Inside and outside stakeholders, such as employees, management, and shareholders, however, competes over their share of the rewards and resources that the organization generates. To grow, change, and survive, an organization must manage both cooperation and competition among stakeholders (Gasparino & Raghavan, 2001; March, 1962). Organizational conflict is the clash that occurs when the goal-directed behavior of one group blocks or thwarts the goals of another.
Conflict can be beneficial because it can overcome organizational inertia and lead to organizational learning and change (Coser, 1956; Robbins, 1974). When conflict within an organization or conflict between an organization and elements in its environment arises, the organization and its managers must reevaluate their view of the world. Conflict between different managers or between different stakeholder groups can improve decision-making and organizational learning by revealing new ways of looking at a problem or the false or erroneous assumptions that distort decision-making. For example, conflict at AT&T between the board of directors and top managers about the slow pace at which top managers were restructuring the company caused a radical change in managerial attitudes (Hymowitz, 2001; Bernstein et al, 2000). ...Show more