Open strategy: role of organizational democracy

Abstract

PurposeA core premise of the paper is that participative, democratic organizational forms have a direct effect on openness. A key proposition is that organizational forms that promote inclusion, transparency and shared decision-making more broadly as part of their structure and culture would enhance greater openness. However, democratic forms are not a panacea when it comes to openness, there are inherent paradoxes, leading to inevitable tradeoffs that democratic organizations must manage.Design/methodology/approachThe theoretical framework in the study explores the interaction between open strategy making and organizational democracy. This paper reviews the literature on open strategy and organizational democracy and presents propositions linking openness and elements of democratic organizations.FindingsOpen strategy requires a level of inclusion and transparency not typically associated with hierarchical organizations. This paper proposed that an organizational context where there are institutionalized processes that promote both transparency and inclusiveness, shared decision-making and a supportive organizational culture would promote openness. At the same time, these organizations need to manage key paradoxes associated with organizational democracy to benefit from its positive effect on openness. The idea is not that hierarchies cannot be open; they may simply need to be more creative and work harder at providing the scaffolding for participation.Research limitations/implicationsThis is a conceptual paper and we cannot make any claims of causality. It is also possible to refine the framework by adding or eliminating some of the conceptual variables.Practical implicationsOpening up the strategy process to non-traditional stakeholders can improve the strategy formation process. Non-traditional stakeholders can bring new insight, and be motivated and prepared for strategy implementation when they are part of the strategy formation process. Organizations need to focus on creating a climate that supports openness by emphasizing structural forms that promote openness. Sharing decision-making, profits and creating a democratic culture are important for successful openness. In addition, organizations need to manage the tradeoffs that arise as they link organizational democracy to openness.Originality/valueThis paper discusses the link between open strategy and organizational democracy. The research sheds light on how organizational forms, specifically structure affects openness, as well as the limits to structure and openness.