1. Organization Development and Change
Chapter Twenty Two:
Transorganizational Change
Thomas G. Cummings
Christopher G. Worley

2. Learning Objectives for Chapter Twenty Two
To understand the rational behind transorganizational interventions
To compare and contrast the three types of transorganizational OD interventions: mergers and acquisitions, strategic alliance interventions, and network interventions within each category
Cummings & Worley, 9e (c) South-Western/Cengage Learning

3. Transorganizational Rationale
Transorganizational strategies allow organizations to perform tasks that are too costly and complicated for single organizations to perform
Goods and services are exchanged between organizations and transactions occur
Transorganizational strategies work best when transactions occur frequently and are well understood
Cummings & Worley, 9e (c) South-Western/Cengage Learning

4. Transorganizational Systems
Members maintain their separate organizational identities and goals
Tend to be underorganized and member organizations are loosely coupled
Different from mergers and acquisitions
Network interventions may be appropriate
Cummings & Worley, 9e (c) South-Western/Cengage Learning

5. Mergers and Acquisitions
Merger - the integration of two previously independent organizations into a completely new organization
Acquisition - the purchase of one organization by another for integration into the acquiring organization.
Distinct from transorganizational systems, such as alliances and networks, because at least one of the organizations ceases to exist.
Cummings & Worley, 9e (c) South-Western/Cengage Learning

6. Merger and Acquisition Rationale
Diversification
Vertical integration
Gaining access to global markets, technology, or other resources
Achieving operational efficiencies, improved innovation, or resource sharing
Cummings & Worley, 9e (c) South-Western/Cengage Learning

7. Merger and Acquisition Application Stages
Pre-combination Phase
The organization must identify a candidate organization, work with it to gather information about each other, and plan the implementation and integration activities
Legal Combination Phase
The two organizations settle on the terms of the deal, gain approval from regulatory agencies and shareholders, and file appropriate legal documents
Operational Combination Phase
Implementing the operational, technical and cultural integration activities
Cummings & Worley, 9e (c) South-Western/Cengage Learning

8. Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning
Strategic Alliances
When two organizations formally agree to pursue a set of goals
There is sharing of resources, intellectual property, people, capital, technology, capabilities or physical assets
Common alliances are licensing agreements, franchises, long-term contracts, and joint ventures
Cummings & Worley, 9e (c) South-Western/Cengage Learning

9. Alliance Intervention Application Stages
Alliance Strategy Formulation
Clarify the business strategy and why an alliance is needed
Partner Selection
Leverage similarities and differences to create competitive advantage
Alliance Structuring and Start-up
Build and leverage trust in the relationship
Alliance Operation and Adjustment
Cummings & Worley, 9e (c) South-Western/Cengage Learning

10. Network Interventions
Involves three or more companies joined together for a common purpose
Each organization in the network has goals related to the network as well as those focused on self-interest
Characterized by two types of change: creating the initial network (transorganizational development) and managing change within an established network
Cummings & Worley, 9e (c) South-Western/Cengage Learning

11. Application Stages for Transorganizational Development
Identification
Convention
Organization
Evaluation
Who should
belong to the
transorganizational
System (TS)?
Relevant skills,
knowledge,
and resources
Key stakeholders
How to organize
for task
performance?
Communication
Leadership
Policies and
procedures
Should a TS
be created?
Costs and
benefits
Task
perceptions
How is the TS
performing?
Performance
outcomes
Quality of
interaction
Member
satisfaction
Cummings & Worley, 9e (c) South-Western/Cengage Learning

12. Managing Network Change
Create instability in the network
Manage the tipping point
The Law of the Few: Salespeople, Mavens, Connectors
Stickiness
The Power of Context
Rely on self-organization
Cummings & Worley, 9e (c) South-Western/Cengage Learning