Complementarities, Common Change Initiatives, and the Team-based Organization*

Governance forms that effectively meld the virtues of both market control and traditional hierarchical control are alluring. While extensive research has examined such hybrids forms, the research has been restricted largely to market or contractual relations infused with elements of hierarchical control. Comparatively little research, outside of the Mform literature, has examined efforts to infuse hierarchical forms with elements of market control. This paper contends that common change initiatives, such as TQM, reengineering, autonomous work teams, and group-based rewards, are appropriately viewed as attempts to craft more market-like organizational forms by selectively infusing elements of market control within hierarchy. However, these common change initiatives are implemented commonly in isolation and, as a consequence, violate patterns of complementarity that both sustain traditional hierarchy or support the stable infusion of market control. Managers overlay new measures on existing, functionally-oriented structures; they implement new structures without new performance measures and without new pay systems; they implement new pay systems, but fail to restructure or develop new performance measures. The paper argues that these violations of complementarity often trigger the unraveling of the bundle of elements that support traditional hierarchy and spiral hierarchies toward fundamental transformation. The clear trajectory of these transformations is toward quite radically, disaggregated organizations structured around teams. The paper presents both logic and evidence supporting the existence of complementarities among these common change initiatives.