional conflict measure accounts for differences of all strategy types. Results show that more total conflict in an organization is associated with lower performance. In addition, the empirical models tested for the possible nonlinear impact of conflict on organization performance. The results, however, yield little support for this hypothesis. This study also illustrates that conflict is more damaging for small organizations. Theoretically, this occurs because small organizations do not have the personnel to mitigate the negative aspects conflict can bring to the organization. Analyses that focused on the interactions between small populations and conflict showed much stronger results and supported a nonlinear relationship between conflict and performance. These findings suggest that managers in these types of organizations should take extra effort to ensure vertical strategic conflict is dealt with appropriately.

A limitation of the strategy measures in this study, though, is that only one question from the survey measures each strategy. Multiple survey questions could be asked to better assess how each level of management engages in each strategy. Another limitation of this study is that organization size is measured through population size. As mentioned above, there are various ways to determine an organization’s size. Other measures of size (like the actual number of government employees) might yield differing results, but these variables currently do not exist for this data set.

These findings have implications for public organizations. As mentioned before, public organizations are more likely to have strategy content impressed on or regulated for them. While they may engage in those strategies to please some other entity, if those strategies do not align with their current efforts they risk spreading strategic efforts too thin, in turn, reducing performance. Public organizations will have to find some way to balance their own internal strategy preferences with those strategies that are directed by other actors, should they not align.

Broadly, organizational conflict could be measured in other ways aside from vertical strategic conflict. This study represents just one type of conflict, but as the literature suggests, there are infinitely many types of conflict. For example, horizontal conflict can have consequences for organizations and is left unaddressed in this work. In regards to management strategies, future research should consider measures that incorporate each of the strategies to gain a more complete understanding of how cohesion or conflict impact organizations on a variety of outcome variables. This study uses the assessments of external organizations to measure performance, not actual outputs. Perhaps vertical strategic conflict hurts some performance indicators, but not others. The present study, though, contributes to the literature by demonstrating how single conflicts are inconsequential to organizations, multiple conflicts are damaging, and the effects are amplified for smaller organizations.

Footnotes

Appendix

Acknowledgements

The author gratefully acknowledges the helpful comments from the anonymous reviewers, Ken Meier, and the participants at the Fourth Conference on Empirical Studies of Organizations and Public Management. A special thanks also to Rhys Andrews for sharing the dataset.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author received no financial support for the research, authorship, and/or publication of this article.

Notes

Author Biography

Carla M. Flink is a Doctoral Candidate in the Department of Political Science at Texas A&M University in College Station and research associate with the Project for Equity, Representation, and Governance. Her fields of interest are public administration, public policy, budgeting, financial management, and methodology.

References

Andrews

Boyne

G. A.

Meier

K. J.

O’Toole

L. J.

Jr. Walker

R. M.

(2005). Representative bureaucracy, organizational strategy, and public service performance: An empirical analysis of English local governments. Journal of Public Administration Research and Theory, 15, 489-504.

Andrews

Boyne

G. A.

Meier

K. J.

O’Toole

L. J.

Jr. Walker

R. M.

(2011). Environmental and organizational determinants of external networking. American Review of Public Administration, 41, 355-374.

Andrews

Boyne

G. A.

Meier

K. J.

O’Toole

L. J.

Jr. Walker

R. M.

(2012). Vertical strategic alignment and public service performance. Public Administration, 90, 77-98.

Andrews

Boyne

G. A.

Walker

R. M.

(2006). Strategy content and organizational performance: An empirical analysis. Public Administration Review, 66, 52-63.

Barry

B. W.

(1986). Strategic planning workbook for nonprofit organizations. St. Paul, MN: Amherst H. Wilder Foundation.

Berry

F. S.

Wechsler

(1995). State agencies’ experience with strategic planning: Findings from a national survey. Public Administration Review, 55, 159-168.

Beyer

J. M.

Trice

H. M.

(1979). A reexamination of the relations between size and various components of organizational complexity. Administrative Studies Quarterly, 24, 48-64.

Boschken

(1988). Strategic design and organizational change. Tuscaloosa: University of Alabama Press.

Boyne

G. A.

Walker

R. M.

(2004). Strategy content and public service organizations. Journal of Public Administration Research and Theory, 14, 231-252.

10.

Bozeman

Straussman

(1990). Public management strategies. San Francisco, CA: Jossey-Bass.

11.

Brambor

Clark

W. R.

Golder

(2006). Understanding interaction models: Improving empirical analyses. Political Analysis, 14, 63-82.

12.

Bryson

J. M.

(1995). Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement. San Francisco, CA: Jossey-Bass.

13.

Bryson

J. M.

Crosby

B. C.

(1992). Leadership for the common good: Tackling public problems in a shared power world. San Francisco, CA: Jossey-Bass.

14.

Bryson

J. M.

Einsweiler

R. C.

(1991). Shared power: What is it? How does it work? How can we make it work better? Lanham, MD: University Press of America.

15.

Conant

Mokwa

Varadarajan

(1990). Strategic types distinctive marketing competencies and organizational performance. Strategy Marketing Journal, 12, 365-383.

16.

Cyert

R. M.

March

J. G

. (1992). A behavioral theory of the firm (2nd Ed.). Cambridge, MA: Blackwell.

17.

Downs

(1967). Inside bureaucracy. New York, NY: Little, Brown and Company.

18.

Enticott

Walker

R. M.

(2008). Sustainability, performance, and organizational strategy: An empirical analysis of public organizations. Business Strategy and the Environment, 17, 79-92.

19.

Evans

Green

(2000). Marketing strategy, constituent influence and resource allocation: An application of the miles and snow typology to closely held firms in Chapter 11 bankruptcy. Journal of Business Research, 50, 2225-2231.

20.

Frazier

M. A.

Swiss

J. E.

(2008). Contrasting views of results-based management tools from different organizational levels. International Public Management Journal, 11, 214-234.

21.

Goerdel

H. T.

(2006). Taking initiative: Proactive management and organizational performance networked environments. Journal of Public Administration Research and Theory, 16, 351-367.

22.

Graber

D. A.

(2003). The power of communication: Managing information in public organizations. Washington, DC: CQ Press.

23.

Hambrick

(1983). Some tests of the effectiveness and functional attributes of Miles and Snow’s strategic types. Academy of Management Journal, 26, 5-26.

24.

Hawes

Crittenden

(1984). A taxonomy of competitive retailing strategies. Strategy Management Journal, 5, 275-287.

25.

Hood

Scott

C. J.

Oliver

J. G.

Travers

(1999). Regulation inside government: Waste-watchers, quality police, and sleaze-busters. Oxford, UK: Oxford University Press.

26.

Jehn

K. A.

Mannix

E. A.

(2001). The dynamic nature of conflict: A longitudinal study of intragroup conflict and group performance. Academy of Management Journal, 44, 238-251.

27.

Kalleberg

A. L.

Knoke

Marsden

P. V.

Spaeth

J. L.

(1996). Organizations in America: Analyzing their structures and human resource practices. Thousand Oaks, CA: Sage.

28.

Kimberly

J. R.

(1976). Organizational size and the structuralist perspective: A review, critique, and proposal. Administrative Science Quarterly, 21, 577-597.

29.

Koteen

(1989). Strategic management in public and nonprofit organizations. Westport, CT: Praeger.

30.

Lan

(1997). A conflict resolution approach to public administration. Public Administration Review, 57, 27-35.

31.

Meier

K. J.

O’Toole

L. J.

Jr. Boyne

G. A.

Walker

R. M.

(2007). Strategic management and the performance of public organizations: Testing venerable ideas against recent theories. Journal of Public Administration Research and Theory, 17, 357-377.

32.

Meier

K. J.

O’Toole

L. J.

Jr. Boyne

G. A.

Walker

R. M.

Andrews

(2010). Alignment and results: Testing the interaction effects of strategy, structure, and environment from Miles and Snow. Administration and Society, 42, 160-192.

33.

Mercer

J. L.

(1991). Strategic planning for public managers. Westport, CT: Quorum.

34.

Miles

R. E.

Snow

C. C.

(1978). Organizational strategy, structure, and process. New York, NY: McGraw-Hill.

35.

Nutt

P. C.

Backoff

R. W.

(1992). Strategic management for public and third sector organizations: A handbook for leaders. San Francisco, CA: Jossey-Bass.

36.

Nutt

P. C.

Backoff

R. W.

(1993). Organizational publicness and its implications for strategic management. Journal of Public Administration Research and Theory, 3, 209-231.

37.

Pugh

D. S.

Hickson

D. J.

Hinings

C. R.

(1969). An empirical taxonomy of work organizations. Administrative Science Quarterly, 14, 115-126.

38.

Rainey

H. G.

(2003). Understanding & managing public organizations. San Francisco, CA: Jossey-Bass.

39.

Ring

Perry

(1985). Strategic management in public and private organizations: Implications of distinctive context and constraints. Academy of Management Review, 10, 276-286.

40.

Schwenk

C. R.

(1990). Conflict in organizational decision making: An exploratory study of its effects in for-profit and not-for-profit organizations. Managerial Science, 36, 436-448.

41.

Shortell

Zajac

(1990). Perceptual and archival measures of Miles and Snow’s strategic types: A comprehensive assessment of reliability and validity. Academy of Management Journal, 33, 817-832.

42.

Steiner

G. A.

(1979). Strategic planning: What every manager must know. New York, NY: Free Press.

43.

Walker

R. M.

Andrews

Boyne

G. A.

O’Toole

L. J.

Jr. Meier

K. J.

(2010). Wake up call: Strategic management, network alarms and performance. Public Administration Review, 70, 731-741.

44.

Wish

Dautsch

Kaplan

S. J.

(1976). Perceived dimensions of interpersonal relations. Journal of Personality and Social Psychology, 33, 409-420.

45.

Woodside

Sullivan

Trappey

(1999). Assessing relationships among strategic types. Journal of Business Research, 45, 135-146.

46.

Zajac

Shortell

(1989). Changing generic strategies: Likelihood, direction and performance implications. Strategic Management Journal, 10, 413-430.