‘Organizational Linkages: Understanding tho Productivity Paradox (1994) pth ng edioperonesDO09045043hra 162 Hl copyright 1884, 2060 The Ral Acaseny of Seles igh ese 162+ _Roneer, parrewano that to understand why the paradox occurs, one must look to the link- ages between the levels of analysis. If performance improves at one level but does not show up in the next, there is something about the linkage between the levels that is causing the disappearance of the ef fect. Understanding the linkages between levels of analysis can lead to ‘a much better translation of improvements at lower levels in the orga- nization into improvements at higher levels in the organization. In other words, ifthe design and evaluation of improvement interventions are grounded in an understanding of the linkages and their effects, they ‘will have a more positive impact on overall organizational performance. LINKAGES DEFINED. ‘An organizational linkage occurs when the outputs from one orga- nizational subsystem are combined with the outputs of another sub- system into broader outputs. Consider the example of a small manu- facturing firm of the type exemplified in Figure 7-1. The firm has three levels of analysis above the individual: the unit, the division, and the total organization. The firm comprises a production division, a mar- keting division, and such other divisions as personnel, maintenance, purchasing, and accounting, The production division includes a design ‘unit and a manufacturing unit. All units and divisions are managed by ‘a top management group. If a new product is being considered, top management makes the decision to allocate resources to develop the new product. The design unit develops the design for the product, the ‘manufacturing unit makes it, and the marketing division sells it. ‘This organization can be thought of as a set of linked subsystems. ‘There are several levels of subsystems in this organization. According to Katz and Kahn (1978) and Naylor et al. (1980), as well as Chapters organization ‘Top Management Division Producton Marketing Other unt [Design | [ Manutacturing | | Advertsing] [Sales FIGURE 7-1. Example of an organizational structure.