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organizational behavior

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organizational behavior

MICHAEL A. HITT Texas A&M University

C. CHET MILLER University of Houston

ADRIENNE COLELLA Tulane University

third edition

John Wiley & Sons, Inc.

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Vice President & Publisher George Hoffmann Executive Editor Lise Johnson Assistant Editor Sarah Vernon Marketing Manager Karolina Zarychta Assistant Marketing Manager Laura Finely Production Manager Dorothy Sinclair Production Editor Sandra Dumas Creative Director Harry Nolan Interior Designer Lucia Tirondola Cover Design Howard Grossman Executive Media Editor Allison Morris Associate Media Editor Elena Santa Maria Photo Department Manager Hilary Newman Photo Editor Jennifer MacMillan Photo Researcher Lisa Passmore Production Management Services MPS Limited, a Macmillan Company

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ISBN 13 978-0470-52853-2 ISBN 13 978-0470-92090-9

Printed in the United States of America. 10 9 8 7 6 5 4 3 2 1

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To Aunt Jinny for all of the love and support you have given us over the years. We are blessed to have you in our lives —MIKE

To Laura Cardinal, who keeps the smiles and joy coming. I am indeed looking forward to our next chapter together. —CHET

To Jessica and Rebecca. You make me proud and you make me smile. —ADRIENNE

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about the authors

Michael A. Hitt Texas A & M University

Michael Hitt is currently a Distinguished Professor of Management at Texas A&M Univer- sity and holds the Joe B. Foster Chair in Business Leadership. He received his Ph.D. from the University of Colorado. Dr. Hitt has coauthored or co-edited 26 books and authored or coauthored many journal articles. A recent article listed him as one of the ten most cited authors in management over a 25-year period. The Times Higher Education listed him among the top scholars in economics, fi nance and management and tied for fi rst among manage- ment scholars with the highest number of highly cited articles. He has served on the edito- rial review boards of multiple journals and is a former editor of the Academy of Management Journal. He is the current co-editor of the Strategic Entrepreneurship Journal. He received the 1996 Award for Outstanding Academic Contributions to Competitiveness and the 1999 Award for Outstanding Intellectual Contributions to Competitiveness Research from the American Society for Competitiveness. He is a Fellow in the Academy of Management and in the Strategic Management Society, a Research Fellow in the National Entrepreneurship Consortium and received an honorary doctorate from the Universidad Carlos III de Madrid for his contributions to the fi eld. He is a former President of the Academy of Management, a Past President of the Strategic Management Society and a member of the Academy of Management Journals’ Hall of Fame. He received awards for the best article published in the Academy of Management Executive (1999), Academy of Management Journal (2000), and the Journal of Management (2006). In 2001, he received the Irwin Outstanding Educator Award and the Distinguished Service Award from the Academy of Management. In 2004, Dr. Hitt was awarded the Best Paper Prize by the Strategic Management Society. In 2006, he received the Falcone Distinguished Entrepreneurship Scholar Award from Syracuse University.

C. Chet Miller University of Houston

Dr. C. Chet Miller is the Bauer Professor of Organizational Studies at the Bauer School of Business, University of Houston. He received his Ph.D. from the University of Texas at Austin. He also received his B.A. from the University of Texas, where he was a member of Phi Beta Kappa and a Summa Cum Laude graduate.

Since working as a shift manager and subsequently completing his graduate studies, Dr. Miller has served on the faculties of Baylor University, Wake Forest University, and the University of Houston. He also has been a visiting faculty member at Cornell University and a guest instructor at Duke University. He is an active member of the Academy of

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viii About the Authors

Management and the Strategic Management Society. He currently serves on the editorial boards of Organization Science and Academy of Management Journal, and is a past associ- ate editor of Academy of Management Journal. Awards and honors include an outstanding young researcher award, nominations of several papers for honors, and teaching awards from multiple schools,

Dr. Miller has worked with a number of managers and executives. Through management-development programs, he has contributed to the development of individuals from such organizations as ABB, Bank of America, Krispy Kreme, La Farge, Red Hat, State Farm Insurance, and the U.S. Postal Service. His focus has been change management, strate- gic visioning, and high-involvement approaches to managing people.

Dr. Miller’s published research focuses on the functioning of executive teams, the design of organizational structures and management systems, and the design of strategic decision processes. His publications have appeared in Organization Science, Academy of Management Journal, Academy of Management Executive, Strategic Management Journal, Journal of Organizational Behavior, and Journal of Behavioral Decision Making.

Dr. Miller teaches courses in the areas of organizational behavior, organization theory, and strategic management.

Adrienne Colella Tulane University

Dr. Adrienne Colella is the A.B. Freeman Professor of Doctoral Studies and Research at the A.B. Freeman School of Business at Tulane University. She has also been a faculty member at the Mays Business School, Texas A&M University and at Rutgers University.

She received her Ph.D. and Masters degree from the Ohio State University in Industrial/ Organizational Psychology and her B.S. degree from Miami University. Dr. Colella is a fellow of the American Psychological Association and the Society for Industrial and Organizational Psychology, Division 14 of the APA. She will be the President of the Soci- ety of Industrial and Organizational Psychology in 2011.

Dr. Colella’s main research focuses on treatment issues regarding persons with dis- abilities in the workplace and workplace accommodation. She has also published on a va- riety of other organizational behavior and human resources topics such as discrimination, pay secrecy, performance appraisal, motivation, socialization, and employee selection. Her research appears in the Journal of Applied Psychology, Personnel Psychology, Academy of Management Journal, Academy of Management Review, Research in Personnel and Hu- man Resource Management, Human Resource Management Review, Journal of Applied Social Psychology, and the Journal of Occupational Rehabilitation, among other places. She is the editor of a Society of Industrial and Organizational Psychology Frontiers Series book on the psychology of workplace discrimination. Dr. Colella serves (or has served) on the editorial boards of Personnel Psychology, Journal of Applied Psychology, Academy of Manage- ment Journal, Journal of Organizational Behavior, Human Resource Management Review, Human Performance, SIOP Frontier’s Series, Human Resource Management, and Journal of Management. She is an ad hoc reviewer for most other journals in the management fi eld and federal funding agencies. Her research has been funded by a variety of national, state, and university sources.

Dr. Colella teaches undergraduate, masters-level, and Ph.D. level courses in Human Resource Management and Organizational Behavior.

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Preface xix

brief contents

O P E N I N G C A S E S T U D Y Whole Foods, Whole People 1

PART III Groups, Teams, and Social Processes 8 Leadership 289 9 Communication 327 10 Decision Making by Individuals and Groups 362 11 Groups and Teams 402 12 Confl ict, Negotiation, Power, and Politics 436

PART IV The Organizational Context 13 Organizational Structure and Culture 485 14 Organizational Change and Development 528

PART I The Strategic Lens 1 A Strategic Approach to Organizational Behavior 11 2 Organizational Diversity 47 3 Organizational Behavior in a Global Context 83

PA R T I C A S E S T U D Y Cooperating and Communicating 121 Across Cultures

PA R T I I I C A S E S T U D Y Bright and Dedicated: What 473 More Do You Want?

PA R T I V C A S E S T U D Y A Sea Change in Staffi ng at Leapfrog 567 Innovations, Inc.

PA R T I I C A S E S T U D Y Brussels and Bradshaw 277

PART II Individual Processes 4 Learning and Perception 131 5 Personality, Intelligence, Attitudes, and Emotions 167 6 Work Motivation 208 7 Stress and Well-being 246

C O N C L U D I N G C A S E S T U D Y Centurion Media: Doing the Right Thing 579

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Preface xix Evidence for the Effectiveness of High-Involvement Management 29 Demands on Managers 30

Organization of the Book 31

Experiencing Organizational Behavior: Pixar: An Organization of Happy, Innovative People 32

What This Chapter Adds to Your Knowledge Portfolio 33 Back to the Knowledge Objectives 34 Key Terms 35

Human Resource Management Applications 35

Building Your Human Capital: Career Style Inventory 35

An Organizational Behavior Moment: All in a Day’s Work 41

Team Exercise: Mcdonald’s: A High-Involvement Organization? 42 Endnotes 43

2 Organizational Diversity 47 Exploring Behavior in Action: Diversity in the Los Angeles Fire Department 47

The Strategic Importance of Organizational Diversity 49 Diversity Defi ned 50 Forces of Change 52

Changing Population Demographics 52 Increase in the Service Economy 53 The Global Economy 54 Requirements for Teamwork 54

Diversity Management and High-Involvement Organizations 55

Individual Outcomes 55 Group Outcomes 56 Organizational Outcomes 57 Societal and Moral Outcomes 58

Experiencing Organizational Behavior: Diversity at The Top 59

contents O P E N I N G C A S E S T U D Y Whole Foods, Whole People 1

PART I The Strategic Lens 1 A Strategic Approach to

Organizational Behavior 11 Exploring Behavior in Action: Strategic Use of Human Capital: A Key Element of Organizational Success 11

The Strategic Importance of Organizational Behavior 13 Basic Elements of Organizational Behavior 13 The Importance of Using a Strategic Lens 14

Foundations of a Strategic Approach to Organizational Behavior 16 Defi nition of an Organization 17

Experiencing Organizational Behavior: Creating Innovation: Leading and Managing the Human Capital at Apple 18

The Role of Human Capital in Creating Competitive Advantage 19

The Nature of Human Capital 19 The Concept of Competitive Advantage 20 Human Capital as a Source of Competitive Advantage 21

Managerial Advice: Leveraging Human Capital with Twitter and Other Social Networking Tools: Managing the Tweets 24

Positive Organizational Behavior 25 High-Involvement Management 26

Key Characteristics of High-Involvement Management 26 Selective Hiring 26 Extensive Training 27 Decision Power 28 Information Sharing 28 Incentive Compensation 29

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xii Contents

Roadblocks to Diversity 60 Prejudice and Discrimination 61 Stereotyping 62

Experiencing Organizational Behavior: Women, Work, and Stereotypes 64

Differences in Social Identity 65 Power Differentials 66 Poor Structural Integration 67 Communication Problems 69

Effectively Creating and Managing Diversity 69 Commitment of the Organization’s Leaders 70 Integration with the Strategic Plan 70 Associate Involvement 70

Managerial Advice: Promoting a Positive Diversity Environment 71

The Strategic Lens 72 What This Chapter Adds to Your Knowledge Portfolio 73 Back to the Knowledge Objectives 73

Thinking about Ethics 74 Key Terms 74

Human Resource Management Applications 75

Building Your Human Capital: What’s Your DQ (Diversity Quotient)? 75

An Organizational Behavior Moment: Project “Blow Up” 76

Team Exercise: What Is It Like to Be Different? 78 Endnotes 79

3 Organizational Behavior in a Global Context 83 Exploring Behavior in Action: McDonald’s Thinks Globally and Acts Locally 83 The Strategic Importance of Organizational Behavior in a Global Context 85 Forces of Globalization 85

Managerial Advice: Multinational Corporations Achieving Glocalization 88

The Globalization Experience for Associates and Managers 89

Internationally Focused Jobs 89 Foreign Job Assignments 91

Experiencing Organizational Behavior: The Glass Ceiling, the Glass Floor, and the Glass Border: The Global Business Environment for Women 94

Foreign Nationals as Colleagues 95

Opportunities for International Participation 97 Multidomestic Firms 98 Global Firms 98 Transnational Firms 99

High-Involvement Management in the International Context 100

Dimensions of National Culture 100

Experiencing Organizational Behavior: Managing Diverse Cultures 103

National Culture and High-Involvement Management 104

Ethics in the International Context 106

The Strategic Lens 109 What This Chapter Adds to Your Knowledge Portfolio 109 Back to the Knowledge Objectives 110

Thinking about Ethics 111 Key Terms 111

Human Resource Management Applications 112

Building Your Human Capital: Assessment of Openness for International Work 112

An Organizational Behavior Moment: Managing in a Foreign Land 114

Team Exercise: International Etiquette 114 Endnotes 115

PART II Individual Processes 4 Learning and Perception 131

Exploring Behavior in Action: The Strategic Importance of Learning and Perception 131

Fundamental Learning Principles 133 Operant Conditioning and Social Learning Theory 134 Contingencies of Reinforcement 134

Managerial Advice: Punishment Taken Too Far 137

Schedules of Reinforcement 138 Social Learning Theory 139

PA R T I C A S E S T U D Y Cooperating and Communicating Across Cultures 121

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Contents xiii

Cognitive and Motivational Properties of Personality 176 Some Cautionary and Concluding Remarks 179

Experiencing Organizational Behavior: “I Have Ketchup in My Veins” 180

Intelligence 181 Attitudes 182

Experiencing Organizational Behavior: Intelligence and Intelligence Testing in the National Football League 183

Attitude Formation 185 Two Important Attitudes in the Workplace 187 Attitude Change 189

Managerial Advice: Job Satisfaction Takes a Dive! 192 Emotions 193

Direct Effects of Emotions on Behavior 194 Emotional Labor 195 Emotional Intelligence 195

The Strategic Lens 196 What This Chapter Adds to Your Knowledge Portfolio 197 Back to the Knowledge Objectives 198

Thinking about Ethics 199 Key Terms 199

Human Resource Management Applications 199

Building Your Human Capital: Big Five Personality Assessment 200

An Organizational Behavior Moment: Whatever Is Necessary! 202

Team Exercise: Experiencing Emotional Labor 202 Endnotes 203

6 Work Motivation 208 Exploring Behavior in Action: Work Motivation at W.L. Gore & Associates 208

The Strategic Importance of Work Motivation 210 What Is Motivation? 210 Content Theories of Motivation 211

Hierarchy of Needs Theory 211 ERG Theory 213 Theory of Achievement, Affi liation, and Power 215

Managerial Advice: Managers over the Edge 217

Two-Factor Theory 218 Conclusions Regarding Content Theories 219

Other Conditions for Learning 141 Training and Enhancing the Performance of Associates 141

OB Mod 142 Simulations 144 Learning From Failure 146

Experiencing Organizational Behavior: “We are Ladies and Gentlemen Serving Ladies and Gentlemen” 147

Perception 148 Perceptions of People 149 Self-Perception 153 Attributions of Causality 153

Experiencing Organizational Behavior: Great Bear Wilderness Crash 154

Task Perception 157

The Strategic Lens 157 What This Chapter Adds to Your Knowledge Portfolio 158 Back to the Knowledge Objectives 159

Thinking about Ethics 159 Key Terms 160

Human Resource Management Applications 160

Building Your Human Capital: Assessment of Approaches Used to Handle Diffi cult Learning Situations 160

An Organizational Behavior Moment: It’s Just a Matter of Timing 161

Team Exercise: Best Bet for Training 162

Endnotes 163

5 Personality, Intelligence, Attitudes, and Emotions 167 Exploring Behavior in Action: I Know She’s Smart and Accomplished . . . But Does She Have “Personality”? 167

The Strategic Importance of Personality, Intelligence, Attitudes, and Emotions 169 Fundamentals of Personality 170

Determinants of Personality Development 170 The Big Five Personality Traits 172 The Big Five as a Tool for Selecting New Associates and Managers 175 The Big Five and High-Involvement Management 175

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xiv Contents

Process Theories of Motivation 219 Expectancy Theory 219 Equity Theory 222 Goal-Setting Theory 224 Goal Specifi city 225 Goal Commitment 225

Experiencing Organizational Behavior: Making Visible Changes 227

Conclusions Regarding Process Theories 228 Motivating Associates: An Integration of Motivation Theories 229

Find Meaningful Individual Rewards 229 Tie Rewards to Performance 230 Redesign Jobs 232 Provide Feedback 234

Experiencing Organizational Behavior: Connecting People in the Workplace 235

Clarify Expectations and Goals 236

The Strategic Lens 236 What This Chapter Adds to Your Knowledge Portfolio 237 Back to the Knowledge Objectives 237

Thinking about Ethics 238 Key Terms 239

Human Resource Management Applications 239

Building Your Human Capital: Assessing Your Needs 239

An Organizational Behavior Moment: The Motivation of a Rhodes Scholar 240

Team Exercise: Workplace Needs and Gender 241 Endnotes 242

7 Stress And Well-Being 246 Exploring Behavior in Action: Striking For Stress at Verizon 246

The Strategic Importance of Workplace Stress 248 Workplace Stress Defi ned 249 Two Models of Workplace Stress 251

Demand–Control Model 251 Effort–Reward Imbalance Model 252

Organizational and Work-Related Stressors 253 Role Confl ict 253 Role Ambiguity 254 Work Overload 254

Managerial Advice: Restoring and Maintaining Work–Life Balance 255

Occupation 256 Resource Inadequacy 256 Working Conditions 256 Management Style 257 Monitoring 257 Job Insecurity 257 Incivility in the Workplace 257

Experiencing Organizational Behavior: Incivility on the Job: The Cost of Being Nasty 258

Individual Infl uences on Experiencing Stress 259

Type A versus Type B Personality 259 Self-Esteem 259 Hardiness 259 Gender 260

Individual and Organizational Consequences of Stress 260

Individual Consequences 260 Organizational Consequences 263

Managing Workplace Stress 264 Individual Stress Management 264 Organizational Stress Management 265

Experiencing Organizational Behavior: Incentives for Participating in Wellness Programs 267

The Strategic Lens 268 What This Chapter Adds to Your Knowledge Portfolio 268 Back to the Knowledge Objectives 269

Thinking about Ethics 269 Key Terms 269

Human Resource Management Applications 270

Building Your Human Capital: How Well Do You Handle Stress? 270

An Organizational Behavior Moment: Friend or Associate? 271

Team Exercise: Dealing with Stress 272

Endnotes 272

PA R T I I C A S E S T U D Y Brussels and Bradshaw 277

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Contents xv

PART III Groups, Teams, and Social Processes

8 Leadership 289 Exploring Behavior in Action: Maria Yee and the Green Furniture Revolution 289 The Strategic Importance of Leadership 291 The Nature of Leadership 292 Trait Theory of Leadership 292

Experiencing Organizational Behavior: Reforming a Rotten Apple and an Evil City 294

Behavioral Theories of Leadership 296

University of Michigan Studies 296 Ohio State University Studies 297

Contingency Theories of Leadership 298 Fiedler’s Contingency Theory of Leadership Effectiveness 298 The Path–Goal Leadership Theory 301

Managerial Advice: Phil Jackson and Leadership Success 304

Conclusions Regarding Contingency Theories 305

Transformational Leadership 305

Experiencing Organizational Behavior: Ethical Leadership? Authentic Leadership! 309

Additional Topics of Current Relevance 308 Leader–Member Exchange 310 Servant Leadership 311 Gender Effects on Leadership 311 Global Differences in Leadership 313

The Strategic Lens 314 What This Chapter Adds to Your Knowledge Portfolio 315 Back to the Knowledge Objectives 316

Thinking about Ethics 317 Key Terms 317

Human Resource Management Applications 317

Building Your Human Capital: Are You a Transformational Leader? 318

An Organizational Behavior Moment: The Two Presidents 320

Team Exercise: Coping with People Problems 320

Endnotes 322

9 Communication 327 Exploring Behavior in Action: IBM and Virtual Social Worlds 327

The Strategic Importance of Communication 329 The Communication Process 330 Organizational Communication 331

Communication Networks 331 Direction of Organizational Communication 333

Experiencing Organizational Behavior: Communication at J. Crew: Mickey Drexler 335

Interpersonal Communication 337 Formal versus Informal Communication 337 Communication Media 338 Communication Technology 339

Managerial Advice: Surfi ng for Applicants 341

Nonverbal Communication 342 Barriers to Effective Communication 343

Organizational Barriers 343

Experiencing Organizational Behavior: Communication Casualties 347

Individual Barriers 348 Overcoming Communication Barriers 350

Conduct Communication Audits 350 Improve Communication Climates 351 Encourage Individual Actions 351

The Strategic Lens 353 What This Chapter Adds to Your Knowledge Portfolio 353 Back to the Knowledge Objectives 354

Thinking about Ethics 354 Key Terms 354

Human Resource Management Applications 355

Building Your Human Capital: Presentation Dos and Don’ts 355

An Organizational Behavior Moment: Going North 357

Team Exercise: Communication Barriers 358

Endnotes 359

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xvi Contents

10 Decision Making by Individuals and Groups 362 Exploring Behavior in Action: Dawn Ostroff’s Decision Making at the CW Television Network 362

The Strategic Importance of Decision Making 364 Fundamentals of Decision Making 364

Basic Steps in Decision Making 365 Optimal versus Satisfactory Decisions 366

Individual Decision Making 367 Decision-Making Styles 367

Managerial Advice: Nurturing Alternative Decision Styles 371

Degree of Acceptable Risk 372 Cognitive Biases 373 Moods and Emotions 375

Experiencing Organizational Behavior: Anger and Fear in Recent U.S. Elections 376

Group Decision Making 377 Group Decision-Making Pitfalls 378 Group Decision-Making Techniques 381

Who Should Decide? Individual Versus Group Decision Making 384

Associate Involvement in Managerial Decisions 385 Value of Individual versus Group Decision Making 387

Experiencing Organizational Behavior: The Vroom–Yetton Model and Military Decisions during the U.S. Civil War 387

The Strategic Lens 391 What This Chapter Adds to Your Knowledge Portfolio 390 Back to the Knowledge Objectives 392

Thinking about Ethics 393 Key Terms 394

Human Resource Management Applications 394

Building Your Human Capital: Decision Style Assessment 394

An Organizational Behavior Moment: Decision Making at a Nuclear Power Facility 395

Team Exercise: Group Decision Making in Practice 397

Endnotes 397

11 Groups and Teams 402 Exploring Behavior in Action: Teamwork at Starbucks 402

The Strategic Importance of Groups and Teams 404 The Nature of Groups and Teams 404

Groups and Teams Defi ned 405 Formal and Informal Groups 405 Identity Groups 406 Virtual Teams 406 Functional Teams 407 Self-Managing Teams 408

Experiencing Organizational Behavior: Teams at Mckinsey & Company 409 Team Effectiveness 408

Knowledge Criteria 410 Affective Criteria 410 Outcome Criteria 410 Is the Team Needed? 410

Factors Affecting Team Effectiveness 411 Team Composition 411 Team Structure 414 Team Processes 417

Experiencing Organizational Behavior: Backup at Cirque Du Soleil 418 Team Development 421 Managing for Effective Teams 423

Top Management Support 423 Support Systems 424

Managerial Advice: The Pros and Cons of Experiential Teambuilding 426

The Strategic Lens 427 What This Chapter Adds to Your Knowledge Portfolio 428 Back to the Knowledge Objectives 428

Thinking About Ethics 429 Key Terms 429

Human Resource Management Applications 429

Building Your Human Capital: Do You Have a Team? 430

An Organizational Behavior Moment: The New Quota 430

Team Exercise: Virtual versus Real Teams 431 Endnotes 432

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Contents xvii

12 Confl ict, Negotiation, Power, and Politics 436 Exploring Behavior in Action: Green Confl ict 436

The Strategic Importance of Confl ict, Negotiation, Power, and Politics 438 The Nature of Confl ict 439

Dysfunctional and Functional Confl ict 439 Types of Confl ict 440

Causes of Confl ict 441 Structural Factors 441 Communication 443

Experiencing Organizational Behavior: Herman Miller, Designing for Teamwork 444

Cognitive Factors 445 Individual Characteristics 445 History 446

Confl ict Escalation And Outcomes 447 Confl ict Escalation 447 Confl ict Outcomes 448

Experiencing Organizational Behavior: Workplace Aggression 449

Responses to Confl ict 450 Negotiation 451

Negotiation Strategies 452 The Negotiation Process 452

Managerial Advice: A Costly Confl ict Resolution: The Importance of Negotiation 454

Power 456 Bases of Individual Power 456 An Example of Power 458 Strategic Contingencies Model of Power 459

Organizational Politics 460

The Strategic Lens 463 What This Chapter Adds to Your Knowledge Portfolio 463 Back to the Knowledge Objectives 464

Thinking about Ethics 464 Key Terms 465

Human Resource Management Applications 465

Building Your Human Capital: Are You Ready to Manage with Power? 465

An Organizational Behavior Moment: The Making of the Brooklyn Bluebirds 466

Team Exercise: Managing Confl ict 467

Endnotes 468

PART IV The Organizational Context 13 Organizational Structure and

Culture 485 Exploring Behavior in Action: Growth and Structure Provide an Integrated Portfolio of Services at Fedex 485

The Strategic Importance of Organizational Structure and Culture 487 Fundamental Elements of Organizational Structure 488

Structural Characteristics 488 Structuring Characteristics 491 The Modern Organization 492

Factors Affecting Organizational Structure 493

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