Research On Co-Evolution Of Organizational Flexibility And Efficiency In Project-Oriented Firms

Projects and operations are the two types of activities that are closely correlated in the process of corporate development. All organizations are either project-oriented or operation-oriented. Along with the competition and internationalization of the market, the differentiation and personalization of customer demands and the prevalence of information technology, the characteristics of project-oriented start to reflect in Chinese enterprises, and project-oriented firm has become a new type of business organization form. In project-oriented firms, the main objective is to complete the project targets or to satisfy customers'demands, thus flexible responding mechanism is required and put forward higher requirements on organizational flexibility. At the same time, in order to maintain stable and sustainable development, project-oriented firms must stick to the work specialization, principle of consistency and scale effect which result in efficiency advantage. The realization of the organizational efficiency derives from a high level of standardization and specialization, whereas these bureaucratic behaviors would suppress the dynamic process of interaction within the organization and further damage the organizational flexibility. Therefore, the relationship between organizational flexibility and efficiency is described by a large number of scholars as one of the core paradoxes in organizational management. If project-oriented firms wished to adapt to the demands of environment and meanwhile realize sustainable development, they must carefully deal with the paradox of flexibility and efficiency.Existing researches are mainly focusing on general organization study, whereas focusing on specific situations in project-oriented firms and connected with practical data are missing. In this context, this research starts from the paradox of flexibility and efficiency that project-oriented firms are facing, in a systematic and dynamic view, propose the solution of co-evolution of flexibility and efficiency, to resolve the paradox. Based on the case study, a variety of qualitative and quantitative research methods are comprehensively performed, in order to systematically study the internal mechanism of co-evolution of organizational flexibility and efficiency in project-oriented firms. In the end, theoretical guidance is provided for Chinese project-oriented firms to resolve the paradox of flexibility and efficiency. This research's main jobs are listed as follows:(1) From the systematic view of organizational design, the project-oriented firm is nested in the environment, system, function, elements, and the relationship-between-elements, the methods of focus group and semi-structured interviews are adopted to collect practical data related to flexibility and efficiency from project-oriented firms. And with the aid of NVivo (analysis software) to further process the data, meanings and attributes of the environment, functions, elements and correlations among elements under the context of flexibility and efficiency are systematically analyzed. Subsequently, a project-oriented firm with flexibility and efficiency as the dual goal is constructed and presented. Research results have shown that, the project-oriented firm can be further decomposed into an efficient and flexible combined system, which is based on the five basic organizational elements:structure, process, personnel, motivation, and authorization. These five organizational elements all can reflect the attributes as the efficiency-oriented or flexibility-oriented, thus to determine the functional characteristics as either efficiency-oriented or flexibility-oriented, in order to satisfy the demands of stable or dynamic environment.(2) Starting from the condition analysis of general system evolution and organization evolution, combined with the project-oriented organizational system model, the analysis framework of co-evolution of organizational flexibility and efficiency in project-oriented firms is presented. Through seven case studies, by implementing data analysis and theoretical model match iteration within and cross cases, specific conditions of co-evolution are explored and interpreted. Research results have shown that:during the co-evolution of flexiblility and efficiency in project-oriented firm, the organization may experience five different situations. Factors affecting the formation of these five situations include market competition, information technology development, customer demand diversity and labor market maturity. These factors illustrate the boundary conditions of co-evolution of organizational flexibility and efficiency in project-oriented firms, from two different dimensions:dynamics and complexity. Structure, process, personnel, motivation and authorization, these five elements have shown compatibility in supporting to achieve the flexibility and efficiency and constitute the necessary conditions of co-evolution of flexibility and efficiency in project-oriented firms. Senior managers and organization members'subjective initiative act as a sufficient condition of the co-evolution. Based on different initiative sources, it can be divided into three drive modes, including bottom-up, top-down, and the double layer interaction.(3) Based on the vertical case study of two project-oriented firms which were proven to perform well in flexibility and efficiency co-evolution, with the help of time series analysis technique to explore and summarize the actual process of flexibility and efficiency co-evolution model, by implementing the critical incident technique for six typical cases for further analysis, interaction relationship happened during the evolution is extracted and introduced. Subsequently it is to reveal the dynamic mechanism for flexibility and efficiency co-evolution. Research results have shown that: the co-evolution process of organizational flexibility and efficiency involves four steps, including demand situation, internal drive, element adjustment and goal realization, and it experiences environment, functions and the competition and synergy between functions and elements. Along with the dynamic changes of the external environment, project-oriented firms will continue to face demands generated from functional transformation, and repeat corresponding process from the four steps, in order to achieve efficiency-oriented or flexibility-oriented functional transformation process, eventually to achieve flexibility and efficiency co-evolution in a project-oriented firm.In the theoretical sense, this research is based on the introduction of system theory to build a model of project-oriented organization system with flexibility and efficiency as its function. In the framework of the system evolution theory, it explores the related mechanism of the co-evolution of flexibility and efficiency. This research not only provides a new research idea for the paradox of organization flexibility and efficiency, but also further enriches the research on the relationship between flexibility and efficiency in modern organizations. Besides, this study also explores and deepens the research of organization and management problems in the context of project-oriented firm, contributed to promote the integration of project management research with general management theory and expand the research to the organizational level. In practice, this research inspires managers should construct the "flexibility-efficiency" system, and recognize the tensions between flexibility and efficiency from a deeper and farther view. The project-oriented firms should find the similarities of flexibility and efficiency from the organizational element level, and realize the co-evolution of the two in a longer time. To achieve the co-evolution of organizational flexibility and efficiency, project-oriented firm should depend on the design organizational elements dynamically and contingently, leading the dynamic alignment of the flexibility and efficiency with changing environment.