Reinventing the State-Owned Enterprise? Negotiating Change during Profound Environmental Upheaval

This study builds theory on organizational change through a qualitative study investigating how a small state-run factory in China transformed into a global leader in power equipment manufacturing. Drawing on cross-level longitudinal data from the company’s founding in 1966 to 2016, we unpack a process of organizational change that unfolded during China’s transition away from a centrally planned economy. Our findings draw attention to the role of “values work” in facilitating and mitigating the risks of implementing highly controversial and seemingly immoral changes, which, in the case of the present study, were necessitated when the relevance of prior experience and organizing templates eroded. We present a model illustrating three strategies that, in combination, animate this values work: reconditioning, negotiated obsolescence, and mitigating risks of nonconformity. The model contributes to an understanding of how organizations reconcile the need for radical change with pressures for continuity and coherence. It also shows how managers find a balance between taking risks and minimizing them through efforts to time and align ongoing changes with shifting conceptualizations of appropriateness—both inside and outside the organization.