Successful organizational change through win-win: How change managers can create mutual benefits

This paper aims to show new ways of overcoming resistance during organizational change by applying insights from New Institutional Economics.

This is a conceptual paper that adapts findings from New Institutional Economics.

The paper highlights the relevance of interactions between managers and employees for value creation processes: interactions can generate either win–win or lose–lose situations. By altering the restrictions on managers’ and employees’ behavior, change managers can create mutual benefits for the staff and the firm. The paper thus explicitly considers the individual interests of employees and managers and highlights an approach to link individual interests with the collective interests of the firm by means of appropriate interactions. Additionally, the paper elaborates the relevant factors that determine the success of classical change management measures, like communication or participation, to overcome resistance during organizational change.

The developed framework also indicates important conditions where approaches inspired by management, psychological and sociological theories can be successfully applied and where change management will benefit from being complemented by New Institutional Economics.

Change managers can optimize inter-organizational competition or cooperation to generate a win–win situation by means of appropriate formal or informal restrictions (like incentives or binding mechanisms).

This paper applies insights from New Institutional Economics to show how organizational change can be facilitated by producing mutual benefits. This paper postulates that organizational change often fails or, at the very least, meets with stiff resistance due to dysfunctional interactions within the company. However, such interactions actually contain great opportunities for change managers: by shifting the focus of these interactions, they can generate the potential for win–win situations. In this approach, mutual benefits are a decisive factor in increasing the acceptance to organizational change and overcoming resistance.