What is Organizational Effectiveness? (Pt.2)

Much of the research on organizational effectiveness in over the last two decades has revolved around one major concern: bringing products to market. Specifically, the ability to innovate, adapt, and stay ahead of changing market conditions form the foundation of the studies that I have recapped below. In these studies, organizational effectiveness can be seen as successfully meeting the goals of the organization, the efficient use of resources, performing well in the marketplace, and, ultimately, the ability to deliver more value to customers than rival organizations. Below is a brief recap of articles that lay out the current state of thinking as of 2018 on organizational effectiveness.

Hunt and Duhan, 2002

  • Hunt and Duhan see organizational effectiveness as the ability to deliver more value to customers.
  • This paper is not a work of empirical research, but rather an examination of competition, efficiency seeking, and effectiveness seeking.
  • Competition is now about becoming an effectiveness seeking enterprise.
  • Businesses will become more dependent on innovations that help firms deliver more value to customers.
  • An effective outcome is superior profits flowing to firms that innovate to deliver superior value while controlling costs.
  • This article looks at effectiveness through the lens of Resource Advantage theory, which views firms and resources as ‘heritable, durable units of evolutionary selection, with competition for comparative advantages in resources constituting the selection process.”
  • Firms seek positions of competitive advantage because those positions result in superior financial performance. Desire ultimately is to produce goods more efficiently with more value (more effective).
  • Organizational effectiveness is therefore seen as the result of producing most efficiently the goods with the highest value to consumers. 

Buganza and Verganti, 2006

  • B & V see organizational effectiveness as an outcome of processes and procedures that enhance an organization’s ability to tailor offerings to the needs of customers.
  • Italian online brokerages were chosen by the authors to form the basis of their research, because of the high level of turbulence in the industry. Environmental turbulence was identified as critical because developing products in a turbulent environment poses particular challenges to the organization: the market or technology may shift rapidly and unpredictably during the product development window, thus requiring sound developmental processes.
  • The purpose of the study was to examine Life-Cycle Flexability: the ability to adapt and redesign products or services according to changes in the market after the product is first released. The main components of the model are the frequency of adaptation, the rapidity of adaptation, and the quality of adaptation.
  •  Case study research was performed to identify the main research hypotheses, and then two surveys were designed to measure both practices and performance in the organizations examined.
  • Result of the research was validation of the LCF model and the identification of a methodology for investigating the model.

Gregory et al 2009

  • Uses the competing values framework (CVF) to understand the impact of employee attitudes on effectiveness.
  • CVF model consists of multiple domains (Group, Developmental, Rational, Hierarchical, and Balanced),each of which has some impact on organizational effectiveness. The most important of these here are Group, which is characterized by high flexibility and internal focus, and Balanced, in which the values of each of the domains are strongly held.
  • Surveys were sent to 677 hospital managers to measure these different domains.
  • Findings indicated that organizations that value teamwork, cohesion, and employee involvement will outperform organizations that do not. Findings also suggest that organizations with a balanced culture will possess a mix of values required to manage the mix of conditions that may be encountered.

Zheng et al 2010

  • In this article, the goal is to examine the relationship between knowledge management and organizational effectiveness, which is here understood to be the degree to which an organization realizes its goals. Zheng posits that knowledge management relates positively to organizational effectiveness, and that there is a relationship between organizational culture, knowledge management, and effectiveness.
  • Mail and web-based surveys were administered to HR professionals in 301 organizations in the service, manufacturing, and agricultural sectors.
  • Statistical analysis of the survey results supported multiple findings:
    • In addition evidence connecting knowledge management and organizational effectiveness, evidence places knowledge management as an intervening mechanism between organizational context and organizational effectiveness.
    • Organizational strategy has an impact on knowledge management.
    • Most importantly, knowledge management was found to mediate the influence of organizational culture on effectiveness. In other words, how well knowledge is managed is largely associated with how well cultural values are translated into value in the organization.
  • The implication for managers is that knowledge management can impact organizational effectiveness when it is in alignment with organizational culture, structure, and strategy. Focus on knowledge management practices can help transfer the impact of resources to the bottom line.

Zheng model

Figure 1: Zheng’s Model of Knowledge Management Effectiveness Mediation

Jimenez-Jimenez and Sanz-Valle 2011

  • The goal of this study was to understand the relationship between organizational learning, innovation, and performance.
  • Past research demonstrates that companies with the capacity to innovate will be able to respond to market challenges faster than less-innovative companies. Organizational learning, the process by which an organization develops the new knowledge and insights of associates, has also been demonstrated in studies to be a key variable in the enhancement of organizational performance. When associates share their learnings, the development, transformation, and exploitation of new knowledge can enhance and drive innovation.
  • Research was performed by conducting personal interviews of 451 employees chosen from 1600 Spanish firms from the manufacturing and service sectors.
  • Among the findings of this research:
    • Innovation has a positive and significant effect on performance, which supports the widely held understanding that innovation is a key driver of company success.
    • Organizational learning has a positive effect on both performance and innovation.
    • Because the impact of organizational learning is higher on innovation than on performance, the implication is that organizational learning influences performance by facilitating innovation.
  • The research therefore suggests that organizations hoping to drive performance through innovation should improve organizational learning processes.

Arnett et al 2018

  • This paper represents an extension of Buganza and Verganti’s research on life-cycle flexability, and multiple studies of the new product development process.  The authors posit that new product development (NPD) capability enables the improvement of organizational effectiveness by improving both product advantage and life-cycle flexability.
  • Telephone survey test data was gathered from 180 Norwegian hotels.
  • Study findings confirmed that NPD capability can improve both product advantage and life-cycle flexability. Therefore, to improve organizational effectiveness, managers should work to develop higher levels of NPD capability.

Arnett Model

Figure 2: Dual Effects of NPD capability on organizational effectiveness


Arnett, D. B., Sandvik, I. L., & Sandvik, K. (2018). Two paths to organizational effectiveness – Product advantage and life-cycle flexibility. Journal of Business Research, 84, 285–292. https://doi.org/10.1016/j.jbusres.2017.11.010

Buganza, T., & Verganti, R. (2006). Life-Cycle Flexibility: How to Measure and Improve the Innovative Capability in Turbulent Environments. Journal of Product Innovation Management, 23(5), 393–407. https://doi.org/10.1111/j.1540-5885.2006.00212.x

Gregory, B. T., Harris, S. G., Armenakis, A. A., & Shook, C. L. (2009). Organizational culture and effectiveness: A study of values, attitudes, and organizational outcomes. Journal of Business Research, 62(7), 673–679. https://doi.org/10.1016/j.jbusres.2008.05.021

Hunt, S. D., & Duhan, D. F. (2002). Competition in the third millennium: efficiency or effectiveness? Journal of Business Research, 55(2), 97–102. https://doi.org/10.1016/S0148-2963(00)00144-2

Jiménez-Jiménez, D., & Sanz-Valle, R. (2011). Innovation, organizational learning, and performance. Journal of Business Research, 64(4), 408–417. https://doi.org/10.1016/j.jbusres.2010.09.010

Zheng, W., Yang, B., & McLean, G. N. (2010). Linking organizational culture, structure, strategy, and organizational effectiveness: Mediating role of knowledge management. Journal of Business Research, 63(7), 763–771. https://doi.org/10.1016/j.jbusres.2009.06.005

What is Organizational Effectiveness? (Pt.1)

As with any construct, like “Leadership” or “Management”, the answer to the question “What is Organizational Effectiveness?” is necessarily complex. So complex, in fact, that over the last three decades, tens of thousands of words have been devoted to describing multiple different models, or to saying that it is impossible to have any kind of model for organizational effectiveness at all. The problem stems from a variety of sources: the functions of different types of organizations (for-profit vs. non-profit), the requirements of various constituents, questions of measurement, and so on. Since effectiveness is a product of the values and preferences of different types of institutions and the individuals that direct them, the best criteria for evaluating effectiveness are difficult to identify. For my purposes, however, I can focus on organizational effectiveness as it can be construed in the context of a for-profit company.

In this first part of my overview of research on Organizational Effectiveness, I want to briefly review the different models discussed in Cameron and Whetten’s 1983 collection, Organizational Effectiveness: A Comparison of Multiple Models (Cameron & Whetten, 1983). Rising anxiety about the competitiveness of American corporations in the late seventies and early eighties gave rise to a lot of thinking about the topic of Organizational Effectiveness (OE), and this volume sums up the state of research through its publication. As such, this is a good place to start trying to understand OE.

Schneider’s Interactionist Model

The first model examined is based in the behaviors follow from the naturally occurring interactions between people and things. In this “interactionist” perspective, organizations are characterized by the people in them, and the people who join organizations that are like themselves. That is, people with similar abilities and needs are attracted to particular settings, and people with positive experiences in those settings tend to stay there (Schneider, 1983). One of the attractors for organizations are their goals, and organizations will naturally select people who appear to be able to help achieve those goals. People who achieve their own goals within the organization, and help the organization achieve its goals, will tend to remain. Those people that do not achieve their goals, or do not fit in with the organization with the organization will leave, and the resulting cycle, illustrated below, shows this cyclical relationship between organizational goals, attraction, selection, and attrition.

Interaction model

This cycle can, however result in organizational decay, as inertia may set in from like-minded people interacting in the stable environment supported by the attraction-selection-attrition cycle. To survive, the necessity for change must be legitimized, and people with diverse views and capabilities, as opposed to those like people already employed, must be sought out. Ultimately, one measure of effectiveness in this model would be the resources devoted to attracting, hiring, and retaining people whose primary contribution to the organization is the push to change driven by constantly evaluating the organization’s long-term viability.

Seashore’s Integrated Model of Organizational Effectiveness

The second perspective examined (Seashore, 1983) is a framework incorporating multiple models:

  • The Natural System Model sees the organization as a self-maintaining system in equilibrium with the environment. Effectiveness here is described and evaluated with reference to all aspects of the organization that have some function in its adaptation, maintenance, and transformation processes.
  • The Goal Model assumes that the organization has clearly definable goals, and effectiveness is a measure of the organization’s ability to achieve its stated goals.
  • The Decision-Process Model states that organizations develop distinctive ways of managing information resources for the attainment of goals. Here, an effective organization is one that optimizes knowledge management.

Integration is suggested by the need of organizations to balance all three of these models, and integration take place in the process of attending to each of them. Evaluation of effectiveness is a function of the perspective of the different possible evaluating parties or stakeholders, a relational construct fit to the needs and interests of constituents.


Weick and Daft’s Effectiveness of Interpretation Systems

The third model explored hinges on the ability of organizations to interpret, or make sense of, their surroundings in a way that enables them to take productive actions. Interpretation is the process of making sense of the events that occur both within and outside of an organization. All the activities that can impact an organization must be captured and mapped conceptually to bring out meaning. Interpretations, furthermore, are reasonable rather than right. Reasonable explanations accommodate more data than they exclude, are sufficient in the eyes of more than one person, and can be used to explain new occurrences that were not used to generate the original interpretation (Weick & Daft, 1983).

Effectiveness in this model is the ability of an organization to interpret the environment in such a way as to suggest actions. Interpretation of the environment can either take place from an objective assessment (which sees events and processes as hard, measurable, and determinant) or a subjective assessment (where the interpretation shapes the environment more than the environment shapes the interpretation.) Organizations that can push the interpretive boundaries of their interpreted environment are called “test makers”, and will develop interpretations very different from those of organizations that do not push those boundaries (the test avoiders). For example, experimenting with a new product that pushes boundaries by violating expectations will yield valuable insight, if the product is successful.

From the (vastly simplified) forgoing, Weick and Daft’s Model of Organizational Interpretation Styles (below) describes the continuum (Objective-Subjective, Test-Making and Test-Avoiding) onto which organizations’ interpretive styles can be mapped.

Interp model

The effectiveness of each style will be evaluated differently according to the expectations of different organizations, but the authors lay out criteria that can define the effectiveness of interpretations: the extent to which they are grounded in more detailed knowledge of the data, the extent to which the data are tied together with strong causal linkages, and the ability to reconstruct with more accuracy the initial data that the interpretation was built to explain. Ultimately, the final indicator of effectiveness in this model is the correspondence between interpretation and reality.

Nord’s Political-Economic Perspective on Organizational Effectiveness

Nord’s discussion gets to the heart of the challenges of defining organizational effectiveness. As Nord puts it, the definition of effectiveness must address what organizations should be doing for whom (Nord, 1983). Recognizing the organizations have economic and political effects, Nord argues that the consequences of these effects must be incorporated into evaluations of their effectiveness. If one believes that organizations have a responsibility for promoting the well-being of members of society, then the set of criteria used to define organization effectiveness needs to be expanded. However, Nord has no clear model to define: rather, he calls on students of organizational effectiveness to develop, administer, and publicize indices that would lead to greater acceptance of the political-economic dimension of organizational performance.

If you’ve made it this far, thanks for reading through to the end! In future posts, I will be bringing the discussion of organizational effectiveness up to date by looking at more recent models that reflect the latest thinking on the subject.


Cameron, K. S., & Whetten, D. A. (1983). Organizational Effectiveness: A Comparison of Multiple Models. New York: Academic Press.

Nord, W. R. (1983). A Political-Economic Perspective on Organizational Effectiveness. In K. S. Cameron & D. A. Whetten (Eds.), Organizational Effectiveness: A Comparison of Multiple Models. New York: Academic Press.

Schneider, B. (1983). An Interactionist Perspective on Organizational Effectiveness. In K. S. Cameron & D. A. Whetten (Eds.), Organizational Effectiveness: A Comparison of Multiple Models. New York: Academic Press.

Seashore, S. (1983). A Framework for an Integrated Model of Organizational Effectiveness. In K. S. Cameron & D. A. Whetten (Eds.), Organizational Effectiveness: A Comparison of Multiple Models. New York: Academic Press.

Weick, K. E., & Daft, R. L. (1983). The Effectiveness of Interpretation Systems. In K. S. Cameron & D. A. Whetten (Eds.), Organizational Effectiveness: A Comparison of Multiple Models. New York: Academic Press.


Knowledge Management, Organizational Effectiveness, and Microsoft #OneNote

Working in a high-turnover function, I have learned first-hand the importance of knowledge management. When associates can be assumed to rotate out into new roles every 18 months, capturing and organizing knowledge becomes a critical exercise for managers and team members. I am defining knowledge management here as efforts to facilitate the acquiring, creating, storing, sharing, diffusing, developing, and deploying knowledge by individuals and groups. The knowledge-based view of the firm holds that the firm’s capability to create and utilize knowledge is the most important source of a firm’s sustainable competitive advantage (Zheng, Yang, & McLean, 2010). Zheng and his research partners surveyed 301 organizations to shed more light on the relationship between knowledge management and organizational effectiveness. Their findings indicated that knowledge management can influence organizational effectiveness when it is in alignment with organizational culture, structure, and strategy. Focus on knowledge management practices, such as providing knowledge management tools, and supporting knowledge management initiatives, helps transfer the impact of organizational resources to the bottom line (Zheng et al., 2010).

I have had considerable success using Microsoft OneNote as a knowledge management tool. OneNote is ideal for capturing knowledge: the notebook and page structure allows for easy and straightforward organization, and the ability to hyperlink throughout the text facilitates movement between different parts of the overall notebook. My team members and I work together to capture not just every day processes, but new learnings that result from the resolution of the challenges we face every day. As situations arise that we have not yet encountered, we document the processes that we develop and make note of any open loops or anticipated future challenges. These notebooks become a frequently consulted reference, a living document of our evolving learning, and a tool to teach new associates.

The adoption of SharePoint within our organization has given us an ideal platform to share our collected OneNote notebooks with other teams. Publicizing our tools and methods via SharePoint has helped us to build a culture of knowledge management, which in turn drives organizational effectiveness.


Zheng, W., Yang, B., & McLean, G. N. (2010). Linking organizational culture, structure, strategy, and organizational effectiveness: Mediating role of knowledge management. Journal of Business Research, 63(7), 763–771. https://doi.org/10.1016/j.jbusres.2009.06.005

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