A Perception-Based View of the Employee: A Study
of Employees’ Reactions to Change

DISSERTATION
of the University of St. Gallen,
Graduate School of Business Administration,
Economics, Law and Social Sciences (HSG)
to obtain the title of
Doctor of Business Administration

submitted by

Chaiporn Vithessonthi

from

Thailand

Approved on the application of

i

Abstract

Drawing on several theoretical perspectives (e.g., individual motivation, behavioral
decision-making, social exchange theories, organizational justice theories, social cognition,
institutional theories and neoclassical economics theories) from different disciplines (e.g.,
organizational psychology, strategic management, and economics), this dissertation
developed a perception-based approach to examine a possibility that employees’ perceptions
and/or attitudes will be associated with their decisions in an organizational setting.
Specifically, this dissertation examined the effects of employees’ perceptions and/or
attitudes on their reactions to organizational change.
This dissertation addressed two major research questions relevant to organizational
change management, organizational behavior and applied psychology. First, it addressed a
question of what perceptions and/or attitudes influence employees’ resistance to change.
Second, it addressed a question of what perceptions and/or attitudes influence employees’
support for change? This was done by drawing on several theoretical perspectives and
examining relationships between perception and/or attitude variables and resistance to
change and support for change.
Based on data obtained from two samples of respondents from two different settings
(i.e., a downsizing in Study 1 and a privatization in Study 2), this dissertation found
significant relationships between perceptions and/or attitudes and resistance to change
and/or support for change. The findings provide some empirical support for the perception-
based view of the employee. Using multinomial ordered probit modeling, some perceptions
and/or attitudes were found to be significantly predictive of employees’ reactions to change.
The potential practical value of using perceptions and/or attitudes as predictors of
employees’ reactions to change is discussed, as are implications and suggestions for future
research.
for offering his valuable suggestions and solutions to statistical issues with enthusiasm, but
also for allowing me to use his computer and statistical applications. I am also grateful to
Silke Bucher, Bernd Beuthel, and Jasmina Hasanbegovic for their thoughtful and
constructive feedback on earlier versions of this dissertation. And, of course, I thank Linda
Roberts, my editor and proofreader, at Western Illinois University, who shouldered the
editorial and proofreading work on my unpolished lines of English. Last but not least, I
would like to thank my parents for their love, incredibly great confidence, and unbounded
support throughout the course of this journey and beyond.

Basel, January 2005 Chaiporn Vithessonthiiii

Table of Contents

Abstract i
Acknowledgements ii
List of Tables vi
List of Diagrams and Figures viii
List of Abbreviations x
1. Introduction 1
1.1. Research Issues 1
1.2. Research Questions 3
1.3. The Importance of the Research Questions 6
1.4. The Scope of the Dissertation 8
1.5. The Intended Contributions of this Dissertation 10
2. Core Concepts and Relevant Literature 12
2.1. Theories of Change 12
2.2. Perceptions 16

4.1.1. Study 1 – Context, Sample and Procedure 78
4.1.2. Study 2 – Context, Sample and Procedure 79
4.2. Alternative Methods of Data Analysis 80
4.3. The Multinomial Ordered Probit Model 81
4.4. Measures of Theoretical Constructs 83
4.4.1. Dependent Variables 83
4.4.2. Independent Variables 84
4.4.3. Control Variables 87
4.5. Data Analysis Procedures 87
5. Results and Discussion 89
5.1. Study 1 – Results and Discussion 89
5.1.1. Analyses of Correlations among Dependent Variables 89
5.1.2. Analyses of Correlations among Independent Variables 90
5.1.3. Results for Hypotheses – The Multinomial Ordered Probit Models 94
5.1.4. Discussion of Study 1 106
5.2. Study 2 – Results and Discussion 108
5.2.1. Analyses of Correlations among Dependent Variables 109
5.2.2. Analyses of Correlations among Independent Variables 110
5.2.3. Results for Hypotheses – The Multinomial Ordered Probit Models 114
5.2.4. Discussion of Study 2 127
5.3. General Discussion 131
5.3.1. Key Contributions of the Dissertation 131
5.3.2. Limitations to this Dissertation 136
5.3.3. Implications and Directions for Future Research 138
5.3.4. Implications and Directions for Practice 139
6. Conclusions 140
References 142
Appendices 165

v

Table 19: Study 1 – Correlations for Passive Resistance (cont.) 188
Table 20: Study 1 – Correlations for Active Support 189
Table 21: Study 1 – Correlations for Active Support (cont.) 190
Table 22: Study 1 – Correlations for Active Support (cont.) 191
Table 23: Study 1 – Correlations for Passive Support 192
Table 24: Study 1 – Correlations for Passive Support (cont.) 193
Table 25: Study 1 – Correlations for Passive Support (cont.) 194
Table 26: Study 2 – Correlations for Dependent Variables 206
Table 27: Study 2 – Correlations for Active Resistance 207
Table 28: Study 2 – Correlations for Active Resistance (cont.) 208
Table 29: Study 2 – Correlations for Active Resistance (cont.) 209
Table 30: Study 2 – Correlations for Passive Resistance (cont.) 210
Table 31: Study 2 – Correlations for Passive Resistance (cont.) 211
Table 32: Study 2 – Correlations for Passive Resistance (cont.) 212
Table 33: Study 2 – Correlations for Active Support 213

vii

Table 34: Study 2 – Correlations for Active Support (cont.) 214
Table 35: Study 2 – Correlations for Active Support (cont.) 215
Table 36: Study 2 – Correlations for Passive Support 216
Table 37: Study 2 – Correlations for Passive Support (cont.) 217
Table 38: Study 2 – Correlations for Passive Support (cont.) 218
Table 39: Summary of Regression Results of Indicators for Resistance to Change 223
Table 40: Summary of Regression Results of Indicators for Support for Change 224
Table 41: Regression Results of Active Resistance to Change 1 225
Table 42: Regression Results of Active Resistance to Change 2 225
Table 43: Regression Results of Active Resistance to Change 3 226
Table 44: Regression Results of Passive Resistance to Change 1 227
Table 45: Regression Results of Passive Resistance to Change 2 228

Figure 18: Study 1 - Indicators for Fear of Unknown Consequences of a Change 176
Figure 19: Study 1 - Indicators for Perceived Change in Power 176
Figure 20: Study 1 - Indicators for Perceived Change in Status 177
Figure 21: Study 1 - Indicators for Perceived Change in Pride 177
Figure 22: Study 1 - Indicators for Job Satisfaction 178
Figure 23: Study 1 - Indicators for Job Security 178
Figure 24: Study 1 - Indicators for Job Motivation 179
Figure 25: Study 1 - Indicators for Perceived Employability 179
Figure 26: Study 1 - Indicators for Self-Confidence for Learning 180
Figure 27: Study 1 - Indicators for Affective Commitment 180
Figure 28: Study 1 - Indicators for Trust in Management 181
Figure 29: Study 1 - Indicators for Perceptions of Colleagues’ Resistance to Change 181
Figure 30: Study 2 - Indicators for Active Resistance to Change 195
Figure 31: Study 2 - Indicators for Passive Resistance to Change 195
Figure 32: Study 2 - Active Support for Change Indicators 196
Figure 33: Study 2 - Indicators for Passive Support for Change 196

ix

Figure 34: Study 2 - Indicators for Perceived Organizational Support 197
Figure 35: Study 2 - Indicators for Perceived Procedural Justice 197
Figure 36: Study 2 - Indicators for Perceived Participation in Decision-Making 198
Figure 37: Study 2 - Indicators for Perceived Need for Change 198
Figure 38: Study 2 - Indicators for Attitude towards Organizational Change 199
Figure 39: Study 2 - Indicator for Fear of Known Consequences of a Change 199
Figure 40: Study 2 - Indicators for Fear of Unknown Consequences of a Change 200
Figure 41: Study 2 - Indicator for Perceived Change in Power 200
Figure 42: Study 2 - Indicators for Perceived Change in Status 201
Figure 43: Study 2 - Indicators for Perceived Change in Pride 201
Figure 44: Study 2 - Indicators for Job Satisfaction 202

PR Passive resistance to change
PR1 Indicator 1 for passive resistance to change
PR2 Indicator 2 for passive resistance to change
PR3 Indicator 3 for passive resistance to change
PS Passive support for change
PS1 Indicator 1 for passive support for change
PS2 Indicator 2 for passive support for change
PS3 Indicator 3 for passive support for change
S.E. Standard error

1

1. Introduction

1.1. Research Issues
The starting point for this research is the challenge of “managing change in organizations.”
Managing organizational change is problematic: situations in which changes are undertaken
are shifting, it is harder for organizations, and in particular top managers as well as change
agents, to prepare for and manage the change in ways that satisfy the demands of both the
organization and its employees.
1
How do organizations go about making “structured” and
“unstructured” decisions concerning how to cope with resistance to change, so that they
achieve the goals of their organizational change efforts? It is not surprising that, over the
years, resistance to change has attracted increasing attention from researchers, practitioners,
and the general public. A great deal of research has focused on understanding the sources
and determinants of resistance to change. The media and the general public are generally
interested in various forms of active resistance to change such as strikes or protests. Other
forms of resistance such as passive resistance, although less observable, have not gone
unnoticed and thus have also warranted extensive research over the years.

performance. These pressures include, for example, increased competitive pressures (Meyer,
Brooks and Goes, 1990), new government regulations (Meyer et al., 1990; Haveman, 1992;
Fox-Wolfgramm, Boal and Hunt, 1998), technological change (Haveman, 1992), or
declining firm performance (Bibeault, 1982).
Given the above-mentioned environments, research on organizational change has been
enriched by both empirical and theoretical studies investigating many aspects of
organizational change such as change strategies, change processes, or antecedents and
outcomes of different forms of change.
3
To search for conditions that promote successful
change in organizations, it is crucial to know the implications or organizational change for
employees, and more importantly, the reactions employees will have. Much of the past
research on employees’ reactions to change seems to have been implicitly based on a
rational choice theory about employees’ behaviors
4
, thereby giving little attention to the
potential effects of perceptions, attitudes, or social influence on decisions and behaviors.
Indeed, rational choice theories
5
have long dominated the research in organization theory,
which encompasses research on organizational change and development In their roughest
form, rational choice theories would assert that when organizational change efforts are
understood to be beneficial to a firm, employees in this firm should support such changes.
This raises the question of whether all employees do in fact share the same view on this
change. What are the implications for their decisions if they do not share the same view?
Within the large body of research on decision-making in the literature on strategic
management or management science, several concepts and underlying assumptions—for
example, cost-benefit analysis and human rationality—seem to have conditioned both the
theoretical and empirical research in organizational change and employees’ reactions to


their application seem to be too sparse to indicate convincingly and conclusively whether
the techniques presented in those models have had significant influences on employees’
reactions to change. Because I do not share the views and assumptions of some prior
researchers
7
, this dissertation theoretically deviates from the mainstream research on change
management by introducing a perception-based view of the employee as an alternative
approach to understand employees’ reactions to change.

1.2. Research Questions
Researchers and practitioners alike posit that employees’ reactions to change have critical
implications for change implementation and firm performance (e.g., Kotter, 1995; Kotter
and Cohen, 2002). For instance, the issue of intraorganizational conflict as a serious
challenge for managers in making strategic asset decisions has been highlighted (Amit and
Schoemaker, 1993). The question of how firms, managers or consultants can minimize
employees’ resistance to change is a subject of debate and further research. There are a
number of theoretical and practical questions, some of which lie more in the area of
philosophy than in the area of change management or social science. In this dissertation I
am particularly concerned with the role of perceptions and attitudes and how these might
constitute determinants of employees’ reactions to change. These perceptions and attitudes
about change (e.g., perceived need for change, perceived change in power, and job security)
are theorized to be factors leading to subsequent conscious or unconscious decisions and/or
behaviors in response to changes in organizations, which may significantly impact the

6
For a more extensive discussion of decision-making, see Section 2.5 of this dissertation.
7
For a more extensive discussion of assumptions in prior studies and assumptions made in this study, see Section 3 of
this dissertation.


relationship between any type of change management practices and resistance to and/or
support for change at the individual level. The results in this dissertation may help scholars
explain such relationship by providing a connecting answer. Rather than answering the
question of the effect of change management practices on employees’ reactions to change
directly, empirical evidence of the role of perceptions and/or attitudes in predicting
employees’ reactions to change may promote a better understanding of psychological
factors influencing employees’ reactions to change. If certain change management practices
were found to influence these perceptions and/or attitudes, then such practices may thereby

5

have the effect on employees’ reactions to change. Thus, the findings in this dissertation add
to the change management literature by examining relationships between perceptions and/or
attitudes held by employees and their reactions to change. Given these research questions,
this dissertation has three major objectives.

• In order to provide foundations for developing a theoretical framework in this
dissertation, the first objective is to review prior research on perceptions, attitudes,
decision-making, theories of change, and employees’ reactions to change. It should
be noted that the literature review on decision-making focuses on the normative and
cognitive decision theories in the fields of management and economics.
• The second objective is to conceptualize a theoretical framework representing the
link between various perceptions and attitudes on the one hand, and resistance to
change and support for change, on the other hand. Here I propose to bring several
theoretical perspectives together, creating a more realistic model of employees’
reactions by combining different conceptions of human rationality. The main aim of
the research model is to investigate which perceptions and attitudes are associated
with resistance to change and/or support for change. Additionally, it aims to provide
theoretical and, perhaps, practical insights to organizations, top managers, as well as
change agents to assist them in developing tools that may detect and alter employees’

may be strategically valuable or positive when it acts as a means to ensure that the change is
indeed designed and implemented to promote an organization’s goals. Thus, one can
question the accuracy of the claim made by some researchers (e.g., Coch and French, 1948)
that resistance to change is always

undesirable. This question seems to have gone unnoticed,
providing little recognition of the conditions under which resistance to change may result in
superior outcomes of organizational change. Although identifying conditions in which
resistance to change has positive or negative outcomes on change processes is not the goal
of this dissertation itself, it deserves mention so as to reflect on this issue.
In order to state that resistance to change always has negative implications for the
firm, one would have to show that such resistance can legitimately be considered negative at
any given moment and in any particular circumstance. If this same resistance does not
create a negative implication for the firm at another moment and in another similar
circumstance, one may not legitimately and precisely conclude that resistance to change is
always undesirable and negative. On the other hand, it is probable that resistance to change
may at times have a positive effect on the outcome of organizational change, and that it may
be strategically valuable to an organization. For example, it is imaginable that resistance to
change could be constructive by entailing a high degree of objective evaluation of the
change. This should suggest that researcher should not make the critical assumption that
resistance to change always has negative effects on the outcomes of organizational change.
Instead, they should investigate how to benefit from resistance to change.

1.3. The Importance of the Research Questions
Clearly, improved firm performance is one of the main objectives of organizational change,
but intermediate outcomes are more proximal indicators of its success or failure.
Employees’ performance can be considered as an immediate outcome or a path through
which changes in organizations affect firm performance. Therefore, one can also reason that

7

9
, I argue that there are potential gaps between the
object’s (e.g., organizational change’s) ‘objective’ (what they actually are) characteristics
and ‘perceived’ (what people believe or perceive them to be) characteristics, and that the

8
Note that in this dissertation, words like “decision”, “behavior”, or “reaction” are used interchangeably since they all
refer to an employee’s resistance to change and/or support for change. In its simplest form, one may find that
resistance to change and support for change can be considered as one kind of decision, and that both resistance to
change and support for change are expressed in terms of behaviors or reactions.
9
Simon (1957) has discussed the two main problems with the economic model of decision-making; first, managers
seldom have perfect information and thus often have to make decisions under uncertainty. Second, managers are not
cognitively capable of processing all of the information that they would need to make a profit-maximizing decision.
Therefore, Simon (1957) has introduced the concept of “bounded rationality” for the model of decision-making.

8

‘perceived’ characteristics rather than the ‘objective’ characteristics are used as inputs in the
decision-making processes determining decisions. Thus, perceptions of the object play an
important role in decision-making processes and result in decisions that at least partially
reflect these perceptions.
As I reflect on economic theories that seem to explain well the utilitarian side of
human behavior, but seem to fail to explain the side of human behavior that goes beyond
outcome-driven self-interest, I want to explore an alterative approach in understanding
employees’ reactions to change, and label this approach the “perception-based view of the
employee.” In short, using perception-based logic, this dissertation focuses on the role of
perceptions and attitudes as the driving forces leading employees to either support or resist
organizational change. Understanding the ways in which employees react to change will
certainly provide a potential avenue for developing new change management strategies that

one category.

9

numerous reasons for choosing privatization as a context of the study. First, many state-
owned enterprises in several countries are, or will eventually be, in a process of
privatization, and this privatization has several implications for markets, other firms, and
their employees. Second, in addition to being a change in itself, privatization is also a source
of other changes within an organization—for example, changes in corporate strategies and
corporate structures. Consequently, it is important to note that a study of employees’
reactions to privatization not only has to deal inclusively with reactions to privatization but
also with reactions to a set of changes that come along with the privatization initiative in a
broader sense.
This dissertation aims to develop a research model which suggests relationships
between perceptions and attitudes on the one hand and resistance to change and support for
change on the other hand, and to empirically test it by using data gathered from employees
currently facing organizational change. The number of variables examined in this
dissertation is limited predominantly due to two key reasons: theoretical aspect (the greater
the number of variables in the model, the less the degree of parsimony of the model), and
practical aspect (the greater the number of variables in the model, the lower the response
rates in the survey).
This dissertation focuses on empirical evidence gathered at a particular point in time
from employees in two organizations. In Study 1, a survey was distributed to a random
sample of 100 teachers at a large private school in Thailand where the management has
recently decided to reduce the number of teachers. Of those sampled, 91 teachers returned
the surveys (91% response rate). In Study 2, a survey was distributed to 500 employees at a
large state-owned company in Thailand where top managers have attempted to privatize the
organization. Of those sampled, 224 employees returned the survey (44.8% response rate).
The focus of this dissertation is strictly limited to the examination of the relationships
between perceptions and attitudes on the one hand and reactions to change on the other hand

It is important to note that the nature and magnitude of the impact of organizational
change on employees depends on, among other things, the type of change and the way in
which the change is introduced. For example, changes can be initiated either from top
management (a so-called top-down approach) or from employees (a so-called bottom-up
approach). Because I assumed that the strength of the impact of the change was inherently
expressed in the perceptions of the employees, it was not necessary to separately explore the
effects of the change on the employees, or distinguish how the changes were introduced.
However, because the changes studied in this dissertation entailed organization-specific,
situation-specific, time-specific, and relationship-specific contexts, the extent to which the
findings can be generalized to other contexts is limited. It is also useful to note that the
implications of cultural differences on reactions to change are not within the scope of this
dissertation. Thus, the examination of relationships between predictors and outcomes within
one culture (Thailand) is conducted.

1.5. The Intended Contributions of this Dissertation
The principal thesis that emerges from the research model is that employees who are
confronted with any form of organizational change tend to develop the initial and
subsequent reactions to this change through a variety of decision-making processes.
Consistent with the bounded rationality framework (Simon, 1957), this dissertation further
argues that certain perceptions and attitudes enhance or prohibit their choices of reactions to
change.
Specifically, this dissertation focuses on employees’ perceptions and attitudes in a
downsizing situation (in Study 1) and a privatization situation (in Study 2). These
perceptions and attitudes are theorized to be factors leading to subsequent conscious and/or
unconscious decisions and/or behaviors in response to the changes, which may significantly
impact the change implementation and firm performance. This dissertation attempts to
contribute to the research on organizational change, especially employees’ resistance to
change and support for change, in three ways.
change. As discussed earlier, employees’ resistance to change is reported to be a source of
problems for organizations and has subsequent negative effects on firm performance.
Understanding employees’ perceptions and attitudes before, during, and after the
implementation of organizational change may prove to be valuable to firms, managers, and
consultants.

12

2. Core Concepts and Relevant Literature

This section discusses the central tenets of theories of change, perception, attitude, emotion,
individual decision-making, resistance to change and support for change, focusing on the
core theoretical and empirical arguments. It is important to note that I neither seek to
provide an exhaustive literature review, nor seek to explicitly review an extended list of the
critiques of the core arguments previously made. This narrow focus is deliberate, for my
purpose is to concisely outline the main tenets of concepts and theories concerning these
topics, to assess how they are conceptualized, to provide a basis for establishing the link
between key concepts, and to develop my research model.

2.1. Theories of Change
There are several relevant questions concerning change. What is it? Why do firms need to
change? Under which conditions will firms initiate changes in their organization? What
kinds of outcome will a change bring to firms? Certainly, these questions already suffice to
show that there is need for research on organizational change.
13
The wide range of past
research on organizational change has focused on four main categories. One category has to
do with content issues, and it mainly focuses on factors related to successful or unsuccessful
change attempts (e.g., Hofer 1980; Bibeault, 1982; Hambrick and Schecter, 1983; Barker
and Duhaime, 1997). Another category concerns process issues, mainly focusing on steps,

organizational change literature, at the abstract level, there are two distinct modes of
change: first- and second-order change. The phrase “first-order change” is used to describe
organizational changes that occur within a relatively stable system that remains mostly
unchanged; and for a system to remain stable or unchanged, it requires frequent first-order
changes (Weick and Quinn, 1999).
14
On the contrary, second-order change or so-called
episodic change modifies or transforms fundamental structures or properties of the system
(Weick and Quinn, 1999). The concept of first- and second-order change is very popular
and powerful, and its fruits have been many. To give but a brief sample of some of the
works that have benefited from this concept, it has advanced several theoretical models such
as Argyris and Schön’s (1979, 1996) single- and double-loop learning by individuals, Miller
and Friesen’s (1984) adaptation vs. metamorphosis by organizations, and Tushman and
Anderson’s (1986) competence-enhancing vs. competence-destroying changes in
technology. In summary, there are several patterns or types of change (Miller, 1980;
Johnson-Cramer, Cross and Yan, 2003): small or large (Ledford et al., 1989), planned or
emergent in nature (Johnson-Cramer et al., 2003), radical or incremental (Weick and Quinn,
1999).
Another aspect of change is that it can occur at differing organizational levels. First,
change can occur within a population of organizations. For example, changes occurring at
an industry level (e.g., changes in customers’ demands and preferences) have implications
for most, if not all, companies within the industry. Similarly, changes occurring at a country
level have implications for most, if not all, organizations within the country. In addition,
changes can occur in a single organization, having implications for the whole organization

14
As the phrase “continuous change” is used to describe organizational changes that tend to be ongoing, cumulative,
and evolving (Weick & Quinn, 1999), the terms “first-order change” and “continuous change” seem to be used
interchangeably.