‘Organizational Linkages: Understanding tho Productivity Paradox (1984) pth np edinperoneDO09045043hra Ml copy 1984, 2050 The Ral Academy of Seles al ihis ese ‘Decomrosino 1s 2RODUCITTY LINKAGES PakaDox +171 ‘ment regulations, and actions of competitors. These are factors that will influence the overall performance of the organization on its mea- sures, but they are not a function of the actions of the organization's divisions. ‘At the bottom of the figure, some of the different measurement pur- poses are listed. They indicate graphically that different factors are included when measurement is done for different purposes. Measure- ‘ment for motivational purposes should measure only what the individual or the unit has control over. It will frequently measure up to the level of unit output, but it should try to remove the effects of the technolo, ‘The management information purpose encompasses individual behav- ior, the performance of the technology, how well supervision is done, the effectiveness of coordination of the individual units, and the effects of resource acquisition. Measuring total organizational performance typically includes all the factors shown in Figure 7-3, including those outside the organization. ‘One should expect the productivity paradox to occur when mea- sures collected for different purposes are compared. For example, sup- pose an organization introduces CAD technology and finds that its de- sign engineers are able to create better designs and in less time. It then measures overall organizational outcomes, such as return on in- vestment and gross profit and finds no change. This is an example of the paradox, but it really makes no sense that the two measures should be related. ‘As Figure 7-3 illustrates, measures at the organizational level of analysis will be influenced in a very minor way by the design unit's producing the better designs. This leads to the following hypoth- * The more factors that are added to a measure of organizational functioning when it is aggregated from lower to higher levels of the organization, the weaker the relationship between the original mea- sure and the composite measure will be * The more factors that are added to measures of organizational functioning when they are aggregated to higher levels of the organiza- tion, the greater is the likelihood of finding evidence of a productivity paradox Ditferent Aggregation Strategies ‘The problem being discussed here can be seen as an issue of aggre- gation. The concept of linkages is by definition a cross-level issue— ‘measures are aggregated actoss levels of analysis. In order to deal with cross-level questions, measures must be developed that go across levels,