Downsizing,competition, and organizational change in government: Is necessity the mother of invention?

One answer to the question of why government organizations don't perform better—common in academic “public choice” literature but also in folk wisdom—is that resources come too easily, independent of performance. Some businessmanagement literature suggests that a crisis in resource flows can force successful change—”necessity is the mother of invention.” However, the literature also presents an alternative view: that crisis promotes rigid preprogrammed responses, not new ways of behaving. This paper examines the impact of crisis on organizational change in government by examining an organizational change effort in the U.S. federal government (procurement reform during the 1990s) that occurred simultaneously with an organizational crisis involving workforce downsizing and introduction of competition for some buying offices. Using a dataset consisting of a survey of approximately 1,600 frontline government contracting officials, the impact of variation in crisis at different buying offices on variation in behavior change is examined. Necessity was found to be the mother of invention, not rigidity. However, these effects were counteracted by two negative effects of crisis on organizational change: 1) employee resentment over violation of a “social contract at work” reduced behavior change, 2) employee association of the change effort with downsizing reduced attitudinal support for the change, which translated into reduced behavior change. On balance, crisis inhibited organizational change, rather than promoting it. © 2006 by the Association for Public Policy Analysis and Management