Does organizational politics kill company growth?

Massimo Garbuio (The University of Sydney Business School, The University of Sydney, Sydney, Australia)
Dan Lovallo (The University of Sydney Business School, The University of Sydney, Sydney, Australia)

Review of International Business and Strategy

ISSN: 2059-6014

Publication date: 6 November 2017

Abstract

Purpose

Whether an organization’s political behaviour is positively related to its performance has been a long-standing question. Most studies elaborating on this issue, although rich in detail, primarily have been limited to case studies, apart from a niche set of studies in international business. This study aims to explore this question through a survey study of managers and executives from around the world, across a range of industries.

Design/methodology/approach

The study explores the link between politics, the ability of a firm to speedily reach the market and its growth rate through a study of 382 executives from across the world. It also investigates alternative explanations of slow speed to market due to power centralization, decision-making layers and conflict.

Findings

The results show that politics – the observable but often covert actions through which executives influence internal decisions – has a direct negative effect on a firm’s ability to reach the market first and on its growth rate. That is, not only is politics time-consuming but it may also have a detrimental impact on the selection of the best growth opportunities.

Originality/value

Politics does have a negative impact on growth; it slows down a firm’s growth and its ability to reach the market. This study eliminates possible alternative explanations of a slow pace to market: slower companies are not so because they have too many decision-making layers but because they use consultative processes in resource-allocation decisions, or because of conflict.

Keywords

Acknowledgements

The authors would like to thank Bo Nielsen, Thomas Powell, Hugh Courtney, Richard Dunford, Christos Pitelis, David Bardolet, Co-editor Hussain Rammal and two anonymous reviewers for their useful comments. The authors also thank Gloria Gheno and Amber Dutkiewicz for their excellent research assistance.

Citation

Garbuio, M. and Lovallo, D. (2017), "Does organizational politics kill company growth?", Review of International Business and Strategy, Vol. 27 No. 4, pp. 410-433. https://doi.org/10.1108/RIBS-09-2017-0073

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Publisher

:

Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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