Article Review

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Ogbonna, E., & Harris, L. C. (2001). The founder’s legacy: Hangover or inheritance? British Journal of Management, 12(1), 13-31. Retrieved from htt Write a review that is a minimum of two pages in length of the article listed above.* Include the following elements in your article review:

 an introduction to the overarching topic of the article,  the authors’ main points,  the authors’ supporting evidence for each main point,  your analysis of how the article relates to this course’s content and how it applies to real-world situations,  your critical evaluation of the main points and supporting evidence presented in this article (your evaluation should demonstrate critical thinking to inform and substantiate your opinion), and  a conclusion.

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British Journal of Management, Vol. 12, 13–31 (2001) The Founder’s Legacy: Hangover or Inheritance?1 E. Ogbonna and L. C. Harris Cardiff Business School, Colum Drive, Cardiff CF10 3EU, UK email: The legacy of organizational founders is a comparatively under-studied topic. Through two in-depth case studies, this article explores the factors which influence whether founding strategic visions, objectives or decisions influence present-day strategic choice. Furthermore, the study identifies and explores a number of factors which influence whether a strategic legacy is categorized as either an inheritance or a hangover. The article begins with an overview of existing research into the role of the founder, commitment and strategic inertia, which suggests that additional research is required to clarify the legacy of company founders. After a review of the research design and methodology adopted for the study, the findings of two case studies are presented. The findings suggest that the initial establishment of a strong organizational culture, continuing perceptions of success as well as successive family control all contribute to an adherence to the founding strategy, mission or objectives. In addition, the study indicates that the flexibility of the original strategy and environmental issues impact on the extent to which the strategic legacy is classified as an inheritance or a hangover. The article culminates in a series of conclusions and implications. Introduction It has been argued that one of the key challenges facing contemporary management is the development of market-led strategic change (Harris and Ogbonna, 2001). However, much extant theory argues that a wide range of forces impede strategic change (see for example, Boeker, 1989; Judson, 1996). These issues have led contemporary theorists to contend that, in many cases, commitment to strategies endure over time (Geletkanycz, 1997; McCarthy, Schoorman and Cooper, 1993) to the extent that the organization may become strategically ‘inert’ (Huff, Huff and Thomas, 1992; White, Abbey and Barnett, 1994). Research into these issues has tended to concentrate on theoretical discussions or descriptive studies designed to discover the extent to which 1 The authors wish to express their gratitude to Professor Gerard Hodgkinson and the anonymous Associate Editor and reviewers whose detailed and constructive comments helped in restructuring this article. © 2001 British Academy of Management past strategies endure over time or restrict current strategic options (for example, Kelly and Amburgey, 1991; Tushman and Romanelli, 1985). Interestingly, such research largely focuses on Chief Executive Officers (CEOs) and often ignores the influence of the founder. Furthermore, the empirical examination of how founding strategies become internal legacies which influence and impact on the effectiveness of future strategic decision-making is frequently overlooked. With the exception of a small survey by Boeker in 1984 (later reported in Boeker, 1989), few studies have combined the study of strategic inertia and the legacy of the founder of an organization. The present study was initiated partially in response to the suggestion of Boeker (1989, p. 511) that further research is required to develop ‘a better understanding of strategic change and the circumstances under which either inertia or adaptation is likely’. Indeed, the extent of the debate pertaining to the level of managers’ strategic choice provides a justification for the current focus on the influence of the founder on subsequent strategy. 14 This study aims to advance existing theory through (1) identifying and exploring which factors influence whether the founding strategic vision, objectives or decisions influence presentday strategic thinking or actions and (2) assessing what factors influence whether this ‘strategic legacy’ helps or hinders the organization. As is discussed later in this article, a ‘strategic legacy’ is defined as the enduring influence of the initial strategy of the founder of an organization over the actions of successive strategic decisionmakers. As such, evidence of a strategic legacy is often uncovered in enduring espoused doctrines, visions, strategic objectives, aims, beliefs and cultural values (see Harris and Ogbonna, 1999; Pettigrew, 1979; Schein, 1992; ). A review of existing literature indicates the requirement of the discussion of three issues. First, it is necessary to clarify the role of an organizational founder in creating visions, objectives and strategies which may become enduring over time. Second, a discussion of the maintenance of strategic decisions by individuals and organizations is presented. Finally, the literature review concludes with a brief overview of the limited research which combines the study of strategic change and the influence of the founder. The role of the founder Within the strategic management and entrepreneurship literatures, it is generally accepted that the emergence of organizations has much to do with the entrepreneurial spirit of founders which drives them to create their vision in a tangible form (Darazsdi, 1993). Adopting a biological analogy, Reynolds and Miller (1992) analyse the ‘gestation’ of a new firm and suggest that a firm is ‘born’ when: the founder exhibits tangible personal commitment; gains financial support; recruits employees, and; makes the first sale (although Carter, Gartner and Reynolds (1996) argue that the sequence and importance of these activities is subject to debate). From an organizational culture perspective, Schein (1991) notes that organizational formation involves four main stages. First, an entrepreneur detects a potential gap in a market and identifies a way in which this gap may be filled. Next, the founder shares the idea either to elicit support or to instigate action. Third, the tangible artefacts of E. Ogbonna and L. C. Harris the organization are established and finally the organization begins to operate. In this way, the founder of an organization transforms their vision into a tangible creation whose culture will largely reflect the personal beliefs of the founder. Thus, two of the main roles of the founder of a company are (1) the creation of a vision leading to a strategy and (2) the establishment of an organizational culture largely reflecting their philosophy. These two roles are discussed below. Schein’s (1991) view of organizational formation emphasizes the critical nature of the establishment of a vision (most commonly articulated and disseminated to other organizational members via a founding strategy). Indeed, Schein (1991) argues that the success of a new enterprise is dependent upon this vision, which in turn is reliant on the characteristics of the founder (such as, the extent of market-sensing and foresight). El-Namaki (1992) contends that in order for a strategic vision to provide a sound base for company strategy, the vision should be characterized by a number of conditions (including coherence, uniqueness, feasibility and power). As such, the rationale for a founding vision is linked to a number of organizational ‘imperatives’ for the founder (Tregoe et al., 1989). These ‘imperatives’ include the need: to attune the organization to environmental conditions (Schein, 1991); to articulate and establish a form of competitive advantage (El-Namaki, 1992); to communicate strategic direction to subordinates and for the founder to control the destiny of their creation (Daily and Dalton, 1992). An important issue arising from the above discussion is the nature of the relationship between organization culture and strategy. Although a detailed discussion of this is beyond the scope of this study (interested readers are referred to a recent review by Ogbonna and Whipp, 1999), it is useful to provide a brief overview as this may have some bearing on later discussions. Whilst some researchers have argued that culture and strategy are mutually dependent variables which interact within a dynamic process (Ogbonna and Whipp, 1999; Schwartz and Davies, 1981), there is significant support from the ‘founder-centred’ literature that initial organizational strategies are moulded by the vision, philosophy and beliefs of founders (see Boeker, 1989; Daily and Dalton, 1992; Schein, 1991). Hence, although it is recognized that organizational strategy The Founder’s Legacy: Hangover or Inheritance? may exert some influences on culture, it is generally believed that organization culture is a broader concept which informs both the process of strategy formulation and the resulting strategy itself (see for example Shrivastava, 1985; Thompson and Wildavsky, 1986). Research evidence on the role of organizational founders range from studies which celebrate the role of founders in creating enduring cultural legacies to those researches which are highly critical of this assumption. Studies grounded in entrepreneurial research tend to accord a significant importance to the ability of founders to mould the cultures and strategies of their organization. For example, Boeker (1988) has observed that founders play an important role not only in creating the initial visions and strategies of their organizations, but also in shaping the nature of the consensus (read culture) around which future strategies are developed. Similarly, Schein (1983) found that in the three organizations he studied, the personal assumptions of the founders became shared by other organizational members and remained widely held even after the companies had grown dramatically and undergone numerous changes in leadership. Further, there are numerous examples of organizational founders who have become legends and whose values are said to continue to dominate the cultures of the organizations they founded (see for example, the discussion of Herb Kelleher of Southwest Airlines in Quick, 1992). Indeed, this pervasive influence can remain long after the founder has left the company (perhaps the most famous examples of this are Bill Hewlett and Dave Packard of Hewlett-Packard fame). In contrast to much theorizing within the strategic management and entrepreneurship literatures, organizational-culture theorists are generally more critical of the role which is frequently attributed to organizational founders in the creation of enduring cultural legacies. For example, Martin, Sitkin and Boehm (1985) provide a critical evaluation of the studies which portray organizational founders as creating what they describe as a ‘personal form of organizational immortality’ (Martin, Sitkin and Boehm 1985, p. 99). They argue that such studies tend to adopt monolithic views of culture in which culture is defined in unitary terms. They note that such an approach frequently focuses on identifying organization-wide consensus wherein the values 15 of top management are assumed to be sacrosanct and shared by all organization members. Contemporary culture theorists have noted that the search for organization-wide consensus is not only elusive but could also ‘blind’ researchers to the important differences which underlie culture within a single organization. Indeed, the perspective of many ‘founder-centred’ studies is said to be characteristic of what Martin (1992) labels ‘integrative’. In this sense, it has been argued that as these studies search for shared meanings in organizations, they frequently ignore the conflicts and contradictions which may be evident (Martin, Sitkin and Boehm, 1985). In contrast, Martin (1992) presents two other perspectives of culture (‘differentiation’ and ‘fragmentation’) to suggest that ambiguity, conflict and subcultural differences are more accurate representations of organizational life. This view is consistent with the findings of other researchers (see Alvesson and Berg, 1992; Rowlinson and Proctor, 1999). Furthermore, the ‘founder-centred’ studies in the strategy and entrepreneurship literatures have been criticized for their uncritical acceptance of official accounts of organizational history. Indeed, many culture theorists note that the focus of many ‘founder-centred’ studies on retrospective accounts of organizational history fail to give due consideration to the construction and reconstruction of such history over time (see Alvesson, 1993; Rowlinson and Proctor, 1999). In particular, it is argued that these studies may suffer from social cognition biases such as ‘salience’, ‘attribution’ and ‘self-enhancing’ biases (Alvesson, 1993; Martin, Sitkin and Boehm 1985). Interestingly, the review of the strategy, organizational culture and entrepreneurship literatures reveals a number of inconsistencies. In particular, whilst strategy and entrepreneurship researchers generally accept the notion that strategies endure and that founders or influential CEOs exert a significant influence long after they have left the organization, culture writers are more equivocal. Prominent culture commentators such as Pettigrew (1979) and Schein (1991) argue that founders create a sustained cultural legacy whilst other more critical culture writers argue that the influence of founders is overstated (see Martin, Sitkin and Boehm, 1995; Rowlinson and Proctor, 1999). 16 Notwithstanding the perspective adopted in the examination of the influence organizational founders, it is clear that a change in leadership constitutes a critical transition for any organization, but especially when the company founder leaves or is replaced. Rubenson and Gupta (1992) find that a number of factors influence a founder’s decision to step aside. However, succession by other family members is comparatively rare. Indeed, recent research finds that only 30% of family concerns remain family-controlled for more than one generation and that fewer than one in ten remain family-controlled beyond the second generation (Ket de Vries, 1993). Morris et al. (1997) explain the low levels of continuing family control through their finding that successful family transition depends on a wide variety of factors including the preparation of heirs, family relationships and planning activities. Boeker and Goodstein (1993) conduct a study of the factors influencing whether Chief Executive successors are chosen from inside or outside the organization. Their research is particularly relevant in the study of the succession of company founders since newly founded firms are frequently family owned and managed. Despite the findings of Willard, Krueger and Feeser (1992) that no significant performance differences exist between founder-managed and professionally-managed companies, Boeker and Goodstein (1993) find that organizational performance is a key determinant of successor choice, although they note that a variety of factors moderate this relationship. Consistent with the earlier findings of Pfeffer (1981), Boeker and Goodstein (1993) conclude that firm ownership significantly affects successor choice in that firms largely owned by ‘insiders’ are less likely to replace their CEOs with external personnel. This implies that organizational founders are more likely to pass succession to insiders (such as family members who work within the company) as this increases the likelihood of a continuation of the founder’s objectives and strategies. Founders, commitment and strategic inertia Brockner (1992, p. 39) defines escalation of commitment as ‘the tendency for decision makers to persist with failing courses of action’. Brockner E. Ogbonna and L. C. Harris (1992) claims that although self-justification explanations have proved the more popular, other theoretical formulations (such as prospect theory or decision dilemma theory) may provide equal or greater insights. In a study of reinvestment decisions, McCarthy, Schoorman and Cooper (1993) analyse the influence of four ‘predictors’ of escalating commitment and find that escalation bias is likely if entrepreneurs: are company founders; have business partners; expect to use their own skills; and are overconfident. Theories examining the phenomena of individuals’ escalation of commitment are complemented by research conducted into top managers’ commitment to the status quo (see Geletkanycz, 1997; Hambrick, Geletkanycz and Fridrickson, 1993). In contrast to escalation of commitment theory (which pertains to increased commitment) commitment to the status quo focuses on that which Hambrick, Geletkanycz and Fridrickson, (1993, p. 402) define as ‘belief in the enduring correctness of current organizational strategies and profiles’. In a large-scale study of top management, Hambrick, Geletkanycz and Fridrickson (1993) conclude that firm and industry tenure, as well as organizational performance, influence top executive commitment to the status quo. In a later study, Geletkanycz (1997) extends her earlier work with Hambrick et al. (1993) through the finding that executive openness to change is influenced by national culture. Thus, Geletkanycz (1997) and Hambrick et al. (1993) both conclude that in certain circumstances managers tend to prefer maintaining the status quo to strategic change. Whereas the theories discussed earlier focus on the commitment of individuals, Huff, Huff and Thomas, (1992, p. 55) propose that the concept of strategic inertia encompasses ‘personal commitments, financial investments and institutional mechanisms’. As such strategic inertia is a wider concept than individual commitment (see Huff and Huff, 1995; Tushman and Romanelli, 1985) and is more akin to what economists call organizational ‘lock-in’ (see Arthur, 1989). Huff, Huff and Thomas (1992) contend that the forces of strategic inertia, manifested in organizational commitment to current strategies, are influenced by environmental pressures. Such pressures may result in cumulative organizational stress which is viewed as the mismatch between the organizational demands and opportunities faced, and The Founder’s Legacy: Hangover or Inheritance? the capacity to respond. Hence, it is these forces of stress and inertia which determine whether strategy is renewed. Whilst, the majority of research into escalation of commitment, commitment to the status quo and organizational inertia focus on CEOs or top management, Boeker (1989) conducts one of the few studies which combine the analysis of the effect of the founder and organizational strategic choices. Boeker (1989) reviews the strategic change literature and identifies two strands of research which categorize organizations as either inertial or adaptive. In contrast to Huff, Huff and Thomas (1992) and White, Abbey and Barnett (1994), Boeker (1989) views inertial strategy as those strategic choices first adopted by the organization, exerting a constraining influence on subsequent strategy making. In this way, Boeker (1989) proposes that the founding circumstances and history of an organization influence the future development of strategy. In a small study of a comparatively young industry (semiconductor production), Boeker (1989) identifies the conditions which can either impose constraints or create opportunities for subsequent strategic actions. These conditions range from the extent to which the organization adopts a dominant initial strategy, the ways through which power and influence are distributed across the organization, the nature of ownership and management and the level of effort made by the founder to develop a consensus around a given strategy. Methodology This study aims to explore which factors influence whether the founding strategic vision, objectives or decisions influence current-day strategic thinking or actions and assess the factors which influence whether the strategic legacy results in positive or negative present-day performance. The current study can be viewed as ‘integrative’ (Martin, 1992) ...
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The article by Ogbonna and Harris (2001), seeks to delve into the ‘legacy of
organizational founders’ and whether or not the founder’s vision, mission, strategic objectives,
and goals still significantly influence the organizations’ present strategies and goals. The study
uses the case study approach by conducting an in-depth analysis of two cases which later lead to
the conclusion that once a strong organizational culture has been established by the founder, the
present ‘strategic legacy’ can only be classified as an inheritance or a hangover based on the
original strategy’s flexibility and the prevailing business environmental conditions given the
dynamic nature of the business environment (Ogb...

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