The Relation Between Organizational Changes And Work Motivation Commerce Essay

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The financial crisis the world experienced last years ,had a large effect on many companies worldwide. A lot of companies could not stand up against the crisis and were forced to go bankrupt, while other companies could only survive by looking for new partners. Especially the last year, while the economy is growing stronger again, companies see new chances in the market to strengthen their strategic position.

This has led to an increase in organizational changes like merges and fusions. But with these changes, their also changes a lot for the employees who work at those companies . The top of a company is motivated for a change, but does this also count for its employees? What does a organizational change do with the motivation of such an employee?

Mergers, supply chain integrations and strategic changes within and between different organisations have a lot of impact on different levels in the organisation. For example, a mergers has impact on the structure of the organisation, different companies will be combined whereby some function will be declared redundant and old work procedures must be reversed (Benchekroun, 2003). This uncertainly for the employees influences the work motivation of individual employees as well as the employees in workgroups. This because these changes creates a lot of resistance by the employees, they fear their opportunities of promotion, the changes in their career plans and they are afraid for being dismissed. (Larson, 2001)

These mergers, integrations and other organisational changes possibly affect the work motivation of individual employees and workgroups. The individual employees which encounter an organizational change can be seen as two different types, namely employees of the existing firm and permanent or temporary newcomers which come out of an organizational change. (Rink, Ellemers, 2009).

The work motivation of employees is related to the treatment they get of the company or the management team. If an employee can develop their own competences and has different types of rewards for his input in the company results, he will be more motivated to work hard. There are different types of rewards that stimulate the productivity of an employee for example the high of salary, the freedom to make own choices, hte opportunity to develop themselves by create opportunities of education. (Bénabou,Tirole, 2003)

In the different researches about work motivation and organisational changes the researchers makes no specific link between the different organisational changes and the different motivation theories. That is why this study is about the relationship between the two different aspects. We want to know how the work motivation of the employees affects the way of the success of an organisational change and how managers can motivate the employees during an organisational change.

1.2 General research question

"How is work motivation affected by organizational changes?"

Sub questions

• Which organizational changes are most common and what are their characteristics?

• What are the perspectives of different researches on the existing theories about work motivation?

• What is the relation between organizational changes and work motivation?

Methodology / Research design

The main question will be examined by reviewing existing literature. Through the identification of published and unpublished work from different data sources, like textbooks, journals, thesis's, reports and newspapers. This literature review would gives the basic theoretical framework for further research in organisational changes and work motivation. (Wiley, 2010) When different articles, books and other sources about these subjects are found, deepening in these subjects will following. It is important to evaluate the different articles and filter the most important aspects of each research. This information gives us different views of researchers about work motivation theories and organisational changes. With these opinions and justifications of the researchers, the link between the two different subjects can made and the research question can be answered.

Structure / Bookmark

The paper will start with an introduction of different organizational changes; common organizational change whereupon different researches are about will be explained. That is why there is choose for the organizational changes; mergers and acquisitions, joint-adventures and strategic alliances. There will describe what these changes include and what the consequences are for a company. After this explanation the next chapter is about different work motivation theories and about the intrinsic and extrinsic motivation drivers of these theories……

Organizational changes

Organizational changes

In the past decades different forms of organizational changes have occurred. Like mergers, acquisitions, joint ventures and strategic alliances. One of the possible reasons that organizational changes occur is the globalization. According to the research by Larry D. Qiu (Qiu, 2010) the last two decades globalization has been accelerated. A small conclusion which can be drawn is a growth of those organizational changes thanks to the acceleration of globalization. The organizational changes which are named before, get a further explanation by characteristics and examples. The explanation of the organizational changes are sorted by change intensity for the organization.

Strategic alliances

Following the writing of Dalia Marciukaityte (Marciukaityte, Roskelly & Wang, 2009) firms can take advantage of new business opportunities by applying one of those called organizational changes. With a strategic alliance two or more firms acquire a long-term cooperation while they share knowledge resources and capacity, which makes it possible to achieve competition advantage for each firm (Strategische allianties, n.d.). In the research of Dalia Marciukaityte (Marciukaityte, 2009) they suggest that if a firm faces more uncertainty, a strategic alliance can be very helpful to get beneficial. The same research (Marciukaityte, 2009) show different kind of strategic alliances which are possible to occur, like:

Cross-industry alliance partners

Within-industry alliance partners

Partners of alliances with cross-border activities

Partners of alliances with within-border activities

Partners of international alliances

Partners of domestic alliances

Equity alliance partners

Non-equity alliance partners

Alliance partners with prior relationships

Alliance partners without prior relationships.

A possible and thinkable organizational change after a strategic alliance is acquiring a joint venture. A drawn conclusion in the research of Dalia Marciukaityte (Marciukaityte, 2009) shows that it is more likely to form a joint venture or merge with a firm, after a strategic alliance.

In a research of strategic alliances by financial services firms (Marciukaityte, 2009) a drawn conclusion is that after the alliance announcement the partner firms increase their value. Cross-border strategic alliances increase their value more than within border strategic alliances. But at the long term there is no evidence that value keep to increase after the alliance announcement, so the alliance announcement only effects the short term value of the partner firms which operate in the financial sector.


A joint venture is more like a contractual cooperation whereby the competing firms join their resources and knowledge for example to acquire joint product development (Joint-venture, n.d.) The report of Thomas Jandik (Jandik & Kali, 2009) indicates that joint-ventures are more tighter than strategic alliances. It means when firms acquire a joint-venture that they depend more on each other. A example of a Joint-venture is a cooperation between Nokia and education company Pearson. They developed an interface for mobile devices which deliver English-language learning materials in China. In a research about differential gains within a joint venture Kumar (Kumar, 2010) wrote that the common benefits of a joint venture only constitutes a part of the total benefits which can be made. The total gains which result out of a joint venture rely on the private benefits which a firm makes within a joint venture. A private benefit can be obtained by using the resources and knowledge of the partner firm and use these outside the cooperation.


A research about antecedents of growth through mergers and acquisitions (Huygebaert & Luypaert, 2010) stated that mergers and acquisitions form a way of growth for firms which merge or takeover. According to a report of Ngo Van Long and Neil Vousden (Long & Vousden, 1995) there has been a wave of mergers and takeovers since the trade barriers within Europe have been lowered. That same report gives a differ in characteristics for mergers, mergers to acquire market power, or mergers to acquire cost reduction (Long & Vousden, 1995). There are different kinds of mergers namely, Domestic mergers, Cross-border mergers, horizontal and vertical mergers. The report of Ngo Van Long and Neil Vousden (Long & Vousden, 1995) name the common differences between the domestic and cross-border mergers. Domestic mergers are mergers in one and the same country, which realizes a reduction in marginal costs compared to other market players. A Cross-border merger is a merger of firms which are located in other countries. Some of the consequences of a cross-border merger, is that the question arises of the plant will keep operating. This has major consequences for the stakeholders of a company.

Written in a study about horizontal mergers and their economic effect on customers and suppliers (Bhattacharyya & Nain, 2011) are horizontal mergers, mergers which create synergies and productive efficiencies for the merged or take over firm. These firms create more market power so they can raise or lower their selling prices. When they raise their selling prices the customer will be disadvantaged because they have to pay a higher price. When the merged firms decide to lower their selling prices, the supplier will be forced to lower their selling prices to. The same research (Bhattacharyya & Nain, 2011) tells that antitrust authorities keep an eye on those merged or merging firms because of the risk they can create by monopoly. An example of a horizontal merger is between Daimler-Benz and Chrysler.

An vertical merger is a merger between firms which create different goods or services for one specific finished product (Vertical Mergers, n.d.). This can be like integrating your supplier in your own firm. An example would be General Motors which take over Bridgestone tires. According to the article written by Volker Nocke (Nocke & White, 2010) the authorities of the United States and Europe have written guidelines about non-horizontal mergers to prevent collusions between up-stream or down-stream firms. By undergoing a horizontal merger, competition of the supplier or customer side can be disadvantaged. Some of their market power can be taken away through these mergers.

CSR view of Mergers and Acquisitions

The research of Nick Collett (Collett, 2010) views that the impact on important stakeholders like employees is mostly ignored with mergers and acquisition. This report also reported a ethical framework which looks at ethical considerations in mergers and acquisitions. This framework rates the impact of Mergers and acquisitions on the key stakeholders of the firms and is a good method to forecast the impact of a merger and acquisition. (Collett, 2010) This ethical framework is a good method to forecast the impact of a merger and acquisition.

Differences between the organizational changes highlighted

A conclusion which can be drawn is the fact that mergers and acquisitions have the most impact on a firm as organizational change compared to strategic alliances and joint ventures. As written by Volker Nocke (Nocke & White, 2010) and Bhattacharyya (Bhattacharyya & Nain, 2011) mergers have more stricter guidelines which results in authorities which keep an eye on those changes. A joint venture is a cooperation which results in a short-term cooperation whereby the firms uses each other's knowledge and resources to develop a product or service. A strategic alliance is a strategic cooperation which results in competitive advantage and can help firms which operate in uncertainty (Marciukaityte, 2009). In the next table the different organizational changes will be shown with some characteristics.

Strategic Alliances


Mergers and Acquisition

Cooperation period

Mid-long term

Short term

Long term


Reach strategic and competitive advantage

Develop a new product or service by using each other's knowledge and resources

Take over the competition or a firm in your own supply chain to realise more synergies and productive efficiencies.

Business Change




Most common organizational change

While doing the research about organizational changes it become clear that mergers and acquisitions are the most common researched organizational changes. Because this organizational change probably has the most effect on work motivation of the employees, since the business change will be permanent, this will be the organizational change which will be used for the further research.


In this chapter research has been done about the theories of motivation in existing literature. Firstly a historical view about motivation theories will be given. The most important theories will be mentioned and described in the chronological timeline of the theories. Different views from the old Greek philosophers until the ''golden age'' of work motivation theories will be overviewed.

After the historical overview, the difference between intrinsic and extrinsic motivation will be explained. In the fourth section the self-determination-, goal- and equity theory will be set out. Topic of interest for each theory is the distinction between intrinsic and extrinsic work-motivation.

At the end of the chapter there is an overview of the three described theories and their main intrinsic and extrinsic motivation perspectives.

Historical view of motivation theories

To understand existing theories about work-motivation it's necessary to look at the definition of motivation, given by different researchers. From origin the term motivation derives from the Latin word for movement. Later, different researches gave their own notification at the term motivation. Summarized by Steers (2004), different definitions have common that they are build on terms of energize, channel and human behaviour over time.

Now the term motivation is clear, developments in motivation theories will be defined. The old Greek philosophers where the first who tries to understand human motivation. They saw hedonism as the main concept in behaviour.

A change in thinking about motivation followed at the end of the nineteenth century. Instead of thinking in the area of philosophy, the movement was being made to the science of psychology. Important researchers in that time where James, Freud and McDougall. They saw behaviour as rational. They argued that behaviour is caused from instinct.

In the early 1920s theories that put instinct central, were substituted by models based on drive or reinforcement.

Later different researchers introduces models of operant conditioning. A breakthrough in this period was the work developed by Frederick Taylor. His focus was based on pragmatic problems. He saw inefficiencies of factory production and suggests a new approach to manage workers.

Around the 1950s, some new models of work motivation were developed, called content theories. The significant aspect of these models was to identify factors that have a relationship with motivation.

At the end of the 1960s and the begin of the 1970s a period that is called the ''golden age'' of work motivation theories appeared. Theories that were built in this period focused on explaining the processes underlying work motivation. The main topic of these process theories is to understand the thought processes that employees go through in establishing how to behave at work.

Underlying to the process theory are a series of cognitive theories. One of them is the expectancy theory. Also called the expectancy-valence theory. The first orderly formulation of expectancy theory was defined by Vroom (1964). Vroom believes that a small part of investment of the employee on a little radar in the process can be seen in a greater perception whereby the employee will believe that the work will lead to fulfilment of greater goals such as promotion.

Building on the expectancy theory, a few other cognitive theories about work motivation were developed around the ''golden age'' of work motivation theories. One of those theories is the equity theory, developed by Adams (1963). The equity theory explains a relationship between under- and overpayment and work behaviour.

Another important theory that was developed in the 1960s is the goal-setting theory. Important researchers for this theory were Locke (1968, 1996) and Steers & Porter (1974). The main topic of the goal-setting theory is the relation between goals and work motivation.

In the 1980s there were refinements and extensions made in existing theories that were developed by the ''golden age''. Around the 1990's and more recent years, developments omitted although the work environment made important changes related to the information technology.

Intrinsic versus extrinsic motivation

Motivation can be both, intrinsic or extrinsic. Intrinsic motivation is an activity to satisfy a individual. It comes from the person itself. An employee has a strong intrinsic motivation if there is an identification with the goals, norms and purposes of the firm. In contrast, extrinsic motivation is strongly related to social demands and pressures. Extrinsic motivation can be determined by values. Monetary compensation is one of the most significant extrinsic values that can be added to motivate employees.

Kehr (2004) wrote about implicit and explicit motives in relation to work motivation. Whereby implicit motives connect with basis reactions and needs. These motives are unconscious and spontaneous. In other words, they are natural. In contrast, explicit motives are identical with values. They do not come from the person itself, but from the environment around the person. Explicit motives have the main aim to reach goals.

The relation between both motives is that explicit motives determine the way implicit motives accomplished. And to reach a high level of work motivation it's necessary that both motives are fulfilled.

Self-determination theory

The self-determination theory is one of the cognitive theories. Gagne and Deci (2005) describe that this theory makes distinction between internal versus external motivation by employees. In terms of the self-determination theory respectively autonomous versus controlled motivation. At the opposite there is totally lack of motivation called amotivation.

The authors describe autonomous motivation as doing something because it is interesting. There is totally no pressure to employ work. Rightabout when there are less degrees of self-determination - so a person exercise work because he or she feels pressure - the authors call it controlled motivation. Gagne and Deci (2005) describe four types of autonomous motivation:

external regulation

introjected regulation

identified regulation

integrated regulation

These four types vary in degrees of self-determination whereby external regulation has the least, and integrated regulation has the most degrees of self-determination. In case of external regulation the motivation is totally controlled. Introjected and identified regulation have a few aspects of ego-involvement and reaching goals and values. Examples are: working because it makes me satisfied or because I earn money for it. Integrated regulation is related with autonomous motivation. The difference is that by integrated regulation the motivation is instrumentally important. In the figure below Gagne and Deci (2005) summarized the types of motivation and the situation that there is lack of motivation.

Goal theory

The goal theory in its whole is based on several ideas and developments trough the years, but the first researchers who came with ideas about goals and motivation were Lock and Latham in the year 1968. (Lock, 1991).

Because the theory contains more than one 'way of thinking', it is quite difficult to give one straight clear definition of it, but examining the different developments the goal theory can be described the best as the use of goals to motivate people (Lock, 1991) (Covington, 2000) (Elliot 2006). The goal itself is affected by three features, namely specificity, difficulty and proximity. So an ideal goal contains an ideal mix of these three features, and in that case people will be maximum motivated to reach that goal (Lock & Latham, 2002).

According to Lock (1991) the goal theory has developed trough years into five different directions. These developments all stand on their own, and are the results of many different researches done on motivation and goals. The five directions are:

Validation of the Core; people with goals perform better on tasks than people without goals.

Demonstrations of Generality; this direction contains several studies on proofing the goal theory on different types of field settings (people, tasks, subjects).

Identification of Moderators; the relationship between the motivation on the goals, and the feedback given after the goals are achieved.

Conceptual Elaboration and Refinement; this direction examined the effect of setting a goal on effort, persistence and direction.

Integration with other theories; other motivation theories have been used to explain and complement the goal theory, the two most common theories used (or the two with the most results) are: expectancy theory and social-cognitive theory. (Lock, 1991)

Categorizing the goal theory into intrinsic or extrinsic properties, it can be concluded that the theory mostly activates intrinsic motivation at people. People will believe in themselves in reaching the goal.

On the other hand, when people (in case of the direction of 'identification of moderators') will strive to get good feedback on their goal, it can be discussed whether it still is intrinsic. Also a bonus can be an extrinsic motivator, to reach this goal. In this vision the theory can also be explained as partial extrinsic.

Equity theory

The equity theory is a work motivation theory about satisfaction in interpersonal relationships in companies and other cooperation's. It was found in 1963 by John Adams, a workplace/ behavioral psychologist. The basis of his theory is that different employees in a company try to find equity in the inputs that they give and the outputs that they receive from their job. The idea of the theory is that different employees in one organization stay motivated for work when they are treated fair by the organization.

The equity theory states (Adams, 1965) that employees that feel under-rewarded or over-rewarded, will feel distress to this fact. The employee that feels under-rewarded feels unfair treated and angry, he wants more input from the company. The employee that feels over-rewarded feels shame and guilt for the fact that he's been paid too much for his output to the company. A result of this distress can be that the employee feels hostile to the organization and his colleagues, and in the end will not perform well on his job. In the most cases equity theory is about wage, but subtle variables also count. Also the feeling of recognition for the job and the output from the employee, as also thanking the employee for his effort, are factors that have impact on the satisfaction of the employee and by this may cause that the employee feels worthwhile and have more output for the company (Guerrero et al., 2007).

The definition of equity is that the employee feels satisfaction if the input he gives to the organization and the output he receives is in balance. This can be measured with a ratio between the inputs and outputs of the certain job. The employee will compare his ratio, to the ratio of his colleagues. If the ratio's are equal, the employee will be satisfied. Though, an manager can have more inputs to his job, so he will receive more outputs. If this will be measured in the equity ratio, it still can be equal to the ratio of a employee in a less important function and by that both employees still feel satisfaction and stay motivated for work.

Inputs can be seen as the part of the employee that he puts in the job. Practically there can be thought about time, effort, loyalty, hard work, skill, experience, flexibility, tolerance, etcetera.

The outputs can be seen as the reward the employee receives for the input he gets for his input. Practically this means thing like salary, job security, reputation, recognition, employee benefit, responsibility, esteem, sense of achievement, etcetera.

Assumptions made when looking to this theory:

An employee will always try to maximize his outputs.

Employees will compare their ratio to that of their colleagues and determine what their input/output should be.

Employees that experience inequity in their input/output will try to change this inequity and change their input of output to the organization, or they will leave the organization.

The basis of the equity theory is about extrinsic output to the employee. This will be the major factor that influences his motivation and drives this theory. Otherwise there can also be intrinsic motivators like reputation, recognition, thanks and sense of achievement (Guerrero et al., 2007). By assuming this theory the factors of these motivators will be lower than their extrinsic counterparts.

Summary of motivation theories

In this section a schematic summary is made about the theories mentioned before. There is made a distinction between intrinsic and extrinsic motives.




Self Determination

Personal interest


A. External regulation: The manager is putting pressure

B. Introjected regulation: The work gives me satisfaction

C. Identified regulation: I want to reach a higher function

D. Integrated regulation: The work I employ is a part of my life

Goal Theory

The use reaching goals to motivate employees

Bonus can be used to motivate employees

Positive feedback from managers can be used to motivate employees

Equity theory

Sense of achievement





Job security

Job benefits

Other materialistic rewards gained from the job