RESPONDING TO ORGANIZATIONAL IDENTITY THREATS: … · 2006 Ravasi and Schultz 435. to investigate...

RESPONDING TO ORGANIZATIONAL IDENTITY THREATS:EXPLORING THE ROLE OF ORGANIZATIONAL CULTURE

DAVIDE RAVASIBocconi University

MAJKEN SCHULTZCopenhagen Business School

In this paper, we present a longitudinal study of organizational responses to environ-mental changes that induce members to question aspects of their organization’s iden-tity. Our findings highlight the role of organizational culture as a source of cuessupporting “sensemaking” action carried out by leaders as they reevaluate theirconceptualization of their organization, and as a platform for “sensegiving” actionsaimed at affecting internal perceptions. Building on evidence from our research, wedevelop a theoretical framework for understanding how the interplay of construedimages and organizational culture shapes changes in institutional claims and sharedunderstandings about the identity of an organization.

To maintain our identity we have to renew it.

—What? (Bang & Olufsen house magazine),November 1993

Research on organizational identities indicates thatevents that call into question members’ beliefs aboutcentral and distinctive attributes of an organizationcan challenge collective self-perceptions and self-cat-egorizations (Dutton & Dukerich, 1991; Elsbach &Kramer, 1996; Golden-Biddle & Rao, 1997). Organiza-tional scholars have generally referred to these poten-tially disrupting events as “identity threats” (Elsbach& Kramer, 1996; Ginzel, Kramer, & Sutton, 1993).

Past research on identity threats has highlightedthe interplay between organizational identities andconstrued or desired organizational images, portray-ing organizational responses aimed at restoring align-ment between who members think they are as anorganization (Albert & Whetten, 1985) and how theybelieve they are perceived—or would like to be per-ceived—by others (Dutton & Dukerich, 1991;. Gioia &Thomas, 1996; Gioia, Schultz, & Corley, 2000). Suchemerging representation of identity dynamics, how-ever, seems to emphasize external responsiveness,

either through manipulation of external perceptions(Ginzel et al., 1993) or adaptation to external changes(Gioia et al., 2000), over internal coherence.

Although researchers have explicitly acknowl-edged the role of organizational practices, norms,symbols, and traditions in providing substance tocollective self-perceptions (e.g., Albert & Whetten,1985; Dutton, Dukerich, & Harquail, 1994), how thesemanifestations of organizational culture affect iden-tity dynamics seems to be largely unexplored. Unlikeconceptualizations of identity-image dynamics, ideasabout identity-culture interrelations have been basedon anecdotal or illustrative evidence only (e.g., Fiol,1991; Fiol, Hatch, & Golden-Biddle, 1998; Rindova &Schultz, 1998). In this paper, building on findingsfrom a longitudinal field study of three organizationalresponses to identity-threatening environmentalchanges in one organization over 25 years, we exam-ine how organizational culture shapes responses toidentity threats and, along with external images,drives identity dynamics. Our findings provide anempirically based account of culture-identity dynam-ics and point to the role of culture in informing andsupporting sensemaking and sensegiving processestriggered by external changes that induce members toreevaluate aspects of their organizational identity.1

Our findings provide evidence of a dynamic relation-ship between organizational culture, identity, andimage that, so far, has been suggested only at a theo-

The authors gratefully acknowledge the helpful com-ments of Kevin Corley, Micki Eisenman, Dennis Gioia,Mary Jo Hatch, Violina Rindova, David Whetten, TomLee, and three anonymous reviewers on earlier versionsof this article. Davide Ravasi is grateful to the ClaudioDematte Research Division of SDA Bocconi and to theStrategic and Entrepreneurial Management Departmentfor their financial support during part of the project.Majken Schultz is grateful for the financial support fromthe Danish Social Science Research Council. Both au-thors are deeply grateful for the openness, time, andsupport offered by the many people from Bang & Olufsen.

1 Following earlier research (Weick, 1995), by “sense-making” we refer to the act of constructing interpreta-tions of ambiguous environmental stimuli; by “sensegiv-ing” we refer to the deliberate attempt to shape theinterpretations of others (Gioia & Chittipeddi, 1991).

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retical level, but never systematically grounded inempirical data (Hatch & Schultz, 1997, 2000, 2002).

The broad scope of our study helped us linkconstructs such as identity claims (Ashforth &Mael, 1996), construed external images (Dutton &Dukerich, 1991), organizational culture (Martin,2002; Schein, 1992), desired external images (Gioia& Thomas, 1996), and desired identity (Whetten,Mischel, & Lewis, 1992) and examine how theirinteractions may change members’ understandingsabout central and distinctive attributes of an organ-ization. In this respect, the conceptual model thatemerged from our study connects various identity-related constructs and processes described in pre-vious research, and it provides a broad frameworkfor understanding how the interaction between ex-ternal stimuli and internal sensemaking and sense-giving processes drives organizational dynamics.

In the first section of this article, we discuss thetheoretical background of our study, arguing for theinclusion of both identity claims and understand-ings in a broad definition of organizational identity.Next, we present our research setting—Bang &Olufsen, a Danish producer of audiovisual equip-ment—and illustrate our methodology. In the fol-

lowing sections, we introduce a conceptual frame-work emerging from our research, and we providesupporting evidence from our study. Implicationsfor theory are discussed in the final section.

THEORETICAL BACKGROUND

Despite generally referencing Albert and Whet-ten’s (1985) original definition of organizationalidentity, students in the field have developed dif-ferent views of the phenomenon, and thus differentinterpretations of dynamism and change in organ-izational identities (Corley, Harquail, Pratt, Glynn,Fiol, & Hatch, 2006; Gioia, 1998; Ravasi & van Re-kom, 2003; Whetten, 2006; Whetten & Godfrey,1998). Table 1 summarizes the two principal linesof thought about organizational identity.

A Social Actor Perspective on OrganizationalIdentity

Some scholars, building on work in the institu-tional tradition (e.g., Friedland & Alford, 1991;Selznick, 1957), have emphasized the functionalproperties of self-definitions in satisfying the basic

TABLE 1Perspectives on Organizational Identity: Social Actor versus Social Constructionist

Characteristic Social Actor PerspectiveSocial Constructionist

Perspective

Theoretical foundations Institutional theory Social constructivism

Definition of identity Organizational identity resides ininstitutional claims, available tomembers, about central, enduringand distinctive properties oftheir organization (e.g., Whetten,2003).

Organizational identity resides incollectively shared beliefs andunderstandings about centraland relatively permanentfeatures of an organization(e.g., Gioia et al., 2000).

Emphasis on cognitiveprocesses

Sensegiving: Identity claims areorganizational self-definitionsproposed by organizationalleaders, providing members witha consistent and legitimatenarrative to construct a collectivesense of self.

Sensemaking: Sharedunderstandings are the resultsof sensemaking processescarried out by members as theyinterrogate themselves oncentral and distinctive featuresof their organization.

Emphasis on enduranceor on change

Identity claims are by their ownnature enduring and resistant tochange; labels tend to changerarely and never easily.

Shared understandings areperiodically renegotiatedamong members.

Fundamental work Czarniawska (1997)Whetten & Mackey (2002)Whetten (2003)

Dutton & Dukerich (1991)Fiol (1991, 2002)Gioia & Thomas (1996)Gioia, Schultz, & Corley (2000)Corley & Gioia (2004)

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requirements of individuals and organizations associal actors: continuity, coherence, and distinc-tiveness (Albert, 1998; Whetten & Mackey, 2002;Whetten, 2003). In other words, these scholars con-ceive of identity as “those things that enable socialactors to satisfy their inherent needs to be the sameyesterday, today and tomorrow and to be uniqueactors or entities” (Whetten & Mackey, 2002: 396).According to this view, organizational identity re-sides in a set of institutional claims—that is, explic-itly stated views of what an organization is andrepresents—that are expected to influence its mem-bers’ perceptions of central, enduring, and distinc-tive features of the organization by providing themwith legitimate and consistent narratives that allowthem to construct a collective sense of self (Czar-niawska, 1997; Whetten & Mackey, 2002).

In our view, proponents of this conception tendto emphasize the sensegiving function of organiza-tional identities, linking identity construction tothe need to provide a coherent guide for how themembers of an organization should behave andhow other organizations should relate to them (Al-bert & Whetten, 1985; Whetten, 2003). Throughformal identity claims, then, organizational leadersand/or spokespersons attempt to influence how in-ternal and external audiences define and interpretthe organization, by locating it within a set of legit-imate social categories.

Advocates of this perspective generally conceiveof organizational identity as a set of emotionallyladen, stable, and enduring self-descriptions orcharacterizations. As Ashforth and Mael observed:“A collective identity provides a sense of self andmeaning, and places one in a wider social context.. . . given the importance of an organization’s soulto its members, a certain degree of inertia is notonly inevitable, but desirable” (1996: 52–53). Pro-ponents of a social actor perspective, therefore, ob-serve how deeply held beliefs, embodied in formalclaims, tend to change only rarely and never easily(Whetten & Mackey, 2002). External occurrencesthat challenge an organization’s claims are likely totrigger responses aimed at countering identity-threatening events and preserving personal and ex-ternal representations of what the organization is orstands for (Albert & Whetten, 1985; Ginzel et al.,1993).

A Social Constructionist Perspective onOrganizational Identity

Empirical evidence of changing interpretationsof the identity of organizations, however, has ledother scholars to observe how members’ beliefsabout central and distinctive characteristics of their

organization may indeed evolve in the face of in-ternal and external stimuli (Corley & Gioia, 2004;Dutton & Dukerich, 1991; Fiol, 2002; Gioia &Thomas, 1996). These scholars have shifted atten-tion from formal claims to, as Gioia and colleaguesput it, “collective understandings of the featurespresumed to be central and relatively permanent,and that distinguish the organization from otherconfigurations” (2000: 64; emphasis added). Intheir view, organizational identities reside inshared interpretive schemes that members collec-tively construct in order to provide meaning totheir experience (Gioia, 1998). These sharedschemes may or may not correspond to their organ-ization’s official narrative (Ashforth & Mael, 1996).

According to Fiol, the adoption of a social con-structionist approach emphasizes the sensemakingprocess that underlies the social construction oforganizational identities, as “meanings and mean-ing structures . . . are negotiated among organiza-tional members” (reported in Whetten and Godfrey[1998: 36]). Scholars embracing this perspectivehave observed how substantial organizationalchanges tend to require alterations in the way mem-bers interpret what is central and distinctive abouttheir organization. In other words, substantialchanges require members to “make new sense”—todevelop new interpretations—of what their organi-zation is about (Fiol, 1991; Gioia & Chittipeddi,1991).

Research in this tradition examines how mem-bers develop collective understandings of their or-ganization and how these affect organizationalchanges (e.g., Corley & Gioia, 2004; Fiol, 1991) andstrategic decisions (e.g., Gioia & Thomas, 1996). Infact, proponents of a social constructionist perspec-tive expect shared beliefs to be subjected to peri-odic revision, as organizational members modifytheir interpretations in light of environmentalchanges. Accordingly, these scholars generallydownplay endurance as a constitutive property oforganizational identities and observe how strategicresponses to environmental changes may be drivenby organizational leaders envisioning and promot-ing new conceptualizations of an organization (Cor-ley & Gioia, 2004; Fiol, 2002; Gioia & Thomas,1996). These scholars do not deny the relative en-durance of formal claims, or their importance inpreserving a sense of self and continuity, yet theyobserve that the meanings associated with theseclaims may evolve as organizational members try toadapt to changing environments (Gioia et al., 2000).

By changing the focus of attention from formalclaims to meanings and understandings, social con-structionist research highlights the dynamism inorganizational identities and encourages scholars

2006 435Ravasi and Schultz

to investigate organizational responses to severeexternal changes that induce members to recon-sider the sustainability of presumed core and dis-tinctive features (Corley & Gioia, 2004; Gioia et al.,2000).

Organizational Identity as Claims andUnderstandings

We believe that the respective emphases of thetwo perspectives—institutional claims and collec-tive understandings—represent different aspects ofthe construction of organizational identities. To-gether, the social actor and social constructionistviews suggest how organizational identities arisefrom sensemaking and sensegiving processesthrough which members periodically reconstructshared understandings and revise formal claims ofwhat their organization is and stands for. Oneneeds, therefore, to account for both perspectives tofully understand organizational responses to iden-tity-threatening environmental changes.

Although both groups of scholars often use thesame term, “organizational identity,” withoutany additional qualification, they seem to focuson complementary aspects of the same phenom-enon. On the one hand, proponents of an institu-tional view tend to focus on the discursive re-sources, or “identity claims,” available fororganizational members to use to construct asense of collective self, implying that the formerwill influence the latter. On the other hand,adopters of a social constructionist view concen-trate on shared emergent beliefs about centraland distinctive features of an organization—whatwe could call “identity understandings.” Theyacknowledge the possible influence of an officialorganizational narrative on emergent understand-ings, but they underline the central role of mem-bers’ interpretations of formal claims. Whereasthe first perspective emphasizes institutionalconstraints channeling and shaping members’ in-terpretations (Czarniawska, 1997), the secondemphasizes human agency: the freedom that or-ganizational members enjoy in renegotiatingshared interpretations about what their organiza-tion is about and what its official identity claimsreally mean to them (see Gioia et al., 2000).

We believe that the juxtaposition of these per-spectives will produce a more accurate representa-tion of organizational identities as dynamicallyarising from the interplay between identity claimsand understandings—or, in other words, betweenwho members say they are as an organization (iden-tity claims) and who they believe they are (identityunderstandings). In this respect, we argue that

identity claims and understandings represent twointerrelated dimensions (or levels) of organization-al identity that generate an embedded dynamic, asthe former are expected to reflect organizationalleaders’ interpretations and to influence othermembers’ understandings. Whether claims and un-derstandings will come to coincide and how theymay do so is, we contend, an empirical question.

Adapting Identity to Environmental Changes

In their seminal article, Albert and Whetten(1985) advanced the idea that external pressuresincrease the likelihood that organizational mem-bers engage in explicit reflection on identity issues.Later, in a work representing several views andauthors (Barney et al., 1998), Huff extended thisline of argument, shifting attention from the natureof an event to its interpretation by organizationalmembers as a source of stress demanding substan-tial alterations in core and distinctive organization-al features. In fact, recent studies have indicatedthat substantial environmental changes may chal-lenge the sustainability of organizational identity(Bouchikhi & Kimberly, 2003; Brunninge, 2004).

Past research has indicated how members’ re-sponses to environmental changes and adjust-ments in collective understandings are affectedby construed (Carter & Dukerich, 1998; Dutton &Dukerich, 1991) or desired organizational images(Fombrun & Rindova, 2000; Gioia & Thomas,1996). Building on this research, Gioia, Schultz,and Corley (2000) offered a conceptual elabora-tion of identity-image interdependence, arguingthat comparisons between internal and (con-strued) external perceptions occasionally triggerattempts to alter identity or image. Gioia andcolleagues, however, observed how various con-ditions are likely to constrain the image-drivenshift of organizational identities. As these au-thors concluded, “Organizations cannot con-struct just any arbitrarily chosen identity.Changes in identity are constrained within non-specified, but nonetheless moderating, environ-mental bounds” (Gioia et al., 2000: 73).

Later research has reinforced the idea thatidentity changes are not shaped solely by shiftingorganizational images. A study of a failed attemptto redefine general perceptions of a British insti-tute of higher education to achieve “universitystatus” showed that members are likely to rejectnew conceptualizations that they perceive as in-coherent with organizational history, tradition,and their sense of self, along with the changesthey are expected to promote (Humphreys &Brown, 2002). Conversely, in Dutton and Duk-


erich’s (1991) study at the New York Port Author-ity, managers pushed by a deteriorating organiza-tional image reconsidered their rigid approach tothe issue of homelessness and came to perceivethe adoption of a more humane and socially re-sponsible line of action as closer to the agency’sskills and traditional commitment to the region’swelfare. Together, these studies foreshadow a re-lationship between changing identity claims andunderstandings, and deeper assumptions and be-liefs embodied in organizational traditions, struc-tures, and practices—in other words, a relation-ship between organizational identity and culture.

Organizational Identity and Culture

In the last few decades, management scholarshave proposed various definitions for the conceptof organizational culture (see Martin, 1993;Schultz, 1995; Smircich, 1983). In this article, webroadly define organizational culture as a set ofshared mental assumptions that guide interpreta-tion and action in organizations by defining appro-priate behavior for various situations (Fiol, 1991;Louis, 1983; Martin, 2002). These largely tacit as-sumptions and beliefs are expressed and mani-fested in a web of formal and informal practicesand of visual, verbal, and material artifacts, whichrepresent the most visible, tangible, and audibleelements of the culture of an organization (Schein,1992; Trice & Beyer, 1984).

In the past, the relationships between organization-al identity and culture have been examined mainly ata conceptual level. Advocates of a social actor per-spective have observed how organizational culturemay serve as an important source of self-other dis-tinction and act as a “signifier” of organizationalidentity (Whetten, 2003: 30). In other words, for thesescholars, unique values, beliefs, rituals, and artifactsmay help organizational members substantiate theiridentity claims and express their perceived unique-ness (Albert, 1998; Albert & Whetten, 1985). As Al-bert remarked, “From this perspective, the relation-ship between identity and culture is clear: Aparticular culture [. . .] may, or may not, be part of theanswer to the identity question: Who am I? What kindof firm is this?” (1998: 3).

Theoretical works in a social constructionist tradi-tion, conversely, have emphasized the common na-ture of these constructs and their reciprocal influencein affecting sensemaking in organizations (Fiol, 1991;Fiol et al., 1998; Hatch & Schultz, 1997). Proponentsof this perspective view both organizational cultureand identity as collectively shared interpretiveschemes. However, while organizational culturetends to be mostly tacit and autonomous and rooted

in shared practices, organizational identity is inher-ently relational (in that it requires external terms ofcomparison) and consciously self-reflexive (Fiol etal., 1998; Hatch & Schultz, 2000, 2002; Pratt, 2003).

According to Fiol (1991), organizational identi-ties help members make sense of what they do—asdefined by tacit cultural norms and manifested invisible and tangible artifacts—in relation to theirunderstanding of what their organization is. Orga-nizational identities, then, provide the contextwithin which members interpret and assign pro-found meaning to surface-level behavior. Takingseriously the idea that organizational culture actsas a context for sensemaking efforts, later contribu-tions have underlined how these efforts also in-clude attempts at internal self-definitions (Hatch &Schultz, 2002): “Identity involves how we defineand experience ourselves, and this is at least partlyinfluenced by our activities and beliefs, which aregrounded in and interpreted using cultural as-sumptions and values” (Hatch & Schultz, 2000: 25).

These contributions have emphasized the interre-latedness of organizational identity and culture thatmanifests as organizational members draw on organ-izational culture, as well as on other meaning-makingsystems (professional culture, national culture, etc.),to define “who we are as an organization” (Fiol et al.,1998; Hatch & Schultz, 2002). With this emphasis,these scholars have converged with proponents of asocial actor perspective in advancing the idea thatorganizational culture supplies members with cuesfor making sense of what their organization is about—and for “giving sense” of it as well.

Despite some empirical evidence of the influenceof shared history, traditions, and symbols on mem-ber’s reevaluations of self-definitions (e.g., Albert &Whetten, 1985; Brunninge, 2004; Fombrun &Rindova, 2000; Gioia & Thomas, 1996), the issue hasnever been subjected to systematic investigation. Ourresearch was initially intended to increase our under-standing of organizational responses to identity-threatening environmental changes. Evidence gath-ered in the course of our study directed our attentionto the underexplored role of organizational culture indriving identity dynamics and led us to reframe ourstudy as an empirical investigation of how identity,image, and culture interact in driving responses toidentity threats.

METHODS

Research Setting

Our research was based on a longitudinal studyof Bang & Olufsen, a Danish producer of audio-video systems. At the time of our study, in the mid


90s, Bang & Olufsen (“B&O” from now on) em-ployed around 2,600 people worldwide. The com-pany’s annual turnover had risen significantly from2,180 million Danish kroner in 1992 to more than3,700 million (513 million euros) at the end of2000. Its geographical scope had gradually ex-panded beyond Europe and reached 42 countriesby the end of the 90s.

B&O was founded as a radio manufacturer in1925 in the village of Struer in the north of Den-mark. Very early in the life of the company, signif-icant technological innovations and the painstak-ing care of its founders (Peter Bang and SvendOlufsen) for the quality of components and manu-facturing earned the company an excellent reputa-tion, as the first corporate motto, “B&O—The Dan-ish Hallmark of Quality,” proudly boasted. In thefollowing decades, attention to design and styleintensified and led to the fortunate involvement inproduct design of renowned Danish architects andindustrial designers. Between 1972 and 1998, how-ever, three times recurrent competitive threats andenvironmental changes induced organizationalleaders to explicitly address issues of organization-al identity and to reevaluate their beliefs about coreand distinctive features of the organization. In allthree cases, the process culminated in a revision offormal identity claims. This history gave us a rareopportunity to study identity-related processesacross three explicit responses to perceived iden-tity threats within the same organization.

Data Collection

The sources of empirical evidence we relied onto analyze responses to identity threats at B&O canbe divided into five general categories:

Semistructured interviews. We conducted a to-tal of 50 semistructured interviews with 40 organ-izational members. Our sampling logic moved frompurposeful to theoretical (Locke, 2001): we initiallyinterviewed people who could provide rich andinsightful information on the identity-relatedprojects of interest. Later, we theoretically selectedour informants on the basis of specific researchinterests. To deepen our understanding of the en-vironmental and strategic issues the company hadfaced, we interviewed all members of the top man-agement team running the company during the 90sand some retired executives who could illuminateus on an early attempt to formally define the iden-tity of the company (this definition is describedlater as “the Seven Corporate Identity Compo-nents”). In order to investigate in more detail howthe revision of identity claims and understandingswas actually carried out, we also interviewed all

members of project teams that in 1993 and 1998formulated or reformulated identity claims, andmost team members that participated in the earlieridentity-related program mentioned above. Finally,to reduce the risk of capturing only a narrow set ofpotentially biased interpretations, we also inter-viewed national and international middle manag-ers involved in “identity seminars” at the firm (seebelow), as well as company employees at differentlevels. Overall, our informants included 8 top man-agers, 24 middle managers, 4 staff members andtechnicians, and 4 retired executives; 22 of theseindividuals came from the firm’s headquarters, and18 came from the international network. Interviewsranged from a half- hour to two hours, and most ofthem were tape-recorded. Whenever this was notpossible, we took detailed field notes.

Identity seminars. Both in 1993 and 1998, newidentity claims were introduced and debated dur-ing company seminars. We had access to tran-scripts of all the seminars held between December1993 and January 1994, which included all head-quarters employees. In 1998, one of us participatedin ten seminars involving the CEO and 450 manag-ers and dealers. Participation in the identity semi-nars allowed informal conversations (not countedas interviews) with 45 middle managers. Theseconversations offered an important forum for test-ing ideas and emergent interpretations with organ-izational members, and we included issues emerg-ing from them in our field notes. Finally, one of ushad the opportunity to interact with 20 top manag-ers of the company during three full-day seminarsbetween 1997 and 1999.

House magazines and other internal communi-cation tools. The first house magazine published byB&O, B&O Magazine, was founded in late 1991 andpurposefully used by the top managers to sustainchange efforts in the early 90s (the “Break Point”project described later). The internal publicationWhat? later replaced B&O Magazine. Our databaseincluded issues of these magazines published be-tween November 1991 and December 1995, com-prising a total of 476 pages. In 1996, What? wasreplaced by Beolink, initially published in 12 lan-guages and distributed to all the firm’s dealers aswell as at headquarters. We also gained access toother documents, such as identity manuals, post-ers, and the like, used to illustrate and diffuse newidentity statements internally.

Annual reports and other external communica-tion tools. We carefully analyzed annual reportsfrom 1989 through 2000, the corporate Web site invarious stages of development, and other docu-ments intended for external communication. Be-tween 1992 and 1994, the company’s annual re-


ports included interviews with managers or otheremployees and detailed descriptions of corporatestrategies, the new vision, and the logic underlyingchanges.

Corporate histories and other archival mate-rial. Archival search helped us track the evolutionof B&O’s corporate and business strategy, its stra-tegic goals, and links to the evolving identityclaims. We had also access to the reports of theinternal task forces that in 1997 conducted explor-atory work on fundamental values and future stra-tegic directions. Finally, two corporate histories ofthe firm were of critical importance to our under-standing of the evolution of organizational identityat B&O. The first (Poulsen, 1997) reported a de-tailed analysis of the recent history of the company.The second (Bang & Palshøy, 2000), written by twoimportant leaders of B&O in the 60s and 70s, con-tained insightful retrospective reflections on earlyidentity management programs.

Data Analysis

Our study started as two separate researchprojects that converged into a common investiga-tion. Both authors shared an interest in how envi-ronmental changes affect organizational identities.In 1992, when the reexamination of organizationalidentity at B&O was already underway, the firstauthor gained access to members of the task forcethat had been in charge of redefining the identityclaims of the company. Data collection began soonafter the completion of the projects leading to theredefinition of identity statements. The researcherwas never involved in any internal or external com-munication activity, and there is no evidence thathis work affected the process in any way.

In 1997, the second author was introduced to thecompany as a speaker to the top managementgroup, and soon afterwards she negotiated permis-sion to conduct a two-year intensive study of howthe company responded to new environmentalthreats. During the identity seminars carried out in1999, she acted as a nonparticipant observer. Shedid not have a formal role or responsibility in theprocess. She was asked to share with top managersobservations on the interpersonal dynamics occur-ring during seminars, but there is no evidence thather feedback had an impact on internal initiativesaimed at diffusing and illustrating the new claims.

In the summer of 1999, we two authors discov-ered we had both examined the same companyadopting similar approaches but focusing on differ-ent periods of company history. In the followingmonths, we started a mutual exchange of data inorder to integrate, compare, and elaborate our re-

spective databases. Further data collection on anearlier process leading to the development of thefirst formal identity statement at B&O, dating backto 1972, extended our longitudinal analysis over atime span of more than 25 years and across threedifferent responses to perceived identity threats.Each of the three responses was considered a sep-arate case, although each case provided contextualinformation for analyzing later events.

Following the merger of the databases, we estab-lished a common protocol of analysis. Interviewtranscripts and other pieces of text produced byorganizational members (transcripts from the sem-inars, articles from the house magazines, retrospec-tive narrations from corporate biographies, etc.)served as primary data for our analysis. We alsoused internal documents, annual reports, and otherarchival material to increase our understanding ofthe processes. Our purpose was to build on existingconcepts in organizational identity research to de-velop a more comprehensive framework for under-standing how organizations react to identity-threat-ening external events. In this respect, our analysiswas aimed at elaborating theory, rather than at gen-erating a completely new theoretical framework(Lee, Mitchell, & Sablynski, 1999).

Data analysis followed prescriptions for ground-ed-theory building (Glaser & Strauss, 1967; Locke,2001) and relied initially on a coding phase. Data-bases were searched for identity-related inci-dents—that is, concepts, actions, and statementsthat were explicitly related to the investigation,elaboration, definition, and communication of or-ganizational definitions. During this search, whichwe conducted independently, we identified vari-ous terms and concepts that our informants relatedto the identity of the organization. The literature onorganizational identity and on related constructs(image, culture, etc.) offered us a terminology and aconceptual reference that helped us relate each in-cident (e.g., a market survey of consumers’ percep-tions of the firm) to a more general category (e.g.,analyzing external perceptions). Tables (Miles &Huberman, 1994) and category cards (records ofcategories including related data incidents [Locke,2001]) facilitated comparison of each other’s inter-pretations of categories. Discrepancies were usu-ally solved through mutual agreement. In thisphase, triangulation of sources (interviews, semi-nars, house magazines, etc.) helped us refine andstrengthen our emerging categories (Glaser &Strauss, 1967).

In this initial stage, categorization brought us toidentify a number of identity-related concepts andactions that seemed to underpin organizational re-sponses to environmental changes. Subsequent


readings of our data were dedicated to mergingconcepts and actions into more general conceptualcategories—a procedure Locke (2001) labeled“comparing”—in order to gradually move from ourinformants’ account of the process to a more gen-eral explanation. Building on insights from our ear-lier round of analysis, we first divided actions intothe externally oriented (primarily aimed at explor-ing and influencing external perceptions) and theinternally oriented (primarily aimed at reflectingon organizational features and influencing internalperceptions). Further attempts to group identity-related actions brought us to categorize some iden-tity-related actions as sensemaking or sensegivingactions, given their roles in the change processes(Gioia & Chittipeddi, 1991). Sensemaking actionsincluded those that underpinned the reevaluationof core members’ interpretations of core and dis-tinctive attributes of the company (e.g., interorgan-izational comparison, exploration of refracted im-ages, etc.). Sensegiving actions referred tomanagerial actions that supported the presentationand illustration of new identity claims to internaland external audiences (e.g., promoting coherence,rooting in history, etc.). Eventually, most identity-related actions were categorized according to boththeir orientation (internal vs. external) and role(sensemaking vs. sensegiving) and grouped intofour main processes that appeared to drive identitydynamics.

In the next stage of the analysis, we concernedourselves with how the various conceptual ele-ments we had identified could be linked into acoherent framework explaining organizational re-sponses to identity threats. Initially, within-caseanalysis helped us link the actions and conceptsinto a tentative framework explaining how the re-vision of formal identity claims occurred at B&Oover the three periods. At this stage, memos fromprevious rounds (notes capturing early insightsfrom the first reading of the data [Glaser & Strauss,1967]) supported our efforts to uncover the rela-tionships between our concepts. Later, compari-sons of cases helped us increase the robustness ofour model by refining the boundaries of our cate-gories and by dropping conceptual categories orsubcategories that appeared to be less relevant to ageneral account of the process. After some iterationamong the different sets of data and between dataand theory, we converged on a tentative frame-work. Positive feedback on our tentative interpre-tations from different informants reinforced ourconfidence in the reliability of our constructs andmodel (Lee, 1999).

We believe that the peculiar structure of ourstudy actually reinforced the validity of our explan-

atory framework. First, although we started our re-search with the same general interest, our respec-tive conceptual foundations were only partlyoverlapping, thus reducing the possibility of a bi-ased interpretation of the collected data. Further-more, prescriptions for grounded theory buildingadvise subjecting data to the separate analysis ofdifferent researchers. In this respect, a substantialconvergence on a similar framework for under-standing the observed phenomenon increased ourconfidence in the internal validity of our analysis(Miles & Huberman, 1994). Furthermore, our tenta-tive frameworks were submitted to colleagues in-volved in research on organizational identities, andtheir comments often proposed alternative expla-nations to be examined and helped us refine ourprovisional interpretations (Locke, 2001).

Finally, in order to corroborate our interpreta-tions and increase the robustness and generalizabil-ity of our framework, we compared our findingswith available studies of reexaminations of identityclaims and understandings (e.g., Brunninge, 2004;Gioia & Thomas, 1996; Fombrun & Rindova, 2000).Evidence from related studies, in fact, indicatedthat identity dynamics similar to what we observedseemed to occur, albeit less visibly, in other organ-izations engaged in similar processes, which in-creased our confidence that what we had observedreflected more general dynamics occurring in or-ganizations facing identity threats.

FINDINGS

A comparative analysis of the way managers atB&O responded to identity-threatening environ-mental changes at different times revealed similarpatterns of behavior. In this section, we describethe theoretical framework emerging from our dataand define and illustrate each element. Figure 1summarizes our theoretical framework.

Table 2 provides an overview of how the variousprocesses described in Figure 1 unfolded.

Following earlier work deriving a process modelfrom a rich, longitudinal study (e.g., Sutton & Har-gadon, 1996), we developed a detailed overview ofhow the core elements of the emerging model weregrounded in evidence from each source of data.Table 3 presents this overview.

External Challenges to Organizational Identity

At three different times between 1972 and 1998,environmental changes induced the managers ofB&O to interrogate themselves as to the featuresthat were really central and distinctive to theorganization.


FIG

UR

E1

Org

aniz

atio

nal

Res

pon

seto

Iden

tity

Th

reat

s:A

Th

eore

tica

lM

odel

a

aT

he

dot

ted

lin

ein

dic

ates

rela

tion

ship

san

dco

nst

ruct

sfo

rw

hic

hw

eco

uld

coll

ect

only

lim

ited

evid

ence

.

In 1972, increasing competition from Japaneseproducers motivated CEO Ebbe Mansted’s decisionto stimulate B&O managers’ reflections on core anddistinctive features of the company. Japanese pro-ducers had entered the European markets with alow-price, high-volume strategy. As one of our in-formants observed, there was pressure from audio-visual dealers for B&O to be “more like the Japa-

nese”—that is, to alter product design to conform toJapanese standards (modular square shapes, tradi-tional knobs, hi-fi performance, etc.).

The rise of Japanese competitors raised questionsabout the sustainability of the expensive nichestrategy B&O had pursued, which was expressed inthe corporate motto, “Bang & Olufsen: for thosewho discuss design and quality before price.”

TABLE 2

Stages of Response to Identity Threats at Bang & Olufsen, 1972–98

Stages

Identity Threats and Organizational Responses

Seven Corporate IdentityComponents, 1972: Increasingcompetition from large-scaleJapanese competitors

Pressures from dealers toadopt Japanese formats

Break Point, 1993: Generalrecession and loss ofmarket appeal

Drifting organizationalimages (industry analysts,retailers, customers)

B&O United, 1998: Competitorsenhance the design contentof their products

Open threat of imitation bycompetitors like Thomsonand Sony

Construing externalimages

External recognition reinforcesconfidence in the corporatedesign philosophy.

Consumer surveys arecarried out to identifydistinctive attributes of thecompany and the product.

Evaluation of perceptions byinternational brand experts.Examination of consumerstories.

Reflecting on culturalpractices and artifacts

Reflection on how productshave been designed.

Japanese products are used as anegative term of comparison.

Identity is defined in terms ofdesign principles andpractices.

Reflection on the distinctivetraits of the company andthe products.

Explicit comparison withcompetitors’ claims.

Identity is defined in termsof core technologies andproduct features.

Reflection on the culturalheritage of the company(Bauhaus style, etc.).

Positioning against drift towardexclusivity.

Identity is defined in terms ofmembers’ behavior andproduct features.

Revision of identityclaims

One team formulates The SevenCorporate IdentityComponents: authenticity,autovisuality, credibility,domesticity, essentiality,individuality, andinventiveness.

One team formulates asynthetic definition: “Thebest of both worlds—Bang& Olufsen, the uniquecombination oftechnological excellenceand emotional appeal.”

One task force proposes a set ofvalues, later approved by topmanagement: excellence,synthesis, and poetry.

Projecting desiredimages

Corporate slogan: “Bang &Olufsen: We thinkdifferently.”

The Seven CIC are intended asguidelines for advertisingcampaigns.

Awareness of organizationalidentity is spreadthroughout the dealers’network (Match PointProgram) and diffusedexternally through otherinitiatives (e.g., “visionforum”).

Dialogue is initiated in localseminars with the dealers,and it is later carried outthrough reshaping externalcommunication, taglines, andvisual expression.

Embedding claims inorganizational culture

Identity is illustrated in terms ofdesign principles andestablished practices.

Identity is diffused in the organi-zation through a manual,posters, internal seminars, etc.

Identity is presented interms of corecompetencies.

An exhibition, The CuriousEye, traces the roots of theidentity back in thecorporate history.

Values are presented anddiscussed in “valueseminars,” facilitating furtherinternal dialogue bycascading.

.


TA

BL

E3

Sou

rces

and

Lev

els

ofE

mp

iric

alE

vid

ence

a

Sta

ges

Sem

istr

uct

ure

dIn

terv

iew

sId

enti

tyS

emin

ars

Hou

seM

agaz

ines

and

Oth

erIn

tern

alC

omm

un

icat

ion

Too

ls

An

nu

alR

epor

tsan

dO

ther

Ext

ern

alC

omm

un

icat

ion

Too

lsC

orp

orat

eH

isto

ries

and

Oth

erA

rch

ival

Mat

eria

l

Con

stru

ing

exte

rnal

Str

ong

evid

ence

Mod

erat

eev

iden

ceM

oder

ate

evid

ence

Sp

orad

icev

iden

ceS

por

adic

evid

ence

imag

es“D

eale

rsw

ere

aski

ng

us

tobe

mor

eli

keth

eJa

pan

ese.

”(1

972)

“Cu

stom

ers

are

the

jud

ge.

Ifcu

stom

ers

reje

ctou

rva

lues

,th

eyar

eu

sele

ss.”

(199

8)“B

ran

dex

per

tsre

late

du

sto

stat

us

sym

bols

,sm

artn

ess,

and

tren

dse

ttin

g.”

(199

8)

“B&

Obe

cam

ea

very

exp

ensi

vebr

and

...

.W

eh

ave

mad

ep

oten

tial

buye

rsth

ink

our

pro

du

cts

are

mu

chto

oex

pen

sive

and

‘not

for

them

.’”(1

993)

“Peo

ple

inou

rta

rget

grou

pre

gard

B&

Oas

anu

nu

sual

syn

ergy

ofae

sth

etic

san

dte

chn

olog

y.”

(199

3)

“We

mak

ep

rod

uct

sth

atar

ea

refl

ecti

onof

our

cust

omer

s...

.T

he

or-

gan

izat

ion

and

the

cult

ure

shou

ldth

eref

ore

refl

ect

thei

rw

ays

ofth

inki

ng

and

thei

rp

erce

pti

ons.

”(1

998)

“Bli

nd

test

sin

the

shop

sin

dic

ated

that

onav

erag

e30

–40

per

cen

tof

the

reta

iler

sar

oun

dE

uro

pe

stil

lem

ph

a-si

zed

mer

ely

the

aest

het

icas

pec

tsof

the

pro

du

cts.

”(1

993)

“In

1972

B&

Oh

adca

ptu

red

wh

atth

eM

use

um

ofM

oder

nA

rth

add

efin

edas

good

des

ign

.”(1

972)

“Wh

ilst

con

cen

trat

ing

onou

ter

pre

stig

e,th

ep

rod

uct

’sid

eaco

nte

nt

and

qual

itie

sw

ere

forg

otte

n.”

(199

3)

Ref

lect

ing

oncu

ltu

ral

pra

ctic

esan

dar

tifa

cts

Str

ong

evid

ence

“Th

eS

even

CIC

grew

out

ofth

ed

esig

np

hil

osop

hy

that

emer

ged

du

rin

gth

esi

xtie

s.”

(199

3)“W

ew

ere

not

hap

py

wit

hou

rin

itia

ld

efin

itio

n—

Th

e‘A

rtis

tin

Au

dio

-Vid

eo’:

itfo

cuse

don

aest

het

ics

and

un

der

emp

has

ized

the

tech

nol

ogy

beh

ind

the

pro

du

cts.

”(1

993)

“We

had

the

abil

ity

toch

alle

nge

esta

blis

hed

bou

nd

arie

sof

how

you

mak

era

dio

s.”

(199

8)

Str

ong

evid

ence

“Get

tin

gan

over

all

view

pro

vid

esu

sw

ith

abe

tter

un

der

stan

din

gof

the

fun

dam

enta

lid

eas

that

hav

ep

rove

nto

best

ron

g.”

(199

3)“W

eh

ave

alo

ng

trad

itio

nfo

rp

rod

uct

dev

elop

men

tan

dd

esig

n.”

(199

8)“D

esig

nis

ala

ngu

age.

We

can

use

des

ign

ers

beca

use

we

hav

eso

met

hin

gto

tell

,as

opp

osed

toP

hil

ips’

adve

ntu

rew

ith

Ale

ssi.

”(1

998)

Str

ong

evid

ence

“Th

eid

enti

tyis

wh

atw

ear

e.W

hat

we

com

efr

om.

Ou

rh

erit

age.

”(1

993)

“Pro

du

cts

are

crea

ted

wit

hin

aS

can

din

avia

nco

nte

xtch

arac

teri

zed

byva

lues

such

asp

rid

e,in

tegr

ity,

reli

abil

ity,

and

con

fid

ence

ind

ialo

gue

asa

form

ofco

mm

un

ica-

tion

,as

opp

osed

tom

onol

ogu

eas

afo

rmof

add

ress

.”(1

998)

“An

inte

rnat

ion

alp

rod

uct

has

no

iden

tity

.B

&O

isan

dal

way

sw

ill

bea

Dan

ish

and

Sca

nd

inav

ian

com

pan

y.”

(199

8)

No

evid

ence

Str

ong

evid

ence

“Th

eS

even

CIC

aim

edat

inte

rpre

tin

gex

isti

ng,

but

un

exp

ress

edat

titu

des

.”(1

972)

“For

the

rest

ofth

ece

ntu

ry,

thes

esi

gnif

ican

tin

nov

a-ti

ons,

i.e.

,m

ovem

ent

and

hig

hly

sop

his

ti-

cate

dm

ode

ofop

erat

ion

,re

mai

ned

ah

allm

ark

ofB

&O

’sp

rod

uct

s.M

ore

than

anyt

hin

gel

seth

eyd

if-

fere

nti

ated

the

com

-p

any

from

oth

erp

laye

rsin

the

mar

ket.

”(1

972)

TA

BL

E3

Con

tin

ued

Sta

ges

Sem

istr

uct

ure

dIn

terv

iew

sId

enti

tyS

emin

ars

Hou

seM

agaz

ines

and

Oth

erIn

tern

alC

omm

un

icat

ion

Too

ls

An

nu

alR

epor

tsan

dO

ther

Ext

ern

alC

omm

un

icat

ion

Too

lsC

orp

orat

eH

isto

ries

and

Oth

erA

rch

ival

Mat

eria

l

Pro

ject

ing

des

ired

imag

esS

tron

gev

iden

ceS

tron

gev

iden

ceS

tron

gev

iden

ceM

oder

ate

evid

ence

Sp

orad

icev

iden

ce“T

oday

you

wou

ldca

ll[t

he

Sev

enC

IC]

anat

tem

pt

tom

ake

one

coh

eren

tbr

and

.”(1

972)

“We

are

com

mu

nic

atin

gth

eN

ewV

isio

nto

all

the

reta

iler

s,as

kin

gth

emif

they

agre

e:if

they

do

not

,th

eyca

nas

wel

lse

llso

met

hin

gel

se.”

(199

3)

“In

B&

Ow

en

ever

dou

btfo

ron

em

omen

tth

atou

rid

enti

ty,

seen

asa

wh

ole,

isim

por

tan

tto

peo

ple

’svi

ews

onan

dac

cep

tan

ceof

us

and

our

acti

ons.

”(1

993)

“It

isim

por

tan

tto

tigh

ten

up

the

rela

-ti

ons

wit

hex

clu

sive

dea

lers

....

Th

ed

eale

rssh

ould

alw

ays

beev

an-

geli

sts

ofou

rva

lues

.”(1

998)

“If

our

broc

hu

res,

adve

rtis

emen

ts,

etc.

,ar

ed

irec

ted

tow

ard

dif

fere

nt

grou

ps,

ifw

esp

eak

ind

iffe

ren

tto

ngu

es,

inth

een

d,

we

lose

our

iden

tity

.”(1

993)

“It

isim

por

tan

tth

atal

lou

rco

mm

un

icat

ion

acti

viti

esex

pre

ssth

esa

me

iden

tity

.”(1

993)

“Ou

rvi

sion

isex

pre

ssed

ina

new

busi

nes

sm

odel

:W

eca

llit

Ban

g&

Olu

fsen

Un

ited

,be

cau

sew

efo

cus

and

coh

ere

arou

nd

the

bran

d.

All

busi

nes

sar

eas

buil

don

the

sam

eco

reco

mp

eten

cies

.”(1

998)

“Eac

hsi

ngl

eco

mp

onen

tw

asu

sed

inad

vert

isem

ents

,br

och

ure

s,at

exh

ibit

ion

san

din

shop

des

ign

,su

chth

atth

eS

even

CIC

form

edan

over

all

and

coh

eren

tp

ictu

reof

the

com

pan

y’s

obje

ctiv

e,go

al,

and

spec

ial

char

acte

r.”

(197

2)

Em

bed

din

gcl

aim

sin

the

Str

ong

evid

ence

Str

ong

evid

ence

Str

ong

evid

ence

Str

ong

evid

ence

Str

ong

evid

ence

orga

niz

atio

nal

cult

ure

“In

ord

erto

dif

fuse

the

Sev

enC

IC,

we

pri

nte

dw

hat

late

rca

me

tobe

know

nas

the

‘Lit

tle

Red

Boo

k.’”

(197

2)“T

he

new

visi

onis

aco

nfi

rmat

ion

ofth

ep

ast

and

agu

ide

for

the

futu

re.”

(199

3)“S

ynth

esis

isou

rev

eryd

ayli

fe.

Poe

try

rem

ind

su

sth

atw

ear

ebu

ild

ing

aca

thed

ral,

and

are

just

carv

ing

ston

es.”

(199

8)

“B&

Oh

asa

stro

ng

and

des

irab

leid

enti

tyw

hic

hh

asbe

encr

eate

dov

era

nu

mbe

rof

year

s.”

(199

3)“V

ern

erN

eert

oft’

sgr

aph

icw

ork,

broc

hu

res

and

exh

ibit

ion

s,an

dth

eG

ute

nbe

rgh

us

adve

rtis

ing

cam

pai

gns

beca

me

both

iden

tity

-cr

eati

ng

and

iden

tity

-ca

rryi

ng

elem

ents

.”(1

993)

“We

are

awar

eof

the

pro

du

ctd

esig

n’s

imp

orta

nce

for

our

iden

tity

.”(1

993)

“We

hav

ea

his

tory

,w

ear

em

ore

than

an

ame.

”(1

998)

“Ou

rab

ilit

yto

mai

nta

inth

ep

osit

ive

asp

ects

of‘t

he

old

cult

ure

’as

toid

ea,

form

,an

dqu

alit

yis

ofgr

eat

valu

e.”

(199

3)“F

un

dam

enta

lva

lues

can

not

bein

ven

ted

,co

nst

ruct

ed,

dic

tate

d,

bou

ght,

borr

owed

,co

pie

d,s

up

pre

ssed

....

Val

ues

can

befo

un

d,

dis

cove

red

,re

veal

ed,

reco

gniz

ed,

exp

osed

,ac

know

led

ged

.”(1

998)

“Exc

elle

nce

isd

oin

gth

ings

the

righ

tw

ay,

dow

nto

the

smal

lest

det

ail.

”(1

998)

“It

iseq

ual

lyim

por

tan

t,am

idal

lth

ese

chan

ges,

that

the

com

pan

ym

ain

tain

sit

sba

sic

iden

tity

and

isaw

are

ofit

sh

erit

age.

”(1

993)

“B&

O(.

..)

iden

tity

iscl

osel

yco

nn

ecte

dw

ith

its

pro

du

cts.

”(1

993)

“We

beli

eve

inth

ep

ower

ofex

cell

ence

.E

xcel

len

cem

ean

ing

the

qual

ity

ofm

ater

ials

and

fin

ish

,an

dth

equ

alit

yof

per

for-

man

ce—

two

ofou

rco

reco

mp

eten

cies

!”(1

998)

“[T

he

Sev

enC

IC]

wer

ed

rum

med

into

our

hea

ds.

We

hea

rdab

out

itan

dw

ew

ere

test

edon

it.”

(197

2)“T

he

def

init

ive

new

grap

hic

styl

e..

.to

geth

erw

ith

the

pro

du

ctd

esig

n,

com

mu

nic

ated

the

com

pan

y’s

new

iden

tity

.”(1

972)

a“S

tron

gev

iden

ce”

isu

sed

toin

dic

ate

ad

omin

ant

them

ein

this

dat

aso

urc

e;“m

oder

ate

evid

ence

,”a

recu

rrin

gbu

tn

otp

rom

inen

tth

eme

inth

isd

ata

sou

rce;

“sp

orad

icev

iden

ce,”

ath

eme

that

app

eare

doc

casi

onal

lyin

this

dat

aso

urc

e.N

um

bers

inp

aren

thes

esin

dic

ate

the

year

ofth

eid

enti

ty-r

elat

edp

rogr

amth

ed

ata

refe

rto

;th

us,

1972

refe

rsto

the

Sev

enC

ICs;

1993

,to

Bre

akP

oin

t;an

d19

98,

toB

ang

&O

lufs

enU

nit

ed.

As our informants reported, however, B&O manag-ers doubted that imitating Japanese competitorswould be good for the company, or even possible.Furthermore, they felt that conforming to externalexpectations would have meant the loss of B&O’sunique design philosophy, a loss no managementteam member was even willing to consider. Never-theless, in order to address external changes andexpectations, they felt the need to reevaluate andformalize what really made the company (andhence its products) different from the Japanesecompanies and products. As a participant reportedlater:

The task was not to lay a new foundation, but toformulate values that were already part of Bang &Olufsen’s identity and then select the strongest ele-ments for the company’s international future. (Bang& Palshøy, 2000: 86)

Eventually, the team’s reflections coalesced intothe Seven Corporate Identity Components, or theSeven CIC—authenticity, “autovisuality” (self-ex-planatory design features), credibility, domesticity,essentiality, individuality, and inventiveness—aset of features that, in the eyes of the top managers,distinguished the company and its products fromother producers of audiovisual equipment. TheSeven CIC were shared with the rest of the organi-zation through various internal communication de-vices, including a manual that came to be known as“the little red book.”

Throughout the 1970s, product development andcommunication followed the Seven CIC. Over time,however, members’ understandings, as expressedin product and market strategies, seemed to drift.With the tacit approval of new CEO VagnAndersen, product developers designed increas-ingly sophisticated and expensive equipment.Powerful subsidiaries repositioned products as lux-ury objects and status symbols. As an internal ob-server retrospectively reflected:

For a time, the company tried to create a survivalniche by turning B&O into a Rolls-Royce type com-pany which focused only on exclusivity. Whilstconcentrating on outer prestige, the product’s ideacontent and qualities were forgotten. (Bang &Palshøy, 2000: 102)

In 1990, however, economic recession and theend of the yuppie culture, which had spurred salesof B&O products during the 80s, abruptly halted thetacit drift towards luxury and led the company intosevere financial trouble. The sudden decline insales, combined with research revealing that a largenumber of retailers portrayed B&O as a producer ofbeautiful boxes with average technical quality,

brought managers to conclude that changes in theproduct line and communication policies requireda convergence around a new understanding of whatBang & Olufsen was about. A few months later, anew CEO, Anders Knutsen, initiated a programcalled Break Point ’93, which was aimed at refocus-ing the organization on the “distinctiveness of itsproduct and its spirit.” After several informal meet-ings, the group in charge of revising the identitystatement produced a phrase that would later beknown as “The New Vision”—“The best of bothworlds: Bang & Olufsen, the unique combination oftechnological excellence and emotional appeal.”

Between 1994 and 1996, sales and profits soared.At the end of 1996, however, the high growth ratesof the previous years began to slow down. In thefollowing months, some competitors declared theirintention of invading the profitable niche for “de-sign products,” threatening the unique position ofthe company. An occasional restyling of its prod-ucts by well-known designer Philippe Starcke ledlow-cost producer Thomson to enthusiastically de-clare that it would soon compete in the same leagueas B&O. Eventually, managers felt the need to for-mulate new plans to counter imitative attempts andsupport growth on a global scale. An essential partof this strategy was a much stronger reliance onexclusive stores or “shops-in-shops” in upscale de-partment stores. Bang & Olufsen products had pre-viously been distributed through a wide range ofmultibrand dealers, where they would be displayedand presented along with many other brands. Man-agers were, however, unsure about the possibilityof fully expressing the uniqueness of their productsin such a retail environment and felt that theirdealers had to possess a profound understanding ofthe philosophy behind the products. Consequently,they triggered another wave of reviewing and clar-ifying the identity of the company as part of a newstrategy. In their own words, they focused on “re-stating and debating the fundamental values” of thecompany, as these values were meant “to providethe foundation for strategic change.” This furtherchange effort was labeled “Bang & Olufsen United.”From these reflections, top managers developed anew set of identity claims expected to supportB&O’s future strategy; they labeled these the three“Fundamental Values: Excellence, Synthesis, andPoetry.”

A recent conceptualization of identity change inorganizations (Barney et al., 1998) rests on the ideathat internal or external events that members per-ceive as sources of stress and pressure may lead themembers to consciously reexamine their organiza-tion’s identity. At B&O, the circumstances that or-ganizational leaders perceived as threatening


shared two fundamental features (as indicated inthe first box in Figure 1): first, environmentalchanges seemed to challenge the prospective via-bility of current conceptualizations of the organiza-tion and of the strategies that rested on them; andsecond, external changes were associated withshifting external claims and expectations about theorganization, eventually leading managers at B&Oto ask themselves, “Is this who we really are? Is thiswho we really want to be?”

Making Sense of Organizational Identity

Recent research shows how loss of clarity aboutthe identity of an organization may lead to whatCorley and Gioia (2004) referred to as “identityambiguity.” In this condition, multiple possible in-terpretations of core and distinctive organizationalfeatures stimulate organizational leaders to take ac-tion to resolve the confusion surrounding identityclaims and beliefs and make new sense of “who weare as an organization.” Indeed, research on socialcognition in organizations has shown how ambigu-ity regarding issues or events requires members toengage in constructing or reconstructing shared in-terpretations, allowing coordinated collective ac-tion (Gioia, 1986; Weick, 1979, 1995). Building onthis notion, a stream of research on strategic andorganizational change has emphasized how the ini-tial step of a change process usually involves col-lective efforts to build or to revise shared under-standings of the internal and external environmentin order to coordinate collective efforts toward neworganizational goals (Gioia & Chittipeddi, 1991;Gioia, Thomas, Clark, & Chittipeddi, 1994).

Building on this literature, we conceptualizedB&O managers’ initial response to what they per-ceived as identity threats as a sensemaking phaseaimed at building new interpretations or, at thevery least, revising old conceptions of central anddistinctive features of the organization. As theyreexamined their organization’s identity, theylooked both inside and outside the organization (asindicated in the second box in Figure 1), searchingfor cues that helped them make sense of itsidentity.

Construing external images. Researchers haveobserved how construed external images—mem-bers’ perceptions of how their organization is per-ceived externally—serve as a gauge against whichmembers evaluate organizational action (Dutton &Dukerich, 1991). At B&O, construed external im-ages provided members engaged in self-examina-tion with cues that helped them interpret changesand evaluate action in the light of perceived iden-tity threats.

In 1972, for instance, the decision to resist exter-nal pressures found support in widespread externalrecognition, manifested in design awards and thepraise of critics. Indeed, a tangible sign came inearly 1972, when the Museum of Modern Art inNew York acquired seven B&O products for itspermanent collection. As two members of the teamthat produced the Seven CIC recalled later, officialrecognition from MOMA gave the firm’s managers aconfidence in the soundness of their approach thatthey had lacked in the previous decade (Bang &Palshøy, 2000).

In 1993, the influence of construed organization-al images on the process was even more explicit, asthe reevaluation of the identity of the organizationwas based on information gathered by two teamsworking in parallel, one of which had the mandateto investigate external perceptions of the company.A field survey with four groups of actual and po-tential customers reported consistent perceptionsof the organizational image. Customers rankedwhat one informant later called “the immediateperception of technological excellence” as the pri-mary characteristic of the company: quality ofsound reproduction, reliability, and so forth. Next,customers pointed to “the emotional side of theproduct,” as reflected in the elegant design and theunusual mechanical movements of products. Feed-back from the customer survey was later incorpo-rated in the statement that provided a new self-definition for the organization.

Finally, in 1998, interviews with leading interna-tional brand experts alerted the team in charge ofreexamining the fundamental values of the organi-zation that the notion of “exclusivity” was stillcentral to external perceptions of B&O. Despite in-ternal efforts to revise understandings and aspira-tions, externally B&O was still widely perceived asa producer and purveyor of luxury goods, and as-sociated, as one of our informants summarized,with “Balmain, Chateau Margoux, Dior, Mer-cedes . . . status symbols, trend setting and smart-ness.” According to team members, these percep-tions reflected a mistaken understanding of thecompany’s past and did not capture its desiredfuture image.

In summary, evidence from our study confirmedthe influence of construed external images on iden-tity dynamics. At Bang & Olufsen, however, mem-bers were not merely passive recipients of externalfeedback: as they engaged in self-examination, theydeliberately used consumer surveys, blind tests inshops, expert panels, and other tools to construeexternal perceptions of the organization. Looking atthe organizational images reflected in the mirror ofstakeholders’ perceptions stimulated further elabo-


ration of environmental changes and comparativereflections about identity features.

Reflecting on cultural practices and artifacts.Reinterpretation of organizational identity at B&O,however, was not underpinned solely by a compar-ison between internal understandings and externalimages. On the contrary, members seemed to assigna considerable importance to what some organiza-tional members referred to as the “cultural heri-tage” of the organization, manifested in distinctivepractices and objects that they perceived as a legacyof a shared past. Building on previous works onorganizational culture (Martin, 1993, 2002; Schein,1992), we labeled this process reflection on culturalpractices and artifacts, emphasizing how organiza-tional members interpreted embedded behavioralpatterns and unique physical, linguistic, and mate-rial artifacts as manifestations of underlying as-sumptions and distinctive organizational traits.

In early 1972, the team entrusted with the task ofdefining the “corporate identity” interpreted thetask as a “reflection on what we were doing” andfound in product design—the most visible elementof differentiation between B&O and its competi-tors—a natural starting point for their investigation.A review of recently developed products helpedmembers surface the principles that had guideddesign choices. As chief designer Jacob Jensen ret-rospectively observed:

B&O was about simplicity and understandable prod-ucts. They had no buttons, but were flat and hori-zontal opposed to the Japanese verticalism. Theproduct had to enrich the experience by having asurprising feature. Products should be self-explana-tory and communicate by themselves.

As one of our informants observed, the groupgradually discovered that they had really beenworking according to some common tacit beliefs.Throughout the years, search for simplicity andessentiality was perceived as having inspired mile-stones like the audio system Beomaster 1900,which had user interfaces designed to facilitate ac-cess to music reproduction, and the one-thumb in-tegrated remote control Beolink 1000, which couldconnect all the video and audio sources in a house(Bang & Palshøy, 2000).

In 1993, the group in charge of finding a new wayto define the essence of the company found again inthe products a starting point for making sense ofwhat was unique about the organization. Althoughnot denying the accuracy of earlier statements suchas the Seven Corporate Identity Components, thegroup purposefully tried “to go deeper” into the“essence”or “spirit” of the company. As a memberof the team, a communication manager, recalled:

We knew we were different from Pioneer, fromSony. We knew we were something else. We startedwondering what was so special about us, about theway we do things, about our products, which madeus different from them.

Group members went through a painstakingsearch for a precise definition of what made B&Odistinctive. According to the communication man-ager just cited,

Every single word was subject to an obsessive searchand long discussions. We started with “B&O, theartist in audio-video”; our attention was focused onthe artistic-emotional aspects, and we were leavingthe technological dimension to a definition of ourfield of activity (audio-video). But this was notenough: it was necessary to give more emphasis tothe technological aspects.

Eventually group members condensed their un-derstandings about the features that made the com-pany unique into an identity statement, the NewVision, that, as top managers explained later, syn-thesized the distinctive competencies that were thefoundation for a new strategy: sound-image integra-tion, mechanical micromovements, the choice ofmaterials, human-system interface, and design. Theconcept of “emotional appeal,” for instance, waslinked to distinctive features of the products, suchas the silent sliding doors of CD player B&O 2500,which relied on capabilities (design and mechani-cal micromovements) that, according to groupmembers, no other producer possessed and nocompeting product featured.

Finally, when in late 1997 CEO Anders Knutsenset up a task force to reflect on the fundamentalvalues of the company, he asked them to “identifythe fundamental values of Bang & Olufsen” with“no methodological restrictions.” Despite the for-mal mandate, the team soon redefined its purposeas “rediscovering” rather than “constructing” fun-damental values. They explicitly positioned thecompany’s heritage in opposition to what was de-scribed as the “drift into an international look-a-like luxury brand” of the mid 80s. Team membersobserved how during the 80s the company had“lost touch with its heritage.” The drift towards“exclusivity” was seen as a move away from thecompany’s heritage, which was embedded, accord-ing to the group, in the Bauhaus tradition and re-flected in a motto of that movement, “Better prod-ucts for a better world.”2 They found examples of

2 The Bauhaus movement in architecture and designdeveloped in the early 1920s around the work of archi-tects and designers Walter Gropius, Marcel Breuer, andMies van der Rohe.


the Bauhaus tradition in early products, like theBeolit 39 radio, which had a Bakelite cabinet, andin the sober elegance of the company’s first trade-mark, readopted in 1994 as part of the Break Pointprogram.

Eventually, the team identified a fundamentalchallenge in revitalizing the company’s heritage,rooted in the Bauhaus-inspired balance of design,aesthetics, and technology. Reference to the Bau-haus tradition, for instance, brought them to asso-ciate “excellence” with “simplicity and modesty”and the company’s ability to “make choices on thebasis of patience and persistence, honesty and de-cency.” One manager took the company’s frequentuse of anodized aluminum as a practical illustra-tion of the concept: “Aluminum is excellence. Goldis exclusive.” Similarly, the concept of “poetry”emerged from team members’ attempts to makesense of what really differentiated B&O from rele-vant competitors such as Sony and Philips and wasinspired by observing the unusual features of thecompany’s products. Poetry, as a member of theteam described it, is “the unfolding of the productas a flower.”

Although conceptually distinct, the two pro-cesses described earlier—construing external im-ages and reflecting on cultural practices and arti-facts—were tightly intertwined (hence theirinclusion in the same box in Figure 1). Both pro-cesses drove the careful selection and wording ofnew identity statements (official documents report-ing organizational self-definitions) as members en-gaged in active debate, retaining or discarding la-bels, until they converged on what they judged tobe a satisfying codification and definition of theirperceptions of the essential character of the organ-ization: the Seven CIC in 1972, the New Vision in1993, and the Fundamental Values in 1999 (seeTable 1). Further rounds of reflection, construal,and comparison helped members clarify the mean-ing and the implications of the labels they hadtentatively agreed upon at an earlier stage. Theoutcome of this sensemaking process was a revisionof the official identity claims summarizing whattop managers perceived as central and distinctivefeatures of the organization (see the first oval inFigure 1).

Empirically, we considered the revision of iden-tity claims as the manifestation of adjustments inthe shared understandings of organizational lead-ers. The revised statements expressed a desiredfuture identity (Whetten et al., 1992), a set of fea-tures around which leaders hoped to align the restof the organization in order to address changes inthe external environment successfully. The delib-erate choice and codification of a set of features that

were claimed to define the organizational identitymarked a transition from sensemaking action tosensegiving action, and to organizational leaders’engagement in providing a consistent account ofthe revised claims aimed at affecting collective un-derstandings throughout the organization.

Giving a Sense of Organizational Identity

Given their role as legitimate representatives ofan organization and their privileged access to inter-nal communication channels, organizational lead-ers are in a particularly favorable position to influ-ence official accounts and explanations (Cheney &Christensen, 2001; Whetten, 2003). Furthermore,providing organizational members with a unitaryand consistent narrative that helps them attachmeaning to events, issues, and actions is a criticaladministrative activity (Pfeffer, 1981: 9). Recent re-search indicates that when organizational identi-ties are called into question or surrounded by am-biguity, organizational leaders are increasinglysubjected to a “sensegiving imperative” (Corley &Gioia , 2004). As a consequence, rising uncertain-ties about what is really central to and distinctiveabout the organization require organizational lead-ers to fill a “void of meaning” and to reconstruct acredible and consistent narrative for internal andexternal audiences, helping members rebuild theirsense of who they are as an organization.

At B&O, the reformulation of identity claims wasthen followed by a sensegiving phase (summarizedin the third box in Figure 1), as top managers en-gaged in a number of initiatives to circulate the newidentity statements to an internal audience. Themanagers provided an official account of the state-ments’ meaning and practical implications or, inother words, gave a sense of the new claims to therest of the organization. On the one hand, managersmade a concerted effort to project a unitary andcoherent organizational image, while on the otherhand they strived to imbue the visible outcomes ofthe sensemaking phases—the Seven CIC, the NewVision, and the Fundamental Values, respective-ly—with meaning, by embedding the revised iden-tity claims in the culture of the organization.

Projecting desired images. At this stage, image-related actions were formally aimed at influencingexternal stakeholders’ perceptions of the organiza-tion and primarily targeted subjects such as retail-ers, clients and, to some extent, the press, whoseconstrued perceptions were not aligned with inter-nal beliefs and aspirations. What we observed hasbeen described in the past as the deliberate attemptto leave favorable impressions on external audi-ences in order to realign internal beliefs and aspi-


rations with external perceptions (e.g., Ginzel et al.,1993; Rindova & Fombrun, 1999). At B&O, how-ever, external projections also served a second pur-pose. Past research indicates that organizationalleaders deliberately project desired images in orderto stimulate internal redefinition of organizationalidentity (Fiol, 2002; Gioia & Thomas, 1996), andthey produce ideal organizational images to pro-mote a coherent sense of self inside their organiza-tion (Cheney & Christensen, 2001).

At B&O, presentations and illustrations of thenew corporate slogans embodying the revised iden-tity statements appeared in annual reports as wellas on the corporate Web site. However, the fact thatthese statements were never used in advertisingcampaigns reinforces the impression that the realreceivers of projected images were internal and pe-ripheral members of the organization: employeesand dealers.

In 1972, for instance, the top management ex-pected the newly codified identity claims (theSeven CIC) to be reflected in the products and toguide both marketers and designers. Conscious andconsistent efforts to communicate the essence ofthe product were considered as important as tech-nical quality in differentiating B&O in the market-place. One of our informants retrospectively ob-served that “today you would call it an attempt tomake one coherent brand.” The perceived unique-ness of the company was illustrated in detail in alittle manual and a poster, later to become a corpo-rate icon. A senior marketing manager was giventhe responsibility of presenting and discussing theSeven CIC throughout the company, including for-eign subsidiaries and dealers.

Even in 1993, top managers emphasized that itwas important that actions at every level (design,manufacturing, advertising, retailing, etc.) supporta unitary and internally coherent organizationalimage. As CEO Anders Knutsen publicly declaredin the November 1993 issue of What?:

It is just as important that all our communicationactivities express the same identity. Because a com-pany can have only one identity. . . . We know thata lot of people have strong feelings about B&O, andthat they have great expectations of our products.We must always meet these expectations and neveraccept a compromise as to “the best of bothworlds”—neither in our research and development,nor in our communication activities.

Whereas the investigation of perceptions amongactual customers had revealed a consistency be-tween their expectations and the central features ofthe organizational identity, blind tests in shops in-dicated that on average between 30 and 40 percent

of European retailers still merely emphasized theaesthetic aspects of the products. This emphasisreinforced the idea, diffused among potential cus-tomers and reflected in the press (e.g., Forbes,1991), that, as one of our informants said, “inside,they are all the same” and “what you really pay foris just a beautiful box.”

B&O’s communication efforts, therefore, wereprimarily addressed to the international network ofretailers that shaped how customers perceived itsproducts. In 1994 more than 600 dealers visitedB&O headquarters to participate in training coursesaimed at aligning their perceptions with the inten-tions of the new top managers. Seminars illustratedattributes of the desired image—the “brand es-sence” expressed in the New Vision—in terms ofproduct features, design choices, and technologicalcompetencies. The content of the seminars was alsowidely publicized in the internal magazine.

Similarly, in 1998 top managers expected thenew identity claims to be meaningful to all stake-holders. It was decided, however, that the revisedidentity statement would be communicated to anddebated only among exclusive B&O dealers andwould not be openly used in an advertising cam-paign. Additional seminars were held locally inorder to ensure that new mono-brand shops that thecompany was founding and supporting wouldfaithfully transfer the desired impressions tocustomers.

Embedding claims in organizational culture.Projected images seemed to serve the purpose of“energizing” members (Gioia & Chittipeddi, 1991)and stimulating a reconceptualization of the organ-ization, but top managers turned once again to theculture of the organization to imbue revised iden-tity claims with meaning, relying on a web of fa-miliar stories, objects, and practices to facilitateinterpretation of the new claims and illustrate theirimplications for action.

The Seven CIC, for instance, were described interms of design and communication practices. Au-tovisuality, for instance, meant designing productsso that they were self-explanatory to the user. Sim-ilarly, authenticity was illustrated by a decision totest the quality of sound and image reproduction ontrained panels of viewers and listeners rather thanon sophisticated technological measurement tools.During presentations, recently developed productswere cited as concrete manifestations of the SevenCIC.

In fact, revised claims were never presented asradically new, but rather as a rediscovery of valuesand attitudes that were already part of the collec-tive heritage of the organization. In 1994, everyemployee in the headquarters and several from the


international network participated in a series ofseminars aimed at clarifying the organizationalidentity and its importance for B&O’s competitivesuccess. The seminars were linked to an exhibition,The Curious Eye, which showed the evolution ofB&O identity through different periods, as reflectedin communication, advertising, and so forth. Thefirm’s 1992–93 annual report stated that it wasimportant that “amid all these changes, the com-pany maintains its basic identity and is aware of itsheritage.” In this respect, the exhibition comple-mented the corporate seminar, as it showed howthe company’s identity had been constructed andexpressed through self-defining company slogansand external communications. The presentation ofthe exhibition in the May 1994 issue of the housemagazine What? read:

When we know these periods, when we understandhow they came into existence and see them ex-pressed in the means of communication, we arebetter able to understand why and how Bang &Olufsen’s identity has developed over the years.And understanding Bang & Olufsen’s identity is aprecondition for being able to further develop it.

Later, in 1998, the work of the task force pro-vided a platform for so-called value seminars,where the Fundamental Values were first sharedwithin the company as deliberate statements ofwho B&O was and what it stood for. Top managersintended to stimulate debate about values through-out the entire organization both nationally and in-ternationally. However, the values themselves werenot intended to be questioned, as a human re-sources manager on the top management team re-marked during a seminar:

Values must be found within the company, not de-fined. . . . Our values cannot be discussed: they arethere where we have found them.

Although labels were defined at the top, the CEOintended debate to facilitate the emergence of ashared interpretation that would imbue the valueswith meaning. Top managers used an in-housevideo created in 1998 to provide concrete examplesof how values manifested in everyday behavior. Forinstance, the video presented a popular B&O storyas an illustration of how “synthesis” was a funda-mental feature of the company’s product develop-ment process:

Chief designer David Lewis walks in with a card-board tube that looks like a pencil and says: This isthe new B&O loudspeaker. . . . He passes that on tothe people in Business Development where peopletear it apart and scream: no way! . . . Loads of dis-cussion between them and David, and then they

produce a synthesis: a prototype of the speaker.They then pass it on to Operations, who shout andscream: We can’t make that! After another newround of yelling a new synthesis emerges: the prod-uct. . . . The following round of discussions involvesSales and Marketing: They in turn claim that no-body will buy it. Endless fights result in a newsynthesis: The marketing concept. Now marketinghas the problem. The dealers bend over backwardsclaiming that it won’t sell. The result is a new syn-thesis: How to present the product in the stores. . . .Half a day later it has been sold. That’s the way wework.

In summary, as new identity claims were illus-trated and discussed, a reconstruction of the organ-izational history and tradition through display ofphysical and linguistic artifacts (products, advertis-ing, corporate mottos, logos, stories, etc.) substan-tiated and supported official interpretations. Newdefinitions and conceptualizations, therefore, ap-peared to be solidly embedded in a claimed cul-tural heritage and to reflect established patterns ofbehavior.

Although we have no direct evidence of the effecton the whole organization of the identity-relatedactions the top managers undertook to revise col-lective understandings (hence the dotted line inFigure 1), we gathered indirect indications of thesuccess of their efforts. In none of the three casesdid we observe resistance to changing conceptual-izations of the organization, and our informantsreported no such resistance. Furthermore, most ofour informants traced explicit links between therevision of identity claims and their impact on ac-tivities such as product design or advertising cam-paigns. B&O managers, for instance, seemed toagree that in the long run the Seven CIC had asignificant impact on both employees and dealersacross the world. As a manager recalled:

There was a general acceptance of the fact that theSeven CIC expressed a vision and provided an opera-tional management tool which gave individual ef-forts a meaning and a purpose. (Bang & Palshøy,2000: 87)

Our informants made also explicit connectionsbetween the new interpretations proposed by therevised identity claims and new products, such asthe portable stereo system Beosound Century, andchanges in the style of the company’s catalogues inthe 90s.

DISCUSSION

Past research on how organizations handleidentity-threatening issues has emphasized thecentral role of construed or desired images in


stimulating and gauging members’ responses(Dutton & Dukerich, 1991; Elsbach & Kramer,1996). Gioia, Schultz, and their colleagues (e.g.,Gioia et al., 2000; Hatch & Schultz, 2002) havesuggested that, in doing so, organizational images“destabilize” members’ self-perceptions. Con-strued images provide members with a feedbackfrom external stakeholders about the credibilityof their organization’s identity claims (Whetten &Mackey, 2002). Although minor inconsistenciesbetween external perceptions and internal beliefsare likely to trigger self-justification and the useof impression management to restore a favorableexternal image (Elsbach & Kramer, 1996; Ginzelet al., 1993), a serious discrepancy may under-mine members’ confidence and induce them toreevaluate their understandings of core and dis-tinctive features of the organization (Gioia et al.,2000; Whetten & Mackey, 2002).

At B&O, however, both construed external im-ages and cultural practices and artifacts offeredcues for members who were reevaluating theirorganization’s identity. Although construed ex-ternal images seemed to act as a destabilizingforce, the visible and tangible manifestation ofthe organizational culture seemed to have an op-posite effect, inspiring and circumscribing mem-bers’ responses and preserving their coherencewith underlying assumptions and beliefs under-pinning the collective sense of self. Cultural prac-tices and artifacts served as a context for sense-making and as a platform for sensegiving byproviding organizational members with a rangeof cues for reinterpreting and reevaluating thedefining attributes of the organization through aretrospective rationalization of the past.

Organizational Culture as a Context forSensemaking

Extant conceptions of organizational culture tendto converge on the idea that culture is composed ofa web of cultural expressions—including rituals,stories, artifacts, language, and more—that reflectan underlying pattern of shared interpretive beliefs,assumptions, and values (Louis, 1983; Martin,2002; Schein, 1992; Trice & Beyer, 1984). At Bang &Olufsen, as members engaged in reflections anddiscussions about central and distinctive featuresof their organization, they seemed to find in thesevisible and tangible elements of their organization’sculture a reservoir of cues supporting and mediat-ing interorganizational comparisons, insofar asthese cultural forms were perceived as a legacy of ashared past and interpreted as material manifesta-tions of distinctiveness.

Material practices and interorganizationalcomparison. Building on psychological theories ofidentity, Albert and Whetten (1985) observed howorganizational identities emerge from comparisonsbetween the self and other entities. Perceived sim-ilarity or difference supports members’ self-catego-rizations. Indeed, at B&O, as organizational mem-bers discussed the identity of the organization, theywidely referred to the way products were designedor components selected, catalogues prepared, orprototypes tested. Material practices and artifacts,such as the sliding doors of the CD player Beosys-tem 2500, the sober elegance of anodized alumi-num finishes, and the understatement of graphicdesigner Werner Neertoft’s advertisements from thelate 60s facilitated interorganizational comparison,helping members make sense of the similarity/dis-similarity between B&O and other, comparableorganizations.

Research on organizational culture suggests thatpractices, artifacts, rituals, and other cultural formsvisibly manifest idiosyncratic patterns of thoughtunique to one organization and the product of acollective learning history (Martin, 1993; Schein,1992; Trice & Beyer, 1984). By their own nature,then, cultural forms, such as stories (Martin, Feld-man, Hatch, & Simkin, 1983), sagas (Clark, 1972),corporate architecture (Berg & Kreiner, 1990), anddress (Pratt & Rafaeli, 1997) and other physicalartifacts (Pratt & Rafaeli, 2001) tend to reflect—andbe interpreted by members as evidence of—an or-ganization’s distinctiveness. As Dutton, Dukerich,and Harquail observed:

Organizations have a broad repertoire of culturalforms such as rituals, symbols, ceremonies, and sto-ries that encode and reproduce shared organization-al patterns of behavior and interpretation. . . . Ritu-als, ceremonies, and stories objectify andcommunicate the collective organizational identityto organizational members. (1997: 243)

Tangible, material differences in product designor the content of advertising, therefore, may plau-sibly be interpreted as reflecting deeper, less visibledifferences in goals, values, and competencies.

At B&O, members’ reflections focused largely,although not exclusively, on product design anddevelopment practices and on their visible out-comes as product features. As some of our infor-mants observed, however, products had alwaysbeen central to the culture of the organization. Fur-thermore, when comparing B&O with its competi-tors, the originality of the company’s productsmade them one of the most evident elements ofdifferentiation. In this respect, identity-related re-flections seemed to converge around those aspects


of the organizational culture—its design and devel-opment practices—that members considered dis-tinctive traits of their organization.

Organizationalcultureandretrospectiveration-alization. Sensemaking can be understood as theimposition of an order a posteriori onto an ambig-uous reality (Gioia, 1986; Weick, 1995). In this re-spect, visible and tangible elements of the cultureof an organization may provide cues for retrospec-tive rationalization. At B&O, as managers reexam-ined organizational identity, elements of the cul-tural heritage of the organization were interpretedas reflections of past achievements and manifesta-tions of values, attitudes, and competencies thatwere retrospectively considered as central to thesurvival of the company.

Whether these interpretations were actually“true” is beside the point: organizational history isperiodically reinterpreted by members in light of acurrent situation (Biggart, 1977). As individuals tryto make sense of a complex history and to identifya causal sequence of events leading to a knownoutcome, accuracy is often less important thanplausibility and pragmatism (Weick, 1995). In thisrespect, cultural practices and organizational arti-facts may provide members reevaluating their or-ganization’s identity with a less ambiguous startingpoint than, for instance, values, goals, and mission.As Ashforth and Mael observed:

Matters of the soul are inherently abstract, nebulous,arational, and potentially divisive; members oftenfeel safer and more confident discussing the mani-festations of identity, such as reporting relation-ships, budgets, operating routines, and recruitingpractices. (1996: 29)

As members face a highly ambiguous cognitivetask such as answering the question, “What is thisorganization really about?,” familiar manifestationsof a shared culture provide them with a startingpoint for making sense of their organizationalidentity.

Organizational Culture as a Platform forSensegiving

Although it is not unreasonable to assume thatinstitutional claims will influence members’ un-derstanding of what their organization is andstands for (Czarniawska, 1997; Whetten, 2003), pastresearch indicates that changing identity claimsmay not always alter collective understandings ac-cordingly (Humphreys & Brown, 2002). Institu-tional claims tend to express the view of organiza-tional leaders, individuals who are expected torepresent and to speak on behalf of their organiza-

tion (Cheney, 1983; Whetten, 2003) and to mediatebetween the organization and the external environ-ment (Hatch & Schultz, 1997). Collective under-standings, however, may be less malleable andfluid than leaders’ aspirations. Whereas changingclaims can be plausibly interpreted as an expres-sion of revised interpretations and aspirations onthe organizational leaders’ side, new claims areonly loosely coupled to changes in collective un-derstandings in the rest of the organization. Newconceptualizations must be “socially validated” tobe internalized by organizational members (Ash-forth & Mael, 1996: 39). Therefore, accounting forhow revised claims may influence collective un-derstandings and overcome the spontaneous resis-tance displayed by organizational members is cen-tral to understanding change and adaptation inorganizational identities.

Past research suggests that projecting new ideal-ized conceptualizations embodied in “desired fu-ture images” (Gioia & Thomas, 1996) or “core ide-ologies” (Fiol, 2002) may induce members togradually revise their understandings. At B&O, pro-jected images were supplemented by narrativesforging explicit connections between new claimsand various manifestations of a common organiza-tional culture—a claimed “cultural heritage.” Phys-ical or linguistic artifacts were used as concreteillustrations of values, attitudes, and behaviors thatshould support strategic response to environmentalchanges. Embedding new claims within the cultureof the organization helped managers imbue claimswith meaning and illustrate their practical implica-tions and to preserve a sense of self and continuityin the face of changing self-definitions.

Organizational culture and symbolic action.Research on organizational change has highlightedthe role of symbols and symbolization in promotingnew understandings of an organization (Berg, 1985;Gioia et al., 1994). In order to facilitate members’sensemaking, as organizational leaders strive to“give sense” to organizational changes, they shouldpresent the changes in ways that relate them toprevious experience (Gioia, 1986). Managing organ-izational change, therefore, involves considerable“symbolic action” carried out in order to help therest of the organization develop a new interpreta-tion of the organization, while at the same timepreserving a connection with existing knowledgestructures (Gioia et al., 1994; Pfeffer, 1981).

Symbols, understood as representative objects,acts, or events that stand for wider or more abstractconcepts or meanings (Morgan, Frost, & Pondy,1983), are central to organizational sensemaking, asthey facilitate the interpretation of ambiguous ex-periences or events by conveying relationships


with existing knowledge structures (Donnellon,Gray, & Bougon, 1986; Gioia, 1986). As Gioia re-marked, however:

Attempts to foster change . . . must take explicitrecognition of the socially constructed nature ofsymbols, inasmuch as the overt symbols used tocommunicate the character of desired changeshould not have different meanings for different in-dividuals and groups. It is important to developsymbols for change that have consensual bases tothem: ones that are likely to engender common (anddesired) meaning. (1986: 68)

In organizations, visible, tangible, and audiblemanifestations of culture, such as language, stories,visual images, material artifacts, and establishedpractices, are among the most powerful symbolsmembers rely upon for constructing meaning andorganizing action (Gioia, 1986; Louis, 1983). Asorganizational leaders engage in sensegiving ac-tion, therefore, they can use manifestations of cul-ture as influential discursive resources for craftinga meaningful account of new claims and resolvingpossible divergence of interpretations about coreand distinctive features.

Organizational culture and the preservation ofa sense of self and continuity. Institutional iden-tity claims perform an important function in pro-viding organizational members with a sense of selfand continuity (Whetten & Mackey, 2002). Changesin identity claims, therefore, are likely to generatedistress (Whetten, 2003) and encounter resistance(Fiol, 2002; Humphreys & Brown, 2002). Past re-search suggests that the proposal of idealized im-ages of an organization may help members gradu-ally overcome their resistance and redefine theirbeliefs (Gioia & Thomas, 1996; Reger, Gustafson,DeMarie, & Mullane, 1994). Our findings comple-ment this line of research, as they suggest that arevision of collective understandings may be facil-itated by embedding new claims in a narrative pro-viding a postreconstruction of organizational his-tory. As Whetten remarked:

The need for continuity is so compelling that evenprofound organizational changes are typically por-trayed as reaffirmations of higher level identityclaims. . . . Another strategy used by organizationalchange agents to affirm an essential shared sense oforganizational continuity is to portray a proposedchange as a reinterpretation of an enduring identityclaim. (2003: 13)

The narrative function of institutionalizedclaims, then, leads to the frequent inclusion of ref-erences to the history and tradition of an organiza-tion (Ashforth & Mael, 1996). An albeit simplifiedreconstruction of an alleged past, glossing over dis-

ruption and temporal inconsistency, helps mem-bers preserve a sense of self in the face of proposedchanges (Gioia et al., 2000). In this respect, enrich-ing the illustration of identity claims with specificdetails from a company’s history and culture islikely to increase the credibility of the official nar-rative and support its claim of uniqueness (Martinet al., 1983). As old cultural practices and forms areimbued with new meaning, new claims can be con-vincingly presented as a rediscovery of shared val-ues, the awareness of which had gradually fadedover time. Furthermore, embedding new claims inthe cultural heritage of the organization empha-sizes the connection with “who we have been”rather than “who we want to become” (Gioia et al.,2000), providing credible support to a claim ofcontinuity in the face of a management-driven at-tempt to reframe collective understandings in thelight of new environmental conditions.

At B&O, the periodic renewal of a collectivesense of self involved the projection of “desiredimages” or “future selves” that were deeply embed-ded in the organization’s past.3 Selected images ofan organizational past—the Bauhaus heritage, thelegacy of the founders, milestone products, andexcerpts from old advertising campaigns—wereused to give new sense to the organizationalpresent and substantiate future aspirations. Re-vised identity claims did not seem aimed at sub-stantially altering collective self-perceptions. Onthe contrary, their firm grounding in establishedpractices and cultural forms made them appear tobe attempts to return members’ attention to featuresthat had already been part of the way they hadconceptualized the organization in the past.

Although our findings provide rare longitudinalevidence of actual changes in identity claims, then,they suggest that shared understandings may beless fluid than currently understood. A social actorperspective on organizational identity is centeredon the notion that institutional claims provide con-tinuity and consistency to members’ collective self-perceptions. Conversely, a social constructionistperspective emphasizes the fluidity of shared un-derstandings, even in the face of unchanging formalclaims. Evidence from our study, however, suggeststhe paradoxical insight that although both perspec-tives may be correct in their own right, their advo-cates may have respectively underestimated thegenerative potential of institutional claims and theresilience of shared understandings under environ-mental pressures.

3 We are indebted to one anonymous reviewer forpointing at this paradoxical insight.


Organizational Identity Dynamics

Collectively, our findings suggest that in order tocomprehend the processes that unfold in situationsof perceived identity threat, researchers need toinvoke a simultaneous recognition of the internallyand externally directed dynamics of identity. Evi-dence from our study indicates that redefinitions of“who we are as an organization” tend to be influ-enced by how members believe the organization isperceived externally (construed external image)and by their beliefs and assumptions about idiosyn-cratic patterns of behavior (organizational culture).

Our emerging interpretations extend current con-ceptualizations of organizational responses to iden-tity threats. Table 4 compares the current view oforganizational responses to identity threats, andinsights from our study. Building on our evidence,we propose a broad conception of identity threatsthat includes discrepant images as well as identity-threatening environmental changes, insofar asmembers perceive them as a challenge to the iden-tity of the organization and are induced by them toreevaluate internal claims and understandingsabout organizational self-definitions. Previous con-ceptualizations have emphasized how “spoiled or-ganizational images” threaten individual members’social identity and self-esteem (Elsbach & Kramer,1996), but our conception includes challenges tothe integrity and the continuity of members’ collec-tive sense of self as an organization (Whetten &Mackey, 2002). Unlike past research, which hasfocused on impression management techniques

and cognitive tactics intended to realign externalperceptions and internal beliefs and aspirations,our study points to the influence of organizationalculture on sensemaking and sensegiving processesdriving reexamination and revision of collectiveunderstandings. More broadly, our findings sup-port a view of organizational responses to identity-threatening events as shaped by the interplay be-tween organizational images and culture.

Hatch and Schultz (2000, 2002) advanced theidea that interplay between construed external im-ages and organizational culture drives the evolu-tion of organizational identities. Hatch and Schultzbuilt their arguments on Mead’s theory of identityas a social process, according to which individualidentities arise in the interaction between two con-structs: the “me,” understood as the organized setof attitudes of others assumed by individuals, andthe “I,” the individual answer to external attitudes(Mead, 1934). Hatch and Schultz (2002) argued thatconstrued external images and organizational cul-ture may be considered the organizational equiva-lent of Mead’s “me” and “I” and proposed a frame-work for understanding identity formation asemerging from the interaction of image and culture.According to the two authors, the tacit assumptionsand beliefs of organizational members constitutethe organizational context for the more aware re-flections of “who we are as an organization” andcan be seen as the conceptual parallel to the “or-ganizational I” (Hatch & Schultz, 2000, 2002).

Conceptually, Hatch and Schultz’s arguments are

TABLE 4New Insights on Organizational Responses to Identity Threats

TheoreticalAspect Past Literature Insights from Our Study

Nature ofidentitythreats

External events challenging members’ definitionof central and distinctive attributes of theirorganization (Elsbach & Kramer, 1996; Ginzelet al., 1993).

Organizational identities may also be challenged byenvironmental changes that question the viabilityof what members’ perceive as central, distinctive,and enduring features.

Drivers oforganizationalresponse

Organizational responses are guided by theattempt to realign construed and aspiredexternal images (Dutton & Dukerich, 1991;Ginzel et al., 1993).

Construed external images act as a destabilizingforce and as a trigger for identity-relatedaction (Gioia et al., 2000).

Organizational responses are constrained by theneed to reconcile responsiveness to externalchanges with preservation of sense of self.

The cultural heritage of the organization acts acontext for sensemaking and a platform forsensegiving, helping members maintain a senseof continuity amid formal or substantial changes.

Nature oforganizationalresponse

Organizational responses rely primarily onimpression management (Sutton & Callahan,1987; Ginzel et al., 1993) and self-affirmationtechniques (Elsbach & Kramer, 1996) aimed atinfluencing external perceptions andrepresentations of the organization.

Environmental changes induce reevaluation ofshared definitions of self in light of identity-threatening events (sensemaking).

Revised claims reflect understandings andaspirations of organizational leaders; newconceptualizations support adjustments incollective understandings linking to claimedcultural heritage (sensegiving).


compelling. However, although their frameworkmay provide a theoretical explanation for our find-ings, our study is the first to provide evidence of adynamic relationship between culture, identity,and image that, so far, has been suggested at atheoretical level but never really supportedempirically.

Methodological Limitations

Our study suffered from the usual limitationsassociated with case study research, which tradesgenerality for richness, accuracy, and insight intoobserved processes (Langley, 1999; Yin, 1984). Ourframework, however, emerged from comparingthree separate instances of organizational re-sponses to identity threats. Observing similar pat-terns of behavior across different cases reinforcedour confidence in the generalizability of our emerg-ing interpretations beyond the limited boundariesof our study.

We cannot exclude the possibility that specifictraits of our research setting—a medium-sized busi-ness organization with a highly differentiated nichestrategy—might have affected how the observedprocess unfolded. It is not unreasonable to arguethat the relatively long history, unique productsand positioning, and peculiar values of B&O mighthave provided members with a heightened sense ofself, rooted in a rich organizational culture. Webelieve, however, that at B&O a strong culture anddiffused pride and awareness of cultural heritagemay have simply increased the visibility of pro-cesses that occur less visibly elsewhere. Compari-son with earlier work on organizational identitiesseems to indicate that similar identity-related pro-cesses occur in large global corporations (Brun-ninge, 2004; Fombrun & Rindova, 2000) as well asin public nonprofit organizations (Dutton & Duk-erich, 1991; Gioia & Thomas, 1996).

It is also possible that the emphasis on distinc-tiveness—as opposed to similarity—that we ob-served all along might have been affected by thenature of the organization that we studied: a busi-ness firm. Most organizations are subjected to con-flicting pressures for conformity and differentiation(Deephouse, 1999), but the need for business firmsto differentiate themselves from competitors mayincrease the relative importance of claims of dis-tinction, such as those observed in B&O (Whetten,2003). Claims of uniqueness may be even moreimportant to consistently support a highly differen-tiated niche strategy such as B&O’s. Future researchmight investigate more systematically whethervariables such as age, type of activity, and organi-zational form or strategy influence the relative ex-

tents to which image and culture affect identitydynamics.

Finally, it may be argued that when environmen-tal changes call for a substantial transformation ingoals, values, structures, and practices, it may notbe advisable, or even feasible, to have changes em-anate from a reinterpretation of the past. To ourknowledge, however, the literature holds little ev-idence of successful radical changes of organiza-tional identity. The New York Port Authority, ob-served by Dutton and Dukerich (1991), seemed torediscover traits that were perceived as already partof the identity of the organization. In Gioia andThomas’s (1996) study, whether the new dean’sattempt to turn a large university into a “top ten”school actually produced any effect is not clear. Asimilar attempt described by Humphreys andBrown (2002) failed owing to the resistance of mostorganizational members. This is not to say thatradical identity changes are impossible. We be-lieve, however, that more empirical research onradical identity changes is needed to shed morelight on the conditions that affect organizationalleaders’ willingness and capacity to carry out pro-found modifications in organizational identityclaims and understandings.

Conclusions

Our study explored organizational responses to en-vironmental changes and shifting external represen-tations that induced members to reflect on their or-ganization’s recent and prospective courses of actionand ask themselves, “What is this organization reallyabout?” Although past research has documented theimpact of desired images on organizational responsesto environmental changes, our findings highlight theinfluence of organizational culture—and in particu-lar, the influence of its manifestations—on the redef-inition of members’ collective self-perceptions.

Our findings point to organizational culture as acentral construct in understanding the evolution oforganizational identities in the face of environmen-tal changes, suggesting that collective history, or-ganizational symbols, and consolidated practicesprovide cues that help members make new sense ofwhat their organization is really about and give thatnew sense to others. Further, our findings highlightthe role of culture in preserving a sense of distinc-tiveness and continuity as organizational identityis subjected to explicit reevaluation. Our research,then, suggests that the roles external images andorganizational culture play in affecting organiza-tional responses to identity threats may be morecomplementary than the current literature on or-ganizational identity would suggest.


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Davide Ravasi ([email protected]) is an asso-ciate professor of management in the Strategic and En-trepreneurial Management Department of Bocconi Uni-versity. He received his Ph.D. in management at BocconiUniversity. His current research interests include therelationships between organizational identity, cultureand image, and, more generally, the influence of internaland external interpretative processes in shaping compet-itive advantage and value creation.

Majken Schultz ([email protected]; see also www.brandstudies.com) is a professor of management in the Department ofIntercultural Communication and Leadership, CopenhagenBusiness School. She received her Ph.D. in organizationculture studies from Copenhagen Business School. Her re-search interests revolve around the relations between or-ganizational culture, organizational identity, and stake-holder images and their applications to practice in the areasof identity management, corporate branding, and reputa-tion management.


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