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What do you mean by organizational structure? Acknowledging and harmonizing differences and commonalities in three prominent perspectives

• Point of View
• Open access
• Published: 11 October 2023
• Volume 13 , pages 1–11, ( 2024 )

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• Daniel Albert   ORCID: orcid.org/0000-0003-3888-1643 1  

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The organizational design literature stresses the importance of organizational structure to understand strategic change, performance, and innovation. However, prior studies diverge regarding the conceptualizations and operationalizations of structure. Organizational structure has been studied as an (1) arrangement of activities, (2) representation of decision-making, and (3) legal entities. In this point-of-view paper, the three prominent perspectives of organizational structure are discussed in terms of their commonalities, differences, and the need to study their relationship more thoroughly. Future research may not only wish to integrate these dimensions but also be more vocal about what type of organization structure is studied and why.

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Research Methodology: An Introduction

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Introduction

An important area of research in the organization design literature concerns the role of structure. Early research, including work by Chandler ( 1962 , 1991 ) and Burgelman ( 1983 ), has studied how strategy execution depends on a firm’s structure, and how that structure can influence future strategies. Moreover, prior work has explored organizational structure and its connection to strategic change (Gulati and Puranam 2009 ), performance (Csaszar 2012 ; Lee 2022 ), innovation (Eklund 2022 ; Keum and See 2017 ) and internal power dynamics (Bidwell 2012 ; Pfeffer 1981 ), among others.

What is surprising is the divergence in understanding what constitutes and defines organizational structure. This becomes particularly apparent when considering how structure has often been operationalized in prior studies. While there are a variety of conceptual and empirical approaches to organizational structure, this point of view paper focuses on three particularly prominent perspectives. Scholars of one stream of operationalization have argued that structure is how business activities are grouped and assessed in the form of distinct business units (or divisions) (Karim 2006 ; Mintzberg 1979 ), which may represent a company’s operating segments for internal and external reporting (Albert 2018 ). In another stream of operationalization, scholars argue that structure is inherent in the organizational chart, specifically, the chain of command and the allocation of decision-making responsibilities. Often, a simple yet powerful proxy has been to consider the roles assigned to the top management team members (Girod and Whittington 2015 ). Finally, a third type of operationalization of structure is the composition and arrangement of legal entities (Bethel and Liebeskind 1998 ; Zhou 2013 ), specifically, discrete subsidiaries constituting an organization’s business activities. This may be the most consequential understanding of structure as it relates to the containment of legal responsibilities.

These three perspectives overlap in some cases but may also characterize organizational structure differently in important ways. In a clear-cut case, a firm may consist of a top management team that perfectly reflects its business divisions and units, reported by consolidated but legally distinct entities. However, when examining the financial filings of different corporations, a different picture emerges as such clean alignment is often not the case. Not only are well-studied differences in the corporation's legal form (such as holding versus integrated) present, but top management responsibilities and reporting of business divisions often show that structure is indeed a multi-dimensional phenomenon in organizations.

To illustrate how different perspectives may lead to varying conclusions about organizational structure, two companies, the financial service firm Citigroup and the automotive company Ford Motor, are briefly discussed with respect to each perspective. Both Citigroup and Ford Motor are interesting cases, as they are large organizations with diversified business operations across various industry segments and a presence in multiple geographical markets. This complexity in business operations underscores the necessity of an organizational structure to implement and execute the firms' respective strategies.

The objective of this point of view is to emphasize and discuss the co-existence of fundamentally different measures and their underlying assumptions of organizational structure. These three perspectives highlight different aspects of organizational structure and can help reveal important nuances idiosyncratic to specific organizations. That is, complementing one perspective with one or two other perspectives can paint a more holistic picture of firm-specific structural designs. The “arrangement of activities” perspective provides generally a measure that captures sources of value creation, that is, the groupings of economic activities and knowledge. The “decision making representation” perspective provides generally a measure of hierarchical allocation of decision rights and has been likened to the level of centralization, that is, which responsibilities are specifically assigned to the highest level of decision-making. The “legal entities” perspective often captures decentralization as "truly" autonomous activities that can render integration more difficult and, therefore, imposes greater decentralization among such units.

A follow-up goal of this point of view paper is to discuss the implications and future research opportunities of clearly distinguishing between these perspectives in organizational design studies. A completely new area of research constitutes the inquiry of the relationships between these perspectives and whether and when alignment between the perspectives is enhancing or hindering performance, innovation, and strategic change. It is important to note that this point of view paper is not meant to provide an exhaustive list of perspectives of organizational structure, but to spark a constructive discussion around the theoretical and operational differences and commonalities between the arguably most prominent perspectives. Additional perspectives of organizational structure are discussed in the limitations section.

Three perspectives of structure

Structure as arrangement of activities.

This perspective suggests that groups of economic activities, managed and reviewed together, make up departments, units, and divisions that form the organizational structure (Joseph and Gaba 2020 ; Mintzberg 1979 ; Puranam and Vanneste 2016 ). In the middle of the twentieth century, Chandler ( 1962 ) observed that large American corporations not only diversified into a greater number of different business activities but also started to organize business activities into separately managed divisions, which are typically overseen by a corporate center unit. The organization of activities into compartments is often nested, that is, activities within a given compartment are further organized into subunits and so on. In a more general sense, such compartmentalization constitutes the division of labor (or specialization) in an organization, which can be organized along various dimensions. The most prevalent dimensions along which activities are organized into units include customer segments, products, geography, and functional domains, such as research and development, marketing, and sales activities (Puranam and Vanneste 2016 ).

The way activities are organized has been often related to archetypical designs, such as a more homogenous organization that is organized along functions and multi-divisional corporations that are more heterogenous in the activities making up business divisions (e.g., Raveendran 2020 ). The corporate center is often considered as a distinct unit of activities that holds the design rights of the organization, allowing it to organize these activities (Puranam 2018 ). The center may also play a coordinating role in the management of interdependencies between divisions to ensure alignment with corporate-level goals (Lawrence and Lorsch 1967 ) and foster value creation (Foss 1997 ).

Scholars of this perspective have studied how the arrangement of activities into compartments is associated with the propensity and type of reorganization (e.g., Karim 2006 ; Raveendran 2020 ), as well as its association with innovation outcomes (e.g., Karim and Kaul 2014 ). These two outcomes of interest are closely related, as compartments consist of employees and resources that constitute a source of knowledge that may be rearranged or combined with other units to address a (changing) market in novel and more efficient ways. Hence, this perspective may help to understand the sources of performance and innovation.

Illustration of arrangement of activities perspective

Figure  1 shows Citigroup’s operating business segments, which are in line with accounting regulations that require businesses to disclose operations in the way in which activities are managed internally and held accountable for cost and revenues (see Financial Accounting Standards No. 131). Accordingly, Citigroup operates three business segments, “Institutional Clients Group (ICG)”, “Personal Banking and Wealth Management (PBWM)” and “Legacy Franchises”, which are predominantly groupings of economic activities based on customer segments (i.e., institutional clients, private clients, and consumer clients). These groupings encompass various activities around this customer segment and the relevant product offerings. For example, the division Personal Banking encompasses activities for retail clients, such as Citibank’s physical retail network and online banking as well as private wealth operations for high-net-worth individuals. The respective segments may be understood as the organization’s business divisions, whereas further, nested, groupings exist within these divisions (e.g., U.S. Personal Banking constitutes a subunit with further subgroupings into Cards and Retail Banking operations). Supporting activities and operations that are not part of one of the three divisions are managed by the corporate center unit.

Citigroup’s operating business segments. This figure is the author’s own drawing but entirely based on Citigroup’s 2022 10-K report (page 2)

In Table 1 , the operating business segments are shown for the automotive company Ford. Accordingly, Ford operates six main segments (and one reconciliation of debt segment), “Ford Blue”, “Ford Model e”, “Ford Pro”, “Ford Next”, “Ford Credit”, and “Corporate Other”. These groupings encompass various product and customer segment activities, such as the “Ford Blue” legacy business of internal combustion engine automotives, under the Ford and Lincoln brands. Electric vehicle-related activities are grouped under “Ford Model e”, whereas “Ford Pro” groups activities to address corporate clients who seek to optimize and maintain fleets. Noteworthy is also the segment “Ford Next”, which is a grouping of investment activities into emerging business models. While these segments (i.e., divisions) encompass various activities, information is limited with respect to any nested groupings within these segments (or a potential lack thereof).

Structure as decision making representation

This perspective suggests that the job roles in the top management team (TMT) are reflective of the organizational structure, as executives are charged to oversee certain activities (Girod and Whittington 2015 ; Guadalupe et al. 2013 ). At first glance, this understanding is fairly similar to that of the arrangement of activities. At a closer look, however, the TMT structure perspective is more indicative of an information processing perspective. At the center of the information processing perspective lies hierarchy as a mechanism to cope with information uncertainty and resolve conflicts (Galbraith 1974 ). Moreover, information processing has long been considered as the way in which key decision-makers can ensure coordination and integration of units (Joseph and Gaba 2020 ). That is, the top management roles may in fact extend beyond the formal task structure and include the reintegration and coordination of activities more broadly.

The assignment of decision-making responsibilities can reveal how the organization “thinks” about interdependencies, such as the need to coordinate resources, the potential to leverage synergies and so forth. For example, roles that largely define autonomous areas of business allow managers to make decisions more independently from one another. In contrast, roles that are focused on dedicated functions, such as research and development, marketing, and finance often require greater coordination among managers (e.g., Hambrick et al. 2015 ). Hence, the decision-making representations in the top management team may be understood as a hierarchy mechanism to manage and even create interdependencies between activities. A case in point is the deliberate assignment of creating synergies between otherwise standalone units, for example, in the form of executives holding multiple roles that span several divisions.

While the assignment of decision-making responsibilities clearly relates to efforts of coordination and integration, it can also explain the emergence of internal power and politics dynamics (Cyert and March 1963 , Pfeffer 1981 ). For example, Romanelli and Tushman 9/14/2023 7:00:00 PM suggest that top management turnover is a measure of power dynamics in organizations and treat this as entirely distinct from organizational structure. Moreover, the upper echelons perspective has proposed that organizational choice and strategic outcomes are, at least in part, a direct reflection of the backgrounds of the leadership's individuals (Hambrick and Mason 1984 ), which suggests that design choices, such as organizational structure are decided under the auspice of the very same individuals (Puranam 2018 ) that researchers have used as a proxy to measure organizational structure. This emphasizes the importance of considering the TMT as a structure of decision-making representation rather than a measure of division of labor.

Perhaps it is this representational role of the TMT as a potential liaison between activity arrangements and decision-making, which Gaba and Joseph ( 2020 ) discuss as information processing, that has led some of the prior research argue that structure influences how decisions come about. Accordingly, decisions of reorganization and internal resource allocation are the result of a political negotiation process (Albert 2018 ; Bidwell 2012 ; Keum 2023 ; Pfeffer 1981 ; Pfeffer and Salancik 1974 ). Hence, this perspective may help understand the role of structure as a process that shapes decisions (Burgelman 1983 ).

Illustration of decision-making representation perspective

Table 2 shows Citigroup’s executive leadership team with each member’s specific job title that reflects the decision-making responsibilities. The team is made up of executives responsible for specific business divisions (e.g., one member carries the title CEO of Legacy Franchises), some members oversee particular geographical regions (e.g., one member carries the title CEO of Latin America), other members represent specific subsidiaries (e.g., one member carries the title CEO of Citibank N.A.), and again others are in charge of corporate functions (e.g., one member carries the title Head of Human Resources).

Table 3 shows Ford’s executive leadership team. The team is made up of executives responsible for business divisions, such as “President Ford Blue”, “CEO, Ford Pro” and “CEO, Ford Next”. In addition, executives represent particular activities of these divisions, such as “Chief Customer Officer, Ford Model e” and “Chief Customer Experience Officer, Ford Blue”. Similar to Citigroup, at Ford executives also represent geographical activities and various functional activities. Moreover, one executive represents a legal entity (Ford Next LLC), which is also a business segment (activity grouping).

Structure as legal entities

This perspective suggests that structure is delineated by legal boundaries, such as discrete subsidiaries that make up an organization’s operating units. This may constitute the most consequential understanding of structure as it relates to containment of legal responsibilities.

Thus, empirical studies have operationalized legal entities as a proxy for divisionalization in organizations (Argyres 1996 ; Zhou 2013 ) and degree of decentralization of research and development responsibilities (Arora et al. 2014 ). The way organizations are legally organized may be motivated by liability concerns, tax advantages, shareholder voting rights, as well as international law and compliance consideration (Bethel and Liebeskind 1998 ). Nevertheless, organizing into legally separate units can have important consequences for the management of the organization, such as limited economies of scope (see ibid.). For example, Monteiro et al. ( 2008 ) describe how subsidiaries in multinational corporations can become “isolated” from knowledge sharing with the rest of the organization. This isolation from intra-firm knowledge flows leads these subsidiaries to more likely underperform compared to less isolated subsidiaries.

It is important to note that legal structure is not always at the discretion of the organization. For example, the financial and economic crisis of 2007/8 has led legislators in some countries to introduce laws that require system-relevant banks to organize certain activities and assets into separate legal entities that contain losses and allow quicker resolvability in case the government decides to step in and take ownership stakes of affected units (Reuters 2014 ).

Legal structures, specifically in the context of multi-national organizations, have been studied with respect to decentralized decision-making, local market adaptation, and dynamics between subsidiaries and the headquarters (Bouquet and Birkinshaw 2008 ). Another aspect of studying legal entities in organizational design relates to internal reorganization. Legally separated activities are not only more straightforward to evaluate (i.e., greater transparency) as they typically maintain their own balance sheets and income statements, but they may also be easier to divest or spin-off, which provides the organization with greater flexibility. For example, the legal reorganization of Google into Alphabet in 2015 legally separated Google’s activities from all its “other bets”, which were run as their own legal organizations, with the goal for greater transparency and accountability (Zenger 2015 ). Moreover, the separation of activities into legal entities may also affect how easy or difficult it is for the organization to endorse cross-unit collaboration and execute internal reorganization without changing legal forms. Coordination cost between separate legal entities are greater, as more formal and legally binding contracts may need to be set.

Illustration of legal entities perspective

Figure  2 shows Citigroup’s legal structure. Accordingly, the organization is at the highest level a Bank Holding Company, which legally owns two (intermediate) holding entities, “Citigroup Global Markets Holdings Inc.” and “Citicorp LLC”. Each of these two entities owns additional subsidiaries, which are largely organized by region (these may hold additional subsidiaries). This structure is quite different from Citigroup’s management of operating activities as none of the business divisions is reflected in the legal structure.

Citigroup material legal entities. This figure is the author’s own drawing and a slight adaptation rom Citigroup’s publicly available presentation material via https://www.citigroup.com/rcs/citigpa/akpublic/storage/public/corp_struct.pdf , accessed on March 23, 2023. The dark blue boxed refer to operating material legal entities. The four boxes that are within the grey dashed rectangle are branches of Citibank N.A

Table 4 shows a list of legal entities reported by Ford in its annual report. Many of these subsidiaries are focused on regional activities and/or credit-related activities, which may be due to regulatory requirements of operating consumer financing activities. The legal entity Ford Next LLC is also its own business segment (i.e., an arrangement of activities reported as a managed division) and directly represented in the executive team. The Ford example does not provide much detail on the exact ownership structure among subsidiaries, which generally is indicative of a legal hierarchical structure of the respective legal entities. However, Ford European Holdings Inc. appears to own European subsidiaries, such as Ford Deutschland Holding GmbH, which in turn is the legal entity that owns subsidiaries in Germany and so on.

A path forward

The study of the commonalities , differences , and relationships between the three perspectives of organization structure—i.e., structure as arrangement of activities, decision-making representation, and legal entities—offers great potential for the field of organizational design. Previous research has often focused on one of these dimensions at a time to study organizational structure, but each perspective plays an important role in organizing and influencing decision-making.

Commonalities

All three perspectives share central ideas of organizational design. First, there is the notion that tasks are grouped and kept separate . The arrangement of activities perspective suggests that economic processes are managed and carried out together when these influence one another. Thus, this perspective stresses the grouping of tasks most forcefully of all the perspectives. However, the two other lines of research also reflect groupings of tasks. The decision-making representation perspective considers job titles and decision-making authority assigned to distinct members of the executive team to generally be related to how tasks are structured. Decision makers, therefore, oversee a particular task environment. The legal entity perspective proposes legal boundaries as delineations of responsibility and accountability. That is, legal separation and containment of financial accountability constitute somewhat binding modularity.

The three views also embrace the concept of hierarchy , albeit manifested differently. The arrangement of activities captures hierarchy by stressing that activity groups (i.e., units) can be nested, that is, a division is made up of several sub-units with own task responsibilities. Hierarchy in decision-making representation is captured by reporting lines and may be more focused on hierarchy as a means of conflict resolution and the diffusion of top-down ideas. The legal entity view shares similarity with the arrangement of activities perspective in that nested structures of subsidiaries can exist, but the “mechanism” of hierarchy is the ownership structure.

Differences

While the three perspectives have obvious similarities and overlap—after all, that is why scholars rely on one or the other perspectives to proxy organizational structure—these perspectives also capture distinct elements and, therefore, draw attention to different theoretical aspects of organization structure. The arrangement of activities perspective draws attention to the locus of value creation and innovation associated with structure. The grouping of activities influences whether synergies can be realized, goals achieved more quickly (Raveendran 2020 ) and whether knowledge can be recombined to seize innovation opportunities (Karim and Kaul 2014 ). The representation of decision-making perspectives draws attention to the top management team as structural authority to resolve conflicts between lower-level decision makers, and lobby for distinct operating activities in the organization. Moreover, top management plays a crucial role in the restructuring of the arrangement of activities and decisions with respect to changing the composition of legal entities. For example, political power of executives has been argued and shown to affect division reorganization decisions (Albert 2018 ) and allocation decisions of internal non-financial resources (Keum 2023 ). Finally, the legal entities perspective draws attention to structure as legal accountability and draws a sharp line between what is truly separate and what is more ‘loosely’ integrated. Consequently, arranging activities as legally separate entities often requires more costly coordination measures, such as formal contracts.

Theoretical and empirical questions around these differences may investigate the following claims.

A research focus on organizational structure as arrangement of activities may be of particular interest for the aim of understanding performance and innovation outcomes as economic activities are directly related to the process of value creation.

A research focus on organizational structure as decision-making representation may be of particular interest for the aim of understanding how strategic goals are formed, with respect to change and associated corporate reorganizations.

A research focus on organizational structure as legal entities may be of particular interest for the aim of understanding barriers to integration and realization of synergies as well as flexibility with respect to changes in corporate scope.

However, these preliminary statements about the different perspectives on organizational structure are not meant to encourage researchers to keep them strictly separate. Instead, future studies can explore these perspectives' theoretical relationships, offering wonderful opportunities for new insights, as will be discussed next.

Relationships

By investigating underlying connections between the different perspectives, future research may surface important insights about organizational design that can open up entirely new research programs. An essential theoretical question involves whether there are any directional relationships between specific perspectives. For example, when does top management team structure induce or follow other changes (in divisions and legal structure)? Karim and Williams ( 2012 ) show that changes in executives’ division responsibilities helps predict subsequent reorganizations in the respective units. Another question is how the legal structure may affect the arrangement of activities over time. The greater cost of integration of legally separate entities may imply that greater autonomy is more likely to follow, which future research may want to investigate.

Moreover, it would be useful for the field of organizational design to better understand when potential structural changes in divisions and legal entities trigger in turn a reorganization of leadership responsibilities. The legal structure may change much more slowly than the other two types, because of regulatory and other legal reasons. Nevertheless, the legal structure can play an essential role in how the organization lays out its strategic priorities, is internally managed, and evaluates its performance. At least, these appear to be the main reasons of notable reorganization that lead to an overhaul in legal structure. Recent examples include the already mentioned case of Google’s legal reorganization into contained group subsidiaries under the Alphabet umbrella, Facebook’s legal reorganization into the corporation Meta (Zuckerberg 2021 ), and Lego’s reorganization into the Lego Brand Group (LEGO Group 2016 ). The question remains whether the legal reorganization is a means to enable better top management and divisional structures or whether the top management structure, for example, motivated such legal changes for better alignment.

Finally, a completely novel question that acknowledges the multifaceted perspectives of organizational structure emerges. What are the performance, innovation, and strategic change consequences for organizations when these different perspectives are aligned or misaligned? Are there specific “archetypes” organizational structures along these dimensions?

Implications

It is important to stress that in some cases it may be necessary to draw upon two or all three to gain a more holistic picture of organizational structure and important nuances that may be highly specific to a particular organization. Whereas the arrangement of activities provides an overview of distinct operating units, such as divisions and subunits, this perspective alone does not capture complex interrelationships with respect to who reports to whom. This becomes most critical in cases of a matrix organization, where, for example, a segment is guided by a product goal as well as some geographical goals.

Moreover, a comparison of some of the organizational structure characteristics between Citigroup and Ford demonstrates how important, potentially strategy-influencing differences exist when consulting all three perspectives. For example, the fact that Ford’s executive team is in part made up of executives who represent a specific legal entity, which is its own reporting segment, suggests that legal structure, decision-making and value creation for certain parts of the organization go hand in hand. In contrast, Citigroup’s legal structure bears little to no resemblance to its operational structure. This may suggest that in Citigroup’s case legal entities play a very different role for organizational design purposes, such as containing legal regulatory requirements and legal containment of liability, whereas its management of value creating activities and decision-making responsibilities is guided across these legal boundaries. Concluding that the legal structure is a reflection of operational and strategic design may be somewhat misdirected with respect to product-market operations but more reflective of risk and geographical profiles in Citigroup’s case. Future research is encouraged to explore such differences in more detail.

Limitations

Before concluding this point of view paper, it is important to acknowledge that there are other important attributes of organizational design and structure that should be considered. For example, the leadership perspective of structure may be extended or complemented by considering the structure of corporate governance and its effects on organizational changes (Castañer and Kavadis 2013 ; Goranova et al. 2007 ). Moreover, the arrangement of activities into departments, units, and divisions determines the formal structure of the organization. Employees who belong to the same department (and work on the same task) often work in the same physical location and, therefore, are more likely to interact (including outside their formal task) and form (informal) networks with those close to them (Clement and Puranam 2018 ). As such, the structure of tasks can affect the emergence of networks in the organization. Organizational changes to the arrangement of activities may consequently conflict with the informal structure that has formed over time (Gulati and Puranam 2009 ). Informal networks in the organization may, therefore, constitute another “measure” of structure, but this paper takes the perspective that networks are a more likely to be a consequence of organizational structure (albeit one that may affect future structures).

Finally, organizational design can exceed a focal firm’s boundaries. Partnerships, such as alliances, joint ventures, and meta-organizations (Gulati et al. 2012 ), pose additional challenges in determining the actual structure of an organization. Future research is advised to study how different dimensions of organizational structure extend to and impact such boundary-spanning multi-organization designs.

The divergence in prior literature with respect to conceptualizing and operationalizing organizational structure reveals that this construct has more facets to it than sometimes acknowledged. Studying the alignment and divergence of these three characteristics of structure within organizations has potential to qualify and complement prior theories and generate new insights with respect to nuances of organizational design that we may have overlooked in prior work. It is important to consider that focusing only on one of these dimensions at a time for studying structure can indeed be sufficient. However, the field of organizational design may wish to be more concise in which perspective is chosen and why, when building, testing, and extending theory. Highlighting what is not measured following a particular perspective can already enrich our understanding of the role of organizational structure in novel and impactful ways.

Data availability

Data used in this manuscript are publicly accessible through regulatory filings and company Investor Relations websites.

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Acknowledgements

I appreciate the helpful comments and guidance provided by the handling editor-in-chief Marlo Raveendran and two anonymous reviewers. I also would like to thank all three editors-in-chief for supporting the publication of this point of view manuscript.

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Albert, D. What do you mean by organizational structure? Acknowledging and harmonizing differences and commonalities in three prominent perspectives. J Org Design 13 , 1–11 (2024). https://doi.org/10.1007/s41469-023-00152-y

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Organizational Structure Change and Hybridity: Enhancing Uncertainty as a Response to Competing and Changing Institutional Logics

Associated data.

The raw data supporting the conclusions of this article will be made available by the authors, without undue reservation.

Confronting the uncertain environment, this article adopts a case research approach to resonate with the studies of hybridity. It aims to explain how the perception of uncertainty in the institutional environment affects the adaptation of organizational structure in pursuing legitimacy for hybrid organizations. Based on the empirical data collected from a two-staged fieldwork and in-depth interviews, the case analysis concentrates on the correlation between the evolution of institutional logics and organizational structure change from a diachronic perspective. The findings indicate that in the face of competing and changing institutional logics, Chinese mass media organizations have gradually shifted from a dominated blending strategy in the exploration stage to a deeply compartmentalizing strategy in the stable stage. The hybrids can deal with the uncertainty of the institutional environment by enhancing the uncertainty of the organizational structure. Consequently, the case evolves an organizational integration through internal legitimacy. It manifests a possibility for hybrids of combining the two major response mechanisms in one process.

Introduction

Digital media and mobile communication technology are bringing great challenges to mass media organizations. Scholars have conceptualized organizational change differently to describe this global change, such as “liquid journalism” ( Deuze, 2008 ), “uncertain times” ( Lowrey and Woo, 2010 ), “blurring boundaries” ( Loosen, 2015 ), and among others. These crisis discourse altogether point to a core theme: how the news media would find a new development path in an extremely uncertain environment. However, the reality has shown that Chinese mass media organizations have not found a feasible solution to solve the technical and commercial difficulties in the changing market even after a long time of exploration.

According to the theory of organizational sociology, when the organizational objectives as a measure of organizational performance or achievements are ambiguous, organizations tend to resort to a legitimacy mechanism for their viability ( Zhou, 2003 , pp.89). This trend is also evident in the media sector. Most relevant studies explored the impact of a specific institutional framework on organizational behaviors. These included the intervention of political power ( Dickinson and Memon, 2012 ; Usher et al., 2021 ), performance legitimacy in the era of economic crisis ( Simon and Graves, 2019 ), social expectation of professional news production ( Carlson, 2017 ; Broersma and Singer, 2020 ), and upgrade of media technology ( Tandoc and Maitra, 2018 ; Liu and Berkowitz, 2020 ). However, different institutional elements could not function on its own in China’s social context. They often exist at the same time, conflict with each other, and continue to evolve (e.g., Wei, 2019 ).

Therefore, the change of Chinese mass media organizations provides valuable experience for understanding how organizations respond to the uncertain institutional environments. Although some available literature treats organizational change as a continuous process ( Burnes, 2004 ; Zhang et al., 2015 ), “organizational structure” has been regarded as an apparent indicator and clear evidence of this discrete field ( Král and Králová, 2016 ). There are two research approaches explaining the process of the organizational structure change. The traditional theory emphasizes the coercive impacts of institutions on the organizational structure with a consequence of isomorphism ( DiMaggio and Powell, 1983 ). But recent studies suggest that a favorable way for organizations to maintain or regain legitimacy in the heterogeneous institutional environment may be to combine different and potentially contradictory legitimation strategies ( Scherer et al., 2013 ; Schembera and Scherer, 2017 ). As a result, a sort of “hybrid organization” would be formed as a combination of different institutional logics embedded in the organization ( Battilana and Dorado, 2010 ; Battilana et al., 2015 ).

Essentially, mass media constitutes the typical hybrid organization. Therefore, the purpose of this article is actually to answer how the perception of uncertainty in the institutional environment affects the adaptation of organizational structure in pursuing legitimacy for hybrids. This article begins with a brief overview of the academic context and core issues of hybridity. Their discussions of the competing process of institutional logics are beneficial. However, the previous literature has not paid enough attention to the changes of institutional logics themselves, thus lacking sufficient response to the complexity of the institutional environment. In an effort to fill this gap, this article introduces a new variable of “institutional change” guided by the perspective of institution-as-process ( Thelisson and Meier, 2020 ). Together with “institutional competition,” it constitutes two dimensions of “institutional uncertainty.” On this basis, a new theoretical framework has been constructed to analyze the interactive relationship between organizational behavior and the institutional environment. There are two major responding mechanisms of hybridity to different institutional logics—“blending” and “compartmentalizing” ( Beaton et al., 2021 ).

The empirical data is collected from a two-staged fieldwork and semi-structured interviews in a Chinese metropolis daily between 2016 and 2021. In the case analysis, this article divides the evolution of the critical case into three stages over time: the exploration stage, the conflict stage, and the stable stage. It indicates that in the face of competing and changing institutional logics, Chinese mass media organizations have gradually shifted from a dominated blending strategy in the exploration stage to a deeply compartmentalizing strategy in the stable stage. They dealt with the uncertainty of the institutional environment by enhancing the uncertainty of organizational structure. Consequently, an internal legitimacy is achieved through interaction within the organization to ease internal tensions, thereby promoting an organic combination of the two strategies. These findings not only contribute a better understanding of hybrid organizations’ managerial strategic choices facilitating their sustainability, but also respond to the similarity and variance of newspaper crises around the world ( Siles and Boczkowski, 2012 ).

Hybridity: Organizational Structure in the Uncertain Institutional Environment

The organization studies have proposed that organizations would face two different uncertainties of the environment: objective uncertainty and perceptive uncertainty ( Downey et al., 1975 ). From a microscopic perspective, a variety of studies have explored the impacts of perception of environmental uncertainty on organizational behavior. For example, organizational structures ( Lawrence and Lorsch, 1967 ; Duncan, 1973 ), organizational strategies ( Christine, 1991 ), political processes within organizations ( Child, 1972 ), and the organizational fields ( Vermeulen et al., 2016 ). Following this path, the article focuses on the uncertainty of the institutional environment and discusses how the perception of institutional uncertainty in organizational change affects the adaptation of organizational structure.

Organizational structures in the uncertain institutional environments can be placed in the theoretical spectrum of “hybridity” 1 ( Minkoff, 2002 ; Battilana and Dorado, 2010 ; Pache and Santos, 2013 ). Some other scholarly camps distinguish sectors, societal domains ( Brandsen et al., 2005 ; Minkoff et al., 2008 ; Billis, 2010 ), or organizational identities ( Glynn, 2000 ; Pratt and Foreman, 2000 ). The camp taking institutional stance views hybridity as the combination of pluralistic institutional logics ( Skelcher and Smith, 2015 ; Wells and Anasti, 2019 ). This approach is prominent in the publicity-oriented organizational fields like social enterprises ( Pache and Santos, 2013 ; Wry and York, 2017 ) and non-profit organizations ( Battilana and Dorado, 2010 ; Zhang, 2017 ; Beaton et al., 2021 ). Likewise, mass media essentially combines various values such as economic performance, political participation, and public communication, thus constituting a typical hybrid organizational structure.

Because of the latent contradictions caused by competitions for resources and legitimacy among different institutional elements ( Oliver, 1991 ), how to handle and manage the conflicts between disparate logics has become the central issue in the study of hybridity ( Kraatz and Block, 2008 ; Pache and Santos, 2013 ; Battilana et al., 2015 ). Scholars believe that to reduce these tensions, it is necessary for organizations to construct adaptive structures based on the specific context ( Greenwood et al., 2011 ; Fitzgerald and Shepherd, 2018 ). Relevant literature has detailed analyzed a variety of structural forms including coalition, out-sourced firm, subsidiary corporation, and others ( Smith, 2010 ; Beaton et al., 2021 ). Therefore, the adaptation of organizational structure can be used as a significant mediator to illustrate hybridity in response to different institutional logics.

However, previous studies concentrate more on the competitive nature of the institutional environment and the tensions it creates. The dynamic process of organizational structure change has been ignored ( Smith and Besharov, 2019 ). As stated by Pache and Santos (2013) , “Understanding the dynamic process through which organizational responses shape organizational structure, which in turn influences subsequent responses, is an important next step in uncovering the complexity of institutional process.” Although some scholars have noticed organizations’ ongoing adaptive enactment process ( Jay, 2013 ; Dalpiaz et al., 2016 ; Smith and Besharov, 2019 ), their findings mainly revealed how the paradoxical frame of hybrids influences the flexibility and stability of the organizational structure. The adaptation caused by the change of institutional logics themselves has still not been fully explained which is exactly the crucial context of this article.

Some scholars highlight that legitimacy is an ambiguous concept and the legitimation dynamics need more in-depth investigation ( Suddaby et al., 2017 ; Thelisson and Meier, 2020 ). In this respect, they defined legitimation as a non-linear process inherently contested and negotiated in everyday activities in relation to organizational actions and decisions ( Gnes and Vermeulen, 2019 ; Thelisson and Meier, 2020 ). For example, Thelisson et al. (2018) have explained the evolution of intertwined institutional logics in the merger integration and the relative balance between the logics in play from a managerial perspective. However, this research major concerns the way certain institutional logics coexist and how their relationship evolves in organizational or inter-organizational change. The re-conceptualization of “institutional uncertainty” in this article would provide new empirical evidence for understanding this process deeply.

Competition and Change: Institutional Logics of Mass Media Organizations

Institutional logics affect organizational behaviors through legitimacy mechanisms. Legitimacy is defined here as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” ( Suchman, 1995 ) or it measures the degree to which actors are accepted or supported by stakeholders ( Zimmerman and Zeitz, 2002 ). Organizational legitimacy has different classification standards because of the differences in institutional sources. Scott (2010) divided legitimacy into three categories: regulative legitimacy, normative legitimacy, and cultural-cognitive legitimacy. In addition, some scholars complemented social benefit legitimacy or practical legitimacy according to the interest orientation of enterprise organizations, such as industrial legitimacy ( Zimmerman and Zeitz, 2002 ) and market legitimacy ( Dacin et al., 2007 ). According to these definitions, the sources of legitimacy, in other words, the institutional logics of mass media organizations are shown in Table 1 .

Multiple legitimacy of mass media organizations.

Table 1 describes the institutional pluralism for mass media organizations. On this basis, the conceptualization of “institutional uncertainty” in this article contains two core variables based on the previous studies: “competitiveness” and “change.” Both manifest the dynamic and time-varying nature of institutional logics in line with the process analysis of this article.

Institutional competition refers to the extent to which the institutional logics is incompatible and whether there is a settled or widely accepted prioritization of the logics within the field ( Raynard, 2016 ). It is the basic theoretical premise in the studies of hybridity. As institutional uncertainty is characterized by the multiple, competing, and sometimes conflicting institutional logics ( Greenwood et al., 2011 ; Pache and Santos, 2013 ). Many scholars have noticed this complexity of the Chinese media institutional environment. For example, while being challenged by the digital media, political power has enhanced its ability to control the media ( Chen and Zhang, 2019 ). Meanwhile, Journalism is deeply affected by “commercialism” ( Li and Chen, 2016 ), as well as calling for the return of public responsibility at the social level ( Pan and Lu, 2017 ).

Institutional change is measured by the freedom of evaluation criterion of specific institutional logic. High-level freedom implies a lack of explicit judgment about whether the organization is legitimate ( Lin et al., 2017 ). The institutional ambiguity exacerbates the risk of high uncertainty of regaining legitimacy to implicate organizational transformation for survival and sustainability. This is especially true in the Chinese political-economic environment after the reform and opening-up policy (e.g., Chen et al., 2016 ) and in the Chinese media context with digital technology (e.g., Li, 2017 ). Furthermore, some studies reveal that the evolution of Chinese media logics gradually generates two dimensions of “institutional change.”

On one hand, the internet has been changing the deep structure and overall ecology of Chinese journalism from the industrial structure, regulatory system to the production process ( Zhang and Wu, 2016 ). Consequently, as Pan and Lu (2017) mentioned, a series of questions become openly pending such as “How should news be done?” and “What norms should it adhere to?” News production takes on a liquid character ( Lu and Zhou, 2016 ). On the other hand, the core political, economic, and social expectations for Chinese mass media organizations are suffering a loss of consensus. For instance, the political pressure on mass media transforms into a broad demand of “New mainstream media” based on the traditional censorship. The business innovation is also in face of some disputes of “continuous innovation” or “disruptive innovation” ( Zeng and Wang, 2019 ). Additionally, both of them form a new balance which is increasing the uncertainty of the institutional environment.

Blending or Compartmentalizing: Response Mechanisms of Hybridity

According to the hybridity literature, legitimation is a complicated decision-making process. Besharov and Smith (2014) proposed a new analysis framework for understanding organizations’ strategic choices by combing the degree of centrality and the degree of incompatibility. More specifically, Beaton et al. (2021) classified the responses of hybrids to tensions through adaptation of organizational structures into three broad categories: denying, compartmentalizing, and blending. Denying means the hybrid might eschew hybridity altogether which results in the maintenance of a single organizational form linked to the dominant logic ( Beaton et al., 2021 ). This strategy in some studies has been described as an important solution for organizations to navigate complicated institutional terrain ( Uzo and Mair, 2014 ). But it is not consistent with the practical experience of mass media organizations, so this article adopts the latter two mechanisms.

Blending refers to the integration of competing institutional logics within the organization through a common identity to form a unified legitimacy in which various institutional logics reinforce each other ( Beaton et al., 2021 ). The core notion of this strategy indicates the blurring boundary between different logics ( Murray, 2010 ). In a notable example, Battilana and Dorado (2010) compared two micro-finance organizations. They found that new hybrids can strike a delicate balance between different logics by creating a common organizational identity via hiring strategies and the socialization process. This strategy is also adopted by Chinese mass media organizations that absorbed the market-oriented Metropolis during the integration of enterprise conglomeration ( Zhao, 2000 ). However, the emerging dominant logic is not a global one over the others, but instead requires to be expressed in the stages of evolution ( Thelisson et al., 2018 ).

Compartmentalizing emphasizes the coexistence of institutional logics and suggests that hybrids can entail isolating logics in different organizational departments, divisions, or subsidiaries ( Fitzgerald and Shepherd, 2018 ; Beaton et al., 2021 ). In discussing how organizations manage multiple identities related to different institutions, Pratt and Foreman (2000) defined “compartmentalizing” as an important response mechanism. It means that the organizational members choose to retain all current identities without seeking synergy within the organization. A few research literatures has explained the organizational structure change featured with the segregation between “news gathering sector” and “marketing sector” in the market-oriented reform of mass media (e.g., Li and Fang, 2010 ). While this strategy helps increase the flexibility of hybrids, it can also create new conflicts because different logics would guide organizational decisions and behavior simultaneously.

Data and Methods

This article employs a qualitative research design based on a single case study under a diachronic perspective with the data collected from a two-staged fieldwork and twenty-three semi-structured interviews. The critical case is a metropolis daily (hereafter as “N”) in a China’s province (hereafter as “G”). N is the most important market-oriented newspaper in the provincial newspaper group of G’s and it is also the industry benchmark of Chinese mass media. Since 2012, N has experienced nearly a decade of reform and exploration, which makes it significantly representative theoretically and empirically. In terms of the data analysis, this article opts for a deductive method guided by a new theoretical framework. First, this article re-conceptualized the term of “institutional uncertainty” and introduced two core responding mechanisms of hybrids based on previous research. The case analysis concentrates on the correlation between the evolution of institutions and organizational structure change in three stages.

Data collection was mainly completed through a two-staged fieldwork. In the early stage, from October 2016 to January 2017, the authors got a rough idea of the reform strategies and N’s overall organizational structure framework. Then in the later stage, from June to September 2017, the authors had collected many first-hand materials aimed at organizational structure including internal documents, work-flow information, and communication among insiders. During the fieldwork, one of the authors conducted the investigation in the news headline department of N as an intern editor for 8 months. Her full participation in the routine work collected the direct data of the interaction inside and outside the organization.

Additionally, the authors conducted semi-structured interviews with the currently active or resigned staff of N at different levels from 2016 to 2021 because this period covered the whole process of N ’ structural change from the initial exploration to a relative stable condition. The twenty-three interviewees consisted of two parts: fourteen journalists, editors, and department leaders acquired through snowballing during the fieldwork, and nine added interviewees between 2020 and 2021. These new interviews aimed to supplement data on the new organizational practice of N after 2017. Multiple repeat interviews with a few interviewees were conducted for comparative arguments about the organizational change in different stages. The interviews were conducted face-to-face lasting about 2 h and semi-structured concentrating on the core issues with some free discussion. All the interviews were audio-recorded with permission and given pseudonyms for the protection of their identities.

Case Analysis

The case analysis indicates that enhancing the uncertainty of organizational structure can help mass media organizations better manage the hybridity by creating a flexible adaptive space. In this section, the evolution of N has been divided into three stages over time with the purpose of uncovering the response mechanisms of mass media organizations in different stages.

Exploration Stage: The Blending Strategies of Hybridity Dominated by Technical Legitimacy

Adaptation of hybridity.

The main task of Chinese mass media is to meet the growing information demand through news supply. Therefore, the organizational structure in the early days was set around the allocation of news production resources and market signals, manifested as a typical bureaucratic model based on efficiency mechanism. It was decomposed from top to bottom. The editorial committee was fully responsible for detecting the public opinion environment and arranging the reporting tasks of news departments. At the horizontal level, each department consisted of a specific team of editors and journalists who completed their own tasks independently.

However, the prevalence of new media delegitimized the traditional organizational structure. Adapting to the new production modes and communication channels had become the primary mission of mass media organizations in the exploration stage. N began to build a “central kitchen” in 2016 by adding a new decision-making body to the original functional hierarchy which was named “the reporting command center.” The new organizational structure is demonstrated in Figure 1 . This reform merged the editorial staff originally scattered in various news departments into a large editorial department. It undertook the integration and coordination between the editorial committee and the interview departments. Its primary mission was planning news topics and publishing real-time news information. The editors were required to liaise more with reporters and arrange their reporting tasks according to the breaking news. Therefore, when newspaper layouts had been extremely compressed, the news management authority was centralized to the reporting command center.

The organizational structure of N in the exploration stage.

To solve the insufficient content supply and the deteriorating business crisis, N added two complementary institutional modes into the new organizational structure: “contract-based system” and “project-based system.” Except a few divisions, N promoted the contracted “platform” reform in the Interview Center. Each “platform” signed an agreement about the business target with the organization on an annual basis. After the year-end revenues were turned over, the balance can be distributed internally. The leader of the “platform” determined how the specific year-end bonus should be distributed. Meanwhile, the project-based system included an independent project team and editor-led virtual studio for creating high-quality news columns and expanding brand influence. The specific arrangement was subjected to the operation of news content. For example, some special topics or dynamic content required the operation of specific journalists, thereby the team is more changeable 2 .

Concerning the principal-agent relationship within this organizational structure, the human resource management of N still adopted the traditional “piecework” salary assessment system. It followed the basic principle of more pay for more work and took the quality of news manuscripts as the main evaluation standard. The performance evaluation of journalists and editors was the responsibility of department heads. The performance evaluation process of a typical journalist was as follows:

First, there will be a fixed basic salary, which is generally low. Then, each manuscript mainly undergoes two steps: preliminary review and final review.

During the preliminary review, the department heads will grade the manuscript, such as excellent, medium, and poor. At the final review, the system will do a mathematical processing of the grade and the number of words of the manuscript. The newspaper office has its own calculation formula 3 .

Furthermore, the organization had a unified cap for each department regarding the total amount of salary assessment. But department heads also had limited right to pay more wages than the set amount. Consequently, on the premise of strengthening news censorship and human capital management, the media organization had given news departments some autonomy which was even further expanded after the “platform” reform.

Legitimacy Correlation

The organizational structure adaptation of N in the exploration stage took a dominating blending strategy. Although this media organization had enhanced its internal autonomy by adopting a flexible project-based system and strengthening the market decision-making power of different news departments, the decision-making power of news production had been centralized to the reporting command center. As a result, the reporters had to undertake multiple tasks, and the human resource management was still centered on “news content.” Thus, it can be seen that this organizational structure actually integrated different institutional logics into a news-led organizational system. Its correlation with the institutional environment is as below:

Institutional Competition

Technical legitimacy dominated among the institutional logics and was consistent with political legitimacy. At the beginning, the biggest crisis of the institutional environment comes from the development of new technology. Digital media, especially the internet platforms, requires the mass media organizations to adopt new technologies and re-establish the connection with the audience. In 2014, the Chinese central government promoted the policy of deep media convergence which was regarded as a reform path in line with the competing political needs, news value, and technical innovation simultaneously.

Institutional Change

The logic of social benefit legitimacy changed over time. Since the steep decline of advertising revenue in 2012, Chinese mass media organizations have been continuously exploring a survival model. But skateholders (e.g., enterprises) these days expect mass media organizations to provide integrated marketing strategies in various dimensions. The market-oriented media more depends on its content production capacity, resource integration capacity, and the brand influence instead of advertisements. N’s reform of “platform” was exactly the effort to increase cost consciousness within the organization and encourage employees to actively explore new business models through new incentive mechanisms.

• Change 1: To gain political and technical legitimacy, mass media organizations adopted a centralized decision-making mechanism in the form of “central kitchen,” while increasing organizational flexibility with “project-based” system.
• Change 2: To gain social benefit legitimacy, mass media organizations gave news departments more market decision-making power and residual rights of control to explore new business models.
• Change 3: Different institutional logics were reconciled in the organizational structure and formed an organizational integration centered on news content.

Conflict Stage: The Internal Tensions of Hybridity and Changes of Institutional Logics

The organizational structure adaptation of N had gone through an experimenting period of about 2 years between 2016 and 2018. In view of the internal adjustment and external environment, there were unavoidable obstacles in this organizational structure.

Internal Tensions

In the first place, new institutional designs such as “contracted platform” and “project-based system” brought more serious problems of management differentiation. As the head of each department had their own considerations on practical situations and personal interests, whether the “central kitchen” could function well was subject to the support of department heads. After all, “when the leaders (of the organization) asked the editors to carry out news planning, only journalists interested in the topic can be summoned. Otherwise, the editors can do nothing because journalists report to their (department) heads.” 3

• For example, sometimes a leader finds a topic very interesting, but its implementation depends on whether department directors cooperate. Some directors are very strong willed. You do not expect to use his journalists. Some (directors) may be quite supportive, and (if) senior leaders are also by the side, (journalists’ cooperation) will be relatively easy. There also might be some directors who respect the journalists’ personal preferences. If the journalist is willing and does not affect the routine of his department, it does not matter 4 .

Based on this management model, journalists also began to generate additional cost-benefit trade-offs: “Journalists just want to do what they are willing to do. It takes a lot of energy to select topics, interview, and write. Especially after the newspaper layout had been reduced dramatically and many journalists had resigned, every (journalist) must deal with a large amount of work. In addition, the newspaper office, particularly the leaders required news distribution via mobile terminals to go viral like explosion. Journalists thus felt that it’s better to produce news that would go viral for higher income and visibility, rather than spending too much time on writing useless manuscripts.” 5

Moreover, the “platform” reform led to a more serious risk that might disrupt the organization, like a midlevel head remarked:

• Since the “platform” reform, the separation between departments would be more outrageous. As each platform bears the business task of its own, then (the question will be raised) why I should work with you or why you do not work (with me), problems will arise. If I coordinate with you, I will have to charge you. How should I calculate the money? If you do not coordinate with me, then I will be forced to recruit art editors, video personnel, and researchers by myself. In the end, each platform will have to enlarge, which is not conducive to the management of the newspaper office 6 .

Changes of Institutional Logics

Apart from the internal tensions, it should even more attribute the failure of the two reform strategies to the changes in institutional logics from 2016 to 2018. On the one hand, the “central kitchen” was indeed regarded as a promising transformation for a time. But it lost legitimacy after a period of experimentation as its nature of centralization is contrary to the decentralization of the internet. In other words, the public awareness of technical innovation for mass media organizations became more and more obscure. On the other hand, most platforms of N cannot fulfill their business tasks signed with the organization. “Because there is a great contradiction in forcing content creating journalists to work on commercial activities, it is actually beyond their professional ability. Besides, the tendency of journalists under the pressure of running the business weakened their investment into news production, which is detrimental to the professionalism, credibility and reputation of the media in the long run.” 6 Thus this structural adaptation appeared not in line with the legitimacy of social benefits.

Stable Stage: The Compartmentalizing Strategy of Hybridity in the Uncertain Institutional Environment

Since 2019, N had gradually abolished the “reporting command center” and the “contracted platform.” It instead started a process of reorganization based on the previous exploration which featured as deviating from the media function of public news. N’s organizational structure in this stage keeps relatively stable which is illustrated by the Figure 2 .

The organizational structure of N in the stable stage.

Figure 2 shows that the new organizational structure has three additional departments: Big Data Institute, New Media Center, and Technical Committee under the Management Committee led by the Party Committee. Together with the original Editorial Committee and Marketing Committee, they form the leader board at the top level of the structure. In the manipulation, N redistributes all editors into different news divisions and implements “column responsibility system” which means every account of the official news APP and newspaper layout has been appointed specific chief editors in charge of direct operation. At the same time, the convergent editing team of the original “reporting command center” has been reorganized into News APP Division and Short videos Division which form a fresh New Media center together with the Official Wechat Division. The new Interview Center is no longer under the leadership of the editorial committee, bug undertakes the tasks of news reporting, as well as business projects of “think tank” 7 independently. Although this organizational differentiation has greatly enhanced the autonomy of departments, N offsets the risk of organizational fracture by establishing a new “Big Data Institute” after canceling the “platforms.” It can be regarded as a symbolic institution 8 with the main goal of managing commercial projects previously handled by the platforms. By this means, the new organizational structure constitutes an orderly flat mode under control.

When N tries to achieve diversified organizational goals through organizational differentiation, an urgent problem arises. The traditional “piece work” incentive mechanism has been incapable of suiting the functional transformation of journalists in the new media era. In the example of the new media departments, “it is difficult for the newspaper office to find the production and communication rule for audience’s attention, so there is no way to conduct performance assessment completely according to the new media data. Because many manuscripts have high news value but attract little attention online.” 9 Moreover, after journalists turn more attention to “think tank” projects, their contribution to business results and media brand influence could not be assessed by the workload 10 .

Allowing for these tensions, N introduces the human resource management of internet companies to build a brand-new hierarchical system of professional and technical positions. All positions have transformed from the previous single position set as reporter or editor to five categories of collection-editing, research, product, R&D, and design. The personnel included in this system are paid with the “negotiated annual salary,” a fixed number established by the human resource department. Everyone’s monthly income depends on the fixed number multiplied by the percentage of the performance score. Specific assessment indicators and weights are determined by the department heads, who will set up different evaluation systems for each person according to different task assignments. The indicators include news quality, workload, communication data, social resources, projects, etc. The assessment of middle-level heads has additionally incorporated departmental coordination accounting for 40% 11 .

This new human resource management system of N has deeply increased the flexibility in journalists’ work and the management authority of middle-level heads. In fact, this aims to create more adaptive space for each task unit through the redistribution of human assets, so that they can independently explore how to better meet the requirements of the institutional environment in line with their work preference. Based on the differentiation of organizational structure, this strategy further transmits downward the legitimacy pressure to specific news departments and reporting groups.

N’s organizational structure adaptation in the stable stage is manifested as a deeply compartmentalizing strategy. The centralized coordination mechanism of news production is replaced by a completely flat organizational structure where the decision-making power has been transferred to the middle-level structure. The department heads are responsible for controlling specific production directions, which is matched by the high dependence of human resource management on the personal judgment of leaders. Its correlation with the institutional environment is as follows.

For the sake of combing competing institution logics, mass media organizations entail isolating logics in different departments and divisions. For example, the New Media Center mainly takes responsibility for different technological innovations in news production (e.g., APP/Wechat/short video). The Investigative Reporting Division concentrated on high-quality news content for the legitimacy of news value. The Interview Center undertakes think-tank projects and some part of commercial goals with the Marketing Committee’s support for marketing development and operation. In these task units, the senior leaders only take charge of censorship before releasing news information, and no longer make overall arrangements for news content. Most of the management and decision-making power has been delegated to the mid-level heads which leads to a further differentiation of organizational structure.

Continuous changes in institutional logics are more pronounced in this stage. On the one hand, after the internal integration of organizational structure featured by the “central kitchen” has been proved difficult to succeed, there never forms an explicit consensus on what is an effective reform path.

Mass media organizations must keep open to the external institutional environment as described above and shift to the deeply compartmentalizing strategy. On the other hand, the standards of different institutional logics about whether mass media is legitimate are also very ambiguous and intertwined, thereby requiring ongoing trade-offs on legitimacy.

First, the balance between news and marketing, as mentioned by a journalist:

• The head requires us to do business projects along with public news, because the capacity of news production guarantees the sustainability of think tank. But the standards (of the two) are often inconsistent. For example, how to evaluate the scale, effect, and journalists’ contribution of the project is completely dependent on the personal judgment of the heads 11 .

Second, the balance between quality and distribution of news reporting. Speaking to this point, a journalist from the Investigative Reporting Division indicated: “the (department) head believes that the advantage of investigative reporting is speed. He thinks it adequate to provide additional information without excessive consideration of quality. But sometimes he criticizes us for not reaching the level of our peers and emphasizes the supervisory role of media as the safeguard of public interests.” 12 Lastly, the balance between audience’s attention and news content. In the operation of WeChat official account, the reporter frequently finds it difficult to satisfy social expectations. “When the creative content gets huge attention, the audience censure us for lack of depth and social responsibility. But nobody cares the serious news.” 13 In this case, it should be noted that the flexible human resource management has effectively eased and coordinated the conflicts within the organization when combining different institutional logics.

Integration Through Internal Legitimacy

Although the new organizational structure can create a certain innovation space for regaining legitimacy, it, in turn, leads to a strong uncertainty in the overall organizational goals. Most insiders believe that it is because “senior leaders figure out neither the direction of reform nor the way for public news, and they also aren’t familiar with the detailed tasks.” 14 Meanwhile, after the commercial think tank projects have been charged by the Big Data Institute, the financial investment of each department is arranged through the overall budget. So the resources they can distribute are strictly controlled by the organization. Under this circumstance, departments tend to compete for resources in a fiercer manner. In the event of unclear organizational objectives, every middle-level head must strive to prove the importance and legitimacy of his department to the top echelon 15 . Within N, the legitimacy orientation centered on “online attention” and “political stance” has gradually formed 16 , as these two have the greatest certainty in China’s context. Chinese mass media organizations have spontaneously formed an organizational integration through internal legitimacy to mitigate the latent conflicts, which ultimately promoted the organic combination of the two response mechanisms of blending and compartmentalizing.

• Change 1: To meet the needs of multiple legitimacy, mass media organizations have enhanced the horizontal differentiation of the organizational structure and the decentralization of the decision-making mechanism, creating more independent innovation space for each department.
• Change 2: In response to the continuous changes of institutional logics, mass media organizations have established a more flexible human resource management system to coordinate the internal tensions caused by institutional uncertainty.
• Change 3: In the absence of clear organizational goals, mass media organizations spontaneously form an integration through internal legitimacy when competing for organizational resources as a “workable certainty” connecting the unconsolidated organizational structure.
• Change 4: In the uncertain institutional environment, mass media organizations mainly adopt compartmentalizing strategies, but achieve a certain degree of integration through internal legitimacy. That implies a convergence of two response mechanisms.

Over the course of this study, mass media organizations as typical hybrids have taken a variety of organizational adaptive strategies to combine different institutional logics in response to the uncertain environment. In the exploration stage, they attempted to blend and integrate all the logics represented across the organization and mitigate the internal tensions by the traditional incentive mechanism centered on the news content. However, it turned out to be not in favor of regaining legitimacy to survive because of the new conflicts that arose within the organizational structure and the changing demands of the institutional environment. In consequence, mass media organizations as described in the case shift to a deeply compartmentalizing strategy with separate units and divisions corresponding to each side in the stable stage. And a situational human resource management system has been established to reduce the conflicts. By this means, it creates a flexible structure whose malleability helps to cope with the changing institutional logics. Finally, mass media organizations generate a “workable certainty” ( Luscher and Lewis, 2008 ) to achieve the integration which is reflected in the case as the internal legitimacy.

Sustaining hybridity in the literature has either relied on engaged organizational structures, strategies, practices, and processes to work through the conflicts (e.g., Battilana and Dorado, 2010 ; Battilana et al., 2015 ), or decided by the adaptive process that adjusts the relationship between different elements (e.g., Smith and Tushman, 2005 ; Jay, 2013 ; Dalpiaz et al., 2016 ). This article highlights both sides of these studies. First, the blending and compartmentalizing responses of mass media organizations resonate with the research that depicted hybrids as structurally differentiated or structurally integrated ( Battilana et al., 2017 ; Smith and Besharov, 2019 ). Then the case analysis of the organizational change from the diachronic perspective reveals the provisional and negotiated response to institutional logics for navigating the ongoing tensions, which is to some extent in line with the research of adaptation ( Luscher and Lewis, 2008 ; Jay, 2013 ; Smith and Besharov, 2019 ).

This article recurs the research implication that the institutional environment is dynamic and uncertain ( Miron-Spektor et al., 2011 ). But this study does not follow the approach of cognitive paradoxical frames and adaptation ( Smith and Lewis, 2011 ; Jay, 2013 ). It instead focuses on how the changing and competing for institutional logics during different stages affect the adaptive process of hybrids, thereby morphing into a new framework. In this sense, the article adds some institutional nuance on account of sustaining organizational hybridity by re-conceptualizing “uncertainty” with “institutional competition” and “institutional change.” This research enriches the discussions on organizations’ managerial strategic choices influenced by the evolution of the institutional logics from the legitimation-as-process perspective ( Thelisson et al., 2018 ; Thelisson and Meier, 2020 ).

Additionally, this article expands the existing research from two dimensions. First, there form two kinds of managerial strategic choices in response to the nature of institutional change. On the one hand, mass media organizations shift from the dominating blending strategy to the deeply compartmentalizing strategy based on different demands of competing for institutional logics in different stages. On the other hand, they adopt a flexible organizational structure to handle the goal ambiguity, which can be seen as a further decentralization of hybridity. Secondly, the case evolves an organizational integration based on internal legitimacy spontaneously. It manifests a possibility for hybrids of combining the two major response mechanisms in one process. Therefore, these findings contribute to move beyond the literature which depicts hybrids as either differentiated or integrated, and treat them as static ( Smith and Besharov, 2019 ).

Concluding Remarks

This research has found that under the condition of extreme uncertainties in technology and market, mass media organizations attempt to improve their viability by obtaining external legitimacy. But the complicated environment is increasing the complexity of this process. It has become the core issue in the discussions over hybridity that how mass media organizations respond to the uncertain institutional logics featured by mutual competition and continuous change. Chinese mass media organizations provide a possible answer—to cope with different legitimacy pressures by enhancing the uncertainty of organizational structure within a controllable range.

This uncertainty includes two main dimensions: organizational objectives and organizational incentive mechanism. In this case study, the early “central kitchen” model is a structural adaptation aimed at “news content,” expanding the organizational flexibility through project systems and contracted platforms. Confronting the new tensions inside and outside, this organization takes a compartmentalizing strategy and enhances the uncertainty of organizational structure further at two levels. This change consequently decomposes the legitimacy pressure from top to down by improving organizational differentiation and strengthening departmental independence, thereby constructing a relatively open and independent exploration model. However, the uncertainty of institutional logics also increases the vagueness of organizational objectives, resulting in the instability and contradiction of the internal incentive mechanism. The final organizational structure returns to a bottom-up integration through internal legitimacy and achieves the internalization of external institutional pressures. This is a China’s unique media practical experience.

From a theoretical point of view, the importance of this case study is to provide a most typical template to explain how hybrid organizations form an endogenous structural balance in a complex institutional environment without obvious market bias and signals. Obviously, the combination of the blending and compartmentalizing strategies will determine the distribution of uncertainties within the organization and eventually shape the form of hybridity, and vice versa. Future research could further explore the influence mechanism and formation logic of organizational structure change. For example, under what circumstances will there generate an integration or differentiation, which mechanisms are functioning, and so on. Meanwhile, these theoretical discussions will help a better understanding of the structural change of hybrids.

The empirical data has shown that in the general crisis of journalism, organizational differentiation may be an inevitable path for mass media organizations to deal with the challenges posed by institutional logics. Even in a relatively open organizational structure, how to distribute and regulate the uncertainties of different dimensions will greatly affect news production and public life. For example, the media organization, in this case, has encountered a serious contradiction between organizational legitimacy and efficiency. Due to the lack of normalized news coordination mechanism, not only have much important news been not well presented, but the fragmented operation by departments has led to many ineffective competitions. Therefore, how to deal with the degree and scope of uncertainties will become an important problem that mass media in the future should consider. However, even though this article responds to calls for research in contexts other than North America ( Greenwood et al., 2010 ), questions about whether these findings are unique to Chinese mass media organizations or commonly in other organization field still need further comparative studies.

Data Availability Statement

Author contributions.

Both authors listed have made a substantial, direct, and intellectual contribution to the work, and approved it for publication.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

1 The term “hybridity” is used in two situations in the literature. One is “neither market nor hierarchy,” but a hybrid, networked organizational form ( Powell, 1990 ). The other refers to organizations combing different logics such as public and private organizational goals ( Jay, 2013 ). This article uses it in the latter sense.

2 Authors’ interview with one editor conducted on August 21, 2017.

3 Authors’ interview with one journalist of the investigative reporting division conducted on September 30, 2017.

4 Authors’ interview with one editor conducted on September 25, 2017.

5 Authors’ interview with one editor conducted September 12, 2017.

6 Author’s interview with one mid-level head conducted December 23, 2020.

7 In 2018, N began an organizational transformation from news media to media think tank which means developing some research projects to serve the enterprises and government as a new business model.

8 Because in addition to a small number of principals and technicians, the main staff of this department are concurrently held by journalists from the Interview Center.

9 Authors’ interview with one mid-level head conducted on September 28, 2017.

10 Authors’ interview with one mid-level head conducted on July 14, 2021.

11 Authors’ interview with one journalist from the interview center conducted on December 20, 2021.

12 Authors’ interview with one journalist from the investigating reporting division conducted on December 1, 2021.

13 Authors’ interview with one reporter from the official weChat division conducted on December 4, 2020.

14 Authors’ interviews with two mid-level heads conducted on July 14, 2021 and 23 December 23, 2020.

15 Authors’ interviews with three insiders conducted on November 27, December 4, 2020, and July 14, 2021.

16 Authors’ interviews with some insiders from November 2020 to December 2021.

This study was funded by the National Natural Science Foundation of China (Grant No. 71804120).

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Deposit Insurance, Uninsured Depositors, and Liquidity Risk During Panics

The lack of universal deposit insurance coverage can create liquidity risk during financial crises. This aspect of deposit insurance is hard to test in modern data because of the broad coverage of most systems. We, therefore, study the role that the U.S. Postal Savings System played in commercial bank closures during the Great Depression. The system offered households a federally insured deposit account at post offices throughout the nation, and its structure provides a near-ideal environment to identify this competitive liquidity risk during a crisis. We find that banks that operated nearby a post office that accepted deposits were more likely to close between 1929 and 1935. We further make use of a structural change in the availability of postal depositories in the early 1910 to estimate an IV regression that confirms the results. In either model, the effect is strongest for those banks with low reserves, suggesting that the mechanism was through depositor withdrawals rather than other factors.

The authors have no sources of funding or relevant financial relationships to disclose. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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Call For Submissions: PDW Bridging OB and Entrepreneurship Research, AOM 2024

1.  call for submissions: pdw bridging ob and entrepreneurship research, aom 2024.

Apply to participate in the OB Division PDW

Bridging Organizational Behavior and Entrepreneurship

The OB Division, in collaboration with the ENT Division and sponsored by the Kauffman Foundation, organizes a Professional Development Workshop (PDW) "Bridging Organizational Behavior and Entrepreneurship" for the 2024 AOM Annual Meeting in Chicago, IL. T he aim of this PDW is to stimulate and help develop research at the interface of organizational behavior (OB) and entrepreneurship (ENT). AOM has not published the conference program yet, but based on previous deliveries our expectation is that the PDW will be held on Friday, August 9, 8.00-12.00 (including breakfast).

We invite researchers interested in participating to submit a short description of their research at the interface of OB and ENT that they seek to further develop. This can be a short research proposal, an extended summary of a study that you seek to develop for publication, or something that is in-between these two stages of research. At the PDW, you will receive feedback on your research from one of our expert panelists:

Melissa Cardon, University of Tennessee                               Panelist

Miriam Erez, Technion                                                            Panelist

Jeff Gish, University of Central Florida                                 Panelist

Keith Hmieleski, Texas Christian University                         Panelist

Jeff Pollack, North Carolina State University                        Panelist

Andreas Rauch, Audencia                                                      Panelist

Maija Renko, DePaul University                                            Panelist

Ute Stephan, King's College London                                      Panelist

Marilyn Uy, Nanyang Technology University                        Panelist

You will also be able to participate in a broader, forward-looking, discussion of how to develop research on the interface of OB and ENT, to connect with the other panelist as well as the other participants who share your interest in research on the OB-ENT interface, and to attend presentations by Gilad Chen on research on the interface of OB and ENT and by Denis Gregoire on publishing ENT research in the Academy of Management Journal .

Submissions should be no longer than 10 pages all included (12 font, 1 in margins, double-spaced) and received no later than June 1, 2024 (but we encourage submitting earlier). Please send submissions to Daan van Knippenberg, [email protected] .  

There is a cap on the number of participants this PDW is able to host. We will therefore select submissions based on fit with the PDW, and follow up with an accept/reject decision asap after June 1. Please note that as with all AOM program activities, submitting your application implies a commitment to participate in the (in-person) session if accepted.

The organizers:

Daan van Knippenberg

Brad Kirkman

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