The effects of informal groups on organizational - journal ...

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ijcrb.webs.comINTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSAPRIL 2012VOL 3, NO 121. Introduction:Rapid developments <strong>of</strong> technology and dynamic environment have increased the role <strong>of</strong>human resource as a capital for organizations’ competitive advantage. Employees andorganizations establish communications with each other that are not formed or designedby <strong>of</strong>ficial systems to various causes such as common interests and goals. <strong>The</strong>se kinds<strong>of</strong> communications are self-created and independent <strong>of</strong> formal channel.Organizations create a formal net <strong>of</strong> communication which determines the line <strong>of</strong>authority and activities to achieve organizational goals. According to Krackhardt andHanson (1993) formal <strong>groups</strong> have public identity so are recognized by management.Previous surveys mentioned positive <strong>effects</strong> <strong>of</strong> group-building and team working onorganizations. For instance, Driskell and Salas (1992) argued <strong>groups</strong> can solve problemfaster and improve efficiency. <strong>The</strong>refore, the attention <strong>of</strong> management to formal <strong>groups</strong>has increased radically. Controversially, <strong>informal</strong> <strong>groups</strong> form within formal systemsand rising spontaneously as people work together. Informal <strong>groups</strong> are built on the base<strong>of</strong> common interests and friendship without management control. Although <strong>informal</strong><strong>groups</strong> play important roles in organizations, managers sometimes fail to realize thatthere are <strong>of</strong>ten <strong>informal</strong> group pressures within every organization which influence anddetermine employees’ behavior.Informal <strong>groups</strong> formulate implied codes <strong>of</strong> moral rules and establish behavioralstandards un<strong>of</strong>ficially in organizations. <strong>The</strong> approaches toward <strong>informal</strong> <strong>groups</strong> arevaried in the different level <strong>of</strong> analysis. At the individual level, based on social controltheory, group norms control people by creating group cohesiveness so competencyperformancerelationship would weaken. On the contrary, at the group level analysis,synergistic interaction among group’s members creates high level <strong>of</strong> performance(Barrick et al, 1998). By the way, the formation <strong>of</strong> <strong>informal</strong> <strong>groups</strong> is inevitable and itwould be difficult for organization to forbid <strong>informal</strong> working relationships to arise.Gulati and Puranam stated some external conditions which are largely out <strong>of</strong> controlinfluence the relationship between formal and <strong>informal</strong> <strong>groups</strong> into an organization.Although considerable research has provided strong support on the linkage betweenorganizational performance and formal group, there are notable gaps in the literature onthe empirical examination <strong>of</strong> whether or not <strong>informal</strong> <strong>groups</strong> would affectorganizational performance positively, especially in developing countries. Since cultureis the base <strong>of</strong> group’s behavior and form the way that they interact with each other andorganization (Willcoxson & Millett, 2000), the impacts <strong>of</strong> group can be various fromcountry to another one so more research on <strong>groups</strong> in developing countries seemsessential to reach a better understanding <strong>of</strong> their <strong>effects</strong>.<strong>The</strong> major aim <strong>of</strong> this paper is to explore the impact <strong>of</strong> <strong>informal</strong> <strong>groups</strong> onorganizational performance. To reach this purpose, the study was divided in three steps.Firstly, the <strong>effects</strong> <strong>of</strong> <strong>informal</strong> <strong>groups</strong> on organizations have been drawn by literaturereview and the accuracy <strong>of</strong> these <strong>effects</strong> was examined. Secondly, according to balancedscorecard model <strong>of</strong> Kaplan and Norton (1996), the indicators <strong>of</strong> organizationalperformance were chosen. Finally the impacts <strong>of</strong> <strong>informal</strong> group’s <strong>effects</strong> on four-sidedprism <strong>of</strong> BSC model were investigated by questionnaire in a sample <strong>of</strong> IT industry inIran.COPY RIGHT © 2012 Institute <strong>of</strong> Interdisciplinary Business Research 365
ijcrb.webs.comINTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSAPRIL 2012VOL 3, NO 122. Literature review:2.1. Informal group and organizational performance:Blau and Scott (1962) declared that employees usually do not accomplish their duties byall <strong>of</strong> their power because formal authority <strong>of</strong>ten cannot motivate employeescompletely. Additionally, formal authority has forced employees to show certainbehaviors standardized by regulations so they contract their efforts and avoid beinginnovative and creative. On the other hand, <strong>informal</strong> organizations are the interlockingsocial structure created to answer employees’ social and psychological needs becausepeople need to feel they are part <strong>of</strong> something.Organizational sociologists count several reasons why <strong>informal</strong> <strong>groups</strong> form. Mongeand Eisenberg (1987) discussed <strong>informal</strong> <strong>groups</strong> pop out when people try to express<strong>effects</strong>, influence attempt, and exchange information or services. Some researchers haveidentified some psychological reasons for the existence <strong>of</strong> <strong>informal</strong> networks such asaffiliation needs, the sense <strong>of</strong> identity, social reality, and defense mechanism (Baker,1981; Han, 1983). Waldstrom (2001) have classified the reasons why employees engagein <strong>informal</strong> <strong>groups</strong> into three categories: (1) technical reasons related to work issues, (2)political reasons related to individual and group goals, and (3) cultural approaches. Inaddition, Crampton and Hodge (1998) indicated that <strong>informal</strong> structures can satisfy theneed <strong>of</strong> knowing by their faster and less cumbersome communication network. Someothers stated that people seek benefits so individuals might join an <strong>informal</strong> group to useits power to bias colleagues or superiors in order to obtain an advantage (Waldstrom,2001).Overriding factor that creates an <strong>informal</strong> group is friendship or common interest butthe role <strong>of</strong> members is not the same into an <strong>informal</strong> network. Stephenson (1998)categorized three kinds <strong>of</strong> roles in <strong>groups</strong> by focusing on the flow <strong>of</strong> information in thegroup: (1) Hubs; people who are most connected with others, (2) Gatekeepers; transportinformation between hubs, and (3) Pulse takers; they influence how other membersperceive the information. Moreover, she believes that <strong>informal</strong> networks are the initialstage <strong>of</strong> organizational structure and have hierarchical development which set its ownorganizing principles. This kind <strong>of</strong> classification and argument demonstrate that theimportance and effect <strong>of</strong> members are different so the concept <strong>of</strong> <strong>informal</strong> leaders wascreated. Although, Informal leaders have not legislative power <strong>of</strong> hiring and firingemployees, they are followed by members because <strong>of</strong> their inspiring and moral <strong>effects</strong>.Some studies reveal that <strong>informal</strong> leaders have a strong influence on group operationsand outcomes (Pescosolido, 2001) so it is not questionable to consider them as a source<strong>of</strong> power beside formal authority. <strong>The</strong>refore, there are controversy surroundingswhether <strong>informal</strong> <strong>groups</strong> are positive entities in organizations.<strong>The</strong>re is a plethora <strong>of</strong> debates demonstrating <strong>groups</strong> have a strong effect onorganizational effectiveness by influencing on both employees and superiors’ functions.First <strong>of</strong> all, according to the social identity theory, employees would be satisfied by thesense <strong>of</strong> belonging which stimulates the process <strong>of</strong> motivation and improve self-esteem,resulting in high level <strong>of</strong> performance (Gary, 1996; Smith, 2008). Secondly, formalcommunication arranged by management are likely unidirectional and underprivilegedwhile <strong>informal</strong> <strong>groups</strong> use <strong>informal</strong> communication net that is spontaneous, interactive, andmore effective because <strong>of</strong> the lack <strong>of</strong> pre-specification (Ouchi, 1980; Kraut et al, 2002).Spontaneously, group awareness increases when the sharing <strong>of</strong> information increases soCOPY RIGHT © 2012 Institute <strong>of</strong> Interdisciplinary Business Research 366
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