A semiotic analysis of corporate language: organizational boundaries and joint venturing

Administrative Science Quarterly,  June, 1989  by C. Marlene Fiol

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A Semiotic Analysis of Corporate Language: Organizational Boundaries and Joint Venturing In an attempt to explain differences in the propensity of organizations to enter into joint ventures, this study uses a semiotic method of textual analysis to examine CEOs' letters to shareholders as they reflect the existence and strength of boundaries separating internal organizational subunits and boundaries separating the company from external environments. These boundaries are linked to the propensity of ten companies in the chemical industry to engage in joint-venture activity. Weak internal or interdivisional boundaries and strong boundaries separating the company from the external environment were prevalent in firms having no joint ventures; strong interdivisional boundaries and weak external boundaries were prevalent in firms having several joint ventures.

ORGANIZATIONAL BOUNDARIES AND JOINT VENTURES

Organizational boundaries are imagined lines drawn to separate the organization from its surrounding environment and to specify how internal roles and functions are related but also separated from one another (Wilden, 1980). Corporate boundaries thus define and delimit corporate relationships, delineating areas of autonomy and self-control as well as areas of interdependence. Theories of group dynamics (Miller and Rice, 1967; Miller, 1979) suggest that perceptions of boundaries and autonomy can be related circularly: as autonomy is threatened, boundaries that separate a unit from its surroundings are strengthened, which leads to increased autonomy and perceptions of greater self-control.

Organizational boundary definitions have implications for issues of control, particularly with respect to joint-venture strategies. Joint-venture relationships require shared control of particular activities by two or more companies. Berg, Duncan, and Friedman (1982) argued that many firms do not enter joint ventures because their CEOs fear loss of control. Harrigan (1985) suggested that organizations may fear that sharing control is an admission of weakness. Consistent with earlier research on joint ventures, this study argues that CEOs who prefer autonomy (control) will be less likely to enter into joint ventures. One would expect them to view their firms as separate from the environment and to draw strong external boundaries around their firm. Firms that enter partnerships with others, however, would be expected to tolerate a more open exchange between their organization and the environment and to encourage weak external boundaries.

Joint ventures also require tolerance for organizational separateness of internal units, so that the new-venture "child" can be distinguished from the "parents" (Harrigan, 1985). This implies relatively strong internal boundaries that differentiate the joint-venture units from other units within each of the partners, leading to greater internal separateness. Firms without joint ventures would be expected to encourage relatively cohesive internal units, with weak internal boundaries. In contrast, joint-venturing firms would tolerate relatively autonomous organizational subunits, drawing strong internal boundaries.

Finally, if tendencies to draw or remove strong boundaries between one's own and other organizations are manifestations of a more general disposition, one would expect them to be reflected in the way an organization communicates facts about itself in relation to its environment. Joint-venturing firms would use language conveying external inclusiveness and shared fate and relatively loose control of internal subunits. Firms discouraging joint ventures would speak a language of external separation and disassociation and internal inclusiveness. This study's central proposition is as follows:

Proposition: Joint-venturing firms are likely to exhibit weak boundaries separating the company from external environments and strong boundaries among organizational subunits. Conversely, non-joint-venturing firms are likely to exhibit strong boundaries separating the company from external environments and weak boundaries among organizational subunits.

While letters to shareholders directly communicate facts about a firm, they also communicate implicit beliefs about the organization and its relationships with the surrounding world. A semiotic method of textual analysis is used in this paper to analyze the narrative structures of letters to shareholders and identify consistent patterns in these implicit beliefs. The method uncovers systematic differences in the way these documents portray the boundaries that define interrelationships among units within the company and between the company and external environments. These differences are then shown to distinguish between firms involved in domestic joint ventures and those that are not.

THE SEMIOTICS OF ORGANIZATIONAL BOUNDARIES

A firm's posture toward joint-venture activities can be seen as part of a more general pattern of beliefs regarding the appropriate way to define internal and external relationships. Patterns of beliefs are grounded in underlying meanings attached to self and others (Greimas, 1987). Identifying such patterns requires a methodology that can detect meanings assigned to events and situations and specify the rules that govern meaning in a given context. Semiotics is one such methodology.