Rates and factors of organizational changes

Abstract

Research summary: Organizational changes are caused by the stochastic conditions of external environment that lead to higher economic risks and uncertainty. Organizational changes are aimed at increasing the efficiency of management, choosing the business strategy and providing sustainable development. The research objective is to estimate the appropriate frequency of organizational changes, and the factors that affect this characteristic. Frequent changes can lead the system to the state of chaos, and the increased resources expenditure will be required to overcome it. The authors define a criterion for assessing the optimal interval between subsequent changes in the socio-economic system. Also, they interpret the notion of a company’s resource barriers and propose their classification. Managerial summary: The authors defined a criterion for assessing the optimal interval between subsequent changes in the socio-economic system: a sum of losses caused by changes and losses of the market share due to the lack of timely changes and the reduction of company’s competitiveness. Organizational changes depend on the dynamics of external environment that defines their volume. The stronger competition in the sector, the larger organizational changes, which require a great number of various resources. The interpretation of the notion of company’s resource barriers is proposed. Three types of resource barriers are identified. An interval between changes should be enlarged to enable managers to search for necessary resources and to provide trust in the interaction with internal and external social organizational environment.