24 I HER E C ') MES EV E RY BO DY deep source: newly capable groups are assembling, and they are working without the managerial imperative and outside the previous strictures that bounded their effectiveness. These changes will transform the world everywhere groups of people come together to accomplish something, which is to sayev­ erywhere. SHARING ANCHORS COMMUNITY Groups of people are complex, in ways that make those groups hardtoform and hard to sustain; much of the shape of traditional institutions is a response to those difficulties. New social tools relieve some of those burdens, allowingfor new kinds of group-jorming, like using simple sharing to anchor the creation of newgroups. I m agin e you are standing in line with thirty-five other people, and to pass the time, the guy in front of you pro­ poses a wager. He 's willing to bet fifty dollars that rio two people in line share a birthday. Would you take that bet? If you're like most people. you wouldn't. With thirty-six people and 365 possible birthdays, it seems like there would only be about a one-in-ten chance of a match , leaving you a 90 percent chance of losing fifty dollars. In fact, you should take the bet, since you would have better than an 80 percent chance of winning fifty dollars. This is called the Birthday Paradox (though it's not really a paradox, just a 26 I HER E C O M€5 E V Er, , 6 0 D Y surprise) , and it illustrate s som e of the complexities involved in groups. Most people get the odds of a birthday match wrong for two reasons . First, in situations involving many people , they think about themselves rather than the group. If the guy in line had asked , "Wh at are the odds that someone in this line shares your birthday?" that would indeed have been about a one in ten chance , a distinctly bad bet. But in a group, other people 's relationship to you isn't all that matters; instead of counting people , you need to count links between people. If you're comparing your birthday with one other person's , then there's only one comparison, which is to say only one chance in 365 of a match. If you're comparing birthdays in a group with two other people-you, Alice, and Bob, say-you might think you'd have two chances in 365, but you'd be wrong. There are three comparisons: your birthday with Alice's , yours with Bob's, and Alice's with Bob's. With four people , there are six such comparisons, half of which don't involve you at all; with five, there are ten, and so on. By the time you are at thirty-six people , there are more than six hundred pairs of birthdays. Everyone understands that the chance of any two people in a group sharing a birthday is low; what they miss is that a count of "any two people" rises much faster than the number of people themselves. This is the engine of the Birthday Paradox. This rapidly rising number of pairs is true of any collec­ tion of things: if .

1. 24 I HER E C ') MES EV E RY BO DY
deep source: newly capable groups are assembling, and they
are working without the managerial imperative and outside
the previous strictures that bounded their effectiveness. These
changes will transform the world everywhere groups of people
come together to accomplish something, which is to sayev-
erywhere.
SHARING ANCHORS COMMUNITY
Groups of people are complex, in ways that make those
groups hardtoform and hard to sustain; much of the shape
of traditional institutions is a response to those difficulties.
New social tools relieve some of those burdens, allowingfor
new kinds of group-jorming, like using simple sharing to
anchor the creation of newgroups.
I m agin e you are standing in line with thirty-five other people,
and to pass the time, the guy in front of you pro-
poses a wager. He 's willing to bet fifty dollars that rio two

2. people in line share a birthday. Would you take that bet?
If you're like most people. you wouldn't. With thirty-six
people and 365 possible birthdays, it seems like there would
only be about a one-in-ten chance of a match , leaving you
a 90 percent chance of losing fifty dollars. In fact, you
should take the bet, since you would have better than an 80
percent chance of winning fifty dollars. This is called the
Birthday Paradox (though it's not really a paradox, just a
26 I HER E C O M€5 E V Er, , 6 0 D Y
surprise) , and it illustrate s som e of the complexities
involved in groups.
Most people get the odds of a birthday match wrong for
two reasons . First, in situations involving many people , they
think about themselves rather than the group. If the guy in
line had asked , "Wh at are the odds that someone in this line
shares your birthday?" that would indeed have been about a
one in ten chance , a distinctly bad bet. But in a group, other
people 's relationship to you isn't all that matters; instead of

3. counting people , you need to count links between people. If
you're comparing your birthday with one other person's , then
there's only one comparison, which is to say only one chance
in 365 of a match. If you're comparing birthdays in a group
with two other people-you, Alice, and Bob, say-you might
think you'd have two chances in 365, but you'd be wrong.
There are three comparisons: your birthday with Alice's , yours
with Bob's, and Alice's with Bob's. With four people , there are
six such comparisons, half of which don't involve you at all;
with five, there are ten, and so on. By the time you are at
thirty-six people , there are more than six hundred pairs of
birthdays. Everyone understands that the chance of any two
people in a group sharing a birthday is low; what they miss is
that a count of "any two people" rises much faster than the
number of people themselves. This is the engine of the
Birthday Paradox.
This rapidly rising number of pairs is true of any collec-
tion of things: if you have a bunch of marbles, the number of
possible pairs will be set by the same math. The growing com-

4. plexity gets much more wretched in social settings, however;
marbles don't have opinions, but people do. As a group grows
5 H ~ R I NG ~N CHO RS C O M M U NI TY I 27
to even modest size, getting universal agreem ent becomes first
difficult, then impossible. This quandary can be illustrated with
a simple scenario. You and a friend want to go out to a mo vie.
Before you buy the tickets, you'll have to factor in your various
preferences: comedy or romance, early show or late, near work
or near home. All ofthese will have some effect on your mutual
decision, but with just two of you, getting to some acceptable
outcome is fairly easy.
Now imagine that you and three friends decide to go out to
a movie. This is harder, because the group's preferences are
less likely to overlap neatly. Two of you love action films , two
hate them; one wants the early show, three the late one, and so
on. With two people, you have only one agreement to make.
With four, as Birthday Paradox math tells us , you need six such
agreements : Other things being equal, coordinating anything

5. with a group of four is six times as hard as with two people,
~
Figure 2-1: Three clusters, with all conn ection s drawn. The sm
all cluster
has 5 members and IO connections; the middle one has IO
members and
45 connection s; and the large one has IS and IOS . A group's
compl exity
grows faster than its size .
28 I H ER E C OM E S EVER YBOD Y
and the effect gets considerably worse as the group grows even
moderately large. By the time you want to go to a movie in a
group often, waiting for forty-five separate agreements is pretty
much a lost cause. You could sit around discussing the possible
choices all day, with no guarantee you'll get to an agreement at
all, much less in time for the movie. Instead you'll vote or draw
straws, or someone will just decide to go to a particular movie
and invite everyone else along, without trying to take all pos-
sible preferences into account. These difficulties have nothing
to do with friendship or movie-going specifically; they are
responses to the grim logic of group complexity.

6. This complexity means, in the words of the physicist Philip
Anderson, that "m ore is different." Writing in Science maga-
zine in 1972, Anderson noted that aggregations of anything
from atoms to people exhibit complex behavior that cannot be
predicted by observing the component parts . Chemistry isn't
just applied physics-you cannot understand all the proper-
ties of water from studying its constituent atoms in isolation.
This pattern of aggregates exhibiting novel properties is true
of people as well. Sociology is not just psychology applied to
groups; individuals in group settings exhibit behaviors that no
one could predict by studying single minds. No one has ever
been bashful or extroverted while sitting alone in their room ,
no one can be a social climber or a man of the people without
reference to society, and these characteristics exist because
groups are not just simple aggregations of individuals.
As groups grow, it becomes impossible for everyone to
interact directly with everyone else. If maintaining a connec-
tion between two people takes any effort at all, at some size

7. that effort becomes unsustainable. You can see this phenom-
S H II R I N G IINCHO R S CO M MUN I TY I 29
enon even in simple situations , such as when people clink
glasses during a toast. In a small group , everyone can clink
with everyone else; in a larger group , people touch glasses
only with those near them. Similarly, as Fred Brooks noted in
his book The Mythical Man-Month, adding more employees to
a late project tends to make it later, because the new workers
increase the costs of coordinating the group. Because this con-
straint is so basic, and because the problem can never be
solved, only managed, every large group has to grapple with it
somehow. For all of modem life, the basic solution has been
to gather people together into organizations.
We use the word "organization" to mean both the state of
being organized and the groups that do the organizing-"Our
organization organizes the annual conference. " We use one
word for both because , at a certain scale, we haven't been able
to get organization without organizations; the former seems

8. to imply the latter. The typical organization is hierarchical,
with workers answering to a manager, and that manager an-
swering to a still-higher manager, and so on . The value of such
hierarchies is obvious-it vastly simplifies communication
among the employees. New employees need only one connec-
tion , to the ir boss, to get started. That's much simpler than
trying to have everyone talk to everyone.
Running an organization is difficult in and of itself, no
matter what its goals. Every transaction it undertakes-every
contract , every agreement, every meeting-requires it to ex-
pend some limited resource : time , attention, or money.
Because of these tran saction costs , some sources of value are
too costly to take advantage of. As a result, no institution can
put all its energies into pursuing its mission; it must expend
30 I HERE COMES EVERYBODY
considerable effort on maintaining discipline and structure,
simply to keep itselfviable. Self-preservation of the institution

9. becomes job number one, while its stated goal is relegated to
number two or lower, no matter what the mission statement
says. The problems inherent in managing these transaction
costs are one of the basic constraints shaping institutions of
all kinds.
This ability ofthe traditional management structure to sim-
plify coordination helps answer one of the most famous ques-
tions in all of economics: If markets are such a good idea, why
do we have organizations at all? Why can't all exchanges of
value happen in the market? This question originally was posed
by Ronald Coase in 1937 in his famous paper "The Nature of
the Firm," wherein he also offered the first coherent explana-
tion of the value of hierarchical organization. Coase realized
that
workers could simply contract with one another, selling their
labor, and buying the labor of others in tum, in a market, with-
out needing any managerial oversight. However, a completely
open market for labor, reasoned Coase, would underperform
labor in firms because of the transaction costs, and in particular

10. the costs of discovering the options and making and enforcing
agreements among the participating parties. The more people
are involved in a given task, the more potential agreements
need to be negotiated to do anything, and the greater the trans-
action costs, as in the movie example above.
A firm is successful when the costs of directing employee
effort are lower than the potential gain from directing. It's
tempting to assume that central control is better than markets
for arranging all sorts of group effort. (Indeed, during the
twentieth century much of the world lived under governments
S H A R I N G ANCHORS C OMMUNIT Y I 31
that made that assumption.) But there is a strong limiting fac-
tor to this directed management, and that is the cost of man-
agement itself. Richard Hackman, a Harvard professor of
psychology, has studied the size and effectiveness of work
groups in Leading Teams. Hackman tells a story about a man
who ran a nonprofit whose board of directors numbered forty.
When asked what he thought such a large board could accom-
plish, he replied, "Noth in g," in a way that implied he liked it

11. that way. Because of managerial overhead, large groups can
get bogged down , and whenever transaction costs become too
expensive to manage within a single organization, markets
outperform firms (and central management generally) .
Activities whose costs are higher than the potential value
for both firms and markets simply don't happen. Here is the
institutional dilemma again: .becau se the minimum costs of
being an organization in the first place are relatively high,
certain activities may have some value but not enough to make
them worth pursuing in any organized way. New social tools
are altering this equation by lowering the costs of coordinating
group action . The easiest place to see this change is in activi-
ties that are too difficult to be pursued with traditional man-
agement but that have become possible with new forms
of coordination.
How Did All Those Pictures Get There?
On the last Saturday in June, Coney Island kicks off the sum-
mer with the Mermaid Parade , a sort of hometown procession

12. for New York City hipsters. Hundreds of people show up to
32 I HERE COME S E VERYBOD Y
march around Brooklyn's famously run-down amusement
park in costumes that are equal parts extravagant and weird-
a giant red octopus puppet, a flotilla of hula-hooping mer-
maids, a marcher sporting a bikini top made of two skulls.
Thousands tum out to watch and photograph the festivities,
taking pictures ranging from a couple of snapshots to dozens
of high-quality photos.
A handful of these pictures end up in local newspapers, but
for most of the history of the Mermaid Parade, most pictures
were seen only by the people who took them and a few of their
friends. The sponsor of the parade didn't provide any way for
the
photographers to aggregate or share their photos, and the pho-
tographers themselves didn't spontaneously organize to do so.
That is the normal state of affairs. Given the complexities of
group effort, hundreds of people don't spontaneously do much

13. of any consequence, and it wouldn't have made much sense for
anyone to expend the effort to identify and coordinate the pho-
tographers from the outside. A couple of years ago, however,
the
normal state of affairs stopped operating.
In 2005, for the first time, a hundred or so of the attendees
pooled thousands of their Mermaid Parade photos and made
them publicly available online. The photos came from all sorts
of photographers, from amateurs with camera-phones to pros
with telephoto lenses. The group was mainly populated by
casual contributors-most people uploaded fewer than a
dozen photos-but a handful of dedicated contributors shared
more than a hundred pictures each, and one user, going by
the online name czarina, shared more than two hundred pho-
tos on her own. The group pooled these photos by uploading
them to a service called Flickr, giving each of the photos a free-
3HARING ANCH OR S CO M MU N I TY I 33
form label called a tag. As a result, anyone can go to Flickr

14. today, search for the tag "mermaidparade," and see the photos.
This is a simple chain of events : people take pictures, people
share pictures, you see pictures. It's so simple, in fact, that it's
easy to overlook the substantial effort involved behind the
scenes.
Flickr is the source of the sharing, but here's what Flickr
did not do to get the sharing to happen: it didn't identify the
Mermaid Parade as an interesting event, nor did it coordinate
parade photographers or identify parade photographs. What it
did instead was to let the users label (or tag) their photos as a
way of arranging them. When two or more users adopted the
same tag, those photos were automatically linked. The users
were linked as well; the shared tag became a potential stepping-
stone from one user to another, adding a social dimension to
the simple act ofviewing. The distinction between Flickr coor-
dinating users versus helping them coordinate themselves
seems minor, but it is in fact vital, as it is the only way Flickr
can bear the costs involved. Consider what it would have taken

15. for Flickr to organize hundreds of amateur mermaid photog-
raphers. Someone at Flickr HQ would have had to know about
an obscure parade on the other side of the country. (Flickr is
based in California .) They would have had to propose a tag for
the group to use in order to assemble the uploaded photos.
Finally, they would have had to communicate the chosen tag
to everyone going to the parade.
This last step is especially hard. When you are trying to
address a diffuse group , you are locked into the dilemma that
all advertisers face: how do you reach the people you want,
without having to broadcast your message to everybody?
34 I H E RE CO ME S E VE R Y BOD Y
People in the category "Potential photographer of the Mermaid
Parade" aren't easy to find. Flickr couldn't have known in ad-
vance who would go to the parade. Instead, they would have
to send messages out to many more people than would actu-
ally attend, in hopes of reaching the right audience, advertis-
ing to photographers , hipsters, New Yorkers, and so on, in

16. hope of getting the tiny fraction of those groups who would
actually go. Most such ads would be seen by people who
weren't going to the parade, while most of the people who
were going wouldn't see (or pay attention to) the ads. Given
those obstacles, "no business in the world would take on the
job. The profit motive is little help ; no one could sell enough
pictures, even the skull-bikini ones, to be able to pay the pho-
tographers, much less leave any profit afterward. Likewise, no
nonprofit or government agency would touch the problem;
even the porkiest of pork-barrel projects isn't going to cover
publicity for hula-hooping mermaids. The gap between effort
and payoff is too large for any institution to span .
Yet there the photos are. Without spending any serious
effort on any individual set of photos, and without doing any-
thing to coordinate or even identify groups of photographers ,
Flickr has provided a platform for the users to aggregate the
photos themselves.
The difference between the value of the photos and the

17. cost of aggregation is a general one. Flickr isn't just for photos
of dancing mermaids , family reunions , and the effects of that
third ma rgarita ; it also hosts photos of broad public interest.
Flickr provided some of the first photos of the London
Transport bombings in 2005, including some taken with
camera-phones by evacuees in the Underground's tunnels.
SHARING A N C H O R S C OM M U NI T Y I 35
Flickr beat many traditional news outlets by providing these
photos, because there were few photojournalists in the af-
fected parts of the transport network (three separate trains on
the Underground , and a bu s), but many people near those
parts of the transport system had camera-phones that could
e-m ail the pictures in. Having cameras in the hands of ama-
teurs on the scene was better than having cameras in the
hands of professionals who had to travel.
The photos that showed up after the bombings weren't just
amateur replacements for traditional photojournalism; people
did more than just provide evidence of the destruction
and its aftermath. They photographed official notices ("All

18. Underground services are suspended"), notes posted in
schools ("Please do not inform children of the explosions"),
messages of support from the rest of the world ("We love you
London"), and within a day of the bombings, expressions of
defiance addressed to the terrorists ("We are not afraid" and
"You will fail"). Not only did Flickr host all of these images,
they made them available for reuse, and bloggers writing
about the bombings were able to use the Flickr photos almost
immediately, creating a kind of symbiotic relationship among
various social tools. The images also garnered comments on
the Flickr site. A user going by Happy Dave posted an image
reading "I'm OK," meant to alert his friends who had sub-
scribed to his images on Flickr; he received dozens of com-
ments from well-wishers in the comments. The "Do not
inform the children" image generated a conversation about
how to talk to kids about terrorism . The basic capabilities of
tools like Flickr reverse the old order of group activity, trans-
forming "gather, then share " into "share , then gather." People

19. 36 I ~ERE COM E S EVERYBODY
were able to connect after discovering one another through
their photos.
A similar change in the broadcasting of evidence happened
after the awful destruction caused by the Indian Ocean tsu-
nami at the end of 2004. Within hours of the tsunami dozens
of photos were available on the Web showing various affected
places , and within days there were hundreds. As with the
London bombings, there was no way to get photojournalists
on the scene instantly, but here the problem was not just the
speed ofresponse but the spread of the damage, which affected
thirteen countries. And as with the London bombings, the
photos weren't used just for evidence; people began uploading
photos of missing loved ones , and various weblogs began to
syndicate these photos to aid in relocation. The most visited
photo tagged "tsun am i" is a picture of a little boy, age two at
the time he went missing. The picture originally went up with

20. contact information to aid in the search, but as time went on,
it turned into an ongoing memorial; viewers posted hundreds
of comments of support and prayers under the photo, and
many commenters came back months later to check in and
conversed with one another in the comments. When the boy's
body was finally recovered and identified, months later, several
people posted the sad news on Flickr, and the community that
had formed around the photo posted expressions of grief and
condolences for the family, then dissolved.
Photo sharing also helped provide the world with docu-
mentation ofthe 2006 military coup in Thailand. Immediately
after the coup the military placed restrictions on reporting by
the media, but it didn 't (and probably couldn't) place similar
restrictions on the whole populace. As a result, many of the
S~AR ING A NC H O RS C OMMUNIT Y I 3 7
earliest photos of tanks in front of Government House, the
parliament building, came from individuals posting images
from ordinary digital cameras, and they were discoverable by

21. their tags (Bangkok, Thailand, Military, Coup). One of those
users was Alisara Chirapongse , then a fashion-obsessed col-
lege student, who blogs under the name gnarlykitty, who posted
the coup photos to her weblog, along with running commen-
tary on the cause and immediate aftermath of the anny over-
throwing Thaksin Shinawatra, then prime minister. As the
army announced that it wanted to take control of communica-
tions and ban public political speech, her posts took on a new
urgency:
One new little change that this law brought us is the
whole new level of censorship. No political gather-
ing , no discussing politics , and of course no voicing
your opinions whatsoever about the whole mumbo
ju m bo coup. (Oops did I just do that?)
Alisara posted links to Wikipedia, the collaborative1y produced
encyclopedia, which was acting as a clearinghouse for breaking
news of the coup (as is now usual). She also pointed her read-
ers to a petition to restore freedom of speech and to a proposed

22. demonstration, which she later attended and photographed.
Then , as the initial disorientation of the coup gave way to
the new normal, Chirapongse went back to her life as a
fashion-obsessed student. As she put it,
This blog is my personal blog where I usuall y write
things concerning my life and things I like. Since my
38 I HERE CO MES E V E R Y BO D Y
life is lived here in Bangkok Thailand, it should come
as no surprise to anyone that I sometime blog about
it. So blogging about the Coup is merely blogging
about something that's currently happening in
my country.
The rest of that post was about a night she spent at a club, and
the post after that was about how much she likes her new
camera-phone. She wasn't a full-time journalist, she was a
citizen with a camera and a weblog, but she had participated
in a matter of global significance at exactly the time when the

23. traditional media were being silenced.
The content in these examples is quite varied-the gentle
ridiculousness of the Mermaid Parade and the awful serious-
ness of the London bombings; the man-made intervention of
a military coup and the natural destruction of the tsunami.
The common thread is the complexity of gathering the photos.
The groups of photographers were all latent groups, which is
to say groups that existed only in potentia , and too much effort
would have been required to turn those latent groups into real
ones by conventional means . The mermaid photos were too
unimportant to be worth any institutional effort. The London
bombing photos were taken by the people on the scene. The
tsunami's destruction was spread out over tens of thousands
of miles of coastland, and the uses of photos included finding
missing persons, something outside the purview of typical
news gathering. During the Thai coup the military rulers were
able to place restrictions on organized media, giving amateur
photographers an advantage in providing views oftanks in the

24. streets. In each of those cases the cost of coordinating the
SHARI N G AN CH OR S CO M M U N I T Y I 39
potential photographers would have defeated any institution
wanting to put photos together quickly and make them avail-
able globally.
The task of aggregating and making photos available is
nothing like, say, the task of putting a man on the moon. Prior
to services like Flickr, what kept photo-sharing from happen-
ing wasn't the absolute difficulty but the relative difficulty.
There is obviously some value to both photographers and
viewers in having photos available, but in many cases that
value never exceeded the threshold of cost created by the in-
stitutional dilemma. Flickr escaped those problems, not by
increasing its managerial oversight over photographers but by
abandoning any hope of such oversight in the first place, in-
stead putting in place tools for the self-synchronization of oth -
erwise latent groups.
Making the Trains Run on Time

25. The structure of traditional managerial oversight is often
illustrated by an "org chart," a diagram of the official organi-
zational hierarchy. This chart is the simplest possible view of
an organization's reporting structure. It is usually drawn as an
inverted tree of boxes and arrows. The box at the top repre-
sents the head of the organization; the lines drawn downward
from that box connect her to various officers and vice presi-
dents through the layers of management, until, at the bottom,
there are the rank and file, represented by boxes with lines
connecting upward but not downward. The org chart diagrams
both responsibility and channels of communication-when
40 I H E RE CO H E S E VE R Y B O D Y
two boxes are connected on such a chart, the upper box is the
boss ; communication from the CEO flows down through the
layers of management, while information from the workers
flows up in the same way. Compared to the chaos of the mar-
ket, the org chart draws clear and obvious lines of responsibil-

26. ity, and it is that very clarity that allows the firm to outperform
a pure market for work.
The org chart is like institutional wallpaper-ubiquitous
and not terribly dramatic. It's funny to think of it as a specific
invention, but its existence and form owe quite a lot to the en-
vironment in which it was first widely used-railroad manage-
ment in the 1800s. The pioneering managerial methods were
meticulously documented by Alfred Chandler in his book The
Visible Hand. The principal problem in running a railroad was
arranging for eastbound and westbound trains to share the
same track , because it was prohibitively expensive to lay more
than one track for a particular line . By 1840 Western Railroad,
a pioneer in building longer rail lines, had to deal with a dozen
trains crossing in opposite directions every day. That situation
created obvious safety risks , risks that were not long in moving
from the theoretical to the real: on October 5, 1841, two pas-
senger trains collided head on, with two fatalities and seventeen
injured. This accident alarmed both the public and Congress

27. and forced the railroads to rethink their management.
For the next fifteen years railroads invested in better over-
sight. As a result, their safety record improved, but their profit-
ability decayed. A big firm like Western could haul more people
and cargo to more places than could a smaller railroad, but the
cost of managing the enterprise had risen much faster; Western
was actually making less money per mile of track than its
S HA R ING ANCHORS COHMUNITY I 41
smaller competitors. David McCallum, a railroad superinten-
dent for the New York & Erie Railroad, proposed both an expla-
nation and a solution for this decayed profitability. As he put it
in his Superintendent's Report of 1855:
A Superintendent of a road fifty miles in length can
give its business his personal attention, and may be
constantly engaged in the direction of its details ...
any system however imperfect, may under such cir-
cumstances , prove comparatively successful.
In the govemment of a road five hundred miles

28. in length, a very different state exists. Any system
which might be applicable to the business and extent
of a short road , would be found entirely inadequate
to the wants of a long one.
More is different: a small railroad could function with ad
hoc management, because it had so few emplo yees and so few
passing trains, but as the scale rose, the management prob-
lems rose faster. This is where the institutional dilemma
meets Birthday Paradox math : not only does managing re-
sources take resources. but management challenges grow
faster than organizational size.
McCallum's proposed solution to this dilemma included
making a clear delineation of the responsibility for different
segments of track. Central management would oversee re-
gional divisions and supervise the trains passing through their
region. McCallum introduced several formal innovations to
New York & Erie: strong hierarchical oversight, including an
explicitly divisional organization of the railroad with different

29. 42 I HERE C OM ES EVERYBO D Y
superintendents responsible for different parts of the railroad.
He diagrammed this form of organization with what may have
been the first commercial org chart in history. This method
was widely copied by other railroads, then by other kinds of
firms .
In addition to revolutionizing management structure,
McCallum wrote six principles for running a hierarchical or-
ganization. Most are what you'd expect (number one was en-
suring a "proper division of responsibilities"), but number five
is worth mentioning: his management system was designed
to produce "such information, to be obtained through a sys-
tem of daily reports and checks, that will not embarrass prin -
cipal officers nor lessen their influence with their
subordinates."
If you have ever wondered why so much of what workers in
large organizations know is shielded from the CEO and vice
versa, wonder no longer: the idea of limiting communications,

30. so that they flow only from one layer of the hierarchy to the
next, was part of the very design of the system at the dawn of
managerial culture.
Post-Managerial Organization
When an organization takes on a task , the difficulty of coordi-
nating everyone needs to be reined in somehow, and the larger
the group, the more urgent the need. The standard, almost
universal solution is to create a hierarchy and to slot individu-
als into that organization by role. In Coasean terms, McCallum's
system lowered the transaction costs of running a railroad by
increasing managerial structure. This approach greatly simpli-
SHARING ANCHOR S CO M M U N I TY I 4~
fies lines of responsibility and communication, making even
very large organizations manageable. The individuals in such
an organization have to agree to be managed, of course, which
is usually achieved by paying them, and by making continued
receipt of their pay contingent on their responsiveness to their
manager's requests.
An organization will tend to grow only when the advan -

31. tages that can be gotten from directing the work of additional
employees are less than the transaction costs of managing
them. Coase concentrated his anal ysis on businesses , but the
problems of coordination costs apply to institutions of all
sorts . The Catholic Church and the U.S. Army are as hierar-
chical as any for-profit business , and for many of the same
reasons. The layers of structure between the pope and the
priests , or between the president and the privates, is a product
of the same forces as the layers between the general superin-
tendent and a conductor on the New York & Erie. This hierar-
chical organization reduces transaction costs, but it doesn't
eliminate them.
Imagine a company with fifteen hundred employees,
where each manager is responsible for half a dozen people.
The CEO has six vice presidents, who each direct the work of
six supervisors, and so on. Such a company would have three
layers of management between the boss and the workers. If
you want to bring the workers closer to the boss, you will have

32. to increase the number of workers that each manager is re-
sponsible for. This will reduce the number of layers but will
also reduce average management time with each staff mem-
ber (or force everyone to spend more hours per day commu-
nicating with one another). When an organization grows very
44 I HERE COMES EVERYBODY
large, it reaches the limit implicit in Coase's theory; at some
point an institution simply cannot grow anymore and still re-
main functional, because the cost of managing the business
will destroy any profit margin. You can think of this as a
Coasean ceiling, the point above which standard institutional
forms don't work well.
Coase's theory also tells us about the effects of small
changes in transaction costs. When such costs fall moderately,
we can expect to see two things. First, the largest firms
increase in size. (Put another way, the upper limit of organi-
zational size is inversely related to management costs.) Second,

33. small companies become more effective, doing more business
at lower cost-than the same company does in a world of high
transaction costs. These two effects describe the postwar in-
dustrial world well: Giant conglomerates like ITT in the I970S
and GE in recent years used their management acumen to get
into a huge variety of businesses, simply because they were
good at managing transaction costs. At the same time there
has been an explosion of small- and medium-sized businesses,
because such businesses were better able to discover and ex-
ploit new opportunities.
But what if transactions costs don't fall moderately? What
if they collapse? This scenario is harder to predict from Coase's
original work, and it used to be purely academic. Now it's not,
because it's happening, or rather it has already happened, and
we're starting to see the results.
Anyone who has worked in an organization with more
than a dozen employees recognizes institutional costs.
Anytime you are faced with too many meetings, too much
paperwork, or too many layers of approval (shades of

34. SHARIN G AN CH O RS C O M M U NIT Y I 45
McCallum), you are dealing with those costs. Until recently,
such costs have been little more than the stuff of water-cooler
grumbling-everyone complains about institutional overhead,
without much hope of changing things. In that world (the
world we lived in until recently), if you wanted to take on a
task of any significance, managerial oversight was just one of
the costs of doing business.
What happens to tasks that aren't worth the cost of mana-
gerial oversight? Until recently, the answer was "Those things
don't happen." Because of transaction costs a long list of pos-
sible goods and services never became actual goods and ser-
vices; things like aggregating amateur documentation of the
London transit bombings were simply outside the realm of
possibility. That collection now exists because people have al-
ways desired to share, and the obstacles that prevented shar-
ing on a global scale are now gone. Think of these activities as
lying under a Coasean floor; they are valuable to someone but

35. too expensive to be taken on in any institutional way, because
the basic and unsheddable costs of being an institution in the
first place make those activities not worth pursuing.
Our basic human desires and talents for group effort are
stymied by the complexities of group action at every tum.
Coordination, organization, even communication in groups is
hard and gets harder as the group grows. That difficulty means
that whatever methods help coordinate group action will spread,
no matter how inefficient they are, so long as they are better
than nothing. Small groups have several methods for coordinat-
ing action, like calling each group member in tum or setting up
a phone tree, but most of these methods don't work well even
for dozens of people, much less for thousands. For large-scale
46 I H E R E C OMES EVE RY B O DY
activity, the methods that have worked best have been those
pioneered by McCallum-hierarchical organization, managed
in layers. The most common organizational structures we have

36. today are simpl y the least bad fit for group action in an environ
-
ment of high transaction costs.
Our new tools offer us ways of organizing group effort
without resorting to McCallum's strategies. Flickr stands in a
different kind of relationship to its photographers than a news-
paper does. Where a newspaper is in the business of directing
the work of photographers , Flickr is simply a platform; what-
ever coordination happens comes from the users and is pro-
jected onto the site. This is odd. We generally regard
institutions
as being capable of more things than uncoordinated groups
are , precisely because they are able to direct their employees.
Here , though, we have a situation where the loosely affiliated
group can accomplish something more effectively than the in-
stitution can. Thanks to the introduction of user-generated la-
beling, the individual motivation of the photographers-devoid
of financial reward-is now enough to bring vast collections of
photos into being. These collections didn't just happen to be

37. put together without an institution; that is the only way they
could have been put together.
This is where Coasean logic gets strange. Small decreases
in transaction costs make businesses more efficient, because
the constraints of the institutional dilemma get less severe .
Large decreases in transaction costs create activities that can't
be taken on by businesses , or indeed by any institution, be-
cause no matter how cheap it becomes to perform a particular
activity, there isn't enough payoff to support the cost incurred
by being an institution in the first place. So long as the abso-
S H A RIN G A N C H O R S COMMUNITY I 47
lute cost of organizing a group is high, unmanaged groups
will be limited to undertaking small efforts-a night out at the
movies, a camping trip. Even something as simple as a pot-
luck dinner typically requires some hosting institution. Now
that it is possible to achieve large-scale coordination at low
cost , a third ca!egory has emerged: serious , complex work,
taken on without institutional direction. Loosely coordinated

38. groups can now achieve things that were previously out of
reach for any other organizational structure, because they lay
under the Coasean floor.
The cost of all kinds of group activity-sharing, coopera-
tion , and collective action-have fallen so far so fast that ac-
tivities previously hidden beneath that floor are now coming to
light. We didn't notice how many things were under that floor
because, prior to the current era, the alternative to institutional
action was usually no action. Social tools provide a third alter-
native: action by loosely structured groups, operating without
managerial direction and outside the profit motive.
From Sharing to Cooperation to
Collective Action
For the last hundred years the big organizational question has
been whether any given task was best taken on by the state,
directing the effort in a planned way, or by businesses com-
peting in a market. This debate was based on the universal
and unspoken supposition that people couldn't simply self-

39. assemble ; the choice between markets and managed effort
assumed that there was no third alternative. Now there is.
48 I HERE COMES EVERYB ODY
Our electronic networks are enabling novel forms of collec-
tive action , enabling the creation of collaborative groups that
are larger and more distributed than at any other time in his-
tory. The scope of work that can be done by noninstitutional
groups is a profound challenge to the status quo .
The collapse of transaction costs makes it easier for people
to get together-so much easier, in fact, that it is changing the
world. The lowering of these costs is the driving force under-
neath the current revolution and the common element to ev-
erything in this book. We're not used to thinking of "groupness"
as a specific category-the differences between a college semi-
nar and a labor union seem more salient than their similari-
ties. It's hard to see how Evan Guttman's quest for the return
of the mobile phone is the same kind of thing as the distrib-

40. uted documentation of the Indian Ocean tsunami. But like a
chain of volcanoes all fed by the same pool of magma, the
surface manifestations of group efforts seem quite separate ,
but the driving force of those eruptions is the same: the new
ease of assembly. This change can be looked at as one long
transition, albeit one with many manifestations, unfolding at
different speeds in different contexts. The transition can be
described in basic outline as the answer to two questions: Why
has group action largely been limited to formal organizations?
What is happening now to change that?
We now have communications tools-and increasingly,
social patterns that make use of those tools-that are a better
fit for our native desires and talents for group effort. Because
we can now reach beneath the Coasean floor, we can have
groups that operate with a birthday party's informality and a
multinational's scope. What we are seeing, in the amateur
SHAR ING ANCHORS COMMUNIT Y I 49
coverage of the Thai coup and the tsunami documentation

41. and the struggle over Ivanna's phone and countless other
examples , is the beginning of a period of intense experimenta-
tion with these tools. The various results look quite different
from one another, and as we get good at using the new tools,
those results will diverge still further. New ease of assembly is
causing a proliferation of effects, rather than a convergence,
and these effects differ by how tightly the individuals are
bound to one another in the various groups.
You can think of group undertaking as a kind ofladder of
activities, activities that are enabled or improved by social
tools. The rungs on the ladder, in order of difficulty, are shar-
ing, cooperation, and collective action.
Sharing creates the fewest demands on the participants.
Many sharing platforms, such as Flickr, operate in a largely
take-it-or-leave-it fashion, which allows for the maximum free-
dom of the individual to participate while creating the fewest
complications of group life. Though Flickr sets public sharing
as the default , it also allows users to opt to show photos only
to selected users, or to no one. Knowingly sharing your work

42. with others is the simplest way to take advantage of the new
social tools. (There are also ways ofunknowingly sharing your
work, as when Google reads the linking preferences of hun-
dreds of millions of internet users. These users are helping
create a communally available resource , as Flickr users are ,
but unlike Flickr, the' people whose work Google is aggregat-
ing aren't actively choosing to make their contributions.)
Cooperation is the next rung on the ladder. Cooperating is
harder than simply sharing, because it involves changing your
behavior to synchronize with people who are changing their
50 I HERE COMES E VER YB OD Y
behavior to synchronize with you. Unlike sharing, where the
group is mainly an aggregate of participants, cooperating cre-
ates group identity-you know who you are cooperating with.
One simple form of cooperation, almost universal with social
tools, is conversation; when people are in one another's com-
pany, even virtually, they like to talk. Sometimes the conversa-

43. tion is with words, as with e-mail.TM, or text messaging, and
sometimes it is with other media : YouTube, the video sharing
site, allows users to post new videos in response to videos
they've seen on the site. Conversation creates more of a sense
of community than sharing does , but it also introduces new
problems. It is famously difficult to keep online conversations
from devolving into either name-calling or blather, much less
to keep them on topic. Some groups are perfectly happy with
those effects (indeed , there are communities on the internet
that revel in puerile or fatuous conversation), but for any
group determined to maintain a set of communal standards
some mechanism of enforcement must exist.
Collaborative production is a more involved form of coop-
eration, as it increases the tens ion between individual and
group goals. The litmus test for collaborative production is
simple: no one person can take credit for what gets created,
and the project could not come into being without the partici-
pation of many. Structurally, the biggest difference between

44. information sharing and collaborative production is that in
collaborative production at least some collective decisions
have to be made. The back-and-forth talking and editing that
makes Wikipedia work results in a single page on a particular
subject (albeit one that changes over time) . Collaboration is
not an absolute good-many tools work by reducing the
S H A R I N G ANC H O R S CO M MU N IT Y I 51
amount of required coordination, as Flickr does in aggregat-
ing photos. Collaborative production can be valuable, but it is
harder to get right than sharing, because anything that has to
be negotiated about, like a Wikipedia article, takes more en-
ergy than things that can just be accreted, like a group of
photos.
Collective action , the third rung, is the hardest kind of
group effort, as it requires a group of people to commit them-
selves to undertaking a particular effort together, and to do so
in a way that makes the decision of the group binding on the
individual members. All group structures create dilemmas,

45. but these dilemmas are hardest when it comes to collective
action, because the cohesion of the group becomes critical to
its success . Information sharing produces shared awareness
among the participants, and collaborative production relies on
shared creation , but collective action creates shared responsi-
bility, by tying the user's identity to the identity of the group.
In historical terms, a potluck dinner or a bam raising is col-
laborative production (the members work together to create
something), while a union or a government engages in collec-
tive action, action that is undertaken in the name of the mem-
bers meant to change something out in the world, often in
opposition to other groups committed to different outcomes.
The commonest collective action problem is described as
the "Tragedy of the Commons," biologist Garrett Hardin's
phrase for situations wherein individuals have an incentive to
damage the collective good. The Tragedy of the Commons is a
simple pattern to explain, and once you understand it, you come
to see it everywhere. The standard illustration of the problem
uses sheep. Imagine you are one of a group of shepherds who

46. 52 I H E R E C O MES EV E RY B ODY
graze their sheep on a commonly owned pasture. It's obviously
in everyone's interest to keep the pasture healthy, which would
require each ofyou to take care that your sheep don't overgraze.
As long as everyone refuses to behave greedily, everyone bene-
fits. There is just one problem with this system: "everyone"
doesn 't take your sheep to market. You do. Your incentive , as
an
individual shepherd, is to minimize the cost of raising the fat-
test possible sheep. Everyone benefits from you moderating
your sheep 's consumption of grass, but you would benefit more
from free riding , which is to say letting them eat as much free
grass as they possibly could.
Once you have this realization, you can still refrain from
what would ultimately be a ruinous strategy, on the grounds
that it would be bad for everyone else. Then another, even more
awful thought strikes you: every other shepherd will have the

47. same realization, and if even one of them decides to overgraze,
all your good works will only end up subsidizing them. Seen
in this light , the decision not to overgraze is provisional on
everyone else making the same decision, which makes it very
fragile indeed . The minute one of the other shepherds keeps
his sheep out in the pasture an hour longer than necessary, the
only power you have is to retaliate by doing the same. And this
is the Tragedy of the Commons: while each person can agree
that all would benefit from common restraint, the incentives
of the individuals are arrayed against that outcome.
People who benefit from a resource while doing nothing
in recompense are free riders. Societies have generally dealt
with the problem of free riders in one of two ways. The first
way is elimination of the commons , transferring ownership
of parts of it to individuals, all of whom have an incentive to
SH1<RIN G 1<NCHORS COHHUNITY I 53
protect their own resources. If six shepherds each own one-
sixth of the former commons , the overgrazing problem is a

48. personal one, not a social one. If you overgraze your section,
you will suffer the future consequences , while your neighbor
will not. The second way is governance or, as Hardin puts it,
"mutual coercion, mutually agreed upon." This solution pre-
vents the individual actors from acting in their own interests
rather than in the interests of the group. The Tragedy of the
Commons is why taxes are never voluntary-people would opt
out of paying for road maintenance if they thought their neigh-
bors would pay for it. It's also why restaurants often add an
automatic tip for large parties-when enough people are eat-
ing, everyone feels comfortable underfunding the group's tip,
even if only unconsciously.
Collective action involves challenges of governance or, put
another way, rules for losing . In any group that is determined
to take collective action, different members of the group will
express different opinions. Whenever a decision is taken on
behalf of the group, at least some members won't get their
way, and the bigger the group is, or the more decisions are
made, the more often this will happen. For a group to take

49. collective action, it must have some shared vision strong
enough to bind the group together, despite periodic decisions
that will inevitably displease at least some members. For this
reason collective action is harder to arrange than information
sharin g or collaborative creation. In the current spread of so-
cial tools , real examples of collective action-where a group
acts on behalf of, and with shared consequences for, all of its
members-are still relatively rare.
The essential advantage created by new social tools has
54 I H€R€ CO M ES E VER ',' e O D Y
been labeled "ridiculously easy group-forming" by the social
scientist Seb Paquet. Our recent communications networks-
the internet and mobile phones-are a platform for group -
forming , and many of the tools built for those networks , from
mailing lists to camera-phones, take that fact for granted and
extend it in various ways. Ridiculously easy group-forming
matters because the desire to be part of a group that shares,

50. cooperates, or acts in concert is a basic human instinct that
has always been constrained by transaction costs. Now that
group-forming has gone from hard to ridiculously easy, we are
seeing an explosion of experiments with new groups and new
kinds of groups. Our social tools remove older obstacles to
publicexpression,
and thus remove the bottlenecks that characterized mass
media. The result is the mass amateurization of efforts pre-
viously reserved for media professionals.
My uncle Howard was a small-town newspaperman, pub-lishing
the local paper for Richmond, Missouri (popula-
tion 5,000). The paper, founded by my grandfather, was the
family business, and ink ran in Howard's blood. I can still
remember him fulminating about the rise of USA Today; he
criticized it as "TV on paper" and held it up as further evidence
of the dumbing down of American culture, but he also under-
stood the challenge that USA Today presented, with its color
printing and national distribution. The Richmond Daily News
and USA Today were in the same business; even with the dif-
ference in scale and scope, Howard immediately got what

51. USA Today was up to.
Despite my uncle's obsession, USA Today turned out to be
Organizational Behavior
McShane | Von Glinow
fifth edition
emerging knowledge and practice for the real world
O
rg
an
izatio
n
al B
e
h
avio
r
ISBN 978-0-07-338123-7
MHID 0-07-338123-3
www.mhhe.com

52. E
A
N
e
m
e
rg
in
g
kn
o
w
le
d
g
e
a
n
d
p
ra
ctice
fo
r th
e

53. re
a
l w
o
rld
fifth edition
McShane
Von Glinow
In their new Fifth Edition, McShane and Von Glinow continue
the trailblazing
innovations that made previous editions of Organizational
Behavior recognized and
adopted by the new generation of organizational behavior (OB)
instructors.
McShane and Von Glinow 5e is acclaimed for:
Readability, presentation of current knowledge »
Strong International/Global orientation »
Contemporary Theory Foundation (without the jargon) »
Active Learning and Critical Thinking Support »
Textbook’s philosophy-OB knowledge is for everyone, not just
traditional managers. »
The reality is that everyone needs OB knowledge to
successfully thrive in and around
organizations, from sales representatives to production

54. employees to physicians. The
authors’ ability to engage students by introducing cutting-edge
OB topics while providing
relevancy to OB concepts through the ‘linking theory with
reality’ approach, is the reason OB
5e remains unparalleled in its ability to engage students.
Delivering what we’ve come to expect from this exceptional
author team, McShane/Von
Glinow 5e helps everyone make sense of OB, and provides the
conceptual tools to work more
effectively in the workplace.
To learn more, visit www.mhhe.com/mcshane5e
M
D
D
A
L
IM
1011736 3/25/09 C
Y
A
N
M
A
G
Y

55. E
L
O
B
L
A
C
K
Organizational Behavior
mcs81233_fm_i-xxxiv.indd Page i 3/13/09 9:33:10 PM user-
s173mcs81233_fm_i-xxxiv.indd Page i 3/13/09 9:33:10 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
Emerging Knowledge and
Practice for the Real World
mcs81233_fm_i-xxxiv.indd Page ii 3/13/09 9:33:13 PM user-
s173mcs81233_fm_i-xxxiv.indd Page ii 3/13/09 9:33:13 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB

56. R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
Organizational Behavior
Steven L. McShane
The University of Western Australia
Mary Ann Von Glinow
Florida International University
5th Edition
Boston Burr Ridge, IL Dubuque, IA New York San
Francisco St. Louis
Bangkok Bogotá Caracas Kuala Lumpur Lisbon
London Madrid Mexico City
Milan Montreal New Delhi Santiago Seoul Singapore
Sydney Taipei Toronto
mcs81233_fm_i-xxxiv.indd Page iii 3/14/09 11:11:25 AM
usermcs81233_fm_i-xxxiv.indd Page iii 3/14/09 11:11:25 AM
user /Users/user/Desktop/Users/user/Desktop
ORGANIZATIONAL BEHAVIOR:
EMERGING KNOWLEDGE AND PRACTICE FOR THE REAL
WORLD
Published by McGraw-Hill/Irwin, a business unit of The
McGraw-Hill Companies, Inc., 1221
Avenue of the Americas, New York, NY, 10020. Copyright ©

57. 2010 , 2008 , 2005 , 2003 , 2000 by
The McGraw-Hill Companies, Inc. All rights reserved. No part
of this publication may be
reproduced or distributed in any form or by any means, or
stored in a database or retrieval
system, without the prior written consent of The McGraw-Hill
Companies, Inc., including, but
not limited to, in any network or other electronic storage or
transmission, or broadcast for
distance learning.
Some ancillaries, including electronic and print components,
may not be available to customers
outside the United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 0 DOW/DOW 0 9
ISBN 978-0-07-338123-7
MHID 0-07-338123-3
Vice president and editor-in-chief: Brent Gordon
Publisher: Paul Ducham
Executive editor: John Weimeister
Senior development editor: Christine Scheid
Marketing manager: Natalie Zook
Lead project manager: Christine A. Vaughan
Production supervisor: Gina Hangos
Senior photo research coordinator: Lori Kramer
Photo researcher: Jennifer Blankenship
Lead media project manager: Brian Nacik
Cover and interior design: Pam Verros/pvdesign
Cover image: ©Veer
Typeface: 10/12 Berthold Baskerville
Compositor: Aptara®, Inc.

58. Printer: R. R. Donnelley
Library of Congress Cataloging-in-Publication Data
McShane, Steven Lattimore.
Organizational behavior : emerging knowledge and practice
for the real world / Steven
L. McShane, Mary Ann Von Glinow. — 5th ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-07-338123-7 (alk. paper)
ISBN-10: 0-07-338123-3 (alk. paper)
1. Organizational behavior. I. Von Glinow, Mary Ann Young,
1949- II. Title.
HD58.7.M42 2010
658—dc22
2009005753
www.mhhe.com
mcs81233_fm_i-xxxiv.indd Page iv 3/13/09 9:33:15 PM user-
s173mcs81233_fm_i-xxxiv.indd Page iv 3/13/09 9:33:15 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
http://www.mhhe.com
about the authors
Steven L. McShane
Steven L. McShane is Pro-
fessor of Management in
the Business School at the

59. University of Western
Australia (UWA), where
he receives high teaching
ratings from students in
Perth, Singapore, Manila,
and other cities where
UWA offers its programs.
He is also an Honorary
Professor at Universiti
Tunku Abdul Rahman
(UTAR) in Malaysia and
previously taught in the business faculties at Simon Fraser
University and Queen’s University in Canada. Steve has
conducted executive programs with Nokia, TÜV-SÜD,
Wesfarmers Group, Main Roads WA, McGraw-Hill,
ALCOA World Alumina Australia, and many other organi-
zations. He is also a popular visiting speaker, having given
presentations to faculty and students in almost a dozen
countries over the past four years.
Steve earned his Ph.D. from Michigan State University
in organizational behavior, human resource management,
and labor relations. He also holds a Master of Industrial
Relations from the University of Toronto, and an under-
graduate degree from Queen’s University in Canada. Steve
has served as President of the Administrative Sciences
Association of Canada (the Canadian equivalent of the
Academy of Management) and Director of Graduate Pro-
grams in the business faculty at Simon Fraser University.
Along with coauthoring Organizational Behavior, Fifth
Edition, Steve coauthors with Mary Ann Von Glinow on
Organizational Behavior: Essentials, Second Edition (2009).
He is also the coauthor with Sandra Steen (University of
Regina) of Canadian Organizational Behaviour, Seventh
Edition (2009), with Tony Travaglione (Curtin University)
of Organisational Behaviour on the Pacific Rim, Second Edi-

60. tion (2007), and with Charles Hill (University of Washington)
of Principles of Management, First Edition (2008). Steve is
also coauthor of Indian, Chinese, and Taiwanese editions or
translations of his OB book. Steve has published several
dozen articles and conference papers on workplace values,
training transfer, organizational learning, exit-voice-loyalty,
employee socialization, wrongful dismissal, media bias in
business magazines, and other diverse topics.
Steve enjoys spending his leisure time swimming, body
board surfing, canoeing, skiing, and traveling with his wife
and two daughters.
Mary Ann Von Glinow
Dr. Von Glinow is Director
of the Center for Interna-
tional Business Education
and Research (CIBER)
and is Research Professor
of Management and Inter-
national Business at Florida
International University.
She also is the 2006 Vice
President of the Academy
of International Business
(AIB) and an editor of
JIBS. Previously on the
Marshall School faculty of
the University of Southern California, she has an MBA and
Ph.D. in Management Science from The Ohio State Univer-
sity. Dr. Von Glinow was the 1994–95 President of the Acad-
emy of Management, the world’s largest association of
academicians in management, and is a Fellow of the Academy
and the Pan-Pacific Business Association. She sits on eleven
editorial review boards and numerous international panels.

61. She teaches in executive programs in Latin America, Central
America, the Caribbean region, Asia, and the U.S.
Dr. Von Glinow has authored over 100 journal articles
and 11 books. Her most recent books include Managing Multi-
national Teams (Elsevier, 2005) and Organizational Learning
Capability (Oxford University Press, 1999; in Chinese and
Spanish translation), which won a Gold Book Award from
the Ministry of Economic Affairs in Taiwan in 2002. She has
also coauthored the popular Organizational Behavior, Fifth
Edition textbook and Organizational Behavior: Essentials,
Second Edition (McGraw-Hill/Irwin, 2009). She heads an
international consortium of researchers delving into “Best
International Human Resource Management Practices,” and
her research in this arena won an award from the American
Society for Competitiveness’ Board of Trustees. She also
received an NSF grant to study globally distributed work.
Dr. Von Glinow is the 2005 Academy of Management
recipient of the Distinguished Service Award, one of the
Academy’s three highest honors bestowed.
Mary Ann consults to a number of domestic and multi-
national enterprises, and serves as a mayoral appointee to
the Shanghai Institute of Human Resources in China. Since
1989, she has been a consultant in General Electric’s “Work-
out” and “Change Acceleration Program” including “Coach-
ing to Management.” Her clients have included Asia
Development Bank, American Express, Diageo, Knight-
Ridder, Burger King, Pillsbury, Westinghouse, Southern
California Edison, The Aetna, State of Florida, Kaiser Per-
manente, TRW, Rockwell Int’l, Motorola, N.Y. Life, Amoco,
Lucent, and Joe’s Stone Crabs, to name a few. She is on the
Board of Friends of WLRN, Fielding University, Friends of
Bay Oaks, Pan-Pacific Business Association, and Animal Al-
liance in Los Angeles. She is actively involved in several
animal welfare organizations and received the 1996 Hu-
manitarian Award of the Year from Miami’s Adopt-a-Pet.

62. mcs81233_fm_i-xxxiv.indd Page v 3/13/09 9:33:17 PM user-
s173mcs81233_fm_i-xxxiv.indd Page v 3/13/09 9:33:17 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
Dedicated with love and devotion to Donna, and to our
wonderful
daughters, Bryton and Madison
— S.L.M.
Dedicated to Zack, Emma, and Googun!
—M.A.V.G.
mcs81233_fm_i-xxxiv.indd Page vi 3/13/09 9:33:17 PM user-
s173mcs81233_fm_i-xxxiv.indd Page vi 3/13/09 9:33:17 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
Preface xvi
Glossary 525
References 531
Photo Credits 589

63. Organization Index 591
Name Index 595
Subject Index 616
URL Index 633
PART 1 Introduction 1
Chapter 1 Introduction to the Field of Organizational
Behavior 2
PART 2 Individual Behavior and Processes 31
Chapter 2 Individual Behavior, Personality, and Values 32
Chapter 3 Perception and Learning in Organizations 66
Chapter 4 Workplace Emotions, Attitudes, and Stress 96
Chapter 5 Foundations of Employee Motivation 130
Chapter 6 Applied Performance Practices 164
Chapter 7 Decision Making and Creativity 196
PART 3 Team Processes 231
Chapter 8 Team Dynamics 232
Chapter 9 Communicating in Teams and Organizations 268
Chapter 10 Power and Influence in the Workplace 298
Chapter 11 Conflict and Negotiation in the Workplace 326

64. Chapter 12 Leadership in Organizational Settings 358
PART 4 Organizational Processes 383
Chapter 13 Organizational Structure 384
Chapter 14 Organizational Culture 414
Chapter 15 Organizational Change 442
Additional Cases 469
Case 1: A Mir Kiss? 469
Case 2: Arctic Mining Consultants 471
Case 3: Big Screen’s Big Failure 473
Case 4: Bridging the Two Worlds—The Organizational
Dilemma 478
Case 5: Fran Hayden Joins Dairy Engineering 479
Case 6: From Lippert-Johanson Incorporated to Fenway Waste
Management 482
Case 7: Glengarry Regional Medical Center 484
Case 8: High Noon at Alpha Mills 488
Case 9: Keeping Suzanne Chalmers 490
Case 10: Northwest Canadian Forest Products Limited 492
Case 11: Perfect Pizzeria 494
Case 12: Simmons Laboratories 495
Case 13: Treetop Forest Products 500
Video Cases 502
Appendix A

65. Theory Building and Systematic Research Methods 507
Appendix B
Scoring Keys for Self-Assessment Activities 514
brief
contents
mcs81233_fm_i-xxxiv.indd Page vii 3/13/09 9:33:17 PM user-
s173mcs81233_fm_i-xxxiv.indd Page vii 3/13/09 9:33:17 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
contents
Preface xvi
Part 1 Introduction 1
Chapter 1 Introduction to the Field of
Organizational Behavior 2
The Field of Organizational Behavior 4
Organizational Behavior’s Foundations 5
Why Study Organizational Behavior? 5
Perspectives of Organizational
Effectiveness 7

66. Open-Systems Perspective 7
Global Connections 1.1: Hospitals Take the
Lean Journey to Efficiency 10
Organizational Learning Perspective 10
High-Performance Work Practices Perspective 12
Stakeholder Perspective 13
Types of Individual Behavior 16
Task Performance 17
Organizational Citizenship 17
Counterproductive Work Behaviors 18
Joining and Staying with the Organization 18
Maintaining Work Attendance 18
Contemporary Challenges for Organizations 19
Globalization 20
Increasing Workforce Diversity 20
Emerging Employment Relationships 22
Anchors of Organizational Behavior
Knowledge 23
The Multidisciplinary Anchor 23

67. The Systematic Research Anchor 24
Part 2 Individual Behavior and
Processes 31
Chapter 2 Individual Behavior, Personality,
and Values 32
MARS Model of Individual Behavior and
Performance 34
Employee Motivation 34
Ability 35
Role Perceptions 36
Situational Factors 37
Personality in Organizations 38
Personality Determinants: Nature versus Nurture 39
Five-Factor Model of Personality 39
Jungian Personality Theory and the Myers-Briggs
Type Indicator 41
Caveats about Personality Testing in Organizations 42
The Contingency Anchor 24
The Multiple Levels of Analysis Anchor 24
Chapter Summary 25

68. Key Terms 25
Critical Thinking Questions 26
Case Study 1.1: Jersey Dairies, Inc. 26
Case Study 1.2: Working from Home—It’s in
the Details 28
Team Exercise 1.3: Human Checkers 28
Class Exercise 1.4: Diagnosing Organizational
Stakeholders 29
Self-Assessment 1.5: It All Makes Sense? 30
Self-Assessment 1.6: Is Telecommuting for You? 30
mcs81233_fm_i-xxxiv.indd Page viii 3/13/09 9:33:18 PM user-
s173mcs81233_fm_i-xxxiv.indd Page viii 3/13/09 9:33:18 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
Contents ix
Self-Concept: The “I” in Organizational
Behavior 43
Self-Enhancement 44
Self-Verification 44

69. Self-Evaluation 44
Global Connections 2.1: Feeling Valued Adds
Value at Johnson & Johnson 45
The Social Self 46
Self-Concept and Organizational Behavior 47
Values in the Workplace 47
Types of Values 48
Values and Individual Behavior 49
Value Congruence 49
Values across Cultures 50
Individualism and Collectivism 50
Power Distance 51
Uncertainty Avoidance 51
Achievement-Nurturing Orientation 52
Ethical Values and Behavior 52
Three Ethical Principles 53
Moral Intensity, Ethical Sensitivity, and Situational
Influences 53
Supporting Ethical Behavior 54

70. Chapter Summary 56
Key Terms 56
Critical Thinking Questions 57
Case Study 2.1: SK Telecom Goes Egalitarian in a
Hierarchical Society 57
Case Study 2.2: Pushing Paper Can Be Fun 58
Case Study 2.3: The Trouble with Business
Ethics 59
Class Exercise 2.4: Test Your Knowledge of
Personality 60
Team Exercise 2.5: Comparing Cultural Values 61
Team Exercise 2.6: Ethics Dilemma Vignettes 62
Self-Assessment 2.7: Are You Introverted or
Extroverted? 63
Self-Assessment 2.8: What Are Your Dominant Values? 64
Self-Assessment 2.9: Individualism-Collectivism Scale 64
Self-Assessment 2.10: Estimating Your Locus of
Control 64
Self-Assessment 2.11: Identifying Your General
Self-Efficacy 64
Chapter 3 Perception and Learning in

71. Organizations 66
The Perceptual Process 68
Perceptual Organization and Interpretation 70
Social Identity and Stereotyping 71
Stereotyping in Organizations 72
Global Connections 3.1: “Your Name Says
Everything in France” 74
Attribution Theory 75
Attribution Errors 76
Self-Fulfilling Prophecy 76
Contingencies of Self-Fulfilling Prophecy 77
Other Perceptual Errors 78
Improving Perceptions 79
Awareness of Perceptual Biases 79
Improving Self-Awareness 79
Meaningful Interaction 81
Learning in Organizations 82
Behavior Modification: Learning through
Reinforcement 82
Social Learning Theory: Learning by Observing 85

72. Learning through Experience 86
From Individual to Organizational Learning 87
Chapter Summary 88
Key Terms 89
Critical Thinking Questions 89
Case Study 3.1: Hy Dairies, Inc. 90
Case Study 3.2: How Failure Breeds
Success 91
Class Exercise 3.3: The Learning Exercise 91
Web Exercise 3.4: Stereotyping in Corporate Annual
Reports 92
Self-Assessment 3.5: How Much Perceptual Structure
Do You Need? 92
Self-Assessment 3.6: Assessing Your Perspective Taking
(Cognitive Empathy) 94
Self-Asssessment 3.7: Assessing Your Emotional Empathy
94
Chapter 4 Workplace Emotions, Attitudes,
and Stress 96
Emotions in the Workplace 98
Types of Emotions 99
Emotions, Attitudes, and Behavior 100

73. mcs81233_fm_i-xxxiv.indd Page ix 3/13/09 9:33:21 PM user-
s173mcs81233_fm_i-xxxiv.indd Page ix 3/13/09 9:33:21 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
x Contents
Managing Emotions at Work 103
Emotional Display Norms across Cultures 103
Emotional Dissonance 104
Emotional Intelligence 105
Global Connections 4.1: GM Holden Revs Up
Emotional Intelligence 107
Improving Emotional Intelligence 107
Job Satisfaction 108
Job Satisfaction and Work Behavior 109
The Ethics of Job Satisfaction 112
Organizational Commitment 112
Consequences of Organizational
Commitment 112

74. Building Organizational Commitment 113
Work-Related Stress and Its Management 114
General Adaptation Syndrome 114
Consequences of Distress 115
Stressors: The Causes of Stress 116
Individual Differences in Stress 118
Managing Work-Related Stress 118
Chapter Summary 122
Key Terms 122
Critical Thinking Questions 123
Case Study 4.1: Riding the Emotional Roller Coaster 123
Case Study 4.2: Dispatches from the War
on Stress 124
Class Exercise 4.3: Strength-Based Coaching 125
Team Exercise 4.4: Ranking Jobs on Their Emotional
Labor 126
Team Exercise 4.5: Stage Fright! 126
Self-Assessment 4.6: School Commitment Scale 127
Self-Assessment 4.7: Dispositional Mood Scale 129

75. Self-Assessment 4.8: Work Addiction Risk Test 129
Self-Assessment 4.9: Perceived Stress Scale 129
Self-Assessment 4.10: Stress Coping Preference Scale 129
Chapter 5 Foundations of Employee
Motivation 130
Employee Engagement 132
Employee Drives and Needs 134
Individual Differences in Needs 134
Maslow’s Needs Hierarchy Theory 135
Global Connections 5.1: Shining the Spotlight
on Employee Recognition 137
What’s Wrong with Needs Hierarchy
Models? 138
Learned Needs Theory 138
Four-Drive Theory 140
Expectancy Theory of Motivation 143
Expectancy Theory in Practice 144
Goal Setting and Feedback 145
Balanced Scorecard 147

76. Characteristics of Effective Feedback 148
Sources of Feedback 149
Evaluating Goal Setting and Feedback 151
Organizational Justice 151
Equity Theory 152
Procedural Justice 155
Chapter Summary 156
Key Terms 157
Critical-Thinking Questions 157
Case Study 5.1: Vêtements Ltée 158
Case Study 5.2: Motivating Staff When the
Money Is Tight 159
Class Exercise 5.3: Needs Priority Exercise 159
Team Exercise 5.4: A Question of Feedback 160
Self-Assessment 5.5: Need-Strength Questionnaire 161
Self-Assessment 5.6: Measuring Your Growth-Need
Strength 163
Self-Assessment 5.7: Your Equity Sensitivity 163
Chapter 6 Applied Performance
Practices 164

77. The Meaning of Money in the Workplace 166
Financial Reward Practices 167
Membership- and Seniority-Based
Rewards 167
Job Status–Based Rewards 168
Competency-Based Rewards 169
Performance-Based Rewards 170
Connections 6.1: Nucor Rewards the Team 171
Improving Reward Effectiveness 172
Connections 6.2: When Rewards Go
Wrong 174
mcs81233_fm_i-xxxiv.indd Page x 3/13/09 9:33:21 PM user-
s173mcs81233_fm_i-xxxiv.indd Page x 3/13/09 9:33:21 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
Contents xi
Job Design Practices 175
Job Design and Work Efficiency 175

78. Job Design and Work Motivation 177
Job Design Practices That Motivate 180
Empowerment Practices 182
Supporting Empowerment 182
Self-Leadership Practices 183
Self-Leadership Strategies 184
Effectiveness of Self-Leadership 186
Self-Leadership Contingencies 186
Chapter Summary 187
Key Terms 188
Critical Thinking Questions 188
Case Study 6.1: The Regency Grand Hotel 188
Case Study 6.2: How to Make a Microserf
Smile 190
Team Exercise 6.3: Is Student Work Enriched? 191
Self-Assessment 6.4: What Is Your Attitude toward
Money? 193
Self-Assessment 6.5: Assessing Your
Self-Leadership 194

79. Self-Assessment 6.6: Student Empowerment Scale 195
Chapter 7 Decision Making and
Creativity 196
Rational Choice Paradigm of Decision
Making 198
Problems with the Rational Choice
Paradigm 200
Identifying Problems and Opportunities 200
Problems with Problem Identification 201
Identifying Problems and Opportunities More
Effectively 202
Evaluating and Choosing Alternatives 203
Problems with Goals 203
Problems with Information Processing 204
Problems with Maximization 206
Evaluating Opportunities 206
Emotions and Making Choices 207
Intuition and Making Choices 208
Making Choices More Effectively 209
Implementing Decisions 209

80. Chapter 8 Team Dynamics 232
Teams and Informal Groups 234
Informal Groups 235
Advantages and Disadvantages of Teams 236
The Challenges of Teams 237
Part 3 Team Processes 231
Evaluating Decision Outcomes 210
Escalation of Commitment 210
Evaluating Decision Outcomes More Effectively 212
Employee Involvement in Decision Making 213
Benefits of Employee Involvement 213
Contingencies of Employee Involvement 214
Creativity 215
Characteristics of Creative People 216
Connections 7.1: Going for WowWow at Nottingham-
Spirk 217
Organizational Conditions Supporting Creativity 218
Activities That Encourage Creativity 219
Chapter Summary 221

81. Key Terms 222
Critical Thinking Questions 222
Case Study 7.1: Employee Involvement Cases 223
Case Study 7.2: P&G’s Designer
Thinking 224
Team Exercise 7.3: Where in the World Are We? 224
Team Exercise 7.4: Winter Survival Exercise 227
Class Exercise 7.5: The Hopping Orange 228
Class Exercise 7.6: Creativity Brainbusters 228
Self-Assessment 7.7: Measuring Your Creative Personality
229
Self-Assessment 7.8: Testing Your Creative Bench Strength
230
Self-Assessment 7.9: Decision-Making Style Inventory 230
mcs81233_fm_i-xxxiv.indd Page xi 3/13/09 9:33:22 PM user-
s173mcs81233_fm_i-xxxiv.indd Page xi 3/13/09 9:33:22 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM

82. xii Contents
A Model of Team Effectiveness 238
Organizational and Team Environment 239
Team Design Elements 240
Task Characteristics 240
Team Size 242
Team Composition 242
Global Connections 8.1: Royal Dutch Shell Finds
Team Players in Gourami 243
Team Processes 245
Team Development 245
Team Norms 249
Team Cohesion 250
Team Trust 251
Self-Directed Teams 253
Success Factors for Self-Directed Teams 254
Virtual Teams 255
Success Factors for Virtual Teams 255
Team Decision Making 256

83. Constraints on Team Decision Making 256
Team Structures to Improve Decision Making 258
Chapter Summary 260
Key Terms 261
Critical Thinking Questions 261
Case Study 8.1: The Shipping Industry
Accounting Team 262
Case Study 8.2: Philanthropic Team Building 263
Case Study 8.3: Seagate’s Morale-athon 264
Team Exercise 8.4: Team Tower Power 265
Self-Assessment 8.5: What Team Roles Do You Prefer? 265
Self-Assessment 8.6: Are You a Team Player? 267
Self-Assessment 8.7: How Trusting Are You? 267
Chapter 9 Communicating in Teams and
Organizations 268
The Importance of Communication 270
A Model of Communication 271
Influences on Effective Encoding and Decoding 271
Communication Channels 272

84. Computer-Mediated Communication 273
Connections 9.1: About-Face on Workplace
E-mail 274
Nonverbal Communication 276
Choosing the Best Communication
Channel 277
Social Acceptance 278
Media Richness 278
Communication Channels and Persuasion 281
Communication Barriers (Noise) 281
Information Overload 282
Cross-Cultural and Cross-Gender
Communication 283
Nonverbal Differences across Cultures 284
Gender Differences in Communication 285
Improving Interpersonal
Communication 285
Getting Your Message Across 285
Active Listening 286
Improving Communication throughout the

85. Hierarchy 287
Workspace Design 287
Web-Based Organizational Communication 288
Direct Communication with Top Management 288
Communicating through the Grapevine 289
Grapevine Characteristics 289
Grapevine Benefits and Limitations 290
Chapter Summary 290
Key Terms 291
Critical Thinking Questions 291
Case Study 9.1: Communicating with the Millennials 292
Case Study 9.2: It’s All about the
Face-to-Face 293
Team Exercise 9.3: Analyzing the Blogosphere 294
Team Exercise 9.4: Active Listening Exercise 294
Team Exercise 9.5: Cross-Cultural Communication Game 295
Self-Assessment 9.6: Active Listening Skills Inventory 296
Chapter 10 Power and Influence in the
Workplace 298

86. The Meaning of Power 300
A Model of Power in Organizations 301
Sources of Power in Organizations 301
Legitimate Power 302
Reward Power 302
Coercive Power 303
Expert Power 303
mcs81233_fm_i-xxxiv.indd Page xii 3/13/09 9:33:23 PM user-
s173mcs81233_fm_i-xxxiv.indd Page xii 3/13/09 9:33:23 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
Contents xiii
Referent Power 303
Information and Power 304
Contingencies of Power 305
Substitutability 305
Centrality 306

87. Discretion 306
Visibility 307
Social Networking and Power 307
Global Connections 10.1: Powered by the Social
Network 308
Consequences of Power 309
Influencing Others 309
Types of Influence Tactics 310
Consequences and Contingencies of Influence
Tactics 314
Influence Tactics and Organizational Politics 315
Conditions Supporting Organizational Politics 316
Personal Characteristics 316
Chapter Summary 317
Key Terms 317
Critical Thinking Questions 318
Case Study 10.1: The Rise and Fall of WorldCom 318
Case Study 10.2: Rhonda Clark: Taking Charge at the
Smith Foundation 319
Case Study 10.3: Shaking Up Oxford 322

88. Team Exercise 10.4: Budget Deliberations 322
Self-Assessment 10.5: Guanxi Orientation Scale 323
Self-Assessment 10.6: Machiavellianism Scale 324
Self-Assessment 10.7: Perceptions of Politics Scale (POPS)
324
Chapter 11 Conflict and Negotiation in the
Workplace 326
Is Conflict Good or Bad? 328
The Emerging View: Constructive and
Relationship Conflict 329
Connections 11.1: Constructive Confrontation
inside Intel 331
Conflict Process Model 331
Structural Sources of Conflict in
Organizations 332
Incompatible Goals 333
Differentiation 333
Global Connections 11.2: Conflict Overdrive at
VW and Porsche 334
Interdependence 334
Scarce Resources 335

89. Ambiguous Rules 335
Communication Problems 335
Interpersonal Conflict-Handling Styles 336
Choosing the Best Conflict-Handling Style 337
Cultural and Gender Differences in Conflict-Handling
Styles 339
Structural Approaches to Conflict
Management 340
Emphasizing Superordinate Goals 340
Reducing Differentiation 340
Improving Communication and Understanding 341
Reducing Interdependence 341
Increasing Resources 341
Clarifying Rules and Procedures 341
Resolving Conflict through Negotiation 342
Bargaining-Zone Model of Negotiations 343
Situational Influences on Negotiations 343
Negotiator Skills 345
Third-Party Conflict Resolution 346

90. Choosing the Best Third-Party Intervention
Strategy 347
Chapter Summary 349
Key Terms 349
Critical Thinking Questions 349
Case Study 11.1: Tamarack Industries 350
Case Study 11.2: The New Heat at Ford 351
Class Exercise 11.3: The Contingencies of Conflict
Handling 352
Team Exercise 11.4: Ugli Orange Role Play 356
Self-Assessment 11.5: The Dutch Test for Conflict
Handling 357
Chapter 12 Leadership in Organizational
Settings 358
What Is Leadership? 360
Shared Leadership 360
Competency Perspective of Leadership 361
Competency Perspective Limitations and Practical
Implications 363
mcs81233_fm_i-xxxiv.indd Page xiii 3/13/09 9:33:23 PM user-
s173mcs81233_fm_i-xxxiv.indd Page xiii 3/13/09 9:33:23 PM

91. user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
xiv Contents
Behavioral Perspective of Leadership 364
Choosing Task- versus People-Oriented
Leadership 364
Contingency Perspective of Leadership 365
Path-Goal Theory of Leadership 365
Other Contingency Theories 368
Leadership Substitutes 370
Transformational Perspective of Leadership 371
Transformational versus Transactional Leadership 371
Transformational versus Charismatic Leadership 372
Elements of Transformational Leadership 373
Evaluating the Transformational Leadership
Perspective 374
Implicit Leadership Perspective 375

92. Prototypes of Effective Leaders 375
The Romance of Leadership 376
Cross-Cultural and Gender Issues in
Leadership 376
Chapter Summary 378
Key Terms 379
Critical Thinking Questions 379
Case Study 12.1: Profitel Inc. 379
Case Study 12.2: Mack Attack 381
Team Exercise 12.3: Leadership Diagnostic Analysis 381
Self-Assessment 12.4: What Is Your Boss’s Preferred
Leadership Style? 382
Elements of Organizational Structure 390
Span of Control 390
Centralization and Decentralization 393
Formalization 393
Mechanistic versus Organic Structures 394
Forms of Departmentalization 395
Simple Structure 396

93. Functional Structure 396
Divisional Structure 397
Team-Based Structure 400
Matrix Structure 401
Network Structure 403
Contingencies of Organizational Design 405
External Environment 406
Organizational Size 407
Technology 407
Organizational Strategy 408
Chapter Summary 408
Key Terms 409
Critical Thinking Questions 409
Case Study 13.1: Macy’s Gets Personal 410
Case Study 13.2: More Than Cosmetic Changes
at Avon 411
Team Exercise 13.3: The Club Ed Exercise 412
Self-Assessment 13.4: What Organizational Structure Do
You Prefer? 412

94. Chapter 14 Organizational Culture 414
Elements of Organizational Culture 416
Content of Organizational Culture 418
Organizational Subcultures 419
Deciphering Organizational Culture through
Artifacts 420
Organizational Stories and Legends 420
Rituals and Ceremonies 421
Organizational Language 422
Physical Structures and Symbols 422
Is Organizational Culture Important? 423
Contingencies of Organizational Culture and
Effectiveness 424
Organizational Culture and Business Ethics 426
Part 4 Organizational
Processes 383
Chapter 13 Organizational Structure 384
Division of Labor and Coordination 386
Division of Labor 386
Coordinating Work Activities 387

95. mcs81233_fm_i-xxxiv.indd Page xiv 3/13/09 9:33:24 PM user-
s173mcs81233_fm_i-xxxiv.indd Page xiv 3/13/09 9:33:24 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
Contents xv
Merging Organizational Cultures 426
Bicultural Audit 427
Strategies for Merging Different Organizational
Cultures 427
Changing and Strengthening Organizational
Culture 429
Actions of Founders and Leaders 429
Aligning Artifacts 430
Introducing Culturally Consistent Rewards 431
Attracting, Selecting, and Socializing Employees 431
Organizational Socialization 432
Socialization as a Learning and Adjustment
Process 433

96. Stages of Organizational Socialization 433
Improving the Socialization Process 435
Chapter Summary 436
Key Terms 437
Critical Thinking Questions 437
Case Study 14.1: Hillton’s Transformation 438
Case Study 14.2: Merck’s New Cultural
Cure 439
Class Exercise 14.3: Diagnosing Corporate Culture
Proclamations 440
Self-Assessment 14.4: What Are Your Corporate Culture
Preferences? 441
Chapter 15 Organizational Change 442
Lewin’s Force Field Analysis Model 444
Restraining Forces 445
Connections 15.1: The FBI Meets Its Own
Resistance 448
Unfreezing, Changing, and Refreezing 449
Creating an Urgency for Change 450
Reducing the Restraining Forces 451

97. Refreezing the Desired Conditions 454
Change Agents, Strategic Visions, and Diffusing
Change 455
Change Agents and Strategic Visions 455
Diffusion of Change 455
Four Approaches to Organizational Change 456
Action Research Approach 456
Appreciative Inquiry Approach 458
Large-Group Interventions 460
Parallel Learning Structure Approach 461
Cross-Cultural and Ethical Issues in
Organizational Change 461
Organizational Behavior: The Journey
Continues 462
Chapter Summary 462
Key Terms 463
Critical Thinking Questions 463
Case Study 15.1: TransAct Insurance Corporation 464
Case Study 15.2: Inside Intel 465
Team Exercise 15.3: Strategic Change Incidents 466

98. Self-Assessment 15.4: Are You Tolerant of Change? 467
Additional Cases 469
Case 1: A Mir Kiss? 469
Case 2: Arctic Mining Consultants 471
Case 3: Big Screen’s Big Failure 473
Case 4: Bridging the Two Worlds—The Organizational
Dilemma 478
Case 5: Fran Hayden Joins Dairy Engineering 479
Case 6: From Lippert-Johanson Incorporated to Fenway
Waste Management 482
Case 7: Glengarry Regional Medical Center 484
Case 8: High Noon at Alpha Mills 488
Case 9: Keeping Suzanne Chalmers 490
Case 10: Northwest Canadian Forest Products
Limited 492
Case 11: Perfect Pizzeria 494
Case 12: Simmons Laboratories 495
Case 13: Treetop Forest Products 500
Video Cases 502
Appendix A
Theory Building and Systematic Research Methods 507
Appendix B
Scoring Keys for Self-Assessment Activities 514
Glossary 525

99. References 531
Photo Credits 589
Organization Index 591
Name Index 595
Subject Index 616
URL Index 633
mcs81233_fm_i-xxxiv.indd Page xv 3/13/09 9:33:29 PM user-
s173mcs81233_fm_i-xxxiv.indd Page xv 3/13/09 9:33:29 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
Welcome to the emerging knowledge and practice of
organizational behavior! Social
networks and virtual teams are replacing committee meetings.
Knowledge is replac-
ing infrastructure. Values and self-leadership are replacing
command-and-control
management. Companies are looking for employees with
emotional intelligence and
team competencies, not just technical smarts. Diversity and
globalization have be-
come challenges as well as competitive opportunities for
organizations. Co-workers
aren’t down the hall; they’re at the other end of an Internet

100. connection located some-
where else on the planet.
Organizational Behavior, Fifth Edition, is written in the
context of these emerging
workplace realities. This edition explains how emotions guide
employee motivation,
attitudes, and decisions; how self-concept influences employee
motivation and be-
havior, team cohesion, and leadership; how social networks are
gaining importance
as a source of personal power and organizational effectiveness;
and how appreciative
inquiry has become an important strategy for changing
organizations. This book also
presents the new reality that organizational behavior is not just
for managers; it is
relevant and useful to anyone who works in and around
organizations.
Linking Theory with Reality
Every chapter of Organizational Behavior , Fifth Edition, is
filled with examples that
make OB knowledge more meaningful and reflect the relevance
and excitement of
this field. These stories about real people and organizations
translate academic theo-
ries into relevant knowledge. For example, you will read how
Whole Foods Market
and La-Z-Boy have discovered the advantages of teamwork;
how Sony Europe has
improved employee motivation through the positive
organizational behavior practice
of strengths-based feedback; how Raytheon and other companies
have mapped out
informal social networks throughout the organization; and how
Ernst & Young,

101. Procter & Gamble, and several other firms are sending
employees to overseas social
responsibility assignments to improve their global mindset and
other perceptual
capabilities.
These real-life stories appear in many forms. Every chapter of
Organizational
Behavior, Fifth Edition , offers several detailed photo
captions and many more in-text
anecdotes. Lengthier stories are distinguished in a feature we
call Connections, because
it “connects” OB concepts with real organizational incidents.
Case studies in each
chapter and video case studies for each part of this book also
connect OB concepts to
the emerging workplace realities. These stories provide
representation across the
United States and around the planet. They also cover a wide
range of industries—from
software to government, and from small businesses to the
Fortune 500.
Global Orientation
One of the first things you might notice about this book is its
strong global orienta-
tion. This goes beyond the traditional practice of describing
how U.S. companies
operate in other parts of the world. Organizational Behavior,
Fifth Edition, takes a truly
global approach by illustrating how organizational behavior
concepts and practices
are relevant to companies in every part of the world. For
example, you will read how
Mina Ishiwatari faced resistance to change as she transformed
sleepy Tokyo-based
Hoppy Beverage Co. into a high-profile brand; how Volkswagen

102. and Porsche
xvi
preface
mcs81233_fm_i-xxxiv.indd Page xvi 3/13/09 9:33:29 PM user-
s173mcs81233_fm_i-xxxiv.indd Page xvi 3/13/09 9:33:29 PM
user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
Preface xvii
executives are wrapped up in high-stakes conflict over how
Volkswagen should be
run; how Air New Zealand CEO Rob Fyfe relies on a hands-on
approach to improve
his and others’ perceptions; how Sweden’s Svenska
Handelsbanken relies on em-
ployee empowerment and organizational rewards rather than
centralized budgets to
manage the business; and how Mott MacDonald’s oil and gas
team improves emo-
tions and camaraderie through desert safari treks in Abu Dhabi.
This global orientation is also apparent in our discussion of
many organizational
behavior topics. The first chapter of Organizational Behavior,
Fifth Edition , introduces
the concept of globalization. Global issues are then highlighted
throughout the book,
such as cross-cultural values and ethics, development of a

103. global mindset, job satisfac-
tion and display of emotions in different societies, cross-
cultural issues in the success
of self-directed work teams, problems with cross-cultural
communication, cultural
values and expectations as a factor in preferred influence
tactics, the handling of con-
flict differently across cultures, and preferred leadership styles
across cultures.
Contemporary Theory Foundation
Vivid real-world examples and practices are only valuable if
they are connected to
good theory. Organizational Behavior has developed a
reputation for its solid founda-
tion of contemporary and classic research and writing. You can
see this in the refer-
ences. Each chapter is based on dozens of articles, books, and
other sources. The
most recent literature receives thorough coverage, resulting in
what we believe is the
most up-to-date organizational behavior textbook available.
These references also
reveal that we reach out to marketing, information management,
human resource
management, and other disciplines for new ideas. At the same
time, this textbook is
written for students, not the scholars whose work is cited. So,
although this book pro-
vides new knowledge and its practical implications, it rarely
names researchers and
their university affiliations. It focuses on organizational
behavior knowledge rather
than “who’s who” in the field.
One of the driving forces for writing Organizational Behavior
was to provide a con-

104. duit whereby emerging OB knowledge more quickly reaches
students, practitioners,
and fellow scholars. This objective is so important that we state
it in the subtitle of
this book. To its credit, Organizational Behavior was the first
textbook to discuss work-
place emotions, social identity theory, four-drive theory,
appreciative inquiry, affec-
tive events theory (but without the jargon), somatic marker
theory (also without the
jargon), virtual teams, future-search events, Schwartz’s value
model, resilience,
employee engagement, learning orientation, workaholism, and
several other ground-
breaking topics. This edition introduces additional emerging OB
concepts and prac-
tices, including social networking communication, the
competencies of effective team
members, exceptions to media richness theory, the importance
of self-concept in
organizational behavior, the globally integrated enterprise, the
global mindset, and
strengths-based feedback.
Organizational Behavior Knowledge for Everyone
Another distinctive feature of Organizational Behavior, Fifth
Edition, is that it is written
for everyone in organizations, not just managers. The
philosophy of this book is that
everyone who works in and around organizations needs to
understand and make use
of organizational behavior knowledge. The contemporary reality
is that people
throughout the organization—systems analysts, production
employees, accounting
professionals—are assuming more responsibilities as companies

105. remove layers of
mcs81233_fm_i-xxxiv.indd Page xvii 3/13/09 9:33:29 PM
user-s173mcs81233_fm_i-xxxiv.indd Page xvii 3/13/09
9:33:29 PM user-s173 /Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM/Users/user-
s173/Desktop/TEMPWORK/MARCH/13:03:09/MHBR089/MHB
R089-FM
xviii Preface
management and give the rest of us more autonomy over our
work. This book helps
everyone to make sense of organizational behavior and provides
the conceptual tools
needed to work more effectively in the workplace.
Active Learning and Critical Thinking Support
We teach organizational behavior, so we understand how
important it is to use a text-
book that offers deep support for active learning and critical
thinking. The fact that
business school accreditation associations also emphasize the
importance of the learn-
ing experience further reinforces our attention to classroom
activities. Organizational
Behavior, Fifth Edition, includes more than two dozen case
studies in various forms
and levels of complexity. It offers three dozen self-assessments,
most of which have
received construct validation. This book is also a rich resource
for in-class activities,
some of which are not available in other organizational behavior

106. textbooks, such
as “Test Your Knowledge of Personality,” “Where in the World
Are We?” and “Cross-
Cultural Communication Game.”
Changes to the Fifth Edition
Organizational Behavior, Fifth Edition, has benefited from
reviews by several dozen
organizational behavior teachers and researchers in several
countries over the past
two years. The most significant structural change is that we
have reduced the book to
15 chapters so that it more closely parallels the number of
weeks in a typical OB
course. This edition also continues to update current knowledge
in every chapter and
provides fresh examples to illustrate theories and concepts. The
most notable im-
provements to this edition are described below:
• Chapter 1: Introduction to the Field of Organizational
Behavior. This chapter has
been substantially revised and updated. It introduces four
perspectives of orga-
nizational effectiveness (the ultimate dependent variable in
OB), so students
now have an excellent macro-OB foundation for topics
throughout this book.
The organizational effectiveness section also provides better
organization for
open systems, organizational learning, high-performance work
practices, and
values and ethics. The five types of individual behavior are also
described in
this chapter as a natural micro-OB flow from the organizational
effectiveness

107. discussion. The topic of workforce diversity now distinguishes
surface from
deep-level diversity. Discussion of the systematic research
anchor now includes
the concept of evidence-based management.
• Chapter 2: Individual Behavior, Personality, and Values.
This edition provides im-
portant new knowledge about self-concept, including its main
components (self-
enhancement, self-verification, self-evaluation, and social
identity) and their
relevance for organizational behavior. This edition also has a
rewritten and ex-
panded discussion of personality in line with the topic’s
increasing importance
in OB. The MARS model now includes a fuller conceptual
background.
• Chapter 3: Perception and Learning in Organizations. This
edition updates the sec-
tion on selective attention, organization, and interpretation on
the basis of the
rapidly developing research on this topic. It also introduces the
increasingly
popular concept of global mindset in the context of perception
and learning.
The chapter adds discussion about false-consensus effect as
well as the implicit
association test. It also reorganizes into one section the
discussion about prac-
tices that minimize perceptual problems. Positive organizational
behavior,
mcs81233_fm_i-xxxiv.indd Page xviii 3/13/09 9:33:29 PM
user-s173mcs81233_fm_i-xxxiv.indd Page xviii 3/13/09