The influence of organizational size and change in financial performance on the extent of organizational change

It is argued that organizational size and prior organizational performance affect the rate of future organizational change. Relatively smaller organizations have the incentive to change but do not always have sufficient access to resources. Larger organizations have the resources to change but do not always have the motivation. A study using a random sample of 129 of the 2000 largest public firms in the United States found that relatively smaller organizations can increase their rate of change the most when their performance increases significantly. Larger organizations, on the other hand, tend to increase their rate of change the most when there is a significant reduction in financial performance. Based on these findings, managers of smaller firms should focus more on increasing performance and obtaining resources rather than identifying how to motivate their organization to change, since motivation to improve is generally sufficient. Managers in larger firms may need to focus more on change motivation within their organizations rather than obtaining resources, since resources are generally more plentiful than in smaller organizations. Copyright (C) 2006 John Wiley & Sons, Ltd.